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.

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The Customer Revolution Blog by Laurence Buchanan is licensed under a Creative Commons Attribution 3.0 Unported License.
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