BEYOND THE IOT The Internet of Experiences will change the way the world operates
Participants in the Internet of Things (IoT) tend to focus on individual smart devices, but the Internet of Experiences aims higher, concentrating on what becomes possible when smart devices work together to create experiences. Earning a piece of the Internet of Experiences requires a higher level of strategic thinking – Experience Thinking – but the returns promise to be higher as well.
In 2013, city officials in Melbourne, Australia, assigned ID numbers and email addresses to each of the city’s more than 70,000 trees. Designers of the city’s Urban Forest Strategy program intended for residents to use the addresses to report issues like disease or dangerous branches. However, residents did more than that: they began writing thousands of messages directly to the trees.
They have written heartfelt notes to individual trees to express their love and admiration, to share their memories and to express their gratitude for protection from the sun and carbon dioxide. Sometimes they ask the trees for their views on current events, or write simply to say hello or apologize for their dog’s choice of a urinal.
Occasionally, officials respond to emails on behalf of the trees. One day soon, however, Melbourne’s trees – fitted with an array of sensors and connected to low-cost wireless communications – could truly speak for themselves, sharing a wealth of data: temperature, humidity, noise levels, carbon dioxide concentrations, glucose levels and motion readings. Such data can be used to preserve and protect the health of urban forests, which play a vital role in improving air and water quality, reducing stormwater runoff, lowering urban ground temperatures, reducing energy use and mitigating greenhouse gas emissions.
Such is the power of the Internet of Things (IoT), a wave of innovation in which billions of everyday objects – not just trees, but trash cans, lampposts, parking spots, traffic signals, roadways, hospital equipment, appliances, manufacturing lines, crops in the field and much, much more – are being equipped with sensors, processors and communication devices to share valuable data across the Internet and, in some cases, to act on it.
At its most basic level, the IoT offers an affordable means to understand and manage real-world things from a distance while giving some things – a thermostat, for example – the data and capabilities they need to manage themselves. As the people of Melbourne have shown, however, once the things in the IoT are connected and given a voice, they become more than just “things.” They become part of a living experience shaped by interactions among people, places and objects, among product, nature and life. They become contributors to what beckons just beyond the IoT: the Internet of Experiences.
While participants in the IoT tend to focus on “things” – the individual smart devices connected to a network – the Internet of Experiences aims higher, concentrating on what becomes possible when smart devices piggyback off one another’s capabilities to create experiences: innovative services that simplify and enhance daily life in ways never possible before. Enabling a tree, for example, to report, “I’m being attacked by caterpillars,” which prompts a computer to dispatch a drone equipped to treat the situation. Or a highway to report, “I’ve reached my carrying capacity,” which prompts the rerouting of automobiles onto alternate routes.
Such capabilities, however, only become possible when the maker of one device imagines, anticipates and virtually simulates how it can leverage the capabilities of devices made by others to improve the user’s experience. The trick, experience experts say, is to put the user at the center of the solution’s reason for being, which is the essence of the Experience Economy.
“We have moved from a purely transaction-based, commodities economy to one based on goods, then services, and now experiences – meaningful experiences in a purpose-based economy,” said Albert Boswijk, a co-author of Economy of Experiences and founder and managing director of the European Centre for the Experience and Transformation Economy. “The digitization of products and services is happening so fast that it’s difficult for us as human beings to make sense of it all. But, rest assured, this digital transformation will change the impact and depth of personal experience.”
“REST ASSURED, THIS DIGITAL TRANSFORMATION WILL CHANGE THE IMPACT AND DEPTH OF PERSONAL EXPERIENCE.”CO-AUTHOR OF ECONOMY OF EXPERIENCES AND FOUNDER AND MANAGING DIRECTOR OF THE EUROPEAN CENTRE FOR THE EXPERIENCE AND TRANSFORMATION ECONOMY
Against this backdrop, Boswijk said, the IoT is a means to an end. “The Internet of Things enables the digitalization of experiences, and everything that can be digitalized can be personalized. This is key, as every experience is by definition personal.”
While giants such as Amazon and Netflix have benefited from the personalization that digitization enables – recommendations of other books or movies a customer might like based on past selections, for example – the sensor-laden world of the IoT greatly expands the behavioral and contextual data available to shape and deliver personalized experiences. By enabling their devices to share data with other devices on the network (with the user’s permission, of course), and to evolve as the user’s needs and wants change, organizations that aspire to the Internet of Experiences greatly enrich the value they can deliver.
