In all systems, great change is always preceded by great disequilibrium.
For the past twenty years or so, everyone who knows me has eventually heard me spout the line above. It’s something in which I firmly believe, and it doesn’t take much pondering to come up with anecdotes that support the claim.
Whether it’s a toddler going through potty training, the behaviors of subatomic particles during nuclear fission, a society shifting to a new social norm, the widespread adoption of a new technology, or the arrival of a new boss at your company… it’s all the same: As systems undergo the shift from old model to new, the transitional period is fraught with instabilities and unforeseen disruptions. Put more plainly, things get “squirrely”.
The good news is that the mere expectation of impending “squirelliness” (okay… I’ve officially used that non-word enough…) is the most important tool in overcoming it.
So as the Internet of Things, the greatest technological and social shift since the adoption of the World Wide Web, gets underway, let’s talk a bit about what we can reasonably expect if we want to find stability and success on the other side. Keep in mind my assertion that the IoT is both a technological and a social shift. As such its pitfalls and dangers will be both technological and social in nature, and the point is not to presume to tell you exactly how to solve these problems. Solutions will arise from the minds of individuals smarter than I, and from the adoption of standards both imposed and de facto which do not yet exist.
A Boeing 777 jet on a transatlantic flight from JFK to Heathrow has four engines, and during that flight each of those engines generates one terabyte of data. It’s admittedly a grand example, but should act as a wake-up call for anyone planning their IoT strategy. Data volumes are going to far exceed anything we’ve ever seen. Not only will “Big Data” immediately become “Massive Data”, but for the full promise of the IoT strategy to come to fruition, there will need to be significant upgrades in infrastructure, broader acceptance of the necessity for a massive data strategy by businesses of all kinds, and major leaps forward in the technologies and protocols used in the storage, transmission and parsing of the coming data flood.The IoT is about nothing if not incredible volumes of data, and those who succeed will be those who begin by investing heavily in a robust massive data strategy.
Embedded in the flood of data discussed above will be all kinds of personally identifiable information (PII). Whether that data is directly present in any given data transmission or obfuscated to some degree, for the IoT to “deliver” to consumers, this PII (or more likely the indirect pointers to it) must be present or IoT devices and services will be unable to provide the highly personalized experiences consumers and businesses will expect. Additionally, demand will more certainly grow for democratized sharing of IoT data in order to deliver “cross-platform” value. For example, the idea of your American market Volvo’s embedded IoT sensors being able to seamlessly find and pay for parking during your weekend trip to Toronto? Please! But it will require data sharing. So, when I ponder the manifold increase in data volume, the high sensitivity of the data within, and the market necessity to allow disparate entities to share data from disparate sources (and in the blink of an eye… did I mention that?), I ask myself whether the level of security currently afforded by today’s protocols and practices can handle it, and I get worried. Very worried.
The shift to recurring revenue was well underway before we all started talking about the IoT, and when we here at Aria look at the myriad services we expect to arise from the wide adoption of IoT technologies we see an even larger wave approaching the shore: a wave of service offerings that lend themselves perfectly to recurring revenue models that we already know are desirable to consumers, businesses and investors.
Taken at face value, that’s great news for a company like ours that offers a platform for managing recurring revenue businesses. But taken to its logical extreme, one must presume that the average consumer paying for 10-20 subscription/recurring services today may very well have a different mindset when that number increases to 100 or more and their ability to effectively manage a personal budget becomes ever more unwieldy. I call this anticipated swing of the pendulum “subscription fatigue”, and believe it will be best mitigated by players who offer means for consolidation of heterogeneous services, services offered by different providers, onto a single monthly bill.
Instead of getting 100 “hits” against my credit or debit card spread arbitrarily across the month, wouldn’t it be cool if I was given the option at the time of signing up for IoT-enabled service number 101 to be able to simply add it as a new line item to a bill I already get on, say, the 15th of every month? Sounds like it might be attractive to many people, and it sounds fairly simple, doesn’t it? But this idea fundamentally challenges the direct relationship consumers have with providers as it necessitates the introduction of an intermediary entity that to some degree must stand between a consumer and a provider, an entity that would essentially be responsible for “floating” monies for some number of days for that consumer each month. This could be quite challenging for many merchants who are understandably very motivated to “own” their own customers, not to mention the intermediaries responsible for this “float” who are assuming some amount of risk themselves. But it is doable, and one need look no further than business models like PayPal or LevelUp to see rudimentary examples of what I’m talking about.
A Fundamentally New Business Paradigm
Okay, here’s the part of this essay where I recognize I’m inviting many readers to believe I might be a little crazy. That’s alright… I’m used to it; but stay with me. If we take all of the (admittedly predictive) assertions I’ve made above, what I personally see coming is a fundamental challenge to the very nature of capitalism and the merchant/customer relationship as we know it.
When you go to the supermarket today and fill up your cart, you are purchasing goods that were provided by a wide array of manufacturers and producers. You pay the cashier at checkout, and at some point the store remits appropriate payment to all of those individual providers. Simple enough, but keep in mind this important fact: The supermarket itself, prior to you walking through its doors, made a whole bunch of decisions beforehand about exactly which producers’ goods to make available to you.
But the IoT’s full promise is centered on the fact that there is an unforeseen and unforeseeable “web” of provider interactions that must be accommodated in order for consumers to see the full value in the connected devices and services enabled by the IoT. Remember my example above of the American-market, IoT-ready Volvo parking in IoT-ready Toronto? In a traditional business partnership model, that example would have only worked if Toronto’s city planners had taken the time to directly or indirectly establish a partnership with Volvo. But what if our example driver was trying to park an Audi instead? Or visiting Montreal instead of Toronto? Is it reasonable to assume that every IoT-ready municipality will pre-establish relationships with every conceivable automobile manufacturer? It’s not, and this example of an interaction between an IoT-enabled car and an IoT-enabled municipal parking system is a simplistic and relatively predictable one. With the IoT, we must begin our planning with the assumption that we cannot foresee every service it will enable, much less the complex web of potential interactions between disparate services that smart people will dream up and that consumers will ultimately demand.
What I’m suggesting here is that there will be a demand for a “bottom up”, more democratized version of capitalism driven by users of services themselves. They will expect an ever-more seamless set of interactions of these services among a host of providers that isn’t encumbered by having to wait for these providers to pre-establish business partnerships in advance. While it may be acceptable in these early days of the IoT for a car buyer to learn in advance the list of municipal parking systems with which a Volvo or an Audi interacts in order to influence their car-buying decision, the infinitely more powerful selling tool is obviously being able to tell that buyer “it works with all of them”. Extremely easy to say, extremely hard to do, and not merely because of its technological challenges (such as the standardization challenge described above). The larger challenge is one of establishing a new extensibility for business partnerships themselves.
There you have it, and while I admit that I am most certainly not 100% prescient on all of the points above, I believe a few core points are absolutely undeniable. No technological shift we have ever witnessed will bring as much disruption with it as the IoT, and those disruptions will run the gamut from the purely technological to the most fundamental ways in which commerce operates and the ways in which humans interact with one another… disequilibrium on every front. The winners in the IoT will be those who have the wisdom to begin their efforts with the adoption of the mantra that they don’t know what they don’t know, and therefore do all they can to prepare themselves technologically and even psychologically for the widest array of possibilities in advance.
– Brendan O’Brien