AI + IoT for Midsize Enterprise Part 1

Source: The Author

If you're looking for a company that is doing AI +IoT right, look at Tesla. Tesla today is worth more than all of the rivals combined. That means that if you were to roll up Toyota, Volkswagen, Daimler, BMW, Ford, and GM together, they would not be worth as much as Tesla. Tesla is doing something right. What is their super power?

Tesla has done a great job of marrying AI + IoT. IoT to collect data and make their products smarter. AI to build new value-added services trained on the rich data in the global fleet of vehicles. This strategy is leading to new SaaS-based services such as Full-Self Driving (FSD) and Tesla Insurance. Investors love these types of revenue streams. They are sticky, high-margin and help create an economic moat. Thus, Tesla is valued so much more than its peers.

AI + IoT for Midsize Enterprise Part 1 (YouTube)

However, Tesla is just early to this particular trend.  All Original Equipment Manufacturer’s (OEM’s) and manufacturers will be forced to diversify their revenue mix to include more services and more software. The underpinning for those additional revenue sources is going to come from AI and IOT.

If you're a midsize OEM or manufacturer, then your approach needs to be different from your larger peers. You won’t have the resources that a John Deere has. You won’t have the vendor access that a caterpillar has. But there are other advantages you can lean into.  As a midsize OEM, you can be more nimble and agile. That's good for fast prototyping and quickly testing ideas. Secondly, you can leverage your flatter org structure. Your leadership should be better connected to what is going on “on the factory floor” and leverage trends like AI & IoT allowing you to move faster.

That said, your lack of size (budget and team) will require you to be more strategic with your spend. You won’t have as many “at bats” to get it right. All the more reason to be very strategic with how you start new AI + IoT initiatives.

An encouraging thought, however, is that Tesla was founded in 2003. That makes Tesla a relatively new entrant in the automotive sector. But in that short time Tesla has masterfully leveraged AI+IoT to dominate the space. Will you do the same?

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