Idea in Brief

A Radical Shift

Smart, connected products are forcing companies to redefine their industries and rethink nearly everything they do, beginning with their strategies. This article, the second in a two-part series, focuses on the impact of these products on companies’ operations and organizational structure.

New Relationships

The unprecedented data and capabilities that smart, connected products provide are changing the way firms interact with their customers. Those relationships are becoming continuous and open-ended.

New Processes

The new product capabilities and infrastructure and the data they generate are reshaping the work of virtually every function in the value chain, including product development, IT, manufacturing, logistics, marketing, sales, and after-sale service. In addition, far more intense coordination among functions is now required.

New Structures

New forms of cross-functional collaboration and entirely new functions are emerging. These include unified data organizations, units to continuously improve products postsale, and groups charged with optimizing customer relationships.

The evolution of products into intelligent, connected devices—which are increasingly embedded in broader systems—is radically reshaping companies and competition.

A version of this article appeared in the October 2015 issue (pp.96–112, 114) of Harvard Business Review.