GE & Accenture provide detailed picture of current IoT strategy & deployment

I’ll admit it: until I began writing the “Managing the Internet of Things Revolution” guide to Internet of Things strategy for SAP, I was pre-occupied with the IoT’s gee-wiz potential for radical transformation: self-driving cars, medical care in which patients would be full partners with their doctors, products that customers would be able to customize after purchase.

GE_Accenture_IoT_reportThen I came to realize that this potential for revolution might be encouraging executives to hold off until the IoT was fully-developed, and, in the process, ignoring low-hanging fruit: a wide range of ways that the IoT could dramatically increase the efficiency of current operations, giving them a chance to experiment with limited, less-expensive IoT projects that would pay off rapidly and give them the confidence and understanding necessary to launch more dramatic IoT projects in the near future.

This is crucially important for IoT strategies: instead waiting for a radical transformation (which can be scary), view it instead as a continuum, beginning with small, relatively-low cost steps which will feed back into more dramatic steps for the future.

Now, there’s a great new study, “Industrial Internet Insights Report for 2015,” from GE and Accenture, that documents many companies are in the early stages of implementing such an incremental approach, with special emphasis on the necessary first step, launching Big Data analytics — and that they are already realizing tangible benefits. It is drawn from a survey of companies in the US, China, India, France, Germany, the UK, and South Africa.

The report is important, so I’ll review it at length.

Understandably, it was skewed toward the industries where GE applies its flavor of the IoT (the “Industrial Internet”): aviation, health care, transportation, power generation, manufacturing, and mining, but I suspect the findings also apply to other segments of the economy.

The summary underscores a “sense of urgency” to launch IoT initiatives:

“The vast majority (of respondents) believe that Big Data analytics has the power to dramatically alter the competitive landscape of industries just within the next year, and are investing accordingly…” (my emphasis).

84% said Big Data analytics “has the power to shift the competitive landscape for my industry” within just the next year, and 93% said they feared new competitors will enter the field to leverage data.  Wow: talk about short-term priorities!

It’s clear the authors believe the transformation will begin with Big Data initiatives, which, IMHO, companies should be starting anyways to better analyze the growing volume of data from conventional sources. 73% of the companies already are investing more than 20% of their overall tech budget on Big Data analytics — and some spend more than 30%! 80 to 90% said Big Data analytics was either the company’s top priority or at least in the top 3.

One eye-opening finding was that 53% of respondents said their board of directors was pushing the IoT initiatives. Probably makes sense, in that boards are expected to provide necessary perspective on the company’s long-term health.

GE and Accenture present a  4-step process to capitalize on the IoT:

  1. Start with the exponential growth in data volumes
  2. Add the additional data volume from the IoT
  3. Add growing analytics capability
  4. and, to add urgency, factor in “the context of industries where equipment itself or patient outcomes are at the heart of the business” where the ability to monitor equipment or monitor patient services can have significant economic impact and in some cases literally save lives [nothing like throwing the fear of God into the mix to motivate skeptics!].
For many companies, after implementing Big Data software, the next step toward realizing immediate IoT benefits is by installing sensors to monitor the status of operating assets and be able to implement “predictive maintenance,” which cuts downtime and reduces maintenance costs (the report cites some impressive statistics: ” .. saving up to 12 percent over scheduled repairs, reducing overall maintenance costs up to 30 percent, and eliminating breakdowns up to 70 percent.” What company, no matter what their stance on the IoT, wouldn’t want to enjoy those benefits?). The report cites companies in health care, energy and transportation that are already realizing benefits in this area.
Music to my ears was the emphasis on breaking down data-sharing barriers between departments, the first time I’ve seen substantiation of my IoT “Essential Truth” that, instead of hoarding data — whether between the company and supply-chain partners or within the company itself — that the IoT requires asking “who else can use this data?” It said that: “System barriers between departments prevent collection and correlation of data for maximum impact.” (my emphasis). The report went on to say:

“All in all, only about one-third of companies (36 percent) have adopted Big Data analytics across the enterprise. More prevalent are initiatives in a single operations area (16 percent) or in multiple but disparate areas (47 percent)…. The lack of an enterprise-wide analytics vision and operating model often results in pockets of unconnected analytics capabilities, redundant initiatives and, perhaps most important, limited returns on analytics investments.”

