Wednesday, June 24, 2015

Understanding the Value Chain of the Internet of Things

#InternetOfThings Unfortunately, I shall be unable to use my ticket for the Unicom conference in London next week. (Any reasonable offer considered.) So here are some thoughts in absentia.


Many of the popular examples of IoT suggest a fairly conventional data collection and monitoring process, in which internet-enabled "things" send signals to a central point, from where an intelligent response can be mobilized.

For example, a car manufacturer installs devices to monitor car performance. Or a warehouse installs temperature monitoring and control devices into every fridge. Or a healthcare provider implants a device to monitor's the patient's blood sugar.

In some cases, the devices may be programmed to perform certain actions automatically - for example, to adjust the fuel mix or temperature, or administer a dose of insulin - but these actions are ultimately the responsibility of the provider of the device.

Who is the "owner" of this device? Although the driver or the patient may have paid for the device and will want some benefit in return, the device is also serving the purpose of the organization that provided it, which should have a clear business case and cost justification to cover all the direct and indirect costs incurred.

Some marketing experts are seeing the Internet of Things as a way of reasserting control over the consumer. J Walker Smith talks enthusiastically about what he calls the Pivot to Passive.

"The pivot to passive automates activities that consumers used to do themselves, from monitoring, to researching, to reporting, to deciding. The fundamental nature of this pivot is a shift from screens to sensors. Consumers are better able to tailor their experiences, but they do so through less, not more control, relinquishing influence and authority to technologies. In turn, these are the very same technologies with which marketers are regaining control in the marketplace."
J Walker Smith, The Pivot to Passive (pdf) (Market Leader Q3, June 2014) 


More complex situations may introduce greater multi-sidedness. For example, the monitoring devices in the car may also be sending signals to an insurance company, as part of a Pay-As-You-Drive policy.

Here's the challenge. In a multi-sided situation, the business case may only turn positive when you aggregate the benefits across multiple purposes. So the innovation requires a new business model to orchestrate the costs and benefits (and risks) between all the stakeholders. A new business model introduces changes to the value network, and typically involves the creation of some kind of commercial platform.

Many of the most interesting innovations of recent years have been characterized by radical disruption to the value network. If the Internet of Things proves to be as disruptive as many people expect, I expect it to be the network where the most fundamental disruption will take place.
"In our time, things are not even regarded as objects, because their only important quality has become their readiness for use. Today all things are being swept together into a vast network in which their only meaning lies in their being available to serve some end that will itself also be directed towards getting everything under control." 
Heidegger, The Question Concerning Technology



Understanding the Value Chain of the Internet of Things was at the London Kensington Hilton on 2nd July 2015.


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Defeating the Device Paradigm (Oct 2015)

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