How the internet of things changes everything

The next generation of the internet is called the ‘internet of things’. Some people like to call it M2M or ‘machine to machine’ or ‘internet everywhere’. In any case it is here and it is about to shake things up.

The internet of things is where devices become connected and have embedded sensors that enable them to act and react in connected ways. It means that devices can talk to each other, can instruct and respond to each other in response to contextual stimuli. And by devices I mean any physical object that can have sensors and communications technology attached or embedded.

Objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models and disrupt existing business models.

The internet of things builds on the foundations of Web 2.0:

  1. Participation
  2. Standards
  3. Decentralization
  4. Openness
  5. Modularity
  6. User Control
  7. Identity

Source: Launching the Web 2.0 Framework, Ross Dawson, May 30, 2007

The technical plumbing that is needed to make the internet of things real is already in place: TCP/IP, wifi, Zigbee, Bluetooth, etc. Key factors are almost ubiquitous wireless internet connectivity and devices with connection capability. These are already in place across the world.

The other technology trend that is supporting the emergence of the internet of things is ‘big data’ and our enhanced ability to derive actionable insights from the collection and analysis of enormous amounts of data.

The convergence of big data and ubiquitously connected smart devices means that we can harness predictive capacity and enable things or objects to act in ways that are contextually relevant. It also means that we can finally start using this technology to market to an audience of one. That is, we can use technology to craft individually meaningful and relevant marketing messages and deliver them within a particular context to drive purchase behaviour for a particular individual. The entire marketing conversation can be automated and have human agency largely removed from it, while retaining human-like communication modes and styles of communication. It seems that Minority Report might not have gone far enough in conceptualising the future of marketing.

How big is the market opportunity from the internet of things?

There are many different estimates of the size of the internet of things market. One thing remains constant, business leaders who understand the concept are making big calls and are changing their business focus as a result. For example John Chambers from Cisco:

“The Internet of Things, I think will be the biggest leverage point for IT in the next 10 years, $14 trillion in profits from that one concept alone”
Cisco Chief Executive Officer John Chambers, AllThingsD D11 Conference May 2013
Source: Internet of Things Poses Big Questions, Ben Rooney, July 3, 2013

Where and how do the business opportunities arise?

The internet of things creates value that is not in the devices, rather it is in the new services that are related to the devices. Connected devices are transformed from a single purchase product into a service that generates recurring income.

A big part of the business opportunity is making it possible to bypass traditional aggregators of demand and access customers via peer-to-peer channels. Apps are key to this peer-to-peer landscape and they look to be an important multiplier in the growth of the internet of things marketplace.

“Between 2008 and 2017, Google Play and Apple’s App Store will be responsible for a mind- blowing number of mobile app downloads: 350 billion.”
Source: Decade of the 350 Billion App Downloads

New business models are emerging, and it is seems that open and collaborative models particularly lend themselves to this more interconnected landscape.

Some predictions:

  • Open models will rule the new landscape – organisations that try to control the entire vertically integrated supply chain will struggle unless they bring in partners to add diversity. A good example of this is Apple with their app store, which enables them to have a vertically integrated supply chain along with diversity via apps.
  • Collaboration and loose confederations – the barriers to entry that previously protected large players will begin to dissipate and provide opportunities for new entrants. Uber versus the taxi industry is a good example of this phenomenon.
  • Agile, change ready organisations will be best placed to adapt in this new highly connected world. Any organisation that needs two years to get a new product to market will be overtaken by those who can move faster. A good example of this is Nokia. Their new Lumia Windows phone is a great product that is two years too late to market. And the delay in getting to market means that they will need to find a niche to dominate rather than become a mass provider – perhaps they can dominate as a camera with connectivity rather than as a smartphone? Here Nokia’s decision to align themselves with the notoriously non-agile Microsoft Windows could be part of the problem.
  • Restructured supply chain – the internet of things offers enormous opportunities to restructure supply chains. Smart businesses will take advantage of this. In the 1990s ‘just in time’ inventory models revolutionised the cost base of doing business. The internet of things will provide similar opportunities.

What industries will be impacted?