Most of the companies surveyed are moving toward centralization of data management to break down the silos. 49% plan to appoint a chief analytics officer to run the operation, and most will hire skilled data analysts or partner with outside experts (insert Accenture here, LOL…).

The GE/Accenture report also stressed that companies hoping to profit from the IoT also must create end-to-end security. Do do that, it recommended a strategy including:
  1. assess risks and consequences
  2. develop objectives and goals
  3. enforce security throughout the supply chain.
  4. use mitigation devices specifically designed for Industrial Control Systems
  5. establish strong corporate buy-in and governance.

For the longer term, the report also mentioned a consistent theme of mine, that companies must begin to think about dramatic new business models, such as substituting value-added services instead of traditional sales of products such as jet engines.  This is a big emphasis with GE.  It also emphasizes another issue I’ve stressed in the “Essential Truths,” i.e. partnering, as the mighty GE has done with startups Quirky and Electric Imp:

“Think of the partnering taking place among farm equipment, fertilizer, and seed companies and weather services, and the suppliers needed to provide IT, telecom, sensors, analytics and other products and services. Ask: ‘Which companies are also trying to reach my customers and my customers’ customers? What other products and services will talk to mine, and who will make, operate and service them? What capabilities and information does my company have that they need? How can we use this ecosystem to extend the reach and scope of our products and services through the Industrial Internet?'”

While the GE/Accenture report dwelt only on large corporations, I suspect that many of the same findings would apply to small-to-medium businesses as well, and that the falling prices of sensors and IoT platforms will mean more smart companies in this category will begin to launch incremental IoT strategies to first optimize their current operations and then make more radical changes.

Read it, or be left in the dust!


PS: as an added bonus, the report includes a link to the GE “Industrial Internet Evaluator,” a neat tool I hadn’t seen before. It invites readers to “see how others in your field are leveraging Big Data analytics for connecting assets, monitoring, analyzing, predicting and optimizing for business success.” Check it out!

Why the Internet of Things Will Bring Fundamental Change “What Can You Do Now That You Couldn’t Do Before?”

The great Eric Bonabeau has chiseled it into my consciousness that the test of whether a new technology really brings about fundamental change is to always ask “What can you do now that you couldn’t do before?

Tesla Roadster

That’s certainly the case for the Tesla alternative last winter to a costly, time-consuming, and reputation-staining recall  (dunno: I must have been hiding under a rock at the time to have not heard about it).

In reporting the company’s action, Wired‘s story’s subtitle was “best example yet of the Internet of Things?”

I’d have to agree it was.

Coming at the same time as the godawful Chevy recall that’s still playing out and still dragging down the company, Tesla promptly and decisively response solved another potentially dangerous situation:

 

“‘Not to worry,’ said Tesla, and completed the fix for its 29,222 vehicle owners via software update. What’s more, this wasn’t the first time Tesla has used such updates to enhance the performance of its cars. Last year it changed the suspension settings to give the car more clearance at high speeds, due to issues that had surfaced in certain collisions.”

Think of it: because Tesla has basically converted cars into computers with four wheels, modifying key parts by building in sensors and two-way communications, it has also fundamentally changed its relationship with customers: it can remain in constant contact with them, rather than losing contact between the time the customer drives off the lot and when the customer remembers (hopefully..) to schedule a service appointment, and many modifications that used to require costly and hard-to-install replacement parts now are done with a few lines of code!

Not only can Tesla streamline recalls, but it can even enhance the customer experience after the car is bought: I remember reading somewhere that car companies may start offering customer choice on engine performance: it could offer various software configurations to maximize performance or to maximize fuel savings — and continue to tweak those settings in the future, just as computers get updated operating systems. That’s much like the transformation of many other IoT-enhanced products into services, where the customer may willingly pay more over a long term for a not just a hunk of metal, but also a continuing data stream that will help optimize efficiency and reduce operating costs.

