Monthly Archives: January 2017

Product Oriented IoT and System Oriented IoT

product-and-system-iotIt can seem like there is too much noise on IoT. But caught in the noise are some real signals that IoT is coming of age, with Amazon Echo being the latest and greatest example. Bill Gates’s quote below on change is apt for IoT.

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don't let yourself be lulled into inaction.

It’s better to get started on IoT now instead of waiting because it is hard to get IoT right. It might even take your organization several iterations and nontraditional product development introduction approach.

The more one looks at IoT design and implementation scenarios the more it becomes apparent that there are 2 patterns: Product oriented IoT and System oriented IoT.

  • Product oriented IoT design is primarily related to an individual product and its function. Examples include thermostats (and connected HVAC unit), fitness bands, refrigerators and many products in industrial markets.
  • System oriented IoT design is usually applicable for a complex system that is made of several individual products/components working together. Examples include manufacturing plants, utilities (energy, water, transmission, etc.), traffic management systems, autonomous cars, smart homes, etc.

For a number of very good practical and business reasons most of the focus of IoT marketing hitherto has been on Product oriented IoT use cases and scenarios. The Connected Prduct trend is new and is hitting its stride and will very likely become the norm for a number of product categories in consumer and industrial markets. It is also a little easier from an adoption perspective because the decision making usually rests with a single person or a small group. Remarkable advances in low power computing, widespread availability of mobile communications and broadband, and the rise of cloud computing have made Connected Products the dominant design pattern.

The objective of Product oriented IoT, among others, is to improve customer engagement and support, extend the product with additional capabilities with supporting cloud infrastructure and provide the product manufacturer with intelligence on product usage and performance. The analysis and optimization aspects are simpler and usually pertain to the function of the product.

The System oriented IoT is necessarily more involved and complex and its impact is usually felt at the organizational, community or society level. The value of System oriented IoT, when it works well, can be significant to the organization, community and to the society it serves. System oriented IoT tends to solve a higher level or organizational problem. In addition, it needs to connect, manage and orchestrate disparate components towards a higher, system level goal. For instance, the goal of a System oriented IoT for a manufacturing plant is to optimize production flow while minimizing poor quality and costs.

System oriented IoT has also had a significant historical and technological underpinning in the form of proprietary control systems, communication protocols and data management systems.

The Disruption Posse – Alphabet, Amazon and Apple

I am officially naming the 3 companies, Alphabet, Amazon and Apple, as the “Disruption Posse”. They have gotten into the habit of smelling poorly served markets, complacency and in all cases a belief that they can make significant contribution to enter new markets with compelling products/services. The incumbents should be in for a rude shock and prepare for eventual obliteration of normal (cushy) business models and operations when they sense a possibility of any of these companies entering their markets.

The reason why I pick these the three companies to be part of this exclusive posse, and not VC funded startups, is because of their scale and market reach. Each of the companies have direct relationships with hundreds of millions of prospective customers and have the logistical and financial resources to go after large global markets.

So here is list of industries/markets that are disrupted or about to be disrupted by the Posse.

  • Media – Youtube, Google News, Amazon Prime, iTunes, Apple Music, Apple TV
  • Advertising – Google, Amazon (a little)
  • Computing – AWS, Google Cloud Platform
  • Transportation  (Very long game) – Google, Apple
  • Telecommunications – Apple, Google
  • Medicine – Apple, Google
  • Manufacturing/Warehousing/Logistics – Google (with Robotics), Amazon
  • Smart Home – Apple, Google (Nest), Amazon (Echo)

I will keep updating the list as the disruption or its possibility unfolds.

Is Minimum Viable Product (MVP) Strategy the Right Approach for Digital Transformation

I suspect Digital Transformation is at the top of the minds of executives of established organizations based on the number of blog posts (including this one), pithy tweets, dense infographics and ponderous white papers that I see these days. The Chief Digital Officer role may eventually prove faddish, but the theme itself will be a constant source of anxiety. The anxiety is primarily because of the occasional forays into various industries by the “Disruption Posse”. The Disruption Posse is made up of Amazon, Alphabet and Apple.

