Lifting the Veil After the Sale: another IoT “Essential Truth”

Count me among those who believe the Internet of Things will affect every aspect of corporate operations, from manufacturing to customer relations.

Perhaps one of the most dramatic impacts will be on the range of activities that take place after the sale, including maintenance, product liability, product upgrades and customer relations.

In the past, this has been a prime example of the “Collective Blindness” that afflicted us before the IoT, because we basically had no idea what happened with our products once they left the factory floor.

In fact, what little data we did have probably served to distort our impressions of how products were actually used. Because there was no direct way to find out how the products were actually used, negative data was probably given exaggerated weight: we heard negative comments (warrantee claims, returns, liability lawsuits, etc.), loud and clear, but there was no way to find out how the majority of customers who were pleased with their products used them.

That has all changed with the IoT.

Now, we have to think about products  in totally new ways to capitalize on the IoT, and I think this merits another “Essential Truth” about the IoT:

Everything is cyclical.

Think about products — and industrial processes in general — in the old industrial system. Everything was linear: perhaps best exemplified by Henry Ford’s massive River Rouge Complex, the world’s largest integrated factory, and the epitome of integrated production.

Ford River Rouge Complex

“Ford was attempting to control and coordinate all of the necessary resources to produce complete automobiles.  Although Ford’s vision was never completely realized, no one else has come so close, especially on such a large scale.  His vision was certainly a success, one indication of this is the term Fordism, which refers to his style of mass-production, characterized by vertical integration, standardized products and assembly-line production”

At “The Rouge,” raw materials (literally: it had its own coke ovens and foundry!)  flowed in one side, and completed cars flowed out the other, bound for who knows where. Once the cars were in customers’ hands, the company’s contact was limited to whatever knowledge could be gleaned from owners’ visits to dealers’ service departments, irate calls from customers who had problems, and (in later days) safety recalls and/or multi-million dollar class-action lawsuits.

That linear thinking led to a terrible example of the “Collective Blindness” phenomenon that I’ve written about in the past: who knew how customers actually thought about their Model T’s? How did they actually drive them? Were there consistent patterns of performance issues that might not have resulted in major problems, but did irritate customers?

Sure, you could guess, or try to make inferences based on limited data, but no one really knew.

Fast forward to the newest auto manufacturer, Tesla, and its factory in Fremont, California (aside: this massive building — Tesla only uses a portion, used to be the NUMMI factory, where Chevy built Novas and Toyota built Corollas. Loved the perceptual irony: exactly the same American workers built mechanically identical cars [only the sheet metal varied] but the Toyotas commanded much higher prices, because of the perception of “Japanese quality.” LOL. But I digress….).

Tesla doesn’t lose track of its customers once the cars leave the plant.

Tesla assembly line

In fact, as I’ve written before, these “iPhones on wheels” are part of a massive cyclical process, where the cars’ on-board communications constantly send back data to the company about how the cars are actually doing on the road. And, when need be, as I mentioned in that prior post, the company was able to solve a potentially dangerous problem by simply sending out a software patch that was implemented while owners slept, without requiring customer trips to a repair shop!

I imagine that the company’s design engineers also pour over this data to discern patterns that might indicate elements of the physical design to tweak as well.

Of course, what would a blog post by me about IoT paradigm shifts be without a gratuitous reference to General Electric and its Durathon battery plant (aside to GE accounting: where should I send my W-9 and invoice so you can send me massive check for all the free PR I’ve given you? LOL)?

I can’t think of a better example of this switch to cyclical thinking:

  • including sensors into the batteries at the beginning of the production process rather than slapping them on at the end means that the company is actually able to monitor, and fine tune, the manufacturing process to optimize the critical chemical reaction. The same data allows the workers to remove defective batteries from the assembly line, so that every battery that ships works.
  • once in the field (and, remember: these batteries are deployed in incredibly remote areas where it might take days for a repair crew to reach and either service or repair them) the same sensors send back data on how the batteries are functioning. I don’t know about the specifics in the case of these batteries, but GE has actually created new revenue streams with other continuously-monitored devices by selling this data to customers who can use it (because the data is shared on a real-time basis, not just historically) to optimize performance.

