I’ll Speak Twice at Internet of Things Global Summit Next Week

I always love the Internet of Things Global Summit in DC because it’s the only IoT conference I know of that places equal emphasis on both IoT technology and public policy, especially on issues such as security and privacy.

At this year’s conference, on the  26th and 27th, I’ll speak twice, on “Smart Aging” and on the IoT in retailing.

2015_IoT_SummitIn the past, the event was used to launch major IoT regulatory initiatives by the FTC, the only branch of the federal government that seems to really take the IoT seriously, and understand the need to protect personal privacy and security. My other fav component of last year’s summit was Camgian’s introduction of its Egburt, which combines “fog computing,” to analyze IoT data at “the edge,” and low power consumption. Camgian’s Gary Butler will be on the retail panel with me and with Rob van Kranenburg, one of the IoT’s real thought leaders.

This year’s program again combines a heady mix of IoT innovations and regulatory concerns. Some of the topics are:

  • The Internet of Things in Financial Services and the Insurance sector (panel includes my buddy Chris Rezendes of INEX).
  • Monetizing the Internet of Things and a look at what the new business models will be
  • The Connected Car
  • Connected living – at home and in the city
  • IoT as an enabler for industrial growth and competition
  • Privacy in a Connected World – a continuing balancing act

The speakers are a great cross-section of technology and policy leaders.

There’s still time to register.  Hope to see you there!



Claro’s IoT Strategy Creation Guide: important in own right & symbolically


Claro IoT Service Diagram Cards — collect the whole set!

Some IoT advances are as important symbolically (especially as key steps in the IoT’s maturation) as in their own right.

I consider Claro Partners‘s new “A Guide to Succeeding in the Internet of Things” in that vein, both showing that it’s not just enough to create a whizbang IoT device or app — you need a methodical strategy to maximize the benefits– and providing a very practical tool to create such a strategy. Written as the IoT reaches the top of the Gartner Hype Cycle, it aims at helping readers identify and meet real user needs and create viable business models. Based on several conversations at last night’s Boston IoT Meetup, it couldn’t be more timely, as (for example) smart home device sales slump, as reflected in Quirky’s bankruptcy.

Claro, in case you haven’t heard about them before, is headquartered in my favorite “smart city,” Barcelona, and is known for its Clayton Christensen-style emphasis on the opportunities presented by disruptive change (hmm: wonder if they have wei ji ideograms on the wall, LOL?), particularly with the IoT.

The Guide is a quick read, but can inspire you for a long time to come.

It’s divided into four portions, which I’m guessing codify the process that Claro uses internally to brainstorm strategies for its own clients:

  1. Define the challenge. “Identify a user-centric challenge to solve.”
  2. Ideate* the solution. “Create a solution that provides new value to the user.”
  3. Develop the offer. “Map out the ecosystem and interactions of your product and service.”
  4. Plan for production. “Identify resources needed and conduct gap analysis.”

They suggest you follow these steps sequentially, even if you already have a solution in mind, because “the exercises will help you to refine, develop or rethink it.”

Now for the details, which include very specific steps and some very helpful graphic aids.

First, Define the challenge. They stress you need to avoid being seduced by the lure of doing something just because it’s technologically possible. Make sure it meets a real
human need. The initial categories they suggest include:

    • Human Needs FrameworkAgeing population (sweeeeet! My “smart aging” paradigm shift!)
    • Work-life balance
    • Urban life
    • Health and wellbeing
    • Local Communities
    • Education
    • Sustainability/Shopping
    • Tourism, Family.

Then Claro suggests that your team go through a 30-minute process where it uses the four questions in this “human needs framework,” such as “what do people want to control?” and decide which challenge you’re going to design for (assume you could think big and try for one that meets multiple questions).

Second, Ideate the solution.  Similar to my “What can you do now that you couldn’t do before” question, this one asks you to not just use the IoT to refine a current approach to the issue you identified, but to “reimagine entirely new capabilities and value that an IoT service can deliver.”

This 40-min. process includes defining the person facing the challenge and aspects of their life, then brainstorming solutions to meet their real needs and how the IoT could be used to enable that solution.

Third, Develop the offer. They share my concern about proprietary IoT solutions, (which they label “intranet of things, LOL), and instead remind your team to, IFTTT-like,

IoT Service Diagram

IoT Service Diagram

“take advantage of the ecosystem enabled by the IoT to create interconnected services, experiences and business models.” In this process, which they estimate takes 40 minutes, you print out the IoT Service Diagram Cards (see above — I imagine “flipping” them and trading with the other kids on the playground, until our Moms throw out our collections…) and use them to map out how your idea will work, including drawing the data flow (don’t forget my dictum that data flow must be cyclical with the IoT!).  The important questions to ask — make sure to ask all of them! — include:

  • Will the device just provide information to the user or will it act on that information?
  • What are the specific inputs/outputs of the service? (eg. sight, sounds, touch, taste, smell, temperature)
  • Could the device learn through its use over time and adapt its behaviour accordingly?
  • Could the service use existing devices, data streams or interfaces?

