Circular Company: Will Internet of Things Spark Management Revolution?

Could the IoT’s most profound impact be on management and corporate organization, not just cool devices?

I’ve written before about my still-being-refined vision of the IoT — because it (for the first time!) allows everyone who needs instant access to real-time data to do their jobs and make better decisions to share that data instantly —  as the impetus for a management revolution.

My thoughts were provoked by Heppelmann & Porter’s observation that:

“For companies grappling with the transition (to the IoT), organizational issues are now center stage — and there is no playbook. We are just beginning the process of rewriting the organization chart that has been in place for decades.”

If I’m right, the IoT could let us switch from the linear and hierarchical forms that made sense in an era of serious limits to intelligence about things and how they were working at thaFor companies grappling with the transition, organizational issues are now center stage—and there is no playbook. We are just beginning the process of rewriting the organization chart that has been in place for decades.t moment, to circular forms that instead eliminate information “silos” and instead give are circular, with IoT data as the hub. 

This article expands on that vision. I’ve tried mightily to get management journals to publish it. Several of the most prestigious have given it a serious look but ultimately passed on it. That may be because it’s crazy, but I believe it is feasible today, and can lead to higher profits, lower operating costs, empowering our entire workforces, and, oh yeah, saving the planet.

Audacious, but, IMHO, valid.  Please feel free to share this, to comment on it, and, if you think it has merit, build on it.


W. David Stephenson

The IoT Allows a Radical, Profitable Transformation to Circular Company Structure



W. David Stephenson

Precision assembly lines and thermostats you can adjust while away from home are obvious benefits of the Internet of Things (IoT), but it might also trigger a far more sweeping change: swapping outmoded hierarchical and linear organizational forms for new circular ones.

New org charts will be dramatically different because of an important aspect of the IoT overlooked in the understandable fascination with cool devices. The IoT’s most transformational aspect is that, for the first time,

everyone who needs real-time data to do their jobs better or
make better decisions can instantly 
share it.

That changes everything.

Linear and hierarchical organizational structures were coping mechanisms for the severe limits gathering and sharing data in the past. It made sense then for management, on a top-down basis, to determine which departments got which data, and when.

The Internet of Things changes all of that because of huge volumes of real-time data), plus modern communications tools so all who need the data can share it instantly. 

This will allow a radical change in corporate structure and functions from hierarchy: make it cyclical, with real-time IoT data as the hub around which the organization revolves and makes decisions.

Perhaps the closest existing model is W.L. Gore & Associates. The company has always been organized on a “lattice” model, with “no traditional organizational charts, no chains of command, nor predetermined channels of communication.”  Instead, they use cross-disciplinary teams including all functions, communicating directly with each other. Teams self-0rganize and most leaders emerge spontaneously.

As Deloitte’s Cathy Benko and Molly Anderson wrote, “Continuing to invest in the future using yesteryear’s industrial blueprint is futile. The lattice redefines workplace suppositions, providing a framework for organizing and advancing a company’s existing incremental efforts into a comprehensive, strategic response to the changing world of work.”  Add in the circular form’s real-time data hub, and the benefits are even greater, because everyone on these self-organizing teams works from the same data, at the same time.

You can begin to build such a cyclical company with several incremental IoT-based steps.

One of the most promising is making the product design process cyclical. Designers used to work in a vacuum: no one really knew how the products functioned in the field, so it was hard to target upgrades and improvements. Now, GE has found it can radically alter not only the upgrade process, but also the initial design as well:

“G.E. is adopting practices like releasing stripped-down products quickly, monitoring usage and rapidly changing designs depending on how things are used by customers. ‘We’re getting these offerings done in three, six, nine months,’ (Vice-President of Global Software William Ruh said). ‘It used to take three years.’”

New IoT and data-analytics tools are coming on the market that could facilitate such a shift. GE’s new tool, “Digital Twins,” creates a wire-frame replica of a product in the field (or, for that matter, a human body!) back at the company. Coupled with real-time data on its status, it lets everyone who might need to analyze a product’s real-time status (product designers, maintenance staff, and marketers, for example) to do so simultaneously.

The second step toward a cyclical organization is breaking down information silos.

