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

IoT_strategy_cards

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?

 

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!  

Give It Up, People: Government Regulation of IoT Is Vital

Could this be the incident that finally gets everyone in the IoT industry to — as I’ve said repeatedly in the past — make privacy and security Job 1 — and to drop the lobbying groups’ argument that government regulation isn’t needed? 

I hope so, because the IoT’s future is at stake, and, frankly, not enough companies get it.

I’m referring to the Chrysler recall last week of 1.4 million Jeeps for a security patch after WIRED reported on an experiment in which two white-hat hackers remotely disabled a Jeep on an Interstate from miles away, exploiting a vulnerable link between its entertainment and control systems.  Put yourself in the place of reporter Andy Greenberg, then tell me with a straight face that you wouldn’t be out of your mind if this happened to you:

“As the two hackers remotely toyed with the air-conditioning, radio, and windshield wipers, I mentally congratulated myself on my courage under pressure. That’s when they cut the transmission.

Immediately my accelerator stopped working. As I frantically pressed the pedal and watched the RPMs climb, the Jeep lost half its speed, then slowed to a crawl. This occurred just as I reached a long overpass, with no shoulder to offer an escape. The experiment had ceased to be fun.

At that point, the interstate began to slope upward, so the Jeep lost more momentum and barely crept forward. Cars lined up behind my bumper before passing me, honking. I could see an 18-wheeler approaching in my rearview mirror. I hoped its driver saw me, too, and could tell I was paralyzed on the highway.

“You’re doomed!” Valasek [one of the hackers] shouted, but I couldn’t make out his heckling over the blast of the radio, now pumping Kanye West. The semi loomed in the mirror, bearing down on my immobilized Jeep.”

OK: calm down, get a cool drink, and, when your Apple Watch says your heart beat has returned to normal, read on….

But, dear reader, our industry’s leaders, assumedly knowing the well-publicized specifics of the Chrysler attack, had the hubris to still speak at a hearing of the Internet Subcommittee of the House of Representatives Judiciary Committee last week and claim (according to CIO) that that government regulation of the IoT industry wasn’t needed.

CEA CEO Gary Shapiro said in calling for government “restraint”:

“It’s up to manufacturers and service providers to make good decisions about privacy and security, or they will fail in the marketplace….. Industry-driven solutions are best to promote innovation while protecting consumers.”

Sorry, Gary: if someone dies because their Jeep got spoofed, the survivors’ attorneys won’t be content with the company’s failure in the marketplace.

There are some important collaborative efforts to create privacy and security standards for the IoT, such as the AllSeen Alliance. However, as I’ve written before, there are also too many startups who defer building in privacy and security protections until they’ve solved their technology needs, and others, most famously TRENDnet, who don’t do anything at all, resulting in a big FTC fine.  There are simply too many examples of hackers using the Shodan site to hack into devices, not to mention academics and others who’ve showed security flaws that might even kill you if exploited.

One local IoT leader, Paddy Srinivasan of LoMein, gets it, as reported today by the Boston Globe‘s Hiawatha Bray:

“‘I think it is a seminal moment…. These new devices need a fresh approach and a new way of thinking about security, and that is the missing piece.'”

But it’s too late to just talk about self-policing.

Massachusetts’ own Ed Markey and his Connecticut counterpart, Richard Blumenthal, have called the associations’ bluff, and filed legislation, The Security and Privacy in Your Car Act (AKA SPY Car, LOL)  that would require the National Highway Traffic Safety Administration (NHTSA) and the Federal Trade Commission (FTC) to establish federal standards to secure cars and protect drivers’ privacy. It would also create a rating system — or “cyber dashboard”— telling drivers about how well the vehicle protects drivers’ security and privacy beyond those minimum standards. This comes in the wake of the Markey study I reported on last Winter documenting car companies’ failure to build in adequate cyber-hacking protections.

Guess what, folks?  This is only the beginning.  Probably the only thing I’ve ever agreed with Dick Cheney on (ok, we agree it’s cool to have been born in Wyoming and that Lynne Cheney is a great writer), is that it wouldn’t be cool for the Veep to have his pacemaker hacked, so you can bet there will be legislation and regulations soon governing privacy and security for wearables as well.

As I’ve said before, I come at this issue differently from a lot of engineers, having earned my keep for many years doing crisis management for Fortune 100 companies that bet the farm by doing dumb things that could destroy public trust in them overnight. Once lost, that trust is difficult, if not impossible, to regain.  Even worse, in this case, cavalier attitudes by even one IoT company, if the shock value of the results is great enough, could make everyone in the industry suffer.

So, if you’re arguing for no regulation of the IoT industry, I have just one suggestion: shut up,clean up your act and take a positive role in shaping regulations that would be performance-based, not prescriptive: the horse has already left the barn.

