(Image from Serious Wheels)
Once upon a time, Henry Ford famously summed up the golden age of brand and producer power by saying: “Any customer can have a car painted any color that he wants so long as it is black.” In the second half of the 20th century he might have chosen his words more diplomatically: “in precisely which paisley trim would Madam like the dashboard re-upholstered?” We moved from the seller’s market economist J.K. Galbraith once described as “a world in which people increasingly served the convenience of organizations which were meant to serve them” to a period of unparalleled consumer control.
In media terms, this represented a shift from an era of what we might call Brand Voice, powered by industrial mass media, to one of Consumer Voice, characterized by higher disposable incomes, the Web and social media. The Internet of Things – physical objects becoming part of the Web – means that we’re entering a third age of Product Voice.
For the first time, products can talk directly to people and systems along the supply chain, while data talks back to the brand with real-time analytics, letting them know who their customers are, what they engage with and how interaction drives sales. A product can tell you what and where it is, how and how much it is being used and allows its authenticity to be verified. Consumers can ‘friend’ their stuff for personalized digital services and experiences, while businesses can ‘follow’ products in real-time from factory floor, to high street to living room. In other words, products are becoming dynamic, web-connected intelligent objects – and they get to have a say in how they are made, sold and used.
(Image from Serious Wheels)
Brands came of age in an era of industrial information. At the end of 19th century, the same new technologies that had industrialized the economy, allowing the likes of the Henry Ford to mass produce and mass distribute for mass markets, also shaped the media industries like movie studios and publishing houses. These media corporations were also built with large capital investments in technology infrastructure to allow their cultural goods – newspapers, TV and radio shows, movies – to be mass manufactured, communicated and consumed like Model T Fords. These were factories of cultural content rather than cars, but the media products rolled off industrial production lines in an equivalent way.
Brands were the only ones who had a Voice and household names like Coca Cola and American Express or Singer sewing machines were built telling people what to think and buy using high reach industrial media like national print, radio and broadcast TV. Given the mass reach of media in 1971, Coca Cola really did “teach the world to sing” or at least a large part of it. Their advertising jingle became a top ten hit in the US and UK music charts and is still one of the best selling singles of all time with over 75 different cover versions around the world.
(Image from Amazon)
Around the time Henry was expressing his views on the model T, future retail king Sam was born near Kingfisher, Oklahoma to Thomas and Nancy Lee Walton. The founder of Wal-Mart, the world’s second largest corporation by revenue, succinctly encapsulated this radically altered thinking about consumerism when he later said: “There’s only one boss: the customer. And he can fire everyone in the company from the Chairman on down, simply by spending his money somewhere else.”
Disposable incomes for UK and US households rose five fold in the last sixty years, which powered the creation of our modern consumer society. As individual buying power increased, consumers had much greater influence over the range, price and individuality of products on offer. When people have more cash, their needs move from necessities to luxuries – this creates more choices to cater for shoppers with wide ranging tastes and the money to indulge them. Then just when consumers had never had it so good, the Web handed them an unprecedented degree of information access and control, including price and product comparison, and social media let them form communities with the power to judge, reject, embrace and endorse the brands in their world.
Today, powered by smart cloud software, products use data feedback to personalize and optimize performance over time. They can act as brand-owned digital media assets delivering direct transactions and individualized consumer experiences. Internet of Things technologies mean that physical goods can come with a digital layer of real-time, interactive services, using data to personalize and improve the consumer experience and supply chain operations over time. They are stickier, more differentiated and create new revenue opportunities from subscription or usage-based services.
For instance, Rolls Royce has turned its jet engine product into a service. Thousands of sensors in the engines feed data into proprietary algorithms, which then monitor, diagnose and make predictive recommendations to optimize aircraft maintenance and flight operations. This lets their customers subscribe to jet engine capacity based on usage (think how Amazon sells cloud services).
Similarly, our customer Gooee is using the EVRYTHNG IoT platform to sell lighting as a service.