Since almost every department has some role in creation and sales of every product, doesn’t it make sense to bring them together around a common set of data, to explore how that data could trigger coordinated actions by several departments? 

Collaborative big-data analysis tools such as GE’s Predix, SAP’s HANA, and Tableau facilitate the kind of joint scrutiny and “what-if” discussions of real-time data that can make circular teamwork based on IoT-data sharing really achieve its full potential.

The benefits are even greater when you choose to really think in circular terms, sharing instant access to that real-time data not only companywide, but also with external partners, such as your supply chain and distribution network – and even customers – not just giving them some access later on a linear basis.  For example, SAP has created an IoT-enabled vending machine. If a customer opts in, s/he is greeted by name, and may be offered “your regular combination” based on past purchases, and/or a real-time discount. That alone would be neat from a marketing standpoint, but SAP also opened the resulting data to others, resulting in important logistics improvements. Real-time machine-to-machine (M2M) data about sales at the new vending machines automatically reroute resupply trucks to those machines currently experiencing the highest sales. 

With the IoT, sharing data can make your own product or service more valuable. With the Apple HomeKit, you can say “Siri, it’s time for bed,” and the Hue lights dim, Schlage lock closes, and Ecobee thermostat turns down. By sharing real-time IoT data, each of these companies’ devices become more valuable in combinations than they are by themselves.

Hierarchical and linear management is outmoded in the era of real-time data from smart devices. It is time to begin to replace it with a dynamic, circular model with IoT data as its hub.

The Internet of Things Enables Precision Logistics (& Could Save Planet!)

A degree of precision in every aspect of the economy impossible before the IoT is one of my fav memes, in part because it should encourage companies that have held back from IoT strategies to get involved now (because they can realize immediate benefits in lower operating costs, greater efficiency, etc.), and because it brings with it so many ancillary benefits, such as reduced environmental impacts (remember: waste creation = inefficiency!).

       Zero Marginal Cost Society

Zero Marginal Cost       Society

I’m reminded of that while reading Jeremy Rifkin’s fascinating Zero Marginal Cost Economy which I got months ago for research in writing my own book proposal and didn’t get around to until recently.  I’d always heard he was something of an eccentric, but, IMHO, this one’s brilliant.  Rifkin’s thesis is that:

“The coming together of the Communications Internet with the fledgling Energy Internet and Logistics Internet in a seamless twenty-first-century intelligent infrastructure, “the Internet of Things (IoT),” is giving rise to a Third Industrial Revolution. The Internet of Things is already boosting productivity to the point where the marginal cost of producing many goods and services is nearly zero, making them practically free.”

Tip: when the marginal cost of producing things is nearly zero, you’re gonna need a new business model, so get this book!

At any rate, one of the three revolutions he mentioned was the “Logistics Internet.”

I’m a nut about logistics, especially as it relates to supply chain and distribution networks, which I see as crucial to the radically new “circular enterprise” rotating around a real-time IoT data hub. Just think how efficient your company could be if your suppliers — miles away rather than on the other side of the world, knew instantly via M2M data sharing, what you needed and when, and delivered it at precisely the right time, or if the SAP prototype vending machine notified the dispatcher, again on a M2M basis, so that delivery trucks were automatically re-routed to machine that was most likely  to run out first!

I wasn’t quite sure what Rifkin meant about a Logistics Internet until I read his reference to the work of Benoit Montreuil, “Coca-Cola Material Handling & Distribution Chair and Professor” at Georgia Tech, who, as Rifkin puts it, closes the loop nicely in terms of imagery:

“.. just as the digital world took up the superhighway metaphor, now the logistics industry ought to take up the open-architecture metaphor of distributed Internet communication to remodel global logistics.”

Montreuil elaborates on the analogy (and, incidentally, places this in the context of global sustainability, saying that the current logistics paradigm is unsustainable), and paraphrases my fav Einstein saying:

“The global logistics sustainability grand challenge cannot be addressed through the same lenses that created the situation. The current logististics paradigm must be replaced by a new paradigm enabling outside-the-box paradigm enabling meta-systemic creative thinking.”

wooo: meta-systemic creative thinking! Count me in!

