Pages

Monday 2 November 2015

We've barely begun



Despite 30 years of digitizing analogue information and connecting devices to networks; despite the obvious explosion of eCommerce, mobile, social media; despite the massive disruption to the music industry, newspapers, books, retail, advertising; the digital technology revolution has barely begun.

According to Cisco's former CTO, Padmasree Warrior, we've only reached 1% of the potential connectivity that we will see in the next decade. The exponential growth in connectivity will be driven in part by connecting the remaining 40-50% of the world's population who today do not have access to broadband (most of the technology giants have ambitious programs in place to make this happen via internet balloons or solar powered drones). But the real explosion in connectivity will come through the embedding of sensors, chips and SIM cards into everyday objects – things we wear, things in our home, our infrastructure, factories, machines, buildings, cities; even a bottle of beer can now be connected.

Connectivity on its own is not particularly disruptive, but the combination of the explosion of connectivity with wave upon wave of new technology, (including artificial intelligence, robotics, 3D printing, blockchain etc) will transform previously dumb products into smart, connected products and previously isolated “things” into nodes within smart, self-learning networks. A connected thermostat that previously offered only remote control access via a mobile device, may be transformed into a device that optimises energy consumption and group-buys energy on behalf of a collective. A medical device that checks blood pressure, may be transformed into a diagnostic device that combines multiple sources of data and compares health data with millions of users. Cars may be transformed from metal boxes on wheels into smart fleets of autonomous driving taxis.

Today the speed of change is uncontrollable and unfathomable to most businesses. Today a new technology can reach a critical mass of 50m users in just 35 days. However, what’s both frightening and exciting in equal measure is just how nascent some of these developments still are and how much disruption is yet to occur.

  • Within Healthcare - Genomics England aims to sequence 100,000 genomes, which would create 21 Petabytes of valuable data. A huge step forwards for medical science but still only 0.15% of the UK population.
  • Within Automotive – we’ve already seen Tesla release a software update containing the capability for level 2 auto-pilot, but IHS Automotive estimate that it will be more like 2030, before we see self-driving only cars on our roads.
  • Within energy, there are currently around 2 million smart meters already installed in UK households. Smart energy GB aims to see connect 26 million households by 2020, so today we’ve reached less than 10% penetration of smart meters.
  • According to Canalys, the Global 3D printing market was $3,8bn in 2014, but is set to grow to $16.2bn by 2018. Today, the vast majority of people and businesses do not yet use a 3D printer.
  • A slightly more advanced market (but one with an equally long way to go) is the industrial robotics market, where nanorobots may fuel the next wave of growth. However, the consumer robotics market is set to grow 7 times faster by 2019.
  • After "60 years of false starts", the Artificial Intelligence market also looks set for exponential growth. Tractica estimate growth from a surprisingly low $202.5m in 2015 to $11.1bn by 2024

The combinations of these technology-driven developments will impact every company in every industry sector. Companies that have previously only digitized their front end web sites and apps, will see impact up and down the value chain. If every car is connected and autonomous, will motor insurance be needed? Will consumers still buy cars or will cities buy them under peer to peer schemes? If every aspect of my health and wellbeing is connected, how will my health insurance policy change? How will the healthcare system change from treatment to prevention? How will the pharma sector shift from selling pills to delivering outcomes? If robots are set to take 35% of UK jobs, what new careers will emerge? If 3D printing significantly reduces customs and excise duties, how will the tax systems around the world respond? Moreover, if we are already 20 years behind the skills needed in the market today for cyber security, what on earth will the deficit look like when we reach 50, 70, 90% connectivity?

The previous decade of technology-driven disruption has already brought  profound change, but things have barely started. Today the questions are getting more and more interesting.

Monday 27 July 2015

Trust will make or break the equation for smart connected products


Over the last few years, previously dumb physical products have rushed to add connectivity and online services to their offerings. Product designers of everything from jet engines to tennis rackets, contact lenses to oil rigs and even beer bottles have hacked their own products, embedding chips and sensors into them.

Despite the seemingly daily release of new, smart, connected products, this trend has barely begun. Cisco's CTO, Padmasree Warrior estimates that we have reached just 1% of things that will be connected over the next decade. At the start of mega-trend it's worth thinking about a simple equation to drive success.

SCP = (CJ x C x N2 x AI) x T

OR Smart connected product success = find a killer answer to Customer Jobs multiply by Connectivity, Networks, Networks of Networks, Artificial Intelligence and then by Trust.

The first step in the equation is having a killer answer to a customer job. Ultimately I suspect many connected products will fail because they simply won't deliver enough value to users to be viable – do we really need to control heating in our insoles?. Smart, connected products need to first help a customer complete the job they are trying to complete faster, cheaper, better OR by creating significant new value.

Once we've identified the job that the customer is trying to do and the way in which the smart connected product can create value, Connectivity then becomes the second element of the equation. The embedding of a SIM card, chip, beacon or sensor opens up a world of possibility for users to interact with their product, gaining information and insight or allowing a remote control function. However, many smart connected products stop here. They offer simple connectivity to allow customers to, for example, remote control their central heating but little more… At this stage of the equation a great deal of potential value is left on the table.

In order to unlock additional value, it's worth thinking about networks and the value of the data contained within them.  A connected fitness monitor, thermostat or jet engine is fine, but one that connects with a broader network is able to release far greater value, allowing users to generate insight from comparative benchmarks e.g. engine or fitness performance against peers. Most fitness monitors do this well, allowing users to compete against both their friends and other users of the network.

Connecting multiple networks can unlock exponential value. For example, connecting a network of thermostats to networks containing electrical appliances, weather forecasts, energy prices, carbon emissions, pollution levels etc gives users far more than just a remote control for their thermostat. Furthermore, by adding artificial intelligence, products can become genuinely smart. Picture the smart thermostat plugged into a network of thermostats to group buy energy based on an algorithm that predicted price rises and discounts, and worked out exactly when to power appliances around the home based on their energy consumption.

The final element of the equation, however, is arguably both the most important as well as the most overlooked. Trust is something that can take years to build up, but can be lost in an instant through a cyber attack, a data privacy breach or an ethics breach. Once it is lost a negative trust score is disastrous and renders the preceding equation entirely worthless.

Many companies currently investing in building smart, connected products fail to recognise that their trust score is already a negative one. Through years of mistreating customers and failing to build relationships, they arguably have little chance of succeeding without addressing their trust deficit. Others are sacrificing the trust equity that they have built up by launching new connected products with nothing like enough thought and attention given to cyber security and no clear policies on data usage, sharing or ethics. In the last few weeks alone we have seen cars, planes and home appliances all hacked and taken over by either friendly or unfriendly hackers.

Without question, smart, connected products offer companies the potential for radical innovation and disruption. Entire business models and propositions can be re-written. But success rests not only the attention given to innovation around customer jobs, connectivity, networks and AI, but also on Trust. Without trust, a smart, connected product is nothing but a ticking time bomb for the share price.

Share This

Share |
Creative Commons License
The Customer Revolution Blog by Laurence Buchanan is licensed under a Creative Commons Attribution 3.0 Unported License.
Based on a work at thecustomerevolution.blogspot.com