All industries will be impacted but let’s examine the potential changes for a few that are interconnected:

  • Retail – already we are seeing shoppers use online and offline retail channels to find the best product for the best price. We can expect to see this intensify and put increased pressure on offline retail. Apparel shopping is one area that can expect disruption. Already shoppers are using terrestrial stores as places to check the fit of apparel items of interest, a practice known as ‘showrooming’. Some stores are fighting back by imposing a ‘trying on charge’ that is deducted if a purchase is made in store. But what if the in store retail experience became richer? What if the products started to sell themselves? What if the products knew that you were already wearing a particular brand and reached out to you and suggested complementary products? For example, a pair shoes could recognise that you are wearing a particular brand of jacket and offer you a special deal as a result. The convergence of ubiquitous connectivity, big data, and internet of things makes this scenario possible.
  • Transportation – We already have driverless transport with trains and Google is already showing us a glimpse of this future with their driverless car. But these new forms of transport require the development of new business models. For example, all that time we used to spend actually driving our cars will give rise to a new cognitive surplus – wonder what we’ll do with it? Play games, create art? Another example of new things that driverless vehicles will give rise to is smart intersections, because those new driverless cars will require smarter intersections that we currently deploy. The internet of things will make autonomous transport possible.

What does Leadership look like? Leadership, sexism, and misogyny

In recent times I have been feeling very depressed about the state of things including sexism, misogyny, and leadership. But a few days ago came a beacon of hope.

This beacon came from an unlikely source, the Australian Army. And the topic that this person addressed was the sombre one of sexism and demeaning treatment of women by serving military personnel.

Yet I was moved and inspired by an eloquent demonstration of leadership.

This is what a leader does.

A leader speaks out for the right things.
A leader connects values to behaviour.
A leader takes ownership of problems within their organisation.
A leader sets the standards of acceptable behaviour for members of their organisation.
A leader gets their leadership team to stand along with them to support those standards.
A leader makes it clear that people who will not do the right thing are not welcome.
A leader embraces diversity and recognises its contribution to the organisation.

As Lt Gen Morrison said: “The standard you walk past is the standard you accept.”

It appears that Lt Gen Morrison has form with this kind of thinking. In his talk on International Womens’ Day 2013 where he made his position clear:

“Any nexus between an Army such as the one I aspire to lead and sexual assault is absolutely unacceptable. I will take all necessary steps to stamp out any hint of it among my soldiers.”

He went on to say:

“Yes, we do need to bond our soldiers to one another and instil toughness and resilience into them. But when this goal is invoked to degrade and demonise women and minorities it is undermining rather than enhancing capability. We need to define the true meaning of teamwork to embrace a band of brothers and sisters.”

Organisations everywhere still allow sexist behaviour to prevail. And until their leaders take the same kind of uncompromising attitude that David Morrison has, then sexist behaviour will not disappear.

While organisational leaders are mostly men, it is time for all of our leaders to step up and show similar leadership to that demonstrated so admirably by Lt Gen Morrison.

Even Warren Buffett recently spoke out on this topic, saying:

“Fellow males, get onboard. The closer that America comes to fully employing the talents of all its citizens, the greater its output of goods and services will be. We’ve seen what can be accomplished when we use 50% of our human capacity. If you visualize what 100% can do, you’ll join me as an unbridled optimist about America’s future.”

I encourage all to view the message from the Chief of Army, Lieutenant General David Morrison, AO, to the Australian Army following the announcement on Thursday, 13 June 2013 of civilian police and Defence investigations into allegations of unacceptable behaviour by Army members.

I also recommend the PDF transcript of Lt Gen Morrison’s speech at the United Nations International Women’s Day Conference, New York, March 2013

What’s the big idea with social media? #media140

I was lucky enough to be invited to Media 140 in Perth recently to discuss what the ‘big idea’ is with social media.

The idea was for a context setting discussion about social media and how it is changing business and society.

DIGITAL REVOLUTION
We are living through a digital revolution that is changing the world we inhabit as absolutely and as irrevocably as the industrial revolution of the late eighteenth and early nineteenth centuries.

That previous industrial revolution changed our relationship with time, with money, and with people. It created the wage labourer that we know, and the unions whom we’ve to come know encapsulated by the term ‘organised labour’. It created a society governed by the mechanical clock and the notion of work versus non-work time.

The digital revolution is on a similar scale, and this scale is based on a remarkable shift in the means of production. The digital revolution has at its roots a democratization of access to the means of communication.

EXPECTATIONS AND ACCESS TO COMMUNICATIONS TECHNOLOGY
As a result we are seeing a shift in the expectations of ordinary people about communications technology and their access to that technology. Further, we are seeing a rapid evolution of behaviour in relation to communications technology – mainly in the use of smartphones and tablets.

All of this is leading us to significant shifts in society, and it is all fuelled by innovations in communications devices. The smartphone and almost ubiquitous access to the internet have created a new baseline expectation in people that they will always be connected. I have often argued that with Twitter we are seeing the genesis of the hive mind of humanity.