Now I have to check my Apple Watch to see when my heart rate will get back to normal.

 

The IoT Can Improve Safety and Profitability of Inherently Dangerous Job Sites

You may remember I wrote several months ago about a collaboration between SAP and SK Solutions in Dubai (interesting factoid: Dubai is home to almost 25% of the world’s cranes [assume most of the rest nest at Sand Hill, LOL], and they are increasingly huge, and that makes them difficult to choreograph.

I’m returning to the subject today, with a slightly broader emphasis on how the IoT might manage a range of dangerous job sites, such as mining and off-shore oil rigs, allowing us to do now that we couldn’t do before, one of my IoT Essential Truths.

I’m driven in part by home-town preoccupation with Boston’s bid for the 2024 Olympics, and the inevitable questions that raises on the part of those still smarting from our totally-botched handling of the last big construction project in these parts, the infamous “Big Dig” tunnel and highway project.

I’m one of those incurable optimists who think that part of ensuring that the Olympics would have a positive “legacy” (another big pre-occupation in these parts) would be to transform the city and state into the leading example of large-scale Internet of Things implementation.

There are a couple of lessons from SAP and SK Solutions’ collaboration in Dubai that would be relevant here:

    • The system is real-time: the only way the Boston Olympic sites could be finished in time would be through maximizing efficiency every day. Think how hard that is with a major construction project: as with “for want of a nail the kingdom was lost,” the sensitive interdependence between every truck and subcontractor on the site — many of which might be too small to invest in automation themselves — is critical. If information about one sub being late isn’t shared, in real-time, with all the other players, the delays — and potential collisions — will only pile up. The system includes an auto-pilot that makes immediate adjustments to eliminate operator errors. By contrast, historical data that’s only analyzed after the fact won’t be helpful, because there’s no do-overs, no 2025 Olympics!
    • The data is shared: that’s another key IoT Essential Truth.  “Decision-makers using SK Solutions on a daily basis span the entire organization. Besides health and safety officers, people responsible for logistics, human resources, operations and maintenance are among the typical users.”  The more former information silos share the data, the more likely they are to find synergistic solutions.
    • The system is inclusive, both in terms of data collection and benefits: SK Solutions’ Founder and Inventor Séverin Kezeu, came up with his collision-avoidance software pre-IoT, but when the IoT became practical he partnered with SAP, Cisco, and Honeywell to integrate and slice and dice the data yielded by the sensors they installed on cranes and vehicles and other sources.  For example, the height of these cranes makes them vulnerable to sudden weather changes, so weather data such as wind speed and direction must be factored in, as well as the “machinery’s position, movement, weight, and inertia…. The information is delivered on dashboards and mobile devices, visualized with live 3-D images with customizable views. It’s also incredibly precise.”As a result, by using SAP’s HANA platform, a system developed to reduce construction accidents also makes predictive maintenance of the cranes and other equipment, and lets the construction companies monitor Key Performance Indicators (KPIs) such as asset saturation, usage rates, and collisions avoided.  McKinsey reports that construction site efficiency could improve dramatically due to better coordination: “One study found that buffers built into construction project schedules allowed for unexpected delays resulting in 70 to 80 percent idle time at the worksite.Visibility alone can allow for shorter buffers to be built into the construction process.”

Several other great IoT solutions come to mind at the same time, both relating to dangerous industries. Off-shore oil rigs and mining were treated at length in the recent McKinsey omnibus IoT forecast, “The Internet of Things: Mapping the Value Beyond the Hype:”

  • off-shore rigs: “Much of the data collected by these sensors [30,000 on some rigs] today is used to monitor discrete machines or systems. Individual equipment manufacturers collect performance data from their own machines and the data can be used to schedule maintenance. Interoperability would significantly improve performance by combining sensor data from different machines and systems to provide decision makers with an integrated view of performance across an entire factory or oil rig. Our research shows that more than half of the potential issues that can be identified by predictive analysis in such environments require data from multiple IoT systems. Oil and gas experts interviewed for this research estimate that interoperability could improve the effectiveness of equipment maintenance in their industry by 100 to 200 percent.” (my emphasis). 
  • mining: “In one mining case study, using automated equipment in an underground mine increased productivity by 25 percent. A breakdown of underground mining activity indicates that teleremote hauling can increase active production time in mines by as much as nine hours every day by eliminating the need for shift changes of car operators and reducing the downtime for the blasting process. Another source of operating efficiency is the use of real-time data to manage IoT systems across different worksites, an example of the need for interoperability. In the most advanced implementations, dashboards optimized for smartphones are used to present output from sophisticated algorithms that perform complex, real-time optimizations. In one case study from the Canadian tar sands, advanced analytics raised daily production by 5 to 8 percent, by allowing managers to schedule and allocate staff and equipment more effectively. In another example, when Rio Tinto’s (one mine) crews are preparing a new site for blasting, they are collecting information on the geological formation where they are working. Operations managers can provide blasting crews with detailed information to calibrate their use of explosives better, allowing them to adjust for the characteristics of the ore in different parts of the pit.”
 In all of these cases, the safety and productivity problems — and solutions are intertwined.  As McKinsey puts it:
“Downtime, whether from repairs, breakdowns, or maintenance, can keep machinery out of use 40 percent of the time or more. The unique requirements of each job make it difficult to streamline work with simple, repeatable steps, which is how processes are optimized in other industries. Finally, worksite operations involve complex supply chains, which in mining and oil and gas often extend to remote and harsh locations.”
Could it be that the IoT will finally tame these most extreme work situations, and bring order, safety, and increased profitability?  I’m betting on it.