Wired went on to talk about how the engineering/management paradigm shift represented a real change:

  • “In nearly all instances, the main job of the IoT — the reason it ever came to be — is to facilitate removal of non-value add activity from the course of daily life, whether at work or in private. In the case of Tesla, this role is clear. Rather than having the tiresome task of an unplanned trip to the dealer put upon them, Tesla owners can go about their day while the car ‘fixes itself.’
  • Sustainable value – The real challenge for the ‘consumer-facing’ Internet of Things is that applications will always be fighting for a tightly squeezed share of disposable consumer income. The value proposition must provide tangible worth over time. For Tesla, the prospect of getting one’s vehicle fixed without ‘taking it to the shop’ is instantly meaningful for the would-be buyer – and the differentiator only becomes stronger over time as proud new Tesla owners laugh while their friends must continue heading to the dealer to iron out typical bug fixes for a new car. In other words, there is immediate monetary value and technology expands brand differentiation. As for Tesla dealers, they must be delighted to avoid having to make such needling repairs to irritated customers – they can merely enjoy the positive PR halo effect that a paradigm changing event like this creates for the brand – and therefore their businesses.
  • Setting new precedents – Two factors really helped push Tesla’s capability into the news cycle: involvement by NHTSA and the word ‘recall.’ At its issuance, CEO Elon Musk argued that the fix should not technically be a ‘recall’ because the necessary changes did not require customers find time to have the work performed. And, despite Musk’s feather-ruffling remarks over word choice, the stage appears to have been set for bifurcation in the future by the governing bodies. Former NHTSA administrator David Strickland admitted that Musk was ‘partially right’ and that the event could be ‘precedent-setting’ for regulators.”

That’s why I’m convinced that Internet of Things technologies such as sensors and tiny radios may be the easy part of the revolution: the hard part is going to be fundamental management changes that require new thinking and new questions.

What can you do now that you couldn’t do before??

BTW: Musk’s argument that its software upgrade shouldn’t be considered a traditional “recall” meshes nicely with my call for IoT-based “real-time regulation.”  As I wrote, it’s a win-win, because the same data that could be used for enforcement can also be used to enhance the product and its performance:

  • 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. “

Capgemini Report: dramatic proof most big companies lag on IoT strategy!

In writing the SAP “Managing the Internet of Things Revolution” i-guide to IoT strategy for C-level executives, my research led me to believe that most big companies were still clueless about the IoT and how it would revolutionize every aspect of their operations.  Now a great report by Capgemini, “The Internet of Things: Are Organizations Ready for a Multi-Trillion Dollar Prize?” seems to answer its own question with a resounding “No!” It’s a must read, whether you’re late to the game, or if you’re looking for entrepreneurial opportunities. Let’s start with the conclusion:

The IoT represents the next evolution of the digital universe. The speed at which nimble startups and Internet players are capturing IoT opportunities should serve as a wake-up call to larger, traditional organizations. Analyst estimates point to a world where startups will dominate the IoT market. Fifty percent of IoT solutions are expected to originate in startups less than 3 years old, by 201732. They may be less nimble, but bigger organizations need to step up to the plate. As with all digital disruptions, being an organization that is in catch-up mode will be a deeply uncomfortable place to be. ” (my emphasis)

Earlier, it emphasizes that success will require both a paradigm shift and mastering new technologies such as big data analysis:

The IoT prize will be won by those who achieve a change in mindset, from a product world to a service world. However, that fundamental mind-shift is not the only requirement. Organizations need to get the right IT infrastructure in place, quickly acquire capabilities in analytics, and strengthen a whole host of functional capabilities. “

Got your attention yet?

The report was most emphatic about an aspect of the IoT that I don’t think I’ve emphasized enough in the past, the shift from products to services. Once again, I look to GE as one big company that “gets it” about the IoT transition, building sensors into its products that rotate, then monetizing the investment by offering real-time data about the products’ operations to customers so that they can optimize their operations — and charging for that data.  The study said that within a year after GE began offering its “Predictivity” line of IoT services in 2012, it generated $290 million in revenues.

One of the reasons why I really like the analysis is that it zeros in on a range of management issues that executives must address to capitalize on the IoT.

The study of more than 100 US and European companies reported that most don’t have the in-house expertise to make the switch from selling products to offering services:

“They now need to be able to envision new services, develop commercial models and design service contracts that result in continuous revenue streams. Our discussions with senior executives revealed that these are not areas of strength for many product- centric organizations.”