Finally, in the fourth step, (30 minutes? Dream on!) the rubber hits the road, and you

IoT Canvas

IoT Canvas

Plan for Production!  Claro warns, “Don’t underestimate the complexity of bringing to life an offer that spans both the physical and digital, Do map out all the elements you’ll need to successfully develop and deliver your IoT offer.”

On the IoT Canvas, you bring together all the crucial considerations, such as manufacturing and logistics, revenues and costs, that must be nailed down to make the product affordable and profitable.  Specifically, Claro says you need to specifically state the offer’s value proposition to the end user, use the questions in each box on the form as prompts, fill out the rest of the canvas with details of the product and service idea, and write down “which resources, capabilities and processes you have, and which you’d need to acquire (gap analysis).”

I agree with Claro that these four steps, especially the last one, are iterative, and you need to revisit each of them throughout the entire conceptual and production process.

I have no doubt that, as IoT technology (especially miniscule, low-energy sensors) and experience continues to evolve, this process will be refined, but Claro has done the entire IoT industry, especially makers and entrepreneurs, a real service by codifying this approach and being willing to share it — after all, the IoT’s all about collaboration! 

*we’ll let them off with a warning from the Grammar Police this time. However, please, no more management babble in the future, OK?


SmartHomeDB: Invaluable Resource to Keep on Top of New Smart Home Devices

You can’t tell the players without a program!

smarthomeDBAs the speed of introducing new and increasingly varied smart home devices picks up, SmartHomeDB is more and more valuable as a way to find what you’re looking for and to keep on top of new products from an objective source.

Whether you’re a homeowner, make a competing product or are looking for market niches to exploit, I guarantee you’ll find it helpful!

At last count, they have 84 — count ’em — different categories of devices, from egg trays to pet doors, and, best of all, it offers a variety of easy ways to search, including the product categories, price, reviews, and — all important for smart home devices — compatibilities.

One thing that jumped out — see the screen grab — there are already almost 25,000 reviews of Amazon’s Echo (hmm, I’d better do one soon!), despite the short time it’s been on the market!  Haven’t seen the sales figures yet, but I suspect Echo is quickly becoming the smart home killer device (see Stacey Higginbotham’s very positive review).

In addition to the search options, the site features a neat intro to IoT devices, the QuickGuide, with two options: the simple one consists of your existing router, plus 242 (as of 9/111/15) Wi-Fi enabled products to choose among, plus 377 stand-alone smart home products such as Roombas.  The other, more diverse but trickier to configure, adds in routers using Z-Wave, Zigbee, and other frequencies, with 443 products using those frequencies.

Now they’ve added a new category, “Playbooks,” highlighting users’ hoped for or actual combinations of devices, which may help guide your choices, especially if they describe actual systems that are already in use.

There’s also an area for iOS, Android and Windows apps,  a handy listing of the top 100 devices based on the site’s ratings (which can sorted by compatibility, ranking, price, name, or number of reviews).

All in all, this is not only an important tool in its own right to help you create your own smart home network, but also symbolically, because it demonstrates the rapid growth of smart home products. Nice job!



Deloitte provides process for nuanced IoT strategy decisions

So much of the Internet of Things is still in the gee-whiz stage that we haven’t seen much in terms of nuanced IoT strategies. By that I mean ones that carefully weigh tradeoffs between companies and consumers to try to find strategies that are mutually beneficial and recognize there are new factors at play in IoT strategies, such as privacy and data mining, that may have positive or negative consequences for the customer/company interplay.

Deloitte’s “University” has made an important step in that direction with its “Power Struggle: Customers, companies and the Internet of Things” paper, co-authored by Brenna Sniderman and Michael E. Raynor.

In it, they explore how to create sustainable strategies that will be mutually beneficial to the customer and company — which are not always immediately apparent, especially when you explore the subtleties of how these strategies might play out in the new reality of the Internet of Things.

The study’s goal was to understand the factors that can distort IoT’s benefits, and instead create win-win IoT strategies.

Sniderman and Raynor suggest there are four quadrants into which a given strategy might fall:

  1. (the sweet spot!) “All’s well: Sufficient value is created, and that value is shared between customers and companies sufficiently equitably such that both parties are better off and feel fairly treated.
  2. “Hobson’s choice: A Hobson’s choice exists when you’re free to decide but only one option exists; thus, it is really no choice at all…. Even when customers come out ahead compared with their former options, their implied powerlessness can lead to feelings of unfairness.
  3. “Gridlock: In their quest for value capture, both sides are pulled in opposite directions, with neither able to move toward an optimal outcome. Here, both parties recognize IoT enablement as something that should lead to success, but neither party is able to reach it, since their competing interests or different value drivers are working at cross purposes.
  4. “Customer is king: Although particular IoT deployments might make economic sense for companies, customers end up capturing a disproportionate share of the new value created, pulling this outcome more in the customers’ favor; Craigslist is an obvious example.”

According to the authors, a key to finding the win-win, “all’s well” solution is the Information Value Loop (which I first discussed last Spring) that creates value out of the vast increase in information made possible by the IoT.