Consider, for example, personal health and well-being devices like the Smart Body Analyzer from Withings (Issy-les-Moulineaux, France). It can detect a user’s weight, fat mass, body mass index and heart rate, capture room temperature and display air quality, including carbon dioxide levels. Significantly, it can share this data not only with the user and their Withings smartphone app, but with other apps that the user may turn to for weight loss management, fitness tracking, food logging or fertility and pregnancy tracking. The result is the ability to deliver individualized monitoring, goals, tips and coaching to help users reach their personal objectives.
Put those capabilities together with a smart refrigerator, however, and the weight-loss management app could remind the late-night snacker (with a message displayed on the refrigerator door when he grasps the handle) that he has reached his calorie limit for the day. Pair both with a smart exercise bike and he could receive a text message proposing an apple for 15 minutes of pedaling.
Noted experience author and lecturer Joe Pine, who coined the term “the Experience Economy” with his co-author, James Gilmore, sees in this personalization the potential for the Internet of Experiences to bring consumers closer to a Market of One.
“The key aspect of your customer, the one who pays you and whom you’ve placed at the center of everything you do, is the word ‘one,’” Pine said. “It’s the individual customer you need to engage. It’s not a market. It’s not a segment. It’s not a niche. It’s an individual, living breathing customer.”
In an economy of endless choice, he adds, “it’s the individual relationship you have with that individual customer that is the only lasting competitive advantage you’re going to have.”
Companies that design for the Internet of Experiences also think not only about what their device can deliver today, but how it can evolve. In the Internet of Experiences, conventional physical products are mere “delivery vehicles,” or conduits, for ever-evolving experiences. This transformation is already evident as, increasingly, new or upgraded products arrive in consumers’ homes virtually, in the form of ongoing software updates to devices they already own.
When DJI, a drone-maker headquartered in Shenzhen, China, decided to make its drones easier and safer to fly, hoping to attract more novice users, it didn’t design and release a new product; it issued a software update that added new flight modes to existing drones. It even transformed the built-in 1920 x 1080 pixel camera on one model into a 2704 x 1520 pixel camera via a software update alone.
Withings took a software update path, too, transforming its Pulse pedometer into a new product, Pulse Ox, which improves on the original product by capturing blood oxygen levels, providing automatic wake-up detection, and working not only in English but in five other languages as well. Likewise, home-automation company Nest (Palo Alto, California) used software-only updates in its third-generation Nest Learning thermostat to give customers the option to set the device to display either temperature or an analog or digital clock. Thanks to software integration, these updated Nest thermostats can now send alerts or shut off the heating system if a Nest Protect smoke alarm detects smoke or carbon monoxide.
Arguably, however, no company has mastered the art of product and experience transformation through software updates more than Tesla Motors. When Tesla (Palo Alto, California) decided to add a “crawl” feature, allowing drivers to ease into slow cruise control in heavy traffic, it issued an over-the-air software release that added the feature at once to the entire fleet of existing Tesla cars.
Previous enhancements delivered via software update include automatic emergency braking, forward- and side-collision warnings and avoidance, traffic-based navigation, commute advice, range assurance to reduce the risk of being out of range of a charging device, and a remote-start capability via smartphone.
With its next major software update, Tesla plans to add “Autosteer,” essentially transforming the Model S sedan from a smart car into a self-driving car, including a valet “Autopark” feature that lets customers summon their cars from their parking spots via smartphone.
As the company states on its blog, “Model S actually improves while you sleep. When you wake up, added functionality, enhanced performance and improved user experience make you feel like you are driving a new car. We want to improve cars in ways most people didn’t imagine possible.”
Tesla’s approach demonstrates that, done well, the Internet of Experiences should make once-complex offerings and activities technologically simple, easy and convenient. Behind the scenes, however, blending products, services, software, content, technology, cloud and data into an experience within the multidirectional hyper-connected world of the Internet of Experiences remains a complex undertaking.
Consider, for example, Nest’s smart thermostat. A Nest “learning” thermostat creates an experience by sensing and then automatically adapting to a homeowner’s daily rhythms and personal preferences to make their home safe and comfortable – no programming required. Under the hood, the thermostat is a complex system of sensors, software, processors, circuit boards, communication devices, energy sources, frames, wiring and display monitors. Each of these elements is produced by engineers working in different disciplines, yet they all need to work in sync with one another and with quality technicians, sales and marketing professionals to produce the behavior – the experience – that will delight the customer.