Montreuil’s answer is a “physical Internet” for logistics, which he says is a necessity not only because of the environmental impacts of the current, inefficient system (such as 14% of all greenhouse gas emissions in France), but also its ridiculous costs, accounting for 10% of the US GDP according to a 2009 Department of Transportation report!  That kind of waste brings out my inner Scotsman!

Rifkin cites a variety of examples of the current system’s inefficiency based on Montreuil’s research:

  • trucks in the US are, on average, only 60% full, and globally the efficiency is only 10%!
  • in the US, they were empty 20% of miles driven
  • US business inventories were $1.6 trillion as of March, 2013 — so much for “just-in-time.”
  • time-sensitive products such as food, clothes and medical supplies are unsold because they can’t be delivered on time.

Montreuil’s “physical Internet” has striking parallels to the electronic one:

  • cargo (like packets) must be packaged in standardized module containers
  • like the internet, the cargo must be structured independently of the equipment, so it can be processed seamlessly through a wide range of networks, with smart tags and sensors for identification and sorting (one of the first examples of the IoT I wrote about was FedEx’s great SenseAware containers for high-value cargo!)

With the Logistics Internet, we’d move from the old point-to-point and hub-and-spoke systems to ones that are “distributed, multi-segment, intermodal.” A single, exhausted, over-worked (and more accident-prone) driver would be replaced by several. It’s a  little counter-intuitive, but Montreuil says that while it would take a driver 240 hours to get from Quebec to LA under the current system, instead 17 drivers in a distributed one would each drive about 3 hours, and the cargo would get there in only 60 hours.

Under the new system, the current fractionated, isolated warehouse and distribution mess would be replaced by a fully-integrated one involving all of the 535,000 facilities nationwide, cutting time and dramatically reducing environmental impacts and fuel consumption.

Most important for companies, and looping back to my precision meme, “Montreuil points out that an open supply network allows firms to reduce their lead time to near zero if their stock is distributed among some of the hundreds of distribution centers that are located near their final buyer market.” And, was we have more 3-D printing, the product might actually be printed out near the destination. How cool is that?

Trucking is such an emblematic aspect of the 20th-century economy, yet, as with the neat things that Union Pacific and other lines are doing with the 19th-century’s emblematic railroads, they can be transformed into a key part of the 21-st century “precision economy” (but only if we couple IoT technology with “IoT thinking.”

Now let’s pick up our iPads & head to the loading dock!


PS: I’ll be addressing this subject in one of my two speeches at the SCM2016 Conference later this month. Hope to see you there! 


FedEx package…

Data Is the Hub: How the IoT and Circular Economy Build Profits

Fasten your seatbelts! I think I’ve finally zeroed in on the Internet of Things’ (IoT’s) most important potential economic benefit and how it could simultaneously help us escape the growing global environmental crisis:

make real-time IoT data* the hub of a circular economy and management mentality. It’s both good for the bottom line and the planet.

I started writing about circular business models back in the 90’s, when I consulted on profitable environmental strategies, i.e., those that were good both for the corporate bottom line and the planet.  It galled me that executives who railed about eliminating inefficiency thought reducing waste was for tree-huggers. Semantics and lifestyle prejudices got in the way of good strategy.

Ford’s River Rouge Plant (1952 view)

I could see that it was vital that we get away from old, linear models that began with extracting resources and ended with abandoned products in landfills. Ford’s massive 1 x 1.6 mile River Rouge Plant, the world’s largest integrated factory, was the paradigm of this thinking: ore was deposited at one end, made into steel, and cars came out the other (Hank’s penchant for vertical integration even led him to buy rubber plantations! If you have any illusions about the ultimate impossibility of top-down control, watch the PBS documentary on Ford — he simply couldn’t share power, even with his own son — and it almost ruined the company). The linear model worked for a long time, and, truth to tell, it was probably the only one that was feasible in the era of paper-and-pencil information flow:  it was so hard to gather and transmit information that senior management controlled who got what information, and basically threw it over the transom to the next office.

As for any kind of real-time information about what was actually happening on the factory floor: fugetaboutit: all that was possible was for low-level functionaries to shuffle along the assembly line, taking scheduled readings from a few gauges and writing them on a clipboard. Who knew if anyone ever actually read the forms, let alone made adjustments to equipment based on the readings?