As I mentioned then, “This fits nicely with one of my IoT ‘Essential Truths,’ that we need to turn linear information flows into cyclical ones to fully capitalize on the IoT.” When you do that, it’s possible to design continuous improvement processes that feed back data from actual users to fine tune products and processes.  GE has found it leads to much shorter iterative loops to design improved versions of its products.

Here’s the gussied-up version of the cool hand-drawn visualization from the Deloitte brainstorming session that led to the Information Value Loop (print it & place it on your wall next to the one on privacy and security that I wrote about a while ago):

Deloitte Information Value Loop

The information no longer flows in linear fashion: it’s created from using sensors to record how things act in the real world, then goes through the various stages of the loop, each of which is made possible by one of the new technologies enabling the IoT.  The goal is either enhanced M2M integration among things, or improved actions by humans, and, to be sustainable over time:

“A value loop is sustainable when both parties capture sufficient value, in ways that respect important non-financial sensibilities. For example, retailer-specific and independent shopping apps can use past browsing and purchasing history—along with other behaviors—to suggest targeted products to particular customers, rather than showing everyone the same generic products, as on a store shelf. Customers get what they want, and companies sell more.

…  “The amount of value created by information passing through the loop is a function of the value drivers identified in the middle. Falling into three generic categories—magnitude, risk, and time—the specific drivers listed are not exhaustive but only illustrative. Different applications will benefit from an emphasis on different drivers.”

OK, so how does this theory play out?

Sniderman and Raynor picked a range of IoT-informed strategies to illustrate the concept, some of which may include unintended consequences that would harm/turn off customers or companies. For example, “An ill-considered push for competitive advantage could well overreach and drive away skittish customers. Alternatively, building too dominant an advantage may leave customers feeling exploited or coerced, a position unlikely to prove viable in the long term.”

Understanding the underlying structure of each type of loop is critical, because they naturally pull an IoT strategy in a particular, divergent way.

The example they pick to illustrate the “all’s well” quadrant of results is the dramatic increase in built-in diagnostic technology in cars.  This is of great personal interest: genetic testing has revealed that I am one of the approximately 10% of men who are missing the male car gene: I can’t stand the things, and view them as a big block of metal and plastic just waiting to develop problems (or, ahem, get hit by deer …), so I need all the help I can get. Sniderman and Raynor zero in on maintenance as one area for win-win benefits for drivers and dealers through the IoT:

“Customers often have little understanding of which repairs are necessary, feel inconvenienced by having to go without their car during maintenance periods, and are frustrated by potential overcharges. In response, automakers are embedding sensors that can run a wide range of reliable diagnostics, allowing a car to “self-identify” service issues, rather than relying on customers (“Where’s that squeaking coming from?”) or mechanics (“You might want to replace those brake pads, since I’ve already got the wheels off”). This creates a level of objectivity of obvious customer value and enables automakers to differentiate their products. Interactive features that work with customers’ information can further add value by, for example, potentially syncing with an owner’s calendar to schedule a dealership appointment at a convenient time and reserving a loaner vehicle for the customer, pre-programmed with his preferences to minimize the frustration of driving an unfamiliar car.

In this scenario, both parties collaborate to provide and act on data, in a mutual exchange of value. The customer captures value in multiple ways: He enjoys increased convenience and decreased frustration, improved vehicle performance and longer operating life, reduced maintenance charges, and—since almost everything about this interaction is automated—fewer occasions for perceived exploitation at the hands of unscrupulous service providers.

Value capture extends to companies in the form of ongoing customer interaction. Linking maintenance programming to the dealership encourages customers to return for tune-ups rather than go elsewhere, ideally leading to continued purchases in the long term. OEMs can also access data regarding vehicle maintenance issues and may be able to identify systematic malfunctions worthy of greater attention. Dealers also have an opportunity to make inroads into an untapped market: Currently, just 30 percent of drivers use the dealer for routine maintenance…”

Kumbaya! But then there’s the opposite extreme, according to Sniderman and Raynor, represented by smart home devices, which would lead to the lose-lose, gridlock scenario.  I think they seriously underestimate the understanding already by manufacturers in the field that they need to embrace open standards in order to avoid a range of competing standards (Zigbee, Bluetooth, etc.) that will force consumers to invest in a variety of proprietary, incompatible hubs, and therefore discourage them from buying anything at all.  All you have to do is look at new hubs, such as Amazon’s Echo, which can control devices from WeMo, Hue, Quirky, Wink — you name ’em, to realize that sharing data is already the norm with smart home devices.

Because this missive is getting long, I’ll leave it to you, dear reader, to investigate Sniderman & Raynor’s examples of the “customer is king” scenario, in which the customer grabs too much of the benefit (have to admit, a lot of the location-based IoT retail incentives still give me the creeps: I hate shopping under the best of circumstances, and having something pop up on my phone offering me an incentive based on my past purchases makes a bad experience even worse. How about you?); and the “Hobson’s choice” one, in which usage-based car insurance runs amok and insurers begin to charge unsafe drivers a surcharge — as documented by the devices such as Progressive’s “Snapshot” (I was dismayed to read in the article that Progressive is in fact doing that in Missouri, although I guess it’s a logical consequence of having objective evidence that someone consistently drives unsafely).

