The Internet of Things (IoT) is fundamentally changing the way businesses behave. Up to now, discussions around IoT have tended to focus on well-known industrial uses such as predictive maintenance. But many companies are now venturing off the beaten path, harnessing the power of sensor-enabled real-world data in innovative ways, notes a new report by Boston Consulting Group and Microsoft, Beyond Predictive Maintenance: The “Art of the Possible” with IoT. These pioneers understand that connecting to the real world via sensors can create a rich source of contextual and actionable data—one that leads to benefits as varied as reduced hospital wait times, improved aquaculture yields, and enhanced quality of life for diabetes patients.

From our interviews with more than 50 leaders of IoT initiatives, IoT practitioners, and IoT subject-matter experts, as well as a survey of over 150 IoT executives in various industries, we found that the companies innovating most successfully are taking one or more of the following approaches:

• Delivering new sources of value, whether through providing IoT-supported services, using IoT to discover customer preferences, or deploying IoT products to improve safety and wellness
• Creating recurring revenue models, such as proprietary IoT-powered solutions or outcome-based models in which the business takes action in response to specific sensor data
• Building on other advanced technologies such as drones, AI, machine learning, artificial reality, virtual reality, and blockchain
• Linking previously unconnected domains through IoT-generated data that is collected by one company and utilized by others
• Deploying IoT sensors and devices beyond manmade environments, for such purposes as rainforest and wildlife conservation efforts, livestock management, and aquaculture
• Extending IoT into aspects of life beyond work, from enhancing leisure activities to making communities safer

The IoT market is projected to grow more than 30% annually over the next few years, driven in part by the continued popularity of predictive maintenance but also by improvements in sensor and device capabilities, increasingly reliable connectivity, new advances in data processing and machine-learning techniques, technologies such as cloud and edge computing, and emerging tech such as blockchain.

Companies that want to succeed in this fast-growing market will need to build the underlying technology, of course, but they will also need six broad enablers. These include long-term technology road maps, leaders who are respected across the company, partnerships and alliances, a broad range of talent, and revamped business processes that suit new ways of working. Most important, they will need to refocus their business strategy and the rationale behind it. In fact, when we asked executives involved in IoT to rank these success factors in order of importance, more than two thirds indicated that business strategy and rationale were in the top three.

As companies have rushed to adopt IoT, many have connected machines and devices without thinking through how their actions will address customer pain points or unmet needs. Instead, companies should be willing to tear down and rethink how they reach and service their customers.

In addition, few companies have had a systematic process for selecting and prioritizing their IoT projects. They may have tried too much, too soon, or focused too much on getting a quick payback. In fact, a number of IoT providers and companies spoke to us of working on several hundred IoT use cases at once; in contrast, the more successful companies have been prudent enough to address only a few at a time, many of which rapidly realized value. Companies should also be aware of the perception of low-impact and fragmented value from simpler IoT use cases, being careful not to preclude broader transformative use cases that may take more time.

The next wave of growth in IoT will likely see leading companies break away from the pack—and in unforeseen ways. Businesses should ensure that they have the foundational components in place—components that will allow them to imagine the “art of the possible” and reap the growing benefits of IoT.