The digital divide is no longer about access to technology – as my friend Mark Pesce notes, even poor fishermen in Kerala have access – it’s about your willingness or desire to be connected.

However, people are finding enormous utility in being always connected. For example, the number of ereaders in the hands of people is growing enormously, doubling since July 2011. And an example of a behavioural shift afforded by the technology is the growth in women’s erotic fiction sales. Romance novels have always been a big business globally, but a recent sales data indicates a substantial growth in sales of erotica (the so-called ‘guilty pleasures’ factor) that has been fuelled by the anonymity offered by ereaders.

As long ago as 2008 Australia mobile phone subscribers outnumber people according to ACMA data. This means that individuals have more than one device connected to the mobile phone network.

SOCIAL MEDIA, SOCIAL BUSINESS
Along with this embrace of ubiquitous mobile connectivity we have seen the growth of social media and social networking. This growth of social media is part of the landscape that makes up the digital revolution. Social media is revolutionary because it empowers the populace with access to the means of communication that were once the province of rich media barons.

This growth in social media fuelled by mobile connectivity has also changed the business landscape in important ways. There is a shift from command-control and pipeline driven businesses to social business that is focused on continuous engagement and conversations.

The kind of new business opportunities enabled by this digital revolution include:

  • the ability to compete in a new geography without even opening a local store (like Amazon);
  • the opportunity to reduce complexity for customers and remove friction from business operations (like Telstra);
  • subverting traditional models like recruitment where businesses build online talent banks of people who are interested in working with them (like Deloitte).

However, the shifts in society are not limited to business and consumers. They are also changing some things that we have always accepted. For example, we have always assumed that there is a just and valid separation between the domains of public versus private, or between business versus personal. But now those verities are being shaken by social media and social networking.

Social media is blurring the boundaries between the public, private, business, and personal. We are still working out how to negotiate this new territory. But already we see reports of people turned down for jobs because their online reputation score was too low.

We are now seeing a world where reputation is created, maintained, and mediated by online channels. There are increasing tools for measuring reputation online, such as: Kred, Klout, and Peer Index. Bouncers are even reportedly using Facebook as an identification check for entry into nightspots according to the BBC.

SOCIAL WORKPLACES
Workplaces are changing too, partly in response to the digital revolution. Open plan offices with collaboration spaces and hot desks are enabled because of wifi and portable connected devices like laptops and tablets.

SOCIAL EDUCATION
Our schools and places of education are being swept along by this digital revolution as well. With schools handing out laptops to all students and wifi in schools, libraries, and on public transport our children inhabit an always connected landscape. A teen boy said to me recently of my complaints about the poor wifi in Sydney: “but it’s just in the air, it’s everywhere”. It is a good example of the world that our young people inhabit. They live in a world where the connectivity is just ‘in the air’ around them.

The physical changes in workplaces are being reflected in schools too. They are becoming focused on collaboration rather than rote learning of facts. Students are learning how to discover, assess, and synthesize information rather than memorize facts.

WTF?
When we put together the shifting physical nature of the workplace and schools together with the blurring boundaries between public- private-business-personal, and the always connected devices in the hands of individuals many opportunities and challenges arise.

It is an exciting time to live. We are living through a revolution. The real question is will we drive the revolution or let it just happen to us?

ANZAC 2012

I don’t think that many romanticise war too much these days. And there is something very poignant and compelling about seeing the fruits of war.Picardie-2010-Dec-074-225x300

In northern France and Belgium the unimaginable scale of loss wrought upon so many families in the great wars of the twentieth century is still visible at every step.

It was in north eastern France that I found some family graves. Here is the the resting place of young ANZAC Rupert Alexander, aged 31 years, along with his compatriots lost in France in 1917.

This poem by Gellert captures the melancholy of war:

Anzac Cove

There’s a lonely stretch of hillocks:
There’s a beach asleep and drear:
There’s a battered broken fort beside the sea.
There are sunken trampled graves:
And a little rotting pier:
And winding paths that wind unceasingly.
There’s a torn and silent valley:
There’s a tiny rivulet
With some blood upon the stones beside its mouth.
There are lines of buried bones:
There’s an unpaid waiting debt :
There’s a sound of gentle sobbing in the South.

By Leon Gellert

“They shall grow not old, as we that are left grow old:
Age shall not weary them, nor the years condemn.
At the going down of the sun and in the morning,
We will remember them”
Lest we forget

Authenticity online – not necessary, perhaps essential or Kitteh vs Chickin

This talk by Bitly’s Matt LeMay at Monki Gras entitled: Kitteh vs Chickin: How What We Share is Different from What we Click is important and is really worth watching.