I can’t help thinking that the 800-pound gorilla in the room in many of these situations are the Scylla and Charybdis of the IoT, threats to privacy and security, and that makes it even more important that your IoT strategies are well thought out.

They conclude that, from my perspective, data isn’t just enough, you also need the decidedly non-technical tools of judgment and wisdom (aided by tools such as their Information Value Loop) to come up with a sustainable, mutually advantageous IoT strategy:

“Identifying where the bottlenecks lie (using the Information Value Loop), how each party is motivated to respond, and seeking to shape both incentives and the value loop itself puts companies more in control of their destinies.

“Second, taking a hard look at who benefits most from each IoT-enabled transaction, understanding when a lopsided value-capture outcome tips too far and becomes unsustainable, and taking steps to correct it may also lead to long-term success.

“Lastly, an honest assessment of where IoT investments may not have an appreciable benefit—or may decrease one’s potential for value capture—is just as crucial to a company’s IoT strategy as knowing the right places to invest.”

I may quibble with some of their findings, such as those about smart homes, but bravo to Sniderman and Raynor for beginning what I hope is a spirited and sustained dialogue about how to create sustainable, mutually-advantageous IoT strategies!  I’ve weighed in with my Essential Truths, but what are you thinking about this critical issue, often overlooked in our concentration on IoT technologies? 

The IoT Can Revolutionize Every Aspect of Small Farming

When the New York Times weighs in on an Internet of Things phenomenon, you know it’s about to achieve mainstream consciousness, and that’s now the case with what I like to call “precision agriculture,” enabled by a combination of IoT sensors in the fields and big data analysis tools.

The combination is potent and vital because an adequate supply of safe food is so central to our lives, and meeting that need worldwide depends increasingly on small farms, which face a variety of obstacles that big agribusinesses don’t encounter.

Chris Rezendes, a partner in INEX Advisors, who’s been particularly active with IoT-based ag startups, pointed out to me in a private communication that the problem is world-wide, and particularly matched to the IoT’s capabilities, because food security is such a ubiquitous problem and because (surprisingly to me) the agricultural industry is dominated more by small farms, not agri-biz:

“… most people do not have an understanding of the dimensions of food security beyond calories. Feeding the world demands more than just calories. It demands higher nutritional quotient, safety, affordability and accessibility.

“And all that translates in many models into a need for a more productive, profitable and sustainable small ag industry.

“Most folks do not realize that that there are nearly 700 million farmers on the planet. In the US alone, we have 2.3 million ag operations (and, BTW, the number of millennials entering the field is nearly doubling each year) — and that is not counting processing, packaging, distribution, or anything related to fisheries. Most of those farms are pretty small … less than 500 acres on average, and when you strip out the conglomerates and the hobbyist farmers, you are left with hundreds of thousands of small businesses averaging nearly $4 million per year in revenue.”

As reported by The Times‘ Steve Lohr, Lance Donny, founder of ag technology start-up, OnFarm Systems, said the IoT’s benefits can be even greater outside the US:

“.. the most intriguing use of the technology may well be outside the United States. By 2050, the global population is projected to reach nine billion, up from 7.3 billion today. Large numbers of people entering the middle class, especially in China and India, and adopting middle-class eating habits — like consuming more meat, which requires more grain — only adds to the burden.

“To close the food gap, worldwide farm productivity will have to increase from 1.5 tons of grain per acre to 2.5 tons by 2050, according to Mr. Donny. American farm productivity is already above that level, at 2.75 tons of grain per acre.

“’But you can’t take the U.S. model and transport it to the world,’ Mr. Donny said, noting that American farming is both highly capital-intensive and large scale. The average farm size in the United States is 450 acres. In Africa, the average is about two acres.

“’The rest of the world has to get the productivity gains with data,’ he said.”

The marketplace and entrepreneurs are responding to the challenge. The Times piece also reported that IoT-enabled ag is now big business, with a recent study by AgFunder (equity crowdfunding for ag tech!) reporting start-ups have snared $2.06 billion in 228 deals so far this year (compared to $2.36 billion in all of 2014, which was itself a record).  When you add in the big funding that companies such as Deere have done in IoT over the last few years (in case you didn’t know it, this 178-year old company has revolutionized its operations with the IoT, creating new revenue streams and services in the process) and the cool stuff that’s even being produced here in Boston, and you’ve got a definite revolution in the most ancient of industries.

Rezendes zeros in on the small farmers’ need for data in order to improve every aspect of their operations, not just yields, and their desire to control their data themselves, rather than having it owned by some large, remote conglomerates. Most of all, he says, they desperately needed to improve their profitability, which is difficult with smaller farms:

“Those 2.3 million farmers will deploy IoT in their operations when they know that the data is relevant, actionable, profitable, secure and theirs.

“They are not going to deploy third-party solutions that capture farmers’ operational intelligence, claim ownership of it, and leverage the farmers’ livelihood for the solution vendors’ strategic goals.

“For example, we went into a series of explorations with one ag co-op in the East this spring, after going into the exploration thinking that we might be able to source a number of productivity enhancement solutions for vegetable growers and small protein program managers. We were wrong.