In particular, it targeted salespeople as a problem area: “For IoT solutions, a sales force needs to be comfortable in articulating the value proposition and potential benefits, which is critical to convincing often-reluctant customers to pay for a new class of services.” Customer support will also need to be beefed up — and delivered faster to customers who come to expect real-time data.

 The research showed that most companies were only in the early stages of IoT implementation — if at all. Fewer than 30% support remote operation of devices, and fewer than 40% use sensor data to offer customers the kind of performance improvement insights that GE gives.

One major gap that jumped out to me is that most of the big companies just don’t get my “Essential Truth” that you have to begin asking “who else can use this data”?,” and begin opening up proprietary systems so that third parties will enrich your offerings by creating new combinations and complementary offerings. Fewer “than 15% of organizations offer IoT solutions that integrate with third-party products and services.” (my emphasis) If mighty GE can team with Quirky and Electric Imp, what’s your excuse? On the more positive side, the research revealed that nearly 60% use partnerships to develop IoT solutions, so there’s hope.

The gaps are technological as well as human. 67% of the respondents said they don’t have the technology (shout-out to SAP’s HANA) to handle the massive amounts of big data the IoT will generate.

Another obstacle that the report identified was one I’d not come across before: resistance from within. “An executive at a medical technology company outlined how resistance can come less from the customer – and more from within the organization, explaining, ‘We only have 20% resistance from the customer and 80% from our own organization. Consequently, it is a significant challenge to align our existing business processes with new IoT-based service offerings.’”

The final section is an action agenda to get companies up to speed on the IoT:

  1. Put the Right IT Infrastructure in Place and Acquire Data Analytics Capabilities.
  2. Strengthen Functional Capabilities across Product Management, Sales and Marketing and Customer Support
  3. Use Trainings and Incentives to Prepare the Sales Force to Sell IoT Solutions. Augment Product Management Capabilities with Services Expertise and Emphasize Ease-of-Use in Product Design
  4. Develop Customer Support Capabilities to Drive Real-Time Issue Resolution.

Bottom line, Capgemini concluded that a shocking 42% of all companies don’t provide any IoT services. That, in my mind, is a clarion call to action!

You simply must read this report — then act on it.

Internet of Things interview I did with Jordan Rich

Didn’t realize this had run several weeks ago, but here’s an introduction to the IoT (based on my SAP “Managing the Internet of Things” i-guide) that I did with Jordan Rich of WBZ Radio, who’s also my voice-over mentor.  The examples include the GE Durathon battery plant, “smart aging,” Shodan, the SAP prototype smart vending machine and Ivee. Enjoy!

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My O’Reilly blog post about how the IoT will transform manufacturing

Posted on 29th April 2014 in 3-D printing, Internet of Things, M2M, manufacturing

Woopiedoo! I have a post in today’s O’Reilly SOLID blog (which is, among other things, promoting their SOLID conference in SF next month) about how the Internet of Things will transform manufacturing.

In it, I emphasized the manufacturing variation on the two transformative aspects of the IoT that I think will characterize its effect on every aspect of our lives and economy:

  1. for the first time, we will have real-time information on the current state of all sorts of things
  2. we will also be able to share that information, again, on a real-time basis, with everyone who could benefit from that information.

We’re already starting to see signs of that transformation, with GE’s Durathon battery factory (with 10,000 sensors on the assembly line plus others designed into the batteries themselves), SAP’s Future Factory, and Siemens’ Electronic Works factory.  As the price, size and energy demands of sensors continues to plummet, the trend will accelerate.

As a result, manufacturing will no longer be isolated from real-time activities in the rest of the enterprise:

  • “Designing sensors into products, rather than adding them on retroactively, will allow companies to identify defective products immediately, rather than waiting for post-production testing.
  • The built-in sensors will also allow companies to create new revenue streams. They will be able to sell customers real-time data on product operations that will allow the customers to optimize their use, and they may also choose, instead of selling the products, to lease them, with the price determined dynamically based on how much the product is actually used — take, for instance, jet turbines that are now priced on the basis of how many hours they actually operate.
  • The product design cycle will accelerate. Companies will be able to monitor a product’s actual usage in the field, then implement more rapid upgrades.
  • ‘Just-in-time’ supply chains will become even more efficient as real-time production data triggers resupply orders, just as distribution systems will become more closely integrated on the other end of the production cycle.”

