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CHAPTER 1
Profitably Close the Circle with the IOT
"When wireless is perfectly applied, the whole earth will be converted into a huge brain, which in fact it is, all things being particles of a real and rhythmic whole."
— NIKOLA TESLA
You'll never think of "things" and their changing impact on business the same way after learning about the BigBelly, a microcosm of the emerging Internet of Things.
Behold the traditional municipal trash can! What could be more primitive a thing?
Smelly.
Dented.
Overflowing with trash (and maybe rodents).
Often lying on its side.
And dumb — really dumb — it just sits there.
Unless, that is, the trash can is the BigBelly, a sleek, attractive, enclosed container whose solar electric-powered compacter lets it hold five times as much trash, paired with one or more recycling containers. These features alone would be a noteworthy advance compared to conventional municipal trash cans.
But the BigBelly Solar startup wasn't content to just improve the efficiency of trash and recyclable collection. In the early models, a red light turned on if the BigBelly was nearing its capacity. But with the emergence of the cloud, the company and Digi (a pioneer in the wireless Machine to Machine [M2M] communications field) added wireless communications to the bins, making them "smart." According to Marketing VP Leila Dillon, "We were there before there was an Internet of Things, connecting through the cloud. Our 'aha' moment was that we suddenly realized we could work with cities to transform their waste operations."
Now, instead of traditional pickup routes and schedules probably based on sheer proximity (or, as BigBelly puts it a little more colorfully, "muscle memory and gut instincts"), the company offers a realtime way to monitor actual waste generation, through the wireless "CLEAN Management Console." That lets DPW personnel monitor and evaluate bins' fullness, trends, and historical analysis, for perspective. Collection schedules can now be dynamic and driven by what's happening right now rather than just past averages. On average, cities using BigBelly receptacles reduce the frequency of collections by 70 to 80 percent, while increasing the amount of materials that are recycled.
BigBelly Solar offers a Managed Services option where it analyzes the data and manages the devices on a subscription basis — not unlike the way jet turbine manufacturers and other companies now have substituted services for selling products, offering their customers value-added data that lets the customers optimize performance and generating new revenue streams for the manufacturers. The same communications network can even dramatically increase recycling programs' participation rates and efficiency.
That's not all.
Most recently, according to Dillon, the company has come to realize it has a "precious asset" because the units "are located exactly where the people are." Their engineering team began to think of a city's core needs and understood that the company could make better use of the wireless communications capability they already had. Given the rapid growth of IoT-based "smart city" services, they are now working with host cities to add services such as free Wi-Fi hot spots, IoT beacons to guide pedestrians, and sensors to detect ambient weather conditions. Because the BigBelly receptacles are just placed on location, rather than being built in, installation of new functions is easy and quick, with no wiring required. They can add sophisticated small-cell technology to deal with frequent bandwidth deficits and even bring Wi-Fi to underserved residential neighborhoods.
With BigBelly's decision to offer an open Application Programming Interface (API), smart people will be able to discover other uses for BigBelly data as well.
No wonder the company's website heralds BigBelly as "a platform deployed in the public right-of-way that delivers much more than smart waste and recycling. In addition to modernizing a core city service, it is optimal for hosting additional technologies. It is easy to access and can hide technology in plain sight."
Bottom line: If something as humble and ubiquitous as a municipal trash receptacle can be transformed into a waste-reduction-recycling collection-municipal communications hub, imagine what could happen if we reexamined every conventional product and management system and found ways to make them "smart" through the Internet of Things.
The Internet of Things (IoT), the concept that every "thing," ranging from assembly-line sensors to light bulbs to trees in remote rain forests and cows in a pasture, can be given a distinctive name and then be linked to other things via the internet or a local wired or wireless network, is what creates this ability to uncover and use previously inaccessible information about man-made and natural things. The Internet of Things lets manufacturers and others gather data from these devices, interpret it, and act on it, all in realtime — something that was impossible in the past, and that will change everything. The benefits range from cheaper, quicker, and better maintenance to increased manufacturing efficiency, to product design that will delight customers and create new revenue streams.
But neat, efficient products and services just touch the surface of what the IoT can do if we realize the true significance of realtime data sharing among everyone who needs it.