Fast forward to 2015, and everything’s changed!

The image of the circular corporation popped back into my head last week while I was searching for an image of how the IoT really can change every aspect of corporate operations, from product design to supply chain management.  I was happily surprised that when I Googled “circular economy” I found a large number of pieces, including ones from consulting gurus Accenture and McKinsey (the most comprehensive report on the concept is probably this one from the Ellen MacArthur Foundation), about the bottom-line and environmental benefits of switching from a linear (‘take-make-dispose’) pattern.

But how to make the circular economy really function? That’s where the IoT comes in, and, in my estimation, is THE crucial element.

Visualize everything a company does as a circle, with IoT-gathered real-time data as its hub. That’s crucial, because everything in a profitable circular company revolves around this data, shared in real time by all who need it.

When that happens, a number of crucial changes that were impossible in the era of linear operations and thinking and limited data became possible for the first time:

  • you can optimize assembly line efficiency because all components of the factory are monitored by sensors in real time, and one process can activate and regulate another, and/or managers and assembly-line workers can fine-tune processes (think of the 10,000 sensors on the GE Durathon battery assembly line).
  • you can integrate the assembly line with the supply chain and distribution and sales network as never before (provided that you share the real-time data with them), so materials are delivered on a just-in-time basis) and production is dictated by real-time data on sales (the SAP smart vending machine, integrated with logistics, is a great example).
  • you can optimize product redesign and upgrades and speed the process, because sensor data from the products as they are actually used in the field is immediately fed back to the designers, so they have objective evidence of what does, and doesn’t work properly (think of how GE has improved its product upgrade process). No more ignorance of how your products are actually used!
  • from an environmental standpoint, having sensors on key components can make it possible for you to recover and profitably remanufacture them (closing the loop) rather than having them landfilled (I was excited to learn that Caterpillar has been doing this for 40 years (!) through its Reman Program, which “reduces costs, waste, greenhouse gas emissions and need for raw inputs.”).
  • you can create new revenue streams, by substituting services for actual sales of products.  I’ve written before about how GE and RollsRoyce do this with jet engines, helping clients be more efficient by providing them with real-time data from jet turbines in return for new fees, and Deere does it with data feeds from its tractors. Now I learn that Phillips does this, with industrial lighting, retaining ownership of the lighting: the customers only pay for the actual use of the lights. Phillips also closes the loop by taking the lights back at the end of their life and/or upgrading them.

As I’ve written before, creating the real-time data is perhaps the easier part: what’s harder is the paradigm shift the circular economy requires, of managers learning to share real-time data with everyone inside the enterprise (and, preferably, with the supply chain, distribution network, retailers, and, yes, even customers). When that happens, we will have unprecedented corporate efficiency, new revenue streams, satisfied customers, and, equally important reduce our use of finite resources, cut pollution, and tread lightly on the earth.  There you have it: the secret to 21st-century profitability is:

real-time IoT data, at the hub of the circular enterprise.

*Oh yeah, please don’t drop a dime on me with the grammar police about the title: in fact, I’m a retired colonel in the Massachusetts Grammar Police, but I’ve given up the fight on “data.” From my Latin training, I know that data are the plural form of datum, but datum is used so infrequently now and data with a singular verb has become so common that I’ve given up the fight and use it as a singular noun.  You can see the issue debated ad nauseum here

Energy to Power the #IoT: it’s really just a matter of child’s play

Posted on 12th June 2015 in energy, environmental, Internet of Things, M2M, mobile, sensors, wearables

Saving the Earth from global warming is going to require reducing our use of fossil fuels, yet we keep coming up with new technologies, such as the Internet of Things, that will require even more energy. So how do we reconcile the two needs?

In part, through harvesting ambient energy, and, most cleverly, kinetic energy generated in the process of doing something else, from moving liquids through pipelines, wheels as vehicles move, or even as we humans move about in our daily lives.

As you’ll see from the examples below, there’s enough projects in the field that I’m confident a growing number of sensor networks will be powered through ambient energy in the future. Equally important, in the not-too-distant future we’ll laugh that we once plugged in our smartphone and watches to charge them, rather than harvesting the energy we generate every day simply by moving around.