This anxiety is causing established organizations to create new business units, anoint digital czars and to throw a cool billion dollars for a true garage startup and everything in between. Usually Digital Transformation projects are nothing more than forward looking bets on how future might unfold and usually entails the following

  • New marketing techniques
  • New types of customer engagement, support and service
  • New ways to support commerce
  • New products
  • New supply chain and manufacturing strategies

And they can leverage advances and changing societal norms from any of the following

  • Robotics
  • Artificial Intelligence
  • Synthetic Biology / Genomics
  • Internet of Things
  • Cloud
  • Mobile and Social
  • etc.

What is unique about these types of projects is that there is a cloud of uncertainty in terms of what works, how things should be designed, what is effective and user adoption. These are the same questions that entrepreneurs and new product development teams have to answer when developing and introducing new products.

During their time working in the Silicon Valley, Frank Robinson, Steve Blank and Eric Ries discovered a pattern of product development that they called many names, including Lean Startup, Customer Discovery and Minimum Viable Product (MVP). The pioneering MVP approach put forth by SyncDev is perfectly suited for Digital Transformation. Some highlights from the SyncDev’s MVP philosophy below

Too large or too small a product (project) are big problems. The MVP is the difficult-to-determine sweet spot between them.
MVP is a mindset of the management and development-team. It says, think big for the long term but small for the short term. Think big enough that the first product is a sound launching pad for it and its next generation and the roadmap that follows, but not so small that you leave room for a competitor to get the jump on you.
The notion of MVP doesn’t stop at product. Ask, ‘What is minimum viable…” anything and you’ll discover that it applies to most business-model decisions, not just product: market segments, customers, services, channels, promotion, and more.

You can see from SyncDev’s website that many companies successfully launched transformational products using MVP approach. If your organization’s Digital Transformation efforts are going to primarily rely on homegrown innovation as opposed to buying startups, my recommendation would be that your organization should promote and become good at MVP approach.

When IoT Comes In The Way Of Good Product Design

It’s hard to design good products. Even exemplary companies like Apple get it wrong every now and then. Dieter Rams, the legendary designer who inspired generations of designers, outlined 10 principles of good design that I wish designers of connected products and IoT apply.

Instead we have this.

I unlocked my phone. I found the right home screen. I opened the Wink app. I navigated to the Lights section. I toggled over to the sets of light bulbs that I'd painstakingly grouped and labeled. I tapped "Living Room"—this was it—and the icon went from bright to dark. (Okay, so that was like six taps.)
Nothing happened.
I tapped "Living Room." The icon—not the lights—went from dark to bright. I tapped "Living Room," and the icon went from bright to dark. The lights seemed brighter than ever.
"How many gadget bloggers does it take to turn off a light?" said the friend, smirking. "I thought this was supposed to be a smart home."
I threw my phone at him, got up, walked ten feet to the switch. One tap, and the lights were off.

Allison’s rant on IoT in NY Times is all too real.

IoT’s future is bleak as long as designers are adding new technology for the sake of technology or mindless innovation and are less concerned about effectiveness and usability.

I am still not dejected, however. Amazon’s Echo gives me hope that some companies may be on the verge of figuring this out.

Digital Transformation – The Bullish Case

This post follows the Bearish Case of Digital Transformation. The bullish case of Digital Transformation is a scenario where productivity growth in many industries approaches 3% or higher for a sustained period (2020+) and the product/service quality is continuously improving.

There is a good chance that the bullish case comes true, especially if advances in foundational components of Digital Transformation feed each other and geo-political conditions return to a tranquil state.

Let’s revisit the foundational components of Digital Transformation listed below.