This talk gives us some really important insights into the changed world we now inhabit.  The world in which our passing fancies and offhand comments were written on the wind has passed into history.  Now most things that we click or share online are recorded and ready for analysis.

Matt draws out the point that our real selves – the ones  who listen to Lady Gaga or Katie Perry and then delete them from our scrobbles – are revealed by our online activities.

As Jung suggested, it might be time to embrace our shadow (or as Matt LeMay suggests, learn to be okay with being a kitteh).

I commend this video to you, it presents important concepts in a really engaging way.

There’s a fraction too much friction! Customers, service, and staff.

While trawling around on YouTube recently I came across a 1980s video of Tim Finn’s There’s a Fraction too much Friction and it got me thinking about the things that annoy me  in dealing with businesses. I concluded that the source of my irritation is friction.

I have long observed that business has many things in common with war, and friction is probably the thing that most comes to mind as significant in both business and war.

The problem with friction is nicely put by Clausewitz:

“Everything in war is simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction that is inconceivable unless one has experienced war.”

This description of the effects of friction in war are eerily reminiscent of dealing with a large business (say for example, one of our large telecommunications companies).

The huge opportunity that the digital revolution offers is to remove friction between different parts of businesses – between customers and staff, between operational silos within the organisation, between groups who are internal and external to the organisation.

Organisations that see and act on this opportunity are the ones that will triumph in the hyperconnected future.

People who see a dedicated niche that they can service seamlessly and effectively will grow their businesses almost without trying, and customers will flock to them.

In this milieu the one-stop-shops that try to do everything – those who previously leveraged scale and centralization – are likely to suffer.  This is because scale creates and does not reduce friction. Only in the past when the friction in having services and products delivered from many smaller suppliers was so great did the one-stop-shops have an advantage.

But now even small organisations can remove friction and deliver seamlessly to their customers using web and mobile applications.

Now organisations are liberated to serve customers in ways that were impossible before ubiquitous internet connected mobile devices.

Big companies that are not already offering effective online services are the new dinosaurs.  It will take only the slightest change in their terrestrial trading conditions for them to sicken and die. Two examples of this phenomenon  worth keeping an eye on are Harvey Norman and David Jones . It will be very interesting to see if they can evolve their business models sufficiently fast to survive.

Reduced information asymmetry is another opportunity offered by this reduction in friction.  In the past companies, especially retailers, had better information about pricing of the good they sold.  Now this asymmetry in access to pricing information is dying. A recent tweet from my friend Mark Pesce exemplifies this new trend

And US retailer J.C. Penney recently launched a new pricing model:

“J.C. Penney (JCP) is permanently marking down all of its merchandise by at least 40% so shoppers will no longer have to wait for a sale to get the lowest prices in its stores.

Penney said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing. On Feb. 1, the retailer is rolling out a three-tiered strategy that offers “Every Day” low pricing daily, “Monthly Value” discounts on select merchandise each month and clearance deals called “Best Price” during the first and the third Friday of each month when many shoppers get paid.”

Source: Daily Finance, 25 Jan 2012 

The results of this pricing experiment are just starting to flow in.  There has been an initial drop in sales revenue but analysts note:

“We believe our findings demonstrate that the strategies announced to transform (Penney’s) business are the right actions to take and will resonate well with consumers over time” (Source: MSNBC, Penney’s pricing strategy takes a toll on sales, 30 Mar 2012)

Against this backdrop it is amusing to see an Australian retailer’s response to market conditions – “David Jones Outlines Strategic Plan to Cut Costs” along with their very late in the day online shopping initiatives. It is especially amusing when one observes one of their chief competitors, Net-a-Porter – saying:

“It’s very easy to copy the look and feel, which people have helped themselves generously to,” Massenet said. “But we have 12 years of building ahead [of other sites] and we are sending out 5,000 orders a day as opposed to 20 orders a day and I think it’s very difficult for a business to keep up with that operationally.”

Source: Sydney Morning Herald, How to create an e-empire, 29 Mar 2012

Net-a-Porter is an excellent example of an organisation that has nailed servicing a niche, delivering good product, and ensuring a good customer experience supported by excellent customer service.

The bar has well and truly been raised for traditional organisations. And only those who work out how to reduce friction and deliver seamless service will survive.

The Reputation Economy, Employees, and Privacy

As companies embrace the notion of a reputation economy fueled by the power of social platforms this brings a new set of challenges for management and employees.

I was at the Salesforce #cloudcrowd event in Sydney recently and we were discussing this issue with guest speaker Peter Coffee.

