The Internet of Things (IoT) Promises New Benefits — and Risks: A Systematic Analysis of Adoption Dynamics of IoT Products

10 Pages Posted: 25 Apr 2019

See all articles by Mohammad Jalali

Mohammad Jalali

Massachusetts Institute of Technology (MIT) - Sloan School of Management; Harvard University - Harvard Medical School

Jessica Kaiser

Massachusetts Institute of Technology (MIT), Students

Michael Siegel

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Stuart Madnick

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2017

Abstract

The Internet of Things (IoT) aims to translate our physical world into digital signals, ripe for the improvements promised by faster communication and better analytics. One of the greatest obstacles to broad adoption of IoT is the introduction of cyber risk – real and perceived – to buyers. We aimed to understand the mechanisms by which cybersecurity influences IoT adoption, using system dynamics to develop these mechanisms into a qualitative causal loop diagram. We conducted a case study of commercial building applications of a connected lighting product. Our analyses revealed that potential customers decide to adopt IoT technologies based on their perception of risk-reward ratio. Internet of Things producers need to improve that ratio by developing clear, measureable product benefits in tandem with customer support models that address cyber risk. They should create cybersecurity capabilities at the beginning of their market growth, from identifying and addressing cyber risk in product design to detailed cyber-incident response plans with clear action items and owners. Furthermore, IoT start-ups are particularly vulnerable to the tradeoffs between immediate revenue through accelerated market adoption and risked future revenue from security vulnerabilities. The common rush to build IoT products before securing them will make them potentially vulnerable to cyber-incidents.

Keywords: Business-case analysis, Cyber-physical systems, Internet of Things, Modeling

Suggested Citation

Jalali, Mohammad and Kaiser, Jessica and Siegel, Michael and Madnick, Stuart E., The Internet of Things (IoT) Promises New Benefits — and Risks: A Systematic Analysis of Adoption Dynamics of IoT Products (November 1, 2017). MIT Sloan Research Paper No. 5717-17. Available at SSRN: https://ssrn.com/abstract=3370508 or http://dx.doi.org/10.2139/ssrn.3370508

Mohammad Jalali

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Avenue
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HOME PAGE: http://scholar.harvard.edu/jalali

Harvard University - Harvard Medical School ( email )

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HOME PAGE: http://scholar.harvard.edu/jalali

Jessica Kaiser

Massachusetts Institute of Technology (MIT), Students ( email )

Cambridge, MA
United States

Michael Siegel

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E53-323
Cambridge, MA 02142
United States
617-253-2937 (Phone)
617-258-7579 (Fax)

Stuart E. Madnick (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E53-321
Cambridge, MA 02142
United States
617-253-6671 (Phone)
617-253-3321 (Fax)

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