Elsewhere, as I’ve mentioned before, General Electric’s William Ruh has said that being able to lift the veil of “Collective Blindness” through feedback from how customers actually use their products has even revolutionized their product design process:

“… 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 (Ruh) said. ‘It used to take three years.’”

Back in the ’90’s, I used to lecture and consult on what I called “Natural Wealth,” a paradigm shift in which we’d find all the inspiration we needed for an information-based economy in a table-top terrarium that embodies billion-year-old  principles of nature:

  • embrace chaos, don’t try to control it. (i.e., use open systems rather than proprietary ones)
  • create symbiosis: balance competition with cooperation (IFTTT.com, where you release your APIs to create synergistic mashups with others).
  • close the loop.

With the IoT, we can finally put that last principle into practice, substituting cyclical processes for linear ones.  At long last, the “systems dynamics” thinking pioneered by Jay Forrester and his disciple, Peter Senge, can become a reality. Here’s a closing tip to make that possible: in addition to SAP’s HANA or other analytics packages, look to systems dynamics software such as isee systems’  iThink to model your processes and transform linear into cyclical ones. Now get going: close the loop!

I’ll be on SAP Radio Again Today: the IoT and Big Data

I’ll be on SAP’s “Coffee Breaks With Game Changers” radio again today, live @ 2 EST, appearing again with SAP’s David Jonker, again talking about the IoT and Big Data.  This time I plan to speak about:

  • Integrating real-time and historic data in decision-making:  in the past, it was so hard to glean real-time operating data that we had to operate on the basis of inferring about how to manage the future based on analysis of past data.  Now we have a more difficult challenge: learn to balance past and real-time data.
  • Sharing data in real-time: In the past, data trickled down from top management and might (or might not) eventually get to operators on the shop floor.  Now, everyone can get immediate access to it. Will senior managers continue to be the gatekeepers, or will everyone have real-time access to the data that might allow them to do their jobs more effectively (for example, fine-tuning production processes).

  • Revolutionizing decision-making: Decision-making will also change, because of everyone being able to have simultaneous access to data. Does it really make sense any more for sequential decision-making by various siloed departments when they might all benefit by making the decisions simultaneously and collaboratively, based on the data?

Tune in!

My #IoT predictions for 2015

I was on a live edition of “Coffee Break With Game-Changers” a few hours ago with panelists Sherryanne Meyer of Air Products and Chemicals and Sven Denecken of SAP, talking about tech projections for 2015.

Here’s what I said about my prognostications:

“I predict that 2015 will be the year that the Internet of Things penetrates consumer consciousness — because of the Apple Watch. The watch will unite both health and smart home apps and devices, and that will mean you’ll be able to access all that usability just by looking at your watch, without having to fumble for your phone and open a specific app.

If Apple chooses to share the watch’s API on the IFTTT – If This Then That — site, the Apple phone’s adoption – and usability — will go into warp speed. We won’t have to wait for Apple or developers to come up with novel ways of using the phone and the related devices — makers and just plain folks using IFTTT will contribute their own “recipes” linking them. This “democratization of data” is one of the most powerful – and under-appreciated – aspects of the IoT. In fact, Sherryanne, I think one of the most interesting IoT strategy questions for business is going to be that we now have the ability to share real time data with everyone in the company who needs it – and even with supply chain and distribution networks – and we’ll start to see some discussion of how we’ll have to change management practices to capitalize on this this instant ability to share.

(Sven will be interested in this one) In 2015, the IoT is also going to speed the development of fog computing, where the vast quantities of data generated by the IoT will mean a switch to processing data “at the edge,” and only passing on relevant data to the cloud, rather than overwhelming it with data – most of which is irrelevant.

In 2015 the IoT is also going to become more of a factor in the manufacturing world. The success of GE’s Durathon battery plant and German “Industry 4.0” manufacturers such as Siemans will mean that more companies will develop incremental IoT strategies, where they’ll begin to implement things such as sensors on the assembly line to allow real-time adjustments, then build on that familiarity with the IoT to eventually bring about revolutionary changes in every aspect of their operations.