The SOLID conference focuses on the convergence of hardware and software. It’s about time the two are fully integrated, and the results will be incredible!

 

 

General Electric Keeps on Practicing What They Preach!

I’m beginning to sound like a schill (no, not a typo, just a bad joke: short for [Curt] Schilling, the former Red Sox pitcher — sorry, I can’t get those guys out of my head today…) for GE, but it’s hard to argue with their impressive record of walking their talk about the “Industrial Internet,” their marketing term for the subset of the Internet of Things dealing with the industrial sector.

The latest evidence? A report today in the NYTimes‘ “Bits” blog that GE has just announced “14 more products that combine industrial equipment, Internet-linked sensors and software to monitor performance and analyze big streams of data. G.E. had previously announced 10 similar industrial products.”

Equally impressive, the Industrial Age behemoth turned nimble IoT leader said that by next year, almost all industrial products it makes will have built-in sensors and Big Data software to analyze the huge data streams those sensors will create.

Right now I’m writing an e-book on IoT strategy for C-level executives (not sure if I can disclose the customer — it’s a big one!) and GE VP of Global Software William Ruh, used the news to fire a shot across the bow at companies that are slow to realize a fundamental paradigm shift in manufacturing, product design and maintenance is well underway:

““Everyone wants prediction about performance, and better asset management… The ideas of speed, of information velocity, is what will differentiate the winners from the losers.”

You in the corner office: got your attention?

Equally important, given my insistence that the IoT is all about collaboration, GE simultaneously announced partnerships with Cisco, AT&T and Intel. It had already inked deals with Accenture and Amazon’s cloud subsidiary and has also invested in  Pivotal, an Industrial Internet app creator.

Smart companies will follow GE’s lead in radically reforming the product design process to capitalize on the rapid feedback on performance that the Industrial Internet products’ built-in sensors yield. According to Ruh, they’re switching to an iterative design process, with rapid changes based on data from the field:

“… 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. These approaches follow the ‘lean start-up’ style at many software-intensive Internet companies.

“’We’re getting these offerings done in three, six, nine months,’ he said. ‘It used to take three years.’” (my emphasis)

That change is definitely going to make it into my e-book! Brilliant example of how the IoT, by allowing companies to think in terms of systems dynamics, especially feedback loops, will have profound impacts on the design and manufacturing processes, integrating them as never before (oh, and don’t forget, the data from the built-in sensors will also allow companies to start marketing services — such as leasing jet turbines, with the lease cost based on the actual amount of thrust the engines create)!

Combined, that’s definitely a paradigm shift!

Oh, I almost forgot. Here’s a brief rundown of the products themselves and the industries served. They are clustered under the Predictivity name, and are powered by Predix, a new IoT platform:

  • The Drilling iBox System (oil and gas)
  • Reliability Max (oil and gas
  • Field 360 (oil and gas)
  • System 1 Evolution (oil and gas)
  • Non-destructive Testing Remote collaboration (oil and gas)
  • LifeMax Advantage (power and water)
  • Rail Connect 360 Monitoring and Diagnostics (transportation)
  • ShipperConnect (transportation)
  • Flight Efficiency Services (aviation)
  • Hot SimSuite (healthcare)
  • Cloud Imaging (healthcare)
  • Grid IQ Insight (energy management)
  • Proficy MaxxMine (energy management)

Given the diversity of industries the Predictivity products serve and GE’s global clout, I predict this level of commitment will radically accelerate the IoT’s adoption by big business, as well as accelerating the payback in terms of lower operating, energy and maintenance costs, and reduced environmental impacts.

Will GE’s competitors in these sectors get on board, or will they be left in the dust?

 

Essential Truths of the IoT: Listen to the Things

No, “Listen to the Things” isn’t some sort of zen lesson, although it could be!