I saw an incredible example at the recent Re-Work IoT Summit in Boston, courtesy of Jessica O. Matthews of Uncharted Play. By my calculations, Matthews’ own energy output would allow shutting down 2.3 nukes: before her session began, I saw this striking woman on the stage — Matthews –skipping rope.

In high heels!

Then the fun began. Or should I say, the energy production.

Matthews, an MIT grad, works largely in Africa, creating very clever playthings that — ta da! — harvest energy, such as the very cool Soccket ball shown in the video above (you can see here how it’s made).  It has a battery built in that’s charged by the large amount of kinetic energy created by kids on the playground who are just having fun.  At night, they take the ball home and, voila, plug a socket into the side of the ball and they have precious light to read by. How incredibly cool is that?

The Pulse jump rope powers two lights

Matthews’ jump rope (“The Pulse”)? The kinetic energy from that  powers TWO lights!

But there’s a lot of other neat stuff going on in terms of capturing kinetic energy that could also power IoT devices:

  • Texas Instruments has harvested energy to run sensors from changes in temperature, vibrations, wind and light.  I knew about harvesting the energy from pipeline vibrations, but hadn’t thought about getting it from the temperature differential between the interior of pipes carrying hot water and the outside air. TI says that yields a paltry 300-400 millivolts, but they’ve figured out how a DC-to-DC switching converter can increase it to 3-5 volts — enough to charge a battery.
  • TI is also researching how kinetic energy could charge your phone:”To power wearables, the company has demonstrated drawing energy from the human body by using harvesters the size of wristwatch straps.. It has worked with vibration collectors, for instance, about the same size as a key.”It’s possible that a smartwatch could use two harvested power sources, light and heat, from the body. These sources may not gather enough power to keep a smartwatch continuously operating without action by the user to charge it, but it may give the user’s device a lot more battery life.”
  • Perhaps most dramatically of all, as I reported before, there’s some incredible research on ambient energy underway at the University of Washington, where they use “ambient backscatter,” which: ‘…leverag[es] existing TV and cellular transmissions, rather than generating their own radio waves. This novel technique enables ubiquitous communication where devices can communicate among themselves at unprecedented scales and in locations that were previously inaccessible.’”

    PoWiFi, harvesting ambient energy

    Now, a member of that team,Vamsi Talla, has harvested energy from ambient wi-fi,  “PoWiFi,” as it’s called, to power a temperature sensor and to let a surveillance camera take a picture every 35 minutes (given how pervasive surveillance cameras are today, that could really be a godsend — or a nightmare, depending on your perspective). “For the experiment, hot-spots and routers were modified to broadcast noise when not being used for data transmission. This is because Wi-Fi signals are broadcast in bursts across different frequencies which makes the energy too intermittent to be useful.”  (TY 2 Jackie Bassett of  SealedSpeed for this one).

Bottom line: forget those charging pads that are starting to crop up. In the future, you’ll be powering your phone, and the very devices that sensors are monitoring will be powering them. A win for the IoT — and the environment!

PS: jury’s still out on whether we’ll all have to register with FERC as utilities….

Global Warming: The IoT Can Help Fill Some of the Gap Due to Government Inaction

I won’t dwell on politics here, but  97% of scientists agree that global warming is real, and, according to the latest United National report this month, it is worse than ever (according to the NYTimes,

“The gathering risks of climate change are so profound that they could stall or even reverse generations of progress against poverty and hunger if greenhouse emissions continue at a runaway pace, according to a major new United Nations report.”). (my emphasis)

Thus, it should be noted that the chances of significant government action to curb global warming during the next two years have vanished now that Senator James Inhofe will chair the the Senate Environmental Committee (I won’t repeat any of the clap-trap he has said to deny global warming: look it up…).

While probably not enough to combat such a serious challenge, the Internet of Things will help fill the gap, by helping bring about an era of unprecedented precision in use of energy and materials.

Most important, the IoT is a critical component in “smart grid” electrical strategies, which are critical to reducing CO2 emissions.