2015 will also be the year when we really get serious about IoT security and privacy, driven by the increasing public concern about the erosion of privacy. I predict that if anything can hold back the IoT at this point, it will be failure to take privacy and security seriously. The public trust is extremely fragile: if even some fledgling startup is responsible for a privacy breach, the public will tend to tar the entire industry with the same brush, and that could be disastrous for all IoT firms. Look for the FTC to start scrutinizing IoT claims and levying more fines for insufficient security.”

What’s your take on the year ahead? Would love your comments!

Is GE the future of manufacturing? IoT + nanotech + 3D-printing

The specific impetus for this post was an article in The Boston Globe about heart stents that fit perfectly because they’re 3-D printed individuallly for each patient.

GE jet engine 3-D-printed fuel nozzle

That prompted me to think of how manufacturing may change when three of my favorite technologies — nanotech, 3-D printing and the Internet of Things — are fully mature and synergies begin (as I’m sure they will) to emerge between the three.

I’m convinced we’ll see an unprecedented combination of:

  • waste elimination: we’ll no longer do subtractive processes, where a rough item is progressively refined until it is usable.  Instead, products will be built atom-by-atom, in additive processes where they will emerge exactly in the form they’re sold.
  • as with the stents, products will increasingly be customized to the customer’s exact specifications.
  • the products will be further fine-tuned based on a constant flow of data from the field about how customers actually use them.

Guess what?  The same company is in on the cutting edge of all three: General Electric (no, I’m not on their payroll, despite all my fawning attention to them!):

  • Their Industrial Internet IoT initiative is resulting in dramatic changes to their products, with built-in sensors that relay data constantly to GE and the customer about the product’s current status, allowing predictive maintenance practices that cuts repair costs, optimizing the device’s performance for more economical operations, and even allowing GE to switch from selling products to leasing them, with the lease price determined dynamically using factors such as how many hours the products are actually used.  Not only that, but they practice what they preach, with 10,000 sensors on the assembly line at their Durathon battery plant in Schenectady, plus sensors in the batteries themselves, allowing managers to roam the plant with an iPad to get instant readings on the assembly line’s real-time operation, to fine-tune the processes, and to be able to spot defective batteries while they are still in production, so that 100% of the batteries shipped will work.
    They’re also able to push products out the door more rapidly and updating them quicker based on the huge volumes of data they gather from sensors built into the products: “… 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 [William Ruh] said. ‘It used to take three years.’”
  • They’ve made a major commitment to 3-D printing, with 100,000 3-D printed parts scheduled to be built into their precision LEAP jet engines — a big deal, since there’s not a great deal of fault tolerance in something that may plunge to the earth if it malfunctions! As Bloomberg reported, “The finished product is stronger and lighter than those made on the assembly line and can withstand the extreme temperatures (up to 2,400F) inside an engine.”  They’re making major investments to boost the 3-D printers’ capacity and speed.  Oh, and did I mention their precedent-setting contest to crowd-source the invention of a 3-D printed engine mount?
  • They’re also partnering with New York State on perhaps the most visionary technology of all, nanotech, which manipulates materials on the molecular level. GE will focus on cheap silicon carbide wafers, which beat silicon chips in terms of efficiency and power, leading to smaller and lighter devices.

GE is the only member of the original Dow-Jones Index (in 1884) that still exists. As I’ve said before, I’m astounded that they not only get it about IoT technology, but also the new management practices such as sharing data that will be required to fully capitalize on it.

Thomas A. Edison is alive and well!

Interview w/ Echelon for its IIoT blog

Just finished a delightful interview with three Echelon staffers for a forthcoming piece on its blog about my prognostications for the Industrial Internet of Things (AKA “Industrial Internet” ien GE-marketing speak).  They’ve been around in this field since the dark ages — 1988, and are now focusing on industrial applications.

My main point to them was the one I made in the SAP “Managing the Internet of Things Revolution” e-guide,  that even though the IoT hasn’t realized its full potential yet, that smart companies would begin creating and executing an IoT strategy now, “to connect their existing infrastructure and enhance key foundational IoT technologies,” optimizing their operating efficiency. Then they could build on that experience to make more fundamental transformations.

We touched 0n several other examples how the IoT could increase operating efficiency or make fundamental transformations:

At any rate, a fun time was had by all, and I’ll let you know when their blog post is up!

