On a January 26th Game Changers Radio show, a panel of Futurists will focus on the Internet of Things (IoT) and its world changing implications. Here are some of my thoughts in advance of that discussion. I’ll start with a quote from Carl Bildt, Chair of the Global Commission on Internet Governance and a member of the World Economic Forum’s Global Agenda Council on Europe:
“Very soon the Internet of Things will become the Infrastructure on which all other infrastructures are based.”
That bold statement supports thinking in some circles that a General Purpose Technology Platform (GPT) is emerging, the foundation of which is The Internet of Things. This emerging GPT likely alters our world more dramatically than the GPTs of the first and second Industrial Revolutions:
The impact of IoT is already felt, and a recent TCS Global Trend Study points to the various areas of investment and impact. But what does IoT mean to our future? First, this is not a traditional discussion about competing on physical products or automating the value chain, but about strategies, smart devices, and platforms. Second, we are talking about a significant economic impact. McKinsey estimates that the Internet of Things has a total potential economic impact of $11 trillion a year by 2025 – or the equivalent of 11 percent of the world economy. McKinsey’s findings identify factories and cities as the greatest areas of impact, with advanced economies capturing a greater share. By McKinsey’s estimates, the potential annual economic impact of IoT in 2025 will be split 38 percent in developing economies and 62 percent in advanced economies. These findings and more can be found in the recent report titled Unlocking the potential of the Internet of Things.
A Mechanism for Change
Humanity will change more in the next 20 years than in the previous 300. There are many factors converging to create this phenomenon, with exponential progression the primary driver. But a key mechanism for this level of change is the Internet of Things. It is the mechanism for re-imagining energy, healthcare, education, cities, logistics, and the centralized nature of our current structures – among other things. There is a growing appreciation that the Internet of Things will enable new business models. But the need to shift from firm-centric thinking to value design within complex ecosystems is not being discussed enough. Value creation and capture in the broadest sense is becoming a collaborative affair that increasingly involves multiple stakeholders.
As Michael Porter stated, the emergence of the internet of things will force companies to make hard strategic choices. He believes that big bets will be made that are profoundly important to the success of a company, things that we never had to think about before. Very appropriate words he uses to describe a real issue – we will be breaking new ground in many cases as we go. This emerging GPT and the transformation it drives will be unlike previous waves that boosted productivity; this wave will change strategies and the structure of industries. For an example of changing strategies, the TCS study referenced earlier identified several ways that the Internet of Things enables new models:
Source: Internet of Things: The Complete Re-imaginative Force, TCS Global Trend Study – July 2015
New Ways of Doing Things
The smart connected world enables new ways of doing things. The Internet of Things is the foundation for many shifts in the next 20 years. The data-insight-foresight continuum changes how we improve performance, educate, re-skill for a new world, shift from treatment to prevention, and many more. For example, augmented-reality devices can be used to teach low-skill or medium-skill workers to perform high-skill tasks. Using electronic glasses, graphics can be placed in the field of vision to provide real-time assistance in making a machine adjustment or repairing industrial robots. Given the critical need for re-skilling in the future, this represents an enabling capability.
Another example is a quantified-self movement in full swing, as analysts estimate that 130 million consumers worldwide use fitness trackers today, moving towards 1.3 billion units in 2025. The data that captures aspects of a person’s daily life allows for self-monitoring and self-sensing, and ultimately helps us make the shift from treatment to prevention.
These small examples of shifts enabled by the Internet of Things create a different discussion about the ability of the Internet to hold up under the weight of IoT. TCS CEO Natarajan Chandrasekaran recently wrote about the importance of governing the internet. He describes how the Internet is being choked by an increasing surge of data traffic. As exponential progression continues unabated, the steep point of the exponential curve drives a data explosion that in many cases flows through antiquated networks. Mr. Chandrasekaran talks about the need to step up next generation infrastructure, including 5G telecom networks and a more assertive move to IPv6 to access the Internet. Whereas recent estimates put us at roughly 10 billion connected devices, estimates point to 50 billion devices by 2020. More than 99 percent of physical objects that may one day join the network are still not connected. That’s a staggering thought.
This emerging general purpose technology platform – anchored by the Internet of Things – will indeed drive massive shifts. We find ourselves at a tipping point in this year of shifts; a point in history that we will someday view as the doorway to a very different future. This multi-year journey of continuous change and constant challenge to existing beliefs, structures, and institutions will have the Internet of Things at its heart.