Gooee’s LED light engines not only manage energy usage and lower maintenance costs, they also contain motion and CO2 sensors. This means a connected lighting company can also sell energy management, retail traffic monitoring, security system and fire alarm services. Given the many kinds of data a sensor-packed ‘endpoint’ could gather and manage between business, environment, customer and product, emitting light will be just one of a smart bulb’s valuable qualities.
Another shift is that physical products, constructed in a particular size and shape, never change until you change the product itself, but once it’s connected the digital capability that comes with the product behaves very differently. A connected product uses networked data to keep improving features and performance regardless of physical limitations. In other words, a growing proportion of features, capabilities and value exist outside of the product.
As an example, new connected home products like Wireless Hi-Fi Sonos self-update with new functionality and performance so the product gets better after you’ve bought it with new features and music services. Consumer expectations will start changing fast: whereas traditional products degrade over time, you can expect a smart product to get better the more you use it. After all, my Gmail gives me increased storage and new features over time, so why does my PC gets slower and my TV become last year’s model? One question all product manufacturers should start asking is: how can connectivity and intelligence in my products allow me to compete on self-improving features.
(Image from Big Ass Fans)
In the 20th century we needed instruction manuals to understand how to use a product because the product lacked the ability to think of itself or access and process information to learn. In the 21st century rather than customer adapting to product, product will adapt to customer. We can expect the products we use to learn our needs, personalize to our preferences and adjust to our behaviors over time. For example, connected sensors in (the magnificently named) Big Ass ceiling fans know when you walk in the room and self-regulate based on temperature and humidity, and your programmed settings.
People’s lives are surrounded by connected interfaces that they use to consume, communicate, transact and experience. Consider the connected car collaboration between Visa, BMW and Pizza Hut. Using a voice-activated Visa Checkout app, drivers can order a pizza on the go for home delivery or Pizza Hut is notified via beacons when you drive into the parking lot so your pizza gets brought to your car. The auto payment system is planned to work for a range of drive-through retail products and service scenarios, from filling up the car at the gas station to parking or picking up the dry cleaning.
Smart product businesses see the greatest potential by plugging in to an ecosystem of apps and devices and sharing data with internal and partner enterprise systems (CRM, ERP, BI) and other clouds (e.g. Homekit, Nest, Smart Things, Wink). The more ecosystem connections your smart product makes, the more value it creates.
(Image from Harbor Research)
Smart, Connected Business
That every business will shift dramatically because of digital technology is certain, that it may be almost unrecognizable is a distinct possibility. Consider that a third of the firms listed in the 1970 Fortune 500 were acquired, merged, or broken up by 1983; managing how IoT Smart Products drive business value is the Critical Success Factor today. Every CEO looks at the market today and knows that the industry they exist in and the business landscape in which they operate will fundamentally change in the next decade.
Internet of Things connectivity, smart products and the real-time flow of data is at the heart of this digital transformation and business disruption. According to The Economist Intelligence Unit, 75% of C-suite business leaders are actively using or researching IoT opportunities – a third believe it will unlock new revenue opportunities and inspire new working practices. The EIU says that 96% of companies will be using some kind of IoT solutions within the next three years – 20% for business innovation, 26% on improved customer acquisition and experience and 19% on supply chain efficiencies.
We built the EVRYTHNG cloud platform to make products smart for brands by managing all this IoT data flow to, from and about physical things. We wanted to make it easy for brands to use real-time IoT data to build amazing and powerful new applications and experiences, and to connect products to anything else on the Web.
The fact that everything that can be connected will be is inevitable and impacts every industry, which is why the biggest and bravest global brands are embracing IoT technology at scale, creating systems that will transform business models and operations. Smart products, plus the data-driven business operations and processes that surround them, are at the core.
Consultants and designers see the possibilities to create amazing new consumer experiences using product as a personalized, real-time platform for applications, content and services. Renowned Harvard business strategist Michael Porter believes that smart, connected products represent a third wave of competitive advantage from technology that will make or break all businesses.
In other words, now products have a voice. It’s time to listen.