Disney MagicBands: as important symbolically for IoT as substantively!

(I’ve been meaning to write about this particular IoT device for a long time — my apologies for the delay)

I have no objective evidence for this, but I suspect that many C-level executives first learned about e-commerce when they placed personal orders during the Christmas season of 1995. Thus, Amazon deserves a disproportionate share of credit for launching the e-commerce era.

Magic Bands play a number of roles at Disney parks

Similarly, I suspect that many C-level executives’ first direct experience with the Internet of Things has come, or may come this holiday season, with their family’s first visit to Disneyworld since Disney began the beta testing of its MagicBands, which are arguably the most high-profile public IoT devices so far.

IMHO, Disney deserves a lot of credit for such a public IoT project, especially many of the initial reviews were decidedly mixed due to technical and management glitches — risking irritating customers. 

The project reportedly cost north of $1 billion.

The major lesson to decision makers in other industries to be gained from the MagicBand is my favorite IoT “Essential Truth“: who else can use this data?

Disney uses the band data, either by itself, or aggregated with other visitors, to improve almost every aspect of park operations, marketing, and the customer experience — illustrating the versatility of IoT devices:

  • control logistics, speeding entry to the park and individual rides
  • coordinate outside transportation
  • balance demand for various rides
  • add new functionality to existing technology such as the Disney app
  • control mechanical systems, such as hotel door locks
  • add a social component (and avoid the stresses of families getting
  • handle and speed in-park financial transactions
  • personalize the park experience and improve customer satisfaction
  • harvest and analyze big data on customer preferences.

The bands, which work because they have RFID chips inside, are worn on your wrist throughout your stay at the parks. When you book the trip, Disney lets you choose your favorite color, and the band comes in a presentation box with your name on it.

Before leaving, you can program it in conjunction with the My Disney Experience app and web page, entering key choices such as hotels, your favorite rides (FastPass+), dinner reservations, etc., and your credit card info so that they can be used to pay for meals and merchandise.

Disney warns visitors not to pack the bracelets in their luggage, because they are even used to board the transportation from the Orlando airport.

Putting aside the programming involved, this had to be a tremendous logistical challenge, changing the hotel locks, installing readers at each ride, putting readers in the restaurants and shops, which probably accounts for many of the glitches that customers reported during the pilot phase.

My future son-in-law, Greg Jueneman, who knows EVERYTHING about Disneyland, weighs in from a customer standpoint:

“I think they take the spontaneity out of a Disney World vacation. Everything has to be planned in advance and a schedule has to be followed. As a technology they are cool, I’m sure Disney had lots of plans for them but so far the only real thing that they do is open your hotel room without a “key” and allow you to pay for things without your cards (I’m sure Disney loves that! – some blogs Ifollow have said that spending with Magic Bands is up 40%, that’s impressive!).”

As you can imagine, there are also important data privacy and security issues: on one hand, it would probably be very cool to have Mickey come up to you and say “happy 5th birthday, Jeremy,” but that could also creep parents out, and you’d be worried about someone running up a tab on your credit card if you mislaid the band.

From my reading of the most recent media coverage, it appears that most of the beta test problems have been worked out, and that Disney is fully-committed to universal use of the bands in the future.

If you’re visiting Disney this holiday season, think about possible IoT strategy lessons for your company from the MagicBand:

  • marketing: how it can personalize the customer experience and increase sales?
  • transactions: how can it streamline transactions (have to think that Apple looked carefully at this in designing Apple Pay)?
  • operations: how can real-time data from many users help streamline operations and reduce congestion?

Maybe you can write off the family vacation as research! Have fun.

 

I’ll be on “Game Changer” Radio Today @ 3 EST Talking About IoT

Huzzah!  I’ll be a guest on Bonnie Graham’s “Coffee Break With Game Changers” show live, today @ 3 PM to discuss the Internet of Things. SAP Radio

Other guests will include David Jonker, sr. director of Big Data Initiatives at SAP, and Ira Berk, vice-president of Solutions Go-to-market at SAP, who has global responsibility for the IoT infrastructure and middleware portfolio.