  • Mobile and Cloud Computing
  • Internet of Things (Sensors, Intelligent Machines, etc.)
  • Robotics
  • Artificial Intelligence
  • Genomics and Synthetic Biology
  • New Energy Sources

In the benign scenario, Moore’s law continues to hold true for computing, ubiquitous communications (mobile and fixed broadband) become dirt cheap, mobile phones are miniature super computers with unlimited intelligence and computing power aided by Cloud Computing, Artificial Intelligence endows robots to become reasonably autonomous and intelligent to eliminate human drudgery, clean energy is ubiquitous and cheaper than the cheapest fossil fuel and genomics/synthetic biology eliminate disease and ensure sustainable and plentiful food supply. Sounds like Utopia? This is the type of future many techno-utopians imagine to be coming.

Digital Transformation – The Bearish Case

We can see that a broad discussion on boom or gloom scenarios for the world economy is taking place across the political and economic spectrum based on this New York Times article. How technological innovation increases productivity is at the center of this debate. It aligns nicely with the raging debate and marketing hype around digital transformation.

The marketing hype unleashed by the technology-consulting-analyst industrial complex would lead us to believe that we are at the onset of unprecedented age of growth based on intelligent machines, robotics, cloud computing, big data, new materials, 3D printing, synthetic biology, hyper connectivity, etc. A timely illumination on this topic comes from Dr. Robert J. Gordon in the form of very impressive, “The Rise and Fall of American Growth.” Dr. Gordon’s contention is that advances in technology of the last 3 decades have not been as transformational to the human kind as the ones that happened between 1870 and 1970. He argues the following (from the book)

Economic growth since 1970 has been simultaneously dazzling and disappointing. This paradox is resolved when we recognize that advances since 1970 have tended to be channeled into a narrow sphere of human activity having to do with entertainment, communications, and the collection and processing of information. For the rest of what humans care about—food, clothing, shelter, transportation, health, and working conditions both inside and outside the home—progress slowed down after 1970, both qualitatively and quantitatively.

One way to forecast (bullish or bearish) impact of Digital Transformation over the next few decades (20-30 years) is to see how various elements of Digital Transformation influence different industries.

We can arrive at a bullish case for Digital Transformation if the element(s) of Digital Transformation have a beneficial impact on the productivity and product/service quality in different industries. The bears will triumph if the impact is minimal and/or major headwinds persist for broad adoption of elements of Digital Transformation.

The following elements are generally seen as the foundation for Digital Transformation.

  • Mobile and Cloud Computing
  • Internet of Things (Sensors, Intelligent Machines, etc.)
  • Robotics
  • Artificial Intelligence
  • Genomics and Synthetic Biology
  • New Energy Sources

We will first test the (bullish and bearish) thesis by creating a prognosis of the beneficial impact of the above on various industries from the NAICS industry classification in the table below.

 

As we can see from the table above digital transformation has a beneficial impact mostly on information rich industries. Large parts of the real economy, like construction, agriculture, retail, trade and government may not see much in terms of positive impact on productivity and product/service quality. In addition, major headwinds listed below can act as obstacles to widespread adoption of elements of digital transformation or lead to failure in realization of significant productivity gains, positive outcomes and/or improvement in product/service quality.

  • Adoption of mobile computing is closing on saturation levels globally and no more productivity gains are to be realized due to lack of original iPhone (in 2007) level innovation
  • Adoption of Internet of Things in various industries does not take off due to lack of interoperability, limited user adoption, regulatory hurdles, security issues and limited marginal utility for end customers
  • Artificial Intelligence hits major roadblocks again due to low trust and reliability
  • Robotics fails to achieve dexterity and intelligence of a 5 year old
  • Bio-ethics, regulatory hurdles and consumer aversion for genetic modification stalls progress in Genomics and Synthetic Biology
  • Cost reductions in solar and wind power flatten out and oil prices remain low. Progress in battery technology does not materialize.