The average 2014 revenue gain reported by the top 8% of IoT market leaders, with nearly a 16% average for all other companies investing in IoT, according to Tata Consultancy Services.
The device itself is complex, but it doesn’t operate in a vacuum. To deliver maximum value, such thermostats are being integrated into larger smart home control systems – which may or may not be produced by Nest. Therefore, it must operate not only as a stand-alone system made up of complex subsystems but be capable of operating within a much larger “system of systems,” from a smart home system to a smart local electrical grid system, to a smart regional, national or continental electrical grid system.
“An important fact to remember about the IoT is that things talk to other things,” Pine said. “One day, I’ll turn off my alarm clock when I wake up and it’ll signal the house to warm up downstairs and tell my coffee maker to get my coffee on, and maybe my coffee pot will tell my car to heat up because it’s a cold day here in Minnesota. Customers will be able to design an entire environment for their ideal living experience. Companies need to think about how their experience integrates into such larger, holistic experiences.”
Strategies for addressing such dependencies and complexities are the domain of systems engineering, a collaborative, interdisciplinary approach to designing, realizing and managing complex systems that interact to produce behavior no individual element of the system can (see “Mind-Boggling Complexity”). “The Internet of Things is all about the ubiquity of being connected,” said John Blyler, an adjunct assistant professor of systems engineering at Portland State University, editorial director of “IOT Embedded Systems,” and co-author of the forthcoming book Systems Engineering Management with Benjamin Blanchard, emeritus professor of Industrial and Systems Engineering at Virginia Polytechnic Institute and State University. “Connectivity is going to cross disciplines. Having everything connected means a lot of our silos are going to have to come down. Proper systems engineering dictates that diverse teams are going to have to come together to make a company’s IoT strategy work.”
“HAVING EVERYTHING CONNECTED MEANS A LOT OF OUR SILOS ARE GOING TO HAVE TO COME DOWN.”EDITORIAL DIRECTOR, “IOT EMBEDDED SYSTEMS”
The challenge becomes even bigger when these complex systems become part of the largest system of systems ever created: an ultra-large-scale system (ULSS) known as the IoT, which will incorporate devices from hundreds of thousands of makers, all with differing – even conflicting – objectives and approaches.
“Current engineering practice is ahead of the science,” observes Hillary Sillitto, a fellow of the International Council on Systems Engineering (INCOSE) and author of Architecting Systems: Concepts, Principles and Practice. “We are building systems we do not know how to characterize or analyze, and whose behavior we cannot fully predict.”
As organizations work through the complex business of mastering and making complexity disappear – a critical element of a positive experience – what is most important, Pine believes, is to “keep the customer at the center of their thinking, and to remember they are not producing things for an Internet of Things, but creating living, evolving experiences within an Internet of Experiences.”
Back in Melbourne, Green Leaf Elm, Tree ID 1022165 and citizen “F” are building a relationship that honors this distinction. Once upon a time, “F” might have simply walked by Tree 1022165. But now, Tree 1022165 and “F” are connected. As “F” writes, “we don’t have a lot in common, you being a tree and such. But I’m glad we’re in this together.”
IOT BY THE NUMBERS
Analysts estimate that between 6 billion and 14 billion things (excluding smartphones, tablets, computers and similar devices) are already connected to the Internet or to private networks. By 2020, depending on who is doing the forecasting, they project that between 18 billion and 50 billion things will be connected and that the IoT could become a market worth between US$300 billion and US$1.7 trillion worldwide – or more.
Worldwide, smart and connected things are already reshaping hospitals, homes, offices, factories, farm fields, transportation networks and energy grids. In its 2015 report “Internet of Things: The Complete Reimaginative Force,” Tata Consultancy Services surveyed 3,764 executives and found that 79% already use IoT technologies to track customers, products, locations where they do business or their supply chains. In the business units involved in their IoT initiatives, those companies surveyed reported an average revenue increase of 16% in 2014, while those that Tata identifies as “best-practice” companies reaped an average 64% revenue gain.
What sets the best-practice companies apart from the followers? While the study identified seven characteristics in total, leaders emphasized placing the customer and the value delivered to that customer at the center of their initiatives. According to the report, leaders who adopt the IoT early “are more likely to digitally reimagine their businesses and produce substantial value for customers – not just value for themselves.”
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