According to the Environmental Defense Fund, “Because a smart grid can adjust demand to match intermittent wind and solar supplies, it will enable the United States to rely far more heavily on clean, renewable, home-grown energy: cutting foreign oil imports, mitigating the environmental damage done by domestic oil drilling and coal mining, and reducing harmful air pollution. A smart grid will also facilitate the switch to clean electric vehicles, making it possible to “smart charge” them at night when wind power is abundant and cheap, cutting another huge source of damaging air pollution.”

And then there’s generating electricity from conventional resources: GE, as part of its “industrial internet” IoT strategy, says that it will be able to increase its gas turbines’ operating efficiency (which it says generate 25% of the world’s electricity) by at least 1%.

Equally important, as I’ve written before, “precision manufacturing” through the IoT will also reduce not only use of materials, but also energy consumption in manufacturing.

In other important areas, the IoT can also help reduce global warming:

  • Agriculture: conventional farming is also a major contributor to global warming. “Climate-smart” agriculture, by contrast, reduces the inputs, including energy, needed while maximizing yield (Freight Farms, which converts old intermodal shipping containers into self-contained “Leafy Green Machine” urban farming systems, is a great example!).
  • IoT-based schemes to cut traffic congestion.  As The Motley Fool (BTW, they’re big IoT fans of the IoT as a smart investment opportunity) documents, “1.9 billion gallons of fuel is consumed every year from drivers sitting in traffic. That’s 186 million tons of unnecessary CO2 emissions each year just in the U.S. “

The Motley Fool concludes that, combined, a wide range of IoT initiatives can reduce carbon emissions significantly while increasing the economy’s efficiency:

“A recent report by the Carbon War Room estimates that the incorporation of machine-to-machine communication in the energy, transportation, built environment (its fancy term for buildings), and agriculture sectors could reduce global greenhouse gas emissions by 9.1 gigatons of CO2 equivalent annually. That’s 18.2 trillion pounds, or equivalent to eliminating all of the United States’ and India’s total greenhouse gas emissions combined, and more than triple the reductions we can expect with an extremely ambitious alternative energy conversion program.

“Increased communication between everything — engines, appliances, generators, automobiles — allows for instant feedback for more efficient travel routes, optimized fertilizer and water consumption to reduce deforestation, real-time monitoring of electricity consumption and instant feedback to generators, and fully integrated heating, cooling, and lighting systems that can adjust for human occupancy.”

It always amuses me that self-styled political conservatives are frequently the ones who are least concerned with conserving resources. Perhaps the IoT, by making businesses more efficient, and therefore more profitable, may be able to bring political conservatives into the energy efficiency fold!

Failure to inspect oil rigs another argument for “real-time regulation”

The news that the Bureau of Land Management has failed to inspect thousands of fracking and other oil wells considered at high risk for contaminating water is Exhibit A for my argument we need Intnet of Things-based “real-time regulation” for a variety of risky regulated businesses.

According to a new GAO report obtained by AP:

“Investigators said weak control by the Interior Department’s Bureau of Land Management resulted from policies based on outdated science and from incomplete monitoring data….

“The audit also said the BLM did not coordinate effectively with state regulators in New Mexico, North Dakota, Oklahoma and Utah.”

Let’s face it: a regulatory scheme based on after-the-fact self-reporting by the companies themselves backed up by infrequent site visits by an inadequate number of inspectors will never adequately protect the public and the environment.  In this case, the GAO said that “…. the BLM had failed to conduct inspections on more than 2,100 of the 3,702 wells that it had specified as ‘high priority’ and drilled from 2009 through 2012. The agency considers a well ‘high priority’ based on a greater need to protect against possible water contamination and other environmental safety issues.”

By contrast, requiring that oil rigs and a range of other technology-based products, from jet engines to oil pipelines, have sensors attached (or, over time, built in) that would send real-time data to the companies should allow them to spot incipient problems at their earliest stages, in time to schedule early maintenance that would both reduce maintenance costs and reduce or even eliminate catastrophic failures. As I said before, this should be a win-win solution.

If problems still persisted after the companies had access to this real-time data, then more draconian steps could be required, such as also giving state and federal regulators real-time access to the same data — something that would be easy to do with IoT-based systems. There would have to be tight restrictions on access to the data that would protect proprietary corporate information, but companies that are chronic offenders would forfeit some of those protections to protect the public interest.