“These farmers in this one part of a New England state had been enjoying years of strong, if uneven growth in their output. That was not their challenge: their challenge was with profitability.”

Think of small farms near you, which must be incredibly nimble to market their products (after toiling in the fields!) relying heavily on a mix of CSAs, local restaurants that feature locally-sourced foods, and on farmers’ markets. Rezendes says the small farmers face a variety of obstacles because of their need (given their higher costs) to attract customers who would pay prevailing or (hopefully) premium prices, while they face perceptual problems because small farmers must be jacks-of-all-trades:

“They have only one ‘route.’ They market, sell, and deliver in the same ‘call,’ so their stops are often longer than your typical wholesale food routes. They also have only one marketing, sales and delivery team – and that is often the same team that is tilling, planting, watering, weeding, harvesting and repairing, so they often show up on accounts wearing clothes, driving vehicles, and carrying their inventory in containers that aren’t in any manual for slick brand development manual!

“To complicate things, many of their potential customers could not accept the shipment for insurance purposes, because the farmers didn’t have labels that change with exposure to extreme temperature, sunlight or moisture, or digital temperature recorders.”

Who would think that the IoT might provide a work-around for the perceptual barriers and underscore local farms’ great advantage, the quality of the product?  The farmers suggested to the INEX team once they understood the basics of IoT technology that:

“if we could source a low-cost traceability solution that they could attach to their reusable transport items, they thought they could use that data for branding within the co-op and the regional market. This would reduce the time needed to market and sell, document and file.  The farmers also told us that if the solution was done right, it might serve their regulatory, permitting and licensing requirements, even across state lines.”

Bottom line: not only can sensors in the field improve yields and cut costs for fertilizing and water use through precision, but other sensors can also work after the food is harvested, providing intelligence that lets producers prove their safety, enhance their sales productivity, and drive profit that enables re-investment.

What a great example of the IoT at work, and how, when you start to think in terms of the IoT’s “Essential Truths,” it can revolutionize every aspect of your company, whether a 50-acre farm or a global manufacturer!  

Exploiting full potential of iBeacons for Internet of Things

One of the most exciting aspects of the Internet of Things is seeing how, when more people are exposed to one of its technologies, they find uses for it that the inventors might not have visualized.  I give you … the iBeacon.

The Apple protocol (again, my obligatory disclaimer that I work part-time at an Apple Store, but have no inside information or any obligation to hype their tech) is used in Bluetooth low-energy transmitters (“beacons”) that broadcast their location to nearby devices so they can perform actions such as social-media check-ins or push notifications while near the beacon.  They’re most frequently used in marketing to offer targeted bargains, and primarily have been used by the biggest retailers and sites such as major-league ballparks, but, as you’ll see, not always.

At the Re-Work Internet of Things Summit I met two young entrepreneurs, Justin Mann and Ben Smith  of Beacons in Space, a Boston startup that would allow new apps to leverage existing installed iBeacons — typically installed by large retailers and closed to others —  instead of having to add more beacons in a given space. This would be done through a subscription model with a simple API on top of a beacon rental marketplace. It would allow smaller developers can scale their developments and projects without having to invest in a redundant iBeacon array.

But I was particularly interested in how some clever developers are applying iBeacons outside retail settings.

One is at the Zoom Torino Biopark in Cumiana, Italy. iBeacons around the zoo trigger an app including an interactive map that helps visitors move around the park by giving their exact location and showing where other attractions are located.

“As visitors discover the six different habitat environments of the park, they will be able to unlock specific details, facts and suggestions throughout their journey thanks to hidden Bluetooth transmitting beacons, which trigger relevant content on a visitor’s smartphone based on their location.

“Users will also benefit from alerts on their mobile device informing them of special events during their visit, like meeting animals or presentations. By engaging with the app, visiting certain locations within the park and answering quiz questions, visitors can also earn promotional items and discount coupons for use within the park.”

installing iBeacon on Bucharest trolley to guide visually-impaired

Best of all,  Romania is using them in a very clever system, The Smart Public Transport (SPT) solution, to give visually-impaired riders audio clues through their smartphone about Bucharest’s bus system, a joint project of the Smart Public Transport project and Romania’s RATB trolley buses. Onyx Beacon, a Romanian company, is installing 500 Beacons on the city’s most heavily used public transportation vehicles (the project, incidentally, was funded by Vodafone under its “Mobile for Good” program, encouraging use of technology for social programs and to solve specific problems of those with special personal needs).

All of these projects show the utility — provided there are privacy and security provisions built in, and the systems are opt-in, of iBeacons for giving hyper-localized information and offers. If the Beacons in Space concept takes off, to eliminate the need to deploy more iBeacons for every new app, the concept might really become an important part of the IoT, whether for retail or civic uses.

Deloitte’s IoT “Information Value Loop”: critical attitudinal shift

Ever so often it’s good to step back from the day-to-day minutia of current Internet of Things projects, and get some perspective on the long-term prospects and challenges.

That’s what Deloitte did last December, when it held an “Internet of Things Grand Challenge Workshop,” with a focus on the all-important “forging the path to revenue generation.”