Among other topics that I hope to get to during the discussion:

  • The “Collective Blindness” meme that I raised recently — and how the IoT removes it.
  • The difficult shift companies will need to make from past practices, where information was a zero-sum game, where hoarding information led to profit, to one where sharing information is the key. Who else can use this information?
  • How the IoT can bring about an unprecedented era of “Precision Manufacturing,” which will not only optimize assembly line efficiency and eliminate waste, but also integrate the supply chain and distribution network.
  • The sheer quantity of data with the IoT threatens to overwhelm us. As much as possible, we need to migrate to “fog computing,” where as much data as possible is processed at the edge, with only the most relevant data passing to the cloud (given the SAP guys’ titles, I assume this will be of big interest to them.
  • The rise of IFTTT.com, which means device manufacturers don’t have to come up with every great way to use their devices: use open standards, just publish the APIs to IFTTT, and let the crowd create creative “recipes” to use the devices.
  • Safety and security aren’t the other guy’s problem: EVERY device manufacturer must build in robust security and privacy protections from the beginning. Lack of public trust can undermine everyone in the field.
  • We can cut the cost of seniors’ care and improve their well being, through “smart aging,” which brings together Quantified Self fitness devices that improve their care and make health care a doctor-patient partnership, and “smart home” devices that automate home functions and make them easier to manage.

Hope you can listen in.  The show will be archived if you can’t make it for the live broadcast .

Perhaps Most Important Internet of Things Essential Truth: Everything’s Linked

PROCEED WITH CAUTION!

You see, I’m thinking out loud (that accounts for that sound of gears grinding….) — I really am writing this post as I mull over the subject for the first time, so you’re forewarned that the result may be a disaster — or insightful. Bear with me…

I’m working on a book outline expanding on “Managing the Internet of Things Revolution,” the introduction to IoT strategy for C-level executives that I wrote for SAP. One of the things I’ve been looking for is a theme that would bring together all of the book’s parts, which include product design, manufacturing, marketing and corporate organization, among other topics.

I think I’ve got that theme, and I think it may be the most Essential Truth of all the ones I’ve written about regarding the IoT:

Everything’s Linked!

When you think about it, there have been a lot of dead-ends in business in the past:

  • we haven’t been able to know how customers used our products. We’ve actually got a lot more information about the ones that failed, because of warrantee claims or complaints, than we have about the ones that worked well, because that information was impossible to gather.
  • data that could help workers do their work better has always come from top down, filtered by various levels of management and only delivered after the fact.
  • customers can’t get the full value of our products because they operate in isolation from each other, and often were slow to react to changing conditions.
  • assembly-line machinery has frequently been hard to optimize, because we really didn’t know how it was operating — until it broke down.
  • key parts of the operation, such as supply chain, manufacturing, and distribution, have been largely independent, without simultaneous access to each other’s status.

With the Internet of Things, by contrast, everything will be linked, and that will change everything:

  • we’ll get real-time data about how customers are using our products. Most radically, that data may even allow us, instead of selling products and then severing our ties to the customer as in the past, to instead lease them the products, with the pricing dependent on how they actually use the products and the value they obtain from them.
  • everyone in the company can (if your management practices allow!) have real-time access to data that will help them improve their decision making and daily operations (hmm: still looking for an example of this one: know any companies that are sharing data on a real-time basis??).
  • products will work together, with synergistic results (as with the Jawbone UP turning on the NEXT), with their operation automatically triggered and coordinated by services such as IFTTT.
  • the assembly line can be optimized because we’ll be able to “see” into massive equipment to learn how it is operating — or if it needs repairs in time to avoid catastrophic failure.
  • access to that same data may even be shared with your supply chain and distribution network — or even with customers (again, looking for a good example of that transformation).

There’s won’t be dead ends or one-way streets where information only flows one way. Instead, they’ll be replaced by loops (in fact, I thought loops might be an alternative theme): in many cases, data will be fed back through M2M systems so things can be optimized.

If that’s the case, we’ll be able to increase the use and value of tools such as systems dynamics software, that would help us model and act on these links and loops. Instead of massive oscillations where we’re forced to make sudden, major corrections when data finally becomes available, machinery will be largely self-regulating, based on continuous feedback. We’ll delight customers because products will be more dependable and we’ll be able to fine-tune them by adding features based on actual knowledge of how the products work.  Workers will be more efficient, and happier, because they’ll be empowered. We’ll tread lightly on the earth, because we’ll use only what we need, precisely when we need it.