It’s Time for IoT-enabled “Real-Time” Regulation

Pardon me, but I still take the increasingly-unfashionable view that we need strong, activist government, to protect the weak and foster the public interest.

That’s why I’m really passionate about the concept (for what it’s worth, I believe I’m the first to propose this approach)  that we need Internet of Things enabled “real-time regulation” that wouldn’t rely on scaring companies into good behavior through the indirect means of threatening big fines for violations, but could actually minimize, or even avoid, incidents from ever happening, while simultaneously improving companies’ operating efficiency and reducing costly repairs. I wrote about the concept in today’s O’Reilly SOLID blog — and I’m going to crusade to make the concept a reality!

I first wrote about “real-time” regulation before I was really involved in the IoT: right after the BP Gulf blow-out, when I suggested that:

The .. approach would allow officials to monitor in real time every part of an oil rig’s safety system. Such surveillance could have revealed the faulty battery in the BP rig’s blowout preventer and other problems that contributed to the rig’s failure. A procedure could have been in place to allow regulators to automatically shut down the rig when it failed the pressure test rather than leaving that decision to BP.”

Since then I’ve modified my position about regulators’ necessarily having first-hand access to the real-time data, realizing that any company with half a brain would realize as soon as they saw data that there might be a problem developing (as opposed to having happened, which is what was too often the case in the past..) would take the initiative to shut down the operation ASAP to make a repair, saving itself the higher cost of dealing with a catastrophic failure.

As far as I’m concerned, “real-time regulation” is a win-win:

  • by installing the sensors and monitoring them all the time (typically, only the exceptions to the norm would be reported, to reduce data processing and required attention to the data) the company would be able to optimize production and distribution all the time (see my piece on “precision manufacturing“).
  • repair costs would be lower: “predictive maintenance” based on real-time information on equipment’s status is cheaper than emergency repairs.
  • the public interest would be protected, because many situations that have resulted in disasters in the past would instead be avoided, or at least minimized.
  • the cost of regulation would be reduced while its effectiveness would be increased: at present, we must rely on insufficient numbers of inspectors who make infrequent visits: catching a violation is largely a matter of luck. Instead, the inspectors could monitor the real-time data and intervene instantly– hopefully in time to avoid an incident.

Even though the IoT is not fully realized (Cisco says only 4% of “things” are linked at present), that’s not the case with the kind of high-stakes operation we’re most concerned with.  GE now builds about 60 sensors into every jet, realizing new revenues by proving the real-time data to customers, while being able to improve design and maintenance by knowing exactly what’s happening right now to the engines.  Union Pacific has cut dangerous and costly derailments due to bearing failures by 75% by placing sensors along the trackbed.

As I said in the SOLID post, it’s time that government begin exploring the “real-time regulation” alternative.  I’m contacting the tech-savvy Mass. delegation, esp. Senators Markey and Warren, and will report back on my progress toward making it a reality!

Best quick intro to the IoT that I’ve seen!

Following up on my last post, I’ve found what I think is the best quick intro to the Internet of Things!

Internet of Things,” released today by the Center for Data Innovation (hadn’t heard of them! BTW, they also get points in my book for covering XBRL, the magic potion for data…) is a quick read: it has short intros to most of the major consumer-oriented areas affected by the IoT, from healthcare to home automation, combined with two examples for each of those topics. I hadn’t heard of some of the examples (thanks, authors Daniel Castro and Jordan Misra!), although most are frequently cited ones ranging from the Nest thermostat to the Vitality GlowCap.  All in all, they’ll show almost any skeptic that the IoT is already a reality and that it will change their life!

The report concludes with brief policy recommendations for government and business alike:

  • (for government agencies) lead by example, i.e., include funding for sensors in bridge projects, etc. Yea (you listening, Obama Administration?).
  • reduce barriers to data sharing (this harkens back to my Data Dynamite book: data gains value by being shared!).
  • give consumers access to their data (again, something I wrote about in Data Dynamite).
  • avoid inundating consumers with notices (a fine line, since they need to be informed, in plain English, about how their data will be used).
  • regulate the use of data, not the collection (in line with Mercatus Center’s advice)

All in all, a nice intro to the IoT!