The attendees included two of my idols: John Seely Brown and John Hagel, of Deloitte’s “Center for the Edge” (love the pun in that title!).

The results were recently released, and bear close examination, especially the concept of how to foster what they call the “Information Value Loop”:

Deloitte IoT Information Value Loop

Deloitte IoT Information Value Loop

“The underlying asset that the IoT creates and exploits is information, yet we lack a well- developed, practical guide to understand how information creates value and how companies can effectively capture value. The ‘Information Value Loop’ describes how information creates value, how to increase that value, and how understanding the relevant technology is central to positioning an organization to capture value. The Information Value Loop is one way to begin making sense of the changes we face. The Loop consists of three interconnected elements: stages, value drivers, and technologies. Where the stages and value drivers are general principles defining if and how information creates value under any circumstances, it is the specifics of today’s technology that connect the Loop to the challenges and opportunities created by the IoT.”

This fits nicely with one of my IoT Esssential Truths,” that we need to turn linear information flows into cyclical ones to fully capitalize on the IoT.  No pussy-footin’ about this for these guys: “For information to create any value at all, it must pass through all the stages of the Loop. This is a binary outcome: should the flow of information be blocked completely at any stage, no value is created by that information.”

IMHO, this is also going to be one of the biggest challenges of the IoT for management: in the days when it was sooo difficult to gather and disseminate information, it made sense for those in the C-suite to control it, and parcel out what they felt was relevant, to whom and when they felt it was relevant. More often than not, the flow was linear and hierarchical, with one information silo in the company handing on the results to the next after they’d processed it. That didn’t allow any of the critical advantages the IoT brings, of allowing everyone who needs it to share real-time data instantly.  But saying we need to change those information management practices is one thing: actually having senior management give up their gatekeeper functions is another, and shouldn’t be understated as a challenge.

So here are some of the other key points in the conference proceedings:

  • In line with the multi-step strategy I outlined in Managing the Internet of Things Revolution, they concluded that incremental improvements to existing processes and products are important, but will only take you so far, at which point radical innovation will be crucial: “At first blush, the early IoT emphasis on sustaining innovation seems reasonable. Performance and cost improvement are seldom absent from the priorities of stakeholders; they are relatively easy to measure and their impact is likely more immediate than any investment that is truly disruptive. Put simply, the business case for an IoT application that focuses on operational efficiencies is relatively easy to make. Many decision makers are hard-wired to prefer the path of less resistance and, for many, truly innovative IoT applications seem too far-flung and abstract to risk pursuing. Still, organizations cannot innovate from the cost side forever.”
  • Melding the public and private, “Cities have inherent societal challenges in place to serve as natural incubators of IoT solutions.” Yeah!
  • As in everything else, those contrarian Millennials (who aren’t so hung up on buying stuff and often prefer to just use it)  are likely to save us when it comes to the IoT:  “From an innovation perspective … some of the new technologies are first marketed at the consumers. Thus, many believe that near-term innovation in IoT applications will come out of the consumer sector – spurred by the emergence of the tech-savvy Millennial consumers as a driving economic force.”
  • As I’ve written before, while some customers will still prefer to buy products outright, the IoT will probably bring a shift from selling products to marketing services based on those products, creating new revenue streams and long-term relationships with customers: “As IoT makes successful forays into the world of consumer and industrial products, it may radically change the producer—buyer transactional model from one based on capital expenditure to one based on operating expenditure. Specifically, in a widely adopted IoT world, buyers may be more apt to purchase product service outcomes on some kind of “per unit” basis, rather than the product itself and in so doing, render the physical product as something more of an afterthought. The manufacturer would then gradually transform into a service provider, operating on a complete awareness of each product’s need for replenishment, repair, replacement, etc.”

    Or, a hybrid model may emerge: “What may ultimately happen in a relatively connected product world is that many may accept the notion of the smartly connected product, but in a limited way. Such people will want to own the smartly connected product outright, but will also accept the idea of sharing the usage data to the limited extent that the sellers use such data in relatively benign ways, such as providing advice on more efficient usage, etc. The outcome here will also rely upon a long term total cost of ownership (TCO) perspective. With any fundamental purchasing model changes (as is taking place in owned vs. cloud resources in the network / IT world), not all suppliers will be able to reap additional economic benefit under the service model. Buyers will eventually recognize the increase in TCO and revert back to the more economical business model if the economic rents are too high.”

  • It’s likely that those players in the IoT ecosystem who create value-added data interpretation will be the most valuable and profitable: “…are certain building blocks of the IoT network “more equal” than others?

    “Some have argued that the holy grail of the IoT value loop resides in the data and that those in the IoT ecosystem who aggregate and transform massive amounts of raw data into commercially useful intelligence capture the real value in the IoT environment. This notion holds that commercially useful data provide insights that drive action and ultimately represent the reason that the end user pursues a smart solution in the first place. Put another way, the end customer is more apt to pay for a more comprehensive treatment of raw data than for a better sensor. Indeed, some even believe that as time passes, the gap in relative value captured by those who curate and analyze the data and the rest of the IoT ecosystem will only widen and that, on a long-term basis, players within the “non-data” part of the IoT ecosystem will need to develop some data analytics capabilities simply to differentiate themselves as something more than commodity providers. Of course, some think that the emphasis on data is overblown and argue that where the real value in the IoT ecosystem is captured depends on application. Time will tell of course. But there can be little doubt that the collection and enhancement of data is highly coveted, and analytics and the ability to make use of the vast quantities of information that is captured will serve as critical elements to virtually any IoT solution.”