The issue is that companies increasingly require employees to interact online on behalf of the company but using their own persona.

Upon consideration, it is not much different to offline where one meets with business contacts using a real name.  But the difference is that those meetings are mostly written on the wind.  Online interaction is forever. It is an almost permanent record of where you were, what you said, and to whom it was said.

Thus for the employee, the private conversations and meetings of the past have transformed into public online interactions, potentially geotagged and with accompanying photo.

What this is doing is tying the individual’s personal reputation very closely with that of the company in a very public and well documented way. In the past it was relatively easy (especially in a big city) to gloss over a former job and what you really did in it.

But now this will become increasingly difficult as more and more of our business interaction is transacted in public and online.

It will also become increasingly difficult for companies on several levels:

  • Firstly, they will find it more challenging to repudiate the activities and actions of employees, since these will be well documented online.
  • Secondly, they will find their public reputation increasingly tied explicitly to employee behaviour as played out in various online forums.
  • And thirdly, there is the risk that employees will use online forums to share their feelings (both positive and negative), as per the very colourful  examples of Goldman Sachs’ former employee Greg Smith Why I Am Leaving Goldman Sachs or Google’s James Whittaker Why I Left Google.

Problems for employees include:

Rawn Shah’s October 2011  presentation gives a nice overview of the issues involved in The Blurring of Job Loyalties, Social Collaboration and Personal Freedom.

One thing is certain, the boundaries between private citizens and their online activity as representatives of a company is starting to blur and this is likely to increase.  It also means that we individuals will increasingly be subject to ongoing and continuous surveillance from companies as well as the government.

Privacy is truly dead.

Connectedness – it’s not just a technology thing, it’s a people thing

For many years now my friends, colleagues and I have been talking and thinking about the hyperconnections made available to us by the growth of the internet, telecommunications devices and networks, and social platforms. For a good background on it check out Mark Pesce and Ross Dawson.

But I think that we have reached a state in our evolution as human where the practices of hyperconnectivity have changed the way we are doing, being, and thinking.

Connectedness is no longer about technology it is about people. Our need for connectedness is beginning to transcend the technology. I believe that, even if the internet disappeared tomorrow, our desire for and expectation of connectedness would continue and that the behaviours engendered by the internet will remain to be expressed.

Ian Shafer summed it up nicely recently:

“I think this whole notion of connectedness is more a state of human evolution than rather a generational thing.”
from: Ian Shafer, in Generation C: A new demographic label for marketers by Kai Ryssdal, 24 Feb 2012

Movements like #Occupy and the Arab Spring around the world show that people connecting is more than just a technology thing, although technology has amplified the ability of people to connect across distance.

Human beings don’t want to just engage and connect with brands, a desire to create a world better suited for the beings that inhabit it (and their progeny) is growing and we see real life communities growing.

A good example of this Social Innovation Sydney. It started online but this community connects in real life meetups and the human network creates connections, relationships, and activities far beyond the initial starting point.

If the internet disappears tomorrow how will you be able to find your tribe?

Risk management and real communication

I was reading a post by Dave Snowden that really got me thinking.

In his post, From oratory to the soundbite, he discusses the changes in how our politicians engage with us.  Noting the change from the days of Lloyd George, who would speak for an hour without notes and engage with hecklers in the audience, to that of the manicured and controlled soundbites of modern politicians.

It also got me thinking how we have become conditioned to manicured and carefully prepared speeches and presentations in many areas of our lives nowadays.  And this shift is all about risk control.

This shift to carefully manufactured communications can likely be attributed to the way you can sound easily sound stupid or ill-informed if speaking off the cuff (cf. Barnaby Joyce).  Then that comment can be amplified endlessly (and often mercilessly) via social media.

In the days of Lloyd George his engaging speeches were not recorded for posterity.  They were ephemeral.  Nobody pored over the transcript and excerpted poor phrasing to regurgitate for weeks afterwards in media releases and media interviews.

Our ability to document every happening is changing how free we are to express ideas and opinions.  No longer can we have an amusing interplay with a heckler at a speech that is heard by only those present.  That interplay can now be taken out of context and used as a weapon against you by people of ill-will.

This is one of the reasons I believe we are seeing the growth of the politics of NO. In the past oppositions and governments could make bipartisan stands and it was hardly known by the populace. But now a new transparency means that it is easier and simpler for oppositions to stand against things than to work together for the common good on issues.

Perhaps once people understand how transparent things are becoming we can evolve new ways to communicate in less manufactured ways?  But for that to work we do need to accept imperfection.