Connected Intelligence Challenges Incumbents

Existing product leaders can struggle to embrace new approaches and new technologies

Russell McGuire
Oct 1 · 5 min read

Earlier this week I started a new series on how the Connected Intelligence Revolution is redefining every product and every industry. I used Rachio as an example of a startup company redefining the residential irrigation industry by embracing connected intelligence. Today, I want to look at a different smart home example, garage door openers, to explain how challenging connected intelligence is for existing market leaders.

Not long ago we were having issues with our garage door opener, so I called the company that provides us with regular service. The diagnosis wasn’t good. We needed a new unit and it would cost a few hundred dollars. Long ago I realized that home ownership brings with it the “opportunity” to “invest” in a seemingly endless chain of unexpected repairs and replacements, so I took the bad news in stride and scheduled the service.

When placing the order, we didn’t discuss “smart” features, I simply agreed to purchase the default model for the power we needed and the drive type that we preferred. After the unit was installed, the technician explained the “smart” features included with my unit and pointed me to the pages in the owner’s manual that explained how to connect the opener to our home WiFi, how to install the mobile app, and how to use the app to provide temporary access to Amazon delivery drivers or people coming to work on our home.

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To be honest, I never even connected the device to my WiFi network. The steps in the manual gave me the sense that the process wasn’t the most user friendly and the reviews for the app in the app store weren’t encouraging. (Right now there are supposedly 596,271 ratings with an average rating of 4.8/5, but the 10 “most helpful” ones are 3 five star, 1 four star, 3 three star, and 3 one star ratings, with review titles including “You must start over if…”, “when it works, it’s good…”, “Does what it’s supposed to…”, “Won’t stay connected”, “Not always reliable”, and “The app is broken.”)

For me, the benefits of connecting the opener didn’t justify the cost, even without paying a premium for the connectivity. In fact, I’m not sure I’d call the device “smart”. It has connectivity, but not really any intelligence. You can open and shut the garage door and you can see whether or not it is open. That’s about it. In addition to the cost of the time of setting it up and the trouble of dealing with potentially unreliable connectivity and app, there’s also the cost of fear. I’m not really overly concerned about security on my sprinkler system — the potential damage is limited. However, if someone had the ability to open and shut my garage door at will, that’s a bit more scary.

So, let’s talk a little bit about the strategic implications of the Connected Intelligence Revolution on the makers of garage door openers.

Unlike residential irrigation, there is no Rachio equivalent in the garage door opener space. Sprinkler system controllers are pretty simple and well suited to software adding meaningful smarts. Garage door openers are less susceptible to displacement by software. The factors that make an opener competitive — power, speed, quietness, reliability — have been developed by a small number of market leaders over several decades. A software engineer can’t simply write a few (thousand) lines of code and recreate those capabilities. When I first saw a connected garage door opener from a startup about 8 years ago, I didn’t trust that it would work as well or be as dependable as my existing system, so although I found the concept intriguing, I didn’t really give it serious consideration.

That should be good news for the incumbents, but instead what we’ve seen is the evidence of how hard it is for existing players to adapt to new realities. While the market leaders weren’t being challenged by credible new entrants, they were being challenged by consumer expectations. As wireless connectivity and “smarts” get built into almost everything with a power supply, we expect appliances like our garage openers to be connected and to leverage the power of connected intelligence. And so the current leaders have needed to add those features in.

In his book, The Innovator’s Dilemma¹, Clayton Christensen described how the “value network” of established firms hinders their ability to embrace disruptive technologies. The concept is a bit complex, but a simple explanation is that companies and their ecosystem partners value the things that have always defined success in their industry (e.g. powerful motors and quiet screw drives and reliability). They don’t value things that have never defined success in their industry (e.g. software development and wireless security and agility and integration). They don’t have the architecture or the mindset to be leaders in those capabilities, and they struggle to assign resources and make the investments necessary to establish leadership in those disciplines.

While software-driven startups haven’t had success in building garage door openers, a few are having success with retrofit controllers. These devices are wirelessly connected and app controlled and simply appear to your existing garage door opener like another remote control. While I may not trust companies like Gogogate or BlueMate or Garadget or Brocel to build a robust garage door opener, I probably trust them more than an industrial manufacturer to deal with wireless connectivity, data security, mobile applications, and API-based integration mashups.

Several of these startups have taken the first steps from merely wirelessly connecting the garage door opener to actually bringing it into the Connected Intelligence Revolution. For example, a simple use case for a connected opener is to have the garage door start to open as my car approaches home, and to shut the garage door as I drive away from my house. That’s not currently an option from the garage door opener leaders, but it is readily available from the software-driven startups. Some are also integrating security cameras, music streaming, home lighting controls, etc. to make the return home as welcoming (and safe) as possible.

So incumbents need to consider whether and where they play in the Connected Intelligence Revolution. Do they need to overcome the inertia of their value network and truly lead in this new revolution, or do they focus on their traditional core strengths and look for partners and complementary ecosystem players to provide the connected intelligence (and be content merely being a commodity component of the total solution)?

That may sound like a simple question, but the implications are significant for value capture and the nature of the customer relationship. It should be approached with strategic rigor, discretion, and humility.

¹Christensen, Clayton M.. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press, 1997.

ClearPurpose

Tales and Tools for Sound Strategies

Russell McGuire

Written by

Strategist, Entrepreneur, Executive, Advisor, Mentor, Inventor, Innovator, Visionary, Author, Writer, Blogger, Husband, Father, Brother, Son, Christian

ClearPurpose

Through ClearPurpose, we share our experience, tools, and methodologies to approach strategy development with discipline and structure, making it easier to achieve clarity, gain consensus, and communicate coherently. Note: As an Amazon Associate we earn from qualifying purchases.

Russell McGuire

Written by

Strategist, Entrepreneur, Executive, Advisor, Mentor, Inventor, Innovator, Visionary, Author, Writer, Blogger, Husband, Father, Brother, Son, Christian

ClearPurpose

Through ClearPurpose, we share our experience, tools, and methodologies to approach strategy development with discipline and structure, making it easier to achieve clarity, gain consensus, and communicate coherently. Note: As an Amazon Associate we earn from qualifying purchases.

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