I urge you to download and closely analyze the entire report. It’s one of the most thoughtful and visionary pieces of IoT theory I’ve seen (no doubt because of its roundtable origins: in keeping with the above-mentioned need for cyclical information flow for the IoT [and, IMHO, creativity in general], the more insights you can bring together on a real-time basis, the richer the outcome. Bravo!


The Internet of Things’ Essential Truths

I’ve been writing about what I call the Internet of Things’ “Essential Truths” for three years now, and decided the time was long overview to codify them and present them in a single post to make them easy to refer to.

As I’ve said, the IoT really will bring about a total paradigm shift, because, for the the first time, it will be possible for everyone who needs it to share real-time information instantly. That really does change everything, obliterating the “Collective Blindness” that has hampered both daily operations and long-term strategy in the past. As a result, we must rethink a wide range of management shibboleths (OK, OK, that was gratuitous, but I’ve always wanted to use the word, and it seemed relevant here, LOL):

  1. First, we must share data. Tesla leads the way with its patent sharing. In the past, proprietary knowledge led to wealth: your win was my loss. Now, we must automatically ask “who else can use this information?” and, even in the case of competitors, “can we mutually profit from sharing this information?” Closed systems and proprietary standards are the biggest obstacle to the IoT.
  2. Second, we must use the Internet of Things to empower workers. With the IoT, it is technically possible for everyone who could do their job better because of access to real-time information to share it instantly, so management must begin with a new premise: information should be shared with the entire workforce. Limiting access must be justified.
  3. Third, we must close the loop. We must redesign our data management processes to capitalize on new information, creating continuous feedback loops.
  4. Fourth, we must rethink products’ roles. Rolls-Royce jet engines feed back a constant stream of real-time data on their operations. Real-time field data lets companies have a sustained dialogue with products and their customers, increasingly allowing them to market products as services, with benefits including new revenue streams.
  5. Fifth, we must develop new skills to listen to products and understand their signals. IBM scientists and medical experts jointly analyzed data from sick preemies’ bassinettes & realized they could diagnose infections a day before there was any visible sign. It’s not enough to have vast data streams: we need to understand them.
  6. Sixth, we must democratize innovation. The wildly-popular IFTTT web site allows anyone to create new “recipes” to exploit unforeseen aspects of IoT products – and doesn’t require any tech skills to use. By sharing IoT data, we empower everyone who has access to develop new ways to capitalize on that data, speading the IoT’s development.
  7. Seventh, and perhaps most important, we must take privacy and security seriously. What responsible parent would put an IoT baby monitor in their baby’s room after the highly-publicized incident when a hacker exploited the manufacturer’s disregard for privacy and spewed a string of obscenities at the baby? Unless everyone in the field takes privacy and security seriously, the public may lose faith in the IoT.

There you have ’em: my best analysis of how the Internet of Things will require a revolution not just in technology, but also management strategy and practices. What do you think?

FTC report provides good checklist to design in IoT security and privacy

FTC report on IoT

FTC report on IoT

SEC Chair Edith Ramirez has been pretty clear that the FTC plans to look closely at the IoT and takes IoT security and privacy seriously: most famously by fining IoT marketer TrendNet for non-existent security with its nanny cam.

Companies that want to avoid such actions — and avoid undermining fragile public trust in their products and the IoT as a whole — would do well to clip and refer to this checklist that I’ve prepared based on the recent FTC Report, Privacy and Security in a Connected World, compiled based on a workshop they held in 2013, and highlighting best practices that were shared at the workshop.

  1. Most important, “companies should build security into their devices at the outset, rather than as an afterthought.” I’ve referred before to the bright young things at the Wearables + Things conference who used their startup status as an excuse for deferring security and privacy until a later date. WRONG: both must be a priority from Day One.

  2. Conduct a privacy or security risk assessment during design phase.

  3. Minimize the data you collect and retain.  This is a tough one, because there’s always that chance that some retained data may be mashed up with some other data in future, yielding a dazzling insight that could help company and customer alike, BUT the more data just floating out there in “data lake” the more chance it will be misused.

  4. Test your security measures before launching your products. … then test them again…

  5. “..train all employees about good security, and ensure that security issues are addressed at the appropriate level of responsibility within the organization.” This one is sooo important and so often overlooked: how many times have we found that someone far down the corporate ladder has been at fault in a data breach because s/he wasn’t adequately trained and/or empowered?  Privacy and security are everyone’s job.

  6. “.. retain service providers that are capable of maintaining reasonable security and provide reasonable oversight for these service providers.”

  7. ‘… when companies identify significant risks within their systems, they should implement a defense-in -depth approach, in which they consider implementing security measures at several levels.”

