Industrial Business Models – Choice #1

Hardware is dead. Hardware is booming. Hardware is hard and no one should do it. Hardware is different. Hardware is the same.

Industrial businesses manufacture and sell to supply chains, as opposed to individual consumers.

IoT, IIoT and additive manufacturing attract attention to heavy industry – where a thing is being produced and is being sold into a supply chain, rather than to an end consumer. [1] If you’ve got a new technology and are trying to figure out the right business model, then there is one major decision to make early on in regards to the business model.

  • Option 1: Use your advantage (the new technology) to make a thing and sell it.
  • Option 2: Sell others the ability to make use of your technology.  Enable others.

I would choose between the two based on; (i) ease of access, and (ii) the ability to create cadence, speed and iteration.

Option 1 is the route if you know a target vertical and if the technology gives a big advantage in a vertical.  It’s also a good option if the technology is hard.  You aren’t forcing people to digest the technology – you’re instead using it to sell a ‘new and improved’ version of something they already buy.

Option 2 requires distribution.  It also requires that the technology be a big enough improvement over what the market currently uses that everyone is drawn to it, but that the technology be easy enough (or similar enough to current processes) for customers to be easily educated.

Pick a business model.

There are plenty of other things to consider between these two options – but most of the flavors are really minor variations in how a business aligns with customers, finances the customer’s purchase decision and constructs the right channel.  Supply chain structure matters a great deal and can easily push the decision one way or another.

[1] – I reserve the right to modify this definition.

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