By George, I think I’ve got it! I’m excited about this vision of the Internet of Things linking everything. What do you think?? Please let me know! 

Global Warming: The IoT Can Help Fill Some of the Gap Due to Government Inaction

I won’t dwell on politics here, but  97% of scientists agree that global warming is real, and, according to the latest United National report this month, it is worse than ever (according to the NYTimes,

“The gathering risks of climate change are so profound that they could stall or even reverse generations of progress against poverty and hunger if greenhouse emissions continue at a runaway pace, according to a major new United Nations report.”). (my emphasis)

Thus, it should be noted that the chances of significant government action to curb global warming during the next two years have vanished now that Senator James Inhofe will chair the the Senate Environmental Committee (I won’t repeat any of the clap-trap he has said to deny global warming: look it up…).

While probably not enough to combat such a serious challenge, the Internet of Things will help fill the gap, by helping bring about an era of unprecedented precision in use of energy and materials.

Most important, the IoT is a critical component in “smart grid” electrical strategies, which are critical to reducing CO2 emissions.

According to the Environmental Defense Fund, “Because a smart grid can adjust demand to match intermittent wind and solar supplies, it will enable the United States to rely far more heavily on clean, renewable, home-grown energy: cutting foreign oil imports, mitigating the environmental damage done by domestic oil drilling and coal mining, and reducing harmful air pollution. A smart grid will also facilitate the switch to clean electric vehicles, making it possible to “smart charge” them at night when wind power is abundant and cheap, cutting another huge source of damaging air pollution.”

And then there’s generating electricity from conventional resources: GE, as part of its “industrial internet” IoT strategy, says that it will be able to increase its gas turbines’ operating efficiency (which it says generate 25% of the world’s electricity) by at least 1%.

Equally important, as I’ve written before, “precision manufacturing” through the IoT will also reduce not only use of materials, but also energy consumption in manufacturing.

In other important areas, the IoT can also help reduce global warming:

  • Agriculture: conventional farming is also a major contributor to global warming. “Climate-smart” agriculture, by contrast, reduces the inputs, including energy, needed while maximizing yield (Freight Farms, which converts old intermodal shipping containers into self-contained “Leafy Green Machine” urban farming systems, is a great example!).
  • IoT-based schemes to cut traffic congestion.  As The Motley Fool (BTW, they’re big IoT fans of the IoT as a smart investment opportunity) documents, “1.9 billion gallons of fuel is consumed every year from drivers sitting in traffic. That’s 186 million tons of unnecessary CO2 emissions each year just in the U.S. “

The Motley Fool concludes that, combined, a wide range of IoT initiatives can reduce carbon emissions significantly while increasing the economy’s efficiency:

“A recent report by the Carbon War Room estimates that the incorporation of machine-to-machine communication in the energy, transportation, built environment (its fancy term for buildings), and agriculture sectors could reduce global greenhouse gas emissions by 9.1 gigatons of CO2 equivalent annually. That’s 18.2 trillion pounds, or equivalent to eliminating all of the United States’ and India’s total greenhouse gas emissions combined, and more than triple the reductions we can expect with an extremely ambitious alternative energy conversion program.

“Increased communication between everything — engines, appliances, generators, automobiles — allows for instant feedback for more efficient travel routes, optimized fertilizer and water consumption to reduce deforestation, real-time monitoring of electricity consumption and instant feedback to generators, and fully integrated heating, cooling, and lighting systems that can adjust for human occupancy.”

It always amuses me that self-styled political conservatives are frequently the ones who are least concerned with conserving resources. Perhaps the IoT, by making businesses more efficient, and therefore more profitable, may be able to bring political conservatives into the energy efficiency fold!

Coming Soon to a Language Near You: my IoT guide for C-level execs!

Posted on 31st October 2014 in Uncategorized

Neato! Just heard from SAP that reaction to “Managing the Internet of Things Revolution,” my e-guide to IoT strategy for C-level executives, has been so positive that they’re translating it into 4 languages. C’est magnifique!

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