  8. “… consider implementing reasonable access control measures to limit the ability of an unauthorized person to access a consumer’s device, data, or even the consumer’s network.” Don’t forget: with the Target data breach, the bad guys got access to the corporate data through a local HVAC dealer. Everything’s linked — for better or worse!

  9. “.. companies should continue to monitor products throughout the life cycle and, to the extent feasible, patch known vulnerabilities.”  Privacy and security are moving targets, and require constant vigilance.

  10. Avoid enabling unauthorized access and misuse of personal information.

  11. Don’t facilitate attacks on other systems. The very strength of the IoT in creating linkages and synergies between various data sources can also allow backdoor attacks if one source has poor security.

  12. Don’t create risks to personal safety. If you doubt that’s an issue, look at Ed Markey’s recent report on connected car safety.

  13. Avoid creating a situation where companies might use this data to make credit, insurance, and employment decisions.  That’s the downside of cool tools like Progressive’s “Snapshot,” which can save us safe drivers on premiums: the same data on your actual driving behavior might some day be used become compulsory, and might be used to deny you coverage or increase your premium).

  14. Realize that FTC Fair Information Practice Principles will be extended to IoT. These “FIPPs, ” including “notice, choice, access, accuracy, data minimization, security, and accountability,” have been around for a long time, so it’s understandable the FTC will apply them to the IoT.  Most important ones?  Security, data minimization, notice, and choice.

Not all of these issues will apply to all companies, but it’s better to keep all of them in mind, because your situation may change. I hope you’ll share these guidelines with your entire workforce: they’re all part of the solution — or the problem.

Gartner study confirms senior managers don’t understand IoT

Posted on 21st February 2015 in Internet of Things, M2M, management, manufacturing, marketing, strategy

The “Managing the Internet of Things Revolution” e-guide I wrote for SAP was aimed at C-level executives. Even though it’s proven popular enough that the company is translating it into several languages, it appears we need to redouble our efforts to Managing_the_Internet_of_Things_Revolutionbuild IoT awareness among executives.

I say that because Gartner has just come out with a survey confirming my suspicions: even though a lot of companies now think the IoT will have a major effect on them, they’re clueless about how to manage it and most have yet to launch major IoT initiatives.

In fact, “many survey respondents felt that the senior levels of their organizations don’t yet have a good understanding of the potential impact of the IoT.” (my emphasis)


That’s despite the fact that a key conclusion of my guide was that (even though the IoT is a long way from full maturity) companies can and should begin their IoT strategies and implementation now, because they can already achieve significant savings in operating costs, improve marketing, and create new revenue streams with the current early stage sensors and analytical tools. Getting started will also build their confidence and familiarity with IoT tools and strategy before they begin more dramatic transformational strategies.

Consider these findings from the survey of 463 business and IT leaders:

  • 40% of companies think the IoT will at least bring new short-term revenue and cost reduction opportunities in the next three years — or perhaps even transform them. More than 60% think that will be true over 5 years or more.
  • Fewer than 25% said their company had “established clear business leadership for the IoT,” — even among the companies predicting a significant  – this includes those who said they expect the IoT to have a significant or transformational impact, says Gartner (however, 35% of them came from this group).
  • Yet, few have delegated specific responsibility for IoT strategy and management: “… less than one-quarter of survey respondents has established clear business leadership for the IoT, either in the form of a single organizational unit owning the issue or multiple business units taking ownership of separate IoT efforts.”
  • “attitudes toward the IoT vary widely by industry. For example, board of directors’ understanding of the IoT was rated as particularly weak in government, education, banking and insurance, whereas the communications and services industries scored above-average ratings for senior executive understanding of the IoT.”

Gartner concluded most companies have yet to really create IoT strategies:

“‘The survey confirmed that the IoT is very immature, and many organizations have only just started experimenting with it,’ said Nick Jones, vice president and distinguished analyst at Gartner. ‘Only a small minority have deployed solutions in a production environment. However, the falling costs of networking and processing mean that there are few economic inhibitors to adding sensing and communications to products costing as little as a few tens of dollars. The real challenge of the IoT is less in making products ‘smart’ and more in understanding the business opportunities enabled by smart products and new ecosystems.’ However, a lack of clear business or technical leadership is holding back investment in the technology.” (my emphasis)

In line with my current preoccupation, privacy and security, the survey did show companies are concerned with both issues, as well as with finding talented new staff who understand the IoT and how to benefit from it. According to Steve Kleyhans, Gartner’s research vp:

 “While a single leader for the IoT is not essential, leadership and vision are important, even in the form of several leaders from different business units. We expect that over the next three years, more organizations will establish clear leadership, and more will recognize the value of some form of an IoT center of excellence because of the need to master a wide range of new technologies and skills.”

If you haven’t launched any IoT projects or begun to create a strategy, the writing’s on the wall: get going!

Carpe diem: I take this survey as an omen that there’s a desperate need for When Things Can Talk: profiting from the Internet of Things revolution,” my proposed full-length book on IoT corporate strategy. Let me know if you can suggest a possible publisher!

http://www.stephensonstrategies.com/">Stephenson blogs on Internet of Things Internet of Things strategy, breakthroughs and management