It is one of my occasional series of “Essential Truths of the IoT“: fundamental underlying principles that are essential to understanding the true nature of the Internet of Things as a fundamental paradigm shift.

Sensor-equipped GE power turbine

I think particularly of General Electric when I think of this fundamental principle, because GE is turning “listening to things” into major innovations in product design that, in turn, are leading to new ways of marketing their products and new revenue streams.

For example, not only is GE able to optimize production of the advanced cell-phone tower batteries at its state-of-the-art factory in Schenectady, NY because of 10,000 sensors on the assembly line, but also the batteries themselves include built-in sensors that allow GE to monitor their condition.

Thinking in terms of “listening to things” has revolutionized the very way GE markets its jet engines. Some of its new engines contain 20 sensors, which can generate up to a were 20 sensors that monitor the engine’s performance, generating up to a terrabyte of information on a cross-country flight. That allows the airline user to do “predictive maintenance,” which uses actual data on the actual engine — not just some recommended service interval for engines in general, to determine when that specific engine needs maintenance for best performance.

It also gives GE the option of leasing the engine instead of selling it, with the actual price of the lease again dependent on the actual usage of that particular engine, rather than some arbitrary average.

The customer also benefits — as does the global environment. GE calculates that if “an average-sized airline used F&CS  (Fuel and Carbon Solution to achieve a 2% improvement in fuel consumption, it would be equivalent to removing more than 10,000 cars from our roads.”

Here’s the problem — and the opportunity. We’re used to “dumb things” that were inscrutable — you couldn’t “listen” to how they were actually operating if your life depended on it. As a result, we don’t automatically see the opportunities to redesign products to include sensors that will automatically report real-time data about their operating state and possible problems. To capitalize on this “Essential Truth” of the IoT we will have to start asking a new question:

what things that are part of our intrastructure and/or our products
can be redesigned so we can “listen” to them — and 
learn from them?

It’s Official: Tom Friedman Anoints the IoT; Plus Jobs Issue Is Raised!

Posted on 16th September 2013 in 3-D printing, Internet of Things, M2M, maintenance, manufacturing, services

OK, the Internet of Things is officially a Big Thing: Tom “World is Flat” Friedman wrote about it in the Sunday NY Times.

Friedman, searching for evidence of American “exceptionalism” in a bleak landscape of Capitol Hill paralysis, etc. zeroed in on GE’s “Industrial Internet” initiatives as a ray of hope. As he wrote,

“I wanted to see what new technologies, and therefore business models — and therefore jobs — it might be spawning that public policy, and education policy, might enhance. I have no idea whether or how G.E. will profit from any of these breakthroughs, but I saw the outlines there of three radically new business trends that the United States should want to dominate.”

One of those themes was how 3-D printing could streamline the design and production process.

The second, which I wrote about earlier, was the concept of crowdsourcing design, in particular the contest GE held to design a new jet turbine mount (more about that later!!!).

Finally, Friedman zeroed in on the IoT, specifically widespread use of sensors:

“Lastly, we are on the cusp of what G.E. calls ‘the Industrial Internet’ or the ‘Internet of Things’ — meaning that every major part of a G.E. jet engine, locomotive or turbine is now equipped with online sensors that constantly measure and broadcast every aspect of performance. Computers capture all this big data and use it to improve everything from the flight path to energy efficiency.”

He gave several examples, such as wind turbines and hospital beds, where data from sensors can help to optimize efficiency and cut operating costs. He pointed out that the data allows GE to create new services “… that offer not just to manage an airline’s or railroad’s engines, but how fast all its planes or trains go, how flight and train schedules are coordinated and even how its equipment is parked to get optimal performance and energy efficiency (aside to marketing managers: what kinds of services would the IoT allow you to introduce, perhaps replacing actual sales of products with leases based on use? Think about it!).

Friedman concludes, “Watch this space, even if Washington doesn’t: When everything and everyone becomes connected, and complexity is free and innovation is both dirt-cheap and can come from anywhere, the world of work changes.”

Indeed! Nice to have someone with Friedman’s clout recognizing the IoT is a paradigm shift!