Less understood (and a major theme of this book) is that the IoT can even let you abandon outmoded hierarchical and linear processes. It will enable a radically new circular management model that was impossible in an era of limited data, one that increases operating efficiency, sparks innovation, and promotes collaboration. That's because, for the first time, everyone in an organization who needs access to realtime data to make better decisions or do their job more efficiently can instantly share that data.
The Future Is Smart will provide the overview you need of the major technologies required to implement an IoT strategy, and detail the key areas such as manufacturing, maintenance, and design that it will change. Perhaps even more important, it will introduce you to the radical attitudinal shifts you must make to capitalize on the IoT's full potential to transform every aspect of your company and its thinking.
To better understand the IoT's potential, consider the following examples. You will notice, because they are based on accurate, realtime information never before available about how things actually work, they differ from past practices that had to work around information gaps and unconnected things. There's simply no comparison to business as usual in the past.
Car insurance companies in the past had to cobble together quotes based on proxy indicators such as credit reports ("guilty of driving while poor," in industry parlance) or teens' report cards. Progressive Insurance can now give you an accurate quote based on your actual driving behavior because it first sends you a "Snapshot" unit, which plugs into the diagnostic slot on your dashboard and monitors your driving for a month. If you're a safe driver, the Snapshot can earn you a discount. Insurers are extending the same approach to building insurance by monitoring realtime data on buildings' systems.
Kardia, a tiny metallic unit that fits on the back of your smartphone and costs less than a hundred dollars, will give an FDA-approved accurate EKG of your heart in only thirty seconds, comparable to a $10,000 inpatient procedure. If you want, it can automatically connect you with a cardiologist who can give a professional interpretation, via that smartphone. In fact, journal articles have shown Kardia's results can actually be more valuable than the costly inpatient variety because the readings are taken while you're active, rather than lying flat on your back in a hospital, and you can annotate them and share them instantly with your doctor. One cardiologist at the prestigious Massachusetts General Hospital now prescribes them for every patient.
GE now builds fifty to sixty sensors into each of their jet engines. They use the realtime data from the sensors (a single 787 flight can produce a half a terabyte of data) to detect possible problems so early that the needed parts will be on hand and the engines can usually be fixed the next time the plane lands. That innovation is called "predictive maintenance," avoiding more costly emergency repairs and possible catastrophic crashes. Equally important as a demonstration of the IoT's truly transformative nature, both the manufacturer and the airlines benefit in other ways: If an airline opts in, GE will send them the realtime data, which can be combined with weather and other data streams to improve in-flight economy and performance, in return for a subscription fee that enhances the manufacturer's revenues. It's a far cry from the slapdash maintenance of the past.
In these and countless other examples, companies are able to make radical changes to every aspect of their operations based on the availability of unprecedented amounts of realtime data, while multiple users benefit from sharing the data.
The convergence of several technologies evolving over the past decade makes the Internet of Things possible:
• Cheap and low-powered sensors detect and then report, by wire or (increasingly) wirelessly, on a growing array of realtime factors, from babies' heartbeats to jet turbines' revolutions. There are now lithium-ion batteries the size of a grain of sand (created through another innovation, 3-D printing), and sensors as thin as a hair. A recent breakthrough will enable users to harvest ambient "backscatter" sound to power their devices — for free.
• Actuators act on that data without human intervention to fine-tune assembly lines and product operations.
• Changes in internet nomenclature make it possible to give distinctive internet addresses to countless things of all types — 3.4 x 1038 things, to be more precise — more than the total number of grains of sand on the earth.
• Billions of mobile devices provide a fertile environment — 11.6 billion of them by 2020.
• Expansion of cloud storage allows ready access to massive amounts of data, coupled with dramatic reductions in cloud storage's price — down to free in some cases.
• Development of sophisticated data analysis tools allows almost realtime analysis of the huge volume of data these sensors yield and the ability to visualize it in ways that laymen can understand.
Some have called the Internet of Things the Third Age of Computing (after mainframes and then personal computers and the internet). It promises to revolutionize every aspect of business in the next decade and help workers at every level of the enterprise. The Internet of Things will:
• Streamline and integrate supply chains, manufacturing, and distribution, because all parties will be able to instantly share realtime manufacturing data, so supply and distribution can be automated. This will result in an unprecedented degree of precision in all aspects of operations while reducing waste and inefficiency.
• Improve decision making, because you will no longer have to depend entirely on fragmentary historic data. Various departments can analyze and act on the data simultaneously, rather than sequentially.