BTW: Thanx to ol’ friend Pete O’Dell for turning me on to this report!

IoT will streamline supply chain, reduce environmental impact

There’s a new Deloitte white paper that echoes a theme I’ve been repeating since 1990: smart businesses eliminate inefficiency by eliminating environmental waste.

I predict that the Internet of Things will speed that trend by allowing real-time data sharing throughout the supply chain, further increasing its efficiency.

The white paper, “The Evolving Supply Chain: Lean and Green,” says that:

“Leading companies are now finding that a green supply chain doesn’t just improve the public’s perception of their company and brand; it can save money by using resources more efficiently and reducing waste. It can also help to manage risk by insulating a company from shortages and price shocks, and by reducing the chances that a supplier will do something that gets them in hot water.”

It continues by identifying five key factors to reduce:

“Leading companies create value by modifying their supply chains to manage five key inputs and outputs: energy, carbon, water, materials and waste. These five resources are ubiquitous throughout the supply chain and thus offer vast potential for improved efficiency and cost reduction. Energy is expensive to use; carbon, in the form of emissions, represents dollars gone up in smoke; scarcity and commodity inflation are driving up the price of water and materials; and waste is a potential profit thrown away.”

In my speeches on the “Zero-Waste Economy,” I used to suggest that executives that were contemptuous of tree-hugging environmentalists and could care less about generating wastes should just substitute the work inefficiencies for waste. What hard-nosed company could justify inefficiency?

It’s great to see that the message is finally getting mainstream acceptance, and I really do think that the IoT will boost supply chain efficiency and thereby reduce environmental impacts by allowing everyone in the supply chain who needs operating data to share it simultaneously and in real time.

So there’s really no excuse any more for not practicing smart environmentalism, is there?

PS: To get the specifics about how to translate smart environmentalism into profits, check out Gil Friend’s Natural Logic. He’s got the operating manual.

Essential Truth: Gathering “Ground Truth” through IoT

This is the second in my occasional series of “Essential Truths” — key principles and questions about the Internet of Things.

On Tuesday, when I speak to our next Boston/New England IoT Meetup on the issue of “human communications and the IoT” one of the concepts I’ll be focusing on is what Chris Rezendes of INEX Advisors calls “ground truth,” a concept he was exposed to through his work with clients in the defense industry.

This is the idea that when devices become “smart,” they give off “digital exhaust” (in the same way as our searches do, which Google analyzes, allowing improvement in search results) which creates “device intelligence” that we can analyze and act upon. That is ground truth: accurate data about real-world conditions that we can share in real-time to improve operating performance and analysis.

According to Chris,

“You will have data, objective facts, about that tree or tidal pool, that machine or that vehicle, that room or that field, that patient or that criminal. The data in that ground truth will complement certain aspects of our perceptions about those things; and displace our misperceptions. And that ground truth will help us all make better decisions about how to manage our time on earth.”
— “Internet of Things: Grandest Opportunity, Most Stubborn Challenges

It seems to me that this is one of the IoT’s most important potential benefits: improving decision-making by being able to base it on factual, timely information.

Think, for example, about the contentious issue of global warming. Cisco’s  “Planetary Skin,” and HP’s  “central nervous system for the planet” projects will deploy unprecedented numbers of remote sensors planet-wide, yielding real-time data about how global warming is affecting your community. It may not win over the hard-core global warming deniers (they’ll never listen to reason, IMHO!) but it should provide the objective evidence that rational people can agree on as the basis for action.

Even better, we can also improve this decision making because of my first “Essential Truth,” learning to ask “who else can use this data?”  Think of it: within limits, of course, the more perspectives that are brought into decision making the more likely we are to make sound decisions, because the likelihood of leaving out some important perspective and not analyzing all the possible ramifications is reduced. In the past, we could never do that, because we didn’t have the real-time data, and we couldn’t involve all of those people on a real-time basis.

I suspect that this will be a major issue for management theorists to bat around in coming years, and that our decision-making processes will be fundamentally altered for the better. IMHO, it is this change in decision making, not advances such as automatic regulation of assembly lines or building in feedback loops between manufacturers and customers, is perhaps the most important thing that the IoT will allow. It will have profound impact!

Thanks for the concept, Chris!