MEANWHILE: Make certain to read the comments following the column. They are primarily negative, and zero in on one thing: the IoT’s threat to jobs. In particular, the critics focused on the GE engine mount design contest.  One was particularly pointed:

“According to CNNMoney, General Electric CEO Jeffrey Immelt pocketed $25.8 million in total compensation in 2012. That’s about $20,000 every hour and a half. How come 8 geniuses cost only 90 minutes of CEO time?”

You’ve gotta agree, $20,000 ($7,000 to the winner) is a pretty paltry sum considering what GE gets in return, and given readers’ suspicions that companies may let go their salaried designers and instead exploit freelancers (I’ve thought the same about some of the incentives offered by Innocentive member companies for some of the crowdsourcing projects that they’ve offered), you can bet that there will be more criticisms in the future if this becomes a common practice.

The IoT will undoubtably result in loss of some jobs — disruptive technologies do that — although optimists say they will create jobs as well. But if companies don’t want to reap a lot of criticism for their IoT initiatives, they’d better put some thought into the job creation aspect as well!

 

Why collaboration must replace zero-sum game for IoT profitability

Posted on 3rd September 2013 in collaboration, Essential Truths, Internet of Things, strategy

I guest blogged today @ INEX Advisors today on one of my favorite Internet of Things principles: how thinking collaboratively has to replace I-win-you-lose-zero-sum-game thinking if companies want to really profit from the IoT.

As before, I cited GE as one of the few big companies that’s seizing a strategic advantage in the IoT world by practicing this approach.

GE Crowdsourcing Design For 3-D Printing Project

OK, I admit to losing all sense of objectivity on this one! After all, it hits all my sweet spots:

  • Internet of Things (AKA General Electric’s “Internet of Things”)
  • 3-D printing
  • crowdsourcing/collaboration.

As I wrote earlier, about GE’s collaboration with Electric Imp and Quirky, this exemplar of Industrial Age might (what could be more powerful than a GE locomotive???) really seems to get it that the Internet of Things is as much about new attitudes of collaboration and sharing data as it is about Internet technology.

GE jet engine mount

So it’s no surprise that Industry Week reports on a new GE initiative, soliciting crowdsourced designs for a new jet engine bracket that will be produced through 3-D printing.

As Christine Furstoss, technical director of Manufacturing and Material Technologies at GE Global Research, explains:

“‘For any industry to be successful, you really need to develop communities or ecosystems of partners and thought leaders…

‘No sustainable, established industry technology exists without multiple players, multiple styles of thought, multiple ways of growing … We feel like one of the best ways to stimulate that, to find the newest and best ideas, is to start with open collaboration.'”

Bravo!

Contrast that attitude with what is still all too prevalent, as summarized by Paul Horn, former senior vp of research at IBM:

“Horn remembers a time before open innovation — a competitive, suspicious era when innovative and great, transformative ideas were only allowed to grow in a tightly sealed vacuum.

‘When we built the Almaden Laboratory at IBM in the early 1980s, we put it south of Silicon Valley on purpose,’ he recalls. ‘In those days, our biggest fear was the leaking of intellectual property out into the valley.'”

I suspect that one of the biggest obstacles to full realization of the IoT’s promise will be the difficulty of leaving that old zero-sum game, my-gain-is-your-loss mentality behind!

I wasn’t aware that this latest competition, to design a 3-D printed bracket strong enough to support a jet engine on a commercial plane, is part of a 2-year crowdsourcing initiative, with approximately $20 million in prizes for products, designs and processes, especially in 3-D printing:

“‘We’re trying to find thought leaders in this area — people who may know through a technique they’ve devised or a piece of software that they’ve found or just their own experiences what is the best way to design with additive for real industrial parts,’ Furstoss explains. ‘We’re really at the birth of industrial additive technology. This is a way for us to build support for that community of makers.'”

Furstoss says the crowdsourcing competitions are no knock on GE’s own 50,000 engineers: “‘We have a platform in place that can put a student in his dorm on the same plane as our engineers,’ she says. ‘We’re making sure that people who may have ideas, may have skills, may have things to offer have an opportunity to bring them forward, no matter who they are.'”

It’s that kind of openness to not only new technologies, but also new management practices, that will give GE a huge head start over competitors that have yet to come to grips with the new reality: the Internet of Things!