GE & IBM make it official: IoT is here & now & you ignore it at your own risk!

Pardon my absence while doing the annual IRS dance.

While I was preoccupied, GE and IBM put the last nail in the coffin of those who are waiting to launch IoT initiatives and revise their strategy until the Internet of Things is more ….. (supply your favorite dismissive wishy-washy adjective here).

It’s official: the IoT is here, substantive, and profitable.

Deal with it.

To wit:

The two blue-chips’ moves were decisive and unambiguous. If you aren’t following suit, you’re in trouble.

The companies accompanied these bold strategic moves with targeted ones that illustrate how they plan to transform their companies and services based on the IoT and related technologies such as 3-D printing and Big Data:

  • GE, which has become a leader in 3-D printing, announced its first FAA-approved 3-D jet engine part, housing a jet’s compressor inlet temperature sensor. Sensors and 3-D printing: a killer combination.
  • IBM, commercializing its gee-whiz Watson big data processing system, launched Watson Health in conjunction with Apple and Johnson & Johnson, calling it “our moonshot” in health care, hoping to transform the industry.  Chair Ginny Rometty said that:

“The Watson Health Cloud platform will ‘enable secure access to individualized insights and a more complete picture of the many factors that can affect people’s health,’ IBM says each person generates one million gigabytes of health-related data across his or her lifetime, the equivalent of more than 300 million books.”

There can no longer be any doubt that the Internet of Things is a here-and-now reality. What is your company doing to catch up to the leaders and share in the benefits?

 

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!

 

Outside the (Shoe) Box Internet of Things Thinking!

Posted on 30th March 2015 in design, Internet of Things, retail, strategy, wearables

Could someone please forward this to Carrie Bradshaw? I don’t think she reads this blog, but she’d definitely be interested!

I’ve got to confess that I’m usually oblivious to the world of fashion — or appalled by it (there’s a current ad by Gucci in one of my wife’s magazines that frankly scares me: not sure which looks more weird: the emaciated, heavily-made-up model or the dress!), but this one caught my eye as a way women can have a more versatile wardrobe that takes up less space and saves them money!  Neat, huh?

Equally important, it may be the precursor of a wide range of mass-customized Internet of Things devices of all types that are more personal, create new revenue streams, and provide valuable feedback to the manufacturer on customer tastes.

Ishuu, a Lithuanian startup, is creating a new line of très stylish women’s shoes, Volvorii, that include a strip of e-ink material (similar to a Kindle screen) that can be customized by the owner simply by opening an app on her phone! The requisite electronics are housed in the heels.

As of this writing, the Volvorii Indegogo campaign has raised $34,000 of its $50,000 target, with 14 days to go. If I didn’t send every spare dollar to Loyola University – Maryland for my son’s tuition, I think I’d drop a few on this one: it really intrigues me!

If Ishuu is smart, I’d suggest that they throw open the API for the shoes, and allow bright young fashion design students to submit new designs for the insert.

As for those IoT-based products that are more personal, create new revenue streams, and provide valuable feedback to the manufacturer on customer tastes, here are a few more exciting examples to get you noodling about how you might redesign your own products to capitalize on this potential:

What I love about this as a consumer is that we will no longer have to make difficult binary choices between products: instead of either/or, it will be this/and this (in the case of the Watch and these shoes, I love that there will be so many choices that you’ll be able to change your choice on the fly depending on your mood or other factors.  I’m going to choose toe-tapping Mickey when I’m with my grandchildren, the Utility to keep track of biz during the day, and the Simple for more dignified evening wear.

These fall into my What Can You Do Now That You Couldn’t Do Before category. It’s going to take us a while to ditch our old, more limited mindsets, but the rest will be better for everyone.

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?

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