• Create new revenue streams, by selling customers realtime data that will help them optimize operating efficiency. Many products may now be marketed instead as services, with mutual benefits to manufacturer and customer.
• Improve and speed product design, because you'll get realtime data on how customers actually use your products.
• Delight customers, by making innovations such as mass customization, Augmented Reality (AR), and 3-D printing practical. Customers may actually be the final step in the process, making personal choices that will dictate key aspects of how the product works.
Bear in mind that these are only the early-stage benefits before we make the more radical management changes that can lead to the Circular Company.
The Internet of Things' economic impact will be profound.
In 2013, when the IoT was just taking hold, it was estimated to produce $613 billion in global corporate profits just for industrial applications. According to Juniper Research, the number of connected devices, sensors, and actuators will exceed $46 billion in 2021. Research Nester predicted in 2017 that the market will reach $724.2 billion by 2023, with a compound annual growth rate (CAGR) globally of 13.2 percent from 2016 to 2023.
General Electric has made a sweeping commitment to the IoT, using the marketing term "Industrial Internet" to describe its initiative. GE predicts that, "If the cost savings and efficiency gains of the Industrial Internet can boost U.S. productivity growth by 1 to 1.5 percentage points, the benefit in terms of economic growth could be substantial, potentially translating to a gain of 25 to 40 percent of current per capita GDP." An entire chapter of this book will detail how GE and its European counterpart, Siemens (both major suppliers of IoT services), have proven their claims about the IoT's transformative potential by applying it to their own strategy and operations. Gartner now places the IoT at the height of its famous "hype cycle," and says it is "becoming a vibrant part of our customers' and our partners' business and IT landscape."
While still mentioned only occasionally by mainstream media and still more a matter of research rather than active implementation by most major businesses, a growing number of both leading companies and startups are aggressively pursuing Internet of Things strategies. These strategies are cutting operating costs, increasing revenues and efficiency, and delighting customers. In many cases, these companies are doing things that were simply impossible before the Internet of Things and its ability to understand and link things:
• A prototype vending machine created by SAP allows a snack food company to customize offers for individual consumers based on their past buying practices and lets those individuals pay electronically. Also, if a given machine runs low due to unforeseen circumstances such as a hot day at the beach, the same data would automatically be used — without requiring a human dispatcher — to reroute a delivery truck to restock the machine in time to avoid disappointed customers. This illustrates a key aspect of the IoT, that data can be shared in realtime by a wide range of users who might benefit from it in different ways, rather than having to pass it on sequentially.
• John Deere creates new revenue streams and satisfied customers with its FarmSight technology, which lets farmers plow precisely, with no overlap, and apply exactly the amount of fertilizer needed at just the right time. Deere used to build a variety of tractor engines for various requirements. Now it ships a standard engine and allows each user to choose what configuration to use through software.
• Electric car manufacturer Tesla faced a serious problem — a design issue that could result in a fire. The solution? Instead of mailing owners a notice and hope they would come in for an inconvenient and time-consuming recall, Tesla solved the problem with an automatic, overnight software update to every car.
• Startups such as Nest are reinventing old products such as thermostats and door locks, building in IoT capabilities to delight consumers while helping them save money. Others, such as Ambient Devices, create entirely new products such as the Orb, an attractive table ornament used for everything from cutting companies' electricity use to tracking stock prices.
• From the sublime to the perhaps ridiculous, a Lithuanian startup has created a women's shoe whose wearer can instantly change its appearance simply by touching a new pattern on a smartphone app, which produces that pattern in an insert on the side of the shoe.
These are only a few of a wide range of examples of how the Internet of Things is improving business processes and customer relations. The IoT will eventually change our fundamental relationship with products. They will "talk" to us, with sensors constantly monitoring their status and instantly reporting data to manufacturer and customer alike.
That realtime data will uncover a range of possibilities for products and processes that is impossible to visualize now, because the IoT lets us overcome a limit to our literal and figurative vision that I'll call "Collective Blindness."
COLLECTIVE BLINDNESS
It's hard to visualize in advance exactly how profound this transition will be, but we must try, because the real power of the Internet of Things doesn't come just from enabling technology, but also from learning to rethink the material world and how we relate to it because of this new information flow.
(Continues…)
Excerpted from "The Future Is Smart"
by .
Copyright © 2018 W. David Stephenson.
Excerpted by permission of HarperCollins Publishers.
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