Of course, then some whip-smart MBA got hold of it and it became “build a proprietary supply chain and a captive distribution channel and you can earn superior returns on your cost of capital.” Scale, rather than inspiration, became the path to competitive advantage.
As digital technology pervades the physical world, the principles of scale are changing in a profound way. Ordinary people armed with smartphones are becoming hackers, co-creating their experiences with marketers. Products themselves are becoming services. Supply chains are giving way to demand chains. Marketing has changed forever.
The Internet and The Web
I wrote about the difference between the Web and the Internet a while back, but here’s the short version: The Internet is essentially hardware – a patchwork of fiber, frequencies and protocols that link together the world’s computers. The Web, on the other hand, is software that lays on top of the Internet and presents information on a unified standard.
In other words, the Internet delivers connectivity and the Web provides universality. The Internet gave us “walled gardens” like AOL and the Web broke the walls down. The Internet, originally an obscure platform for scientists to share information, tends to be closed. The Web is an open platform.
The short history of digital technology has been an ongoing interplay between these two architectures. Technology usually appears on the scene proprietary and closed, then after some time becomes open and universal. Up till now, these distinctions have been somewhat academic, because they applied mostly to data and media.
The phase we’re entering now promises to be much more exciting
Digital Invades the the Physical World
As computer chips became smaller, cheaper and less power hungry, it became possible to incorporate them into just about anything. In 1999, a young assistant brand manager at Procter and Gamble named Kevin Ashton realized that by implanting RFID chips into products they could revolutionize the supply chain. The Internet of Things was born.
Ashton’s insight, which he laid out in this article, was that having humans input data is incredibly clumsy and inefficient. It’s much better to get information from objects themselves. With cheap sensors, they know where they are, what happens to them, how much energy they use and they can tell us about it.
This video from IBM’s smarter planet initiative shows how technology is giving the earth a “central nervous system.”
However, in a very real sense, the Internet of Things falls short, much like the Internet itself fell short. While it works well for proprietary systems, it needs an open environment to become ubiquitous. For it to have maximum impact, consumers need to be able to use it in an easy and seamless way.
That’s the essence of the Web of Things.
The Four Pillars of the Web of Things
Over the years, I have noticed a fundamental dissonance between visions of the future and the reality that unfolds. We are presented visions of conformists walking orderly, antiseptic halls in silver spandex and end up with piercings, tattoos and Foosball at the office. As technology advances, people seek more control over it to express their individuality.
That’s exactly what’s happening now. While the virtual Web made documents universal, the Web of Things is making machines interoperable and allowing consumers to tap into the Internet of Things. The technology centers on four pillars:
Smartphones: At the center of the Web of Things is our smartphones. We carry around more processing power than the Apollo program employed to put a man on the moon and we are increasingly using it as a universal remote control for our environment.
The phone itself is a sensor platform. Apps like Shazam and Viggle are able to recognize the media you are watching or listening to and serve related content to your smartphone or tablet. Cameras are able to recognize faces and objects and then search for related information while GPS notes our location and that of objects around us.
Most of all, we are using our smartphones to interact with other elements of the Web of Things, like Smart Homes, Smart Cars and Smart Retail,
Smart Homes: New super-efficient chips are putting connectivity everywhere and our home appliances will be as much a part of the Web of Things as our tablets or smartphones. This isn’t a new idea, we’ve been hearing about “refrigerators that order your milk” for years now. However, what’s emerging is profoundly different.
At CES 2012, Motorola showed of their 4Home system, which can sync any device with your smartphone. You can monitor your home through video feeds, control your home security, manage your energy output and preheat the oven from the car. Again, the vision was of technology running everything itself, the reality will be more control for consumers.
The smart home concept is still in its infancy, but with a little imagination we can see the possibility for a multitude of Web of Things mashups for the home. Food packaging that interacts with ovens to set time and temperature, clothing that interacts with washing machines to alert us when we’re about to ruin that new silk blouse and so on.
Smart Cars: Our cars are becoming an integral part of the new Web of Things as well. Ford recently held a developers challenge for its Sync platform and Toyota just showed off their Insect concept car that will be completely integrated with smartphones.
In Japan, McDonald’s is experimenting with a system that will allow for downloading menus and in-car ordering. Ford is also reaching out to medical device makers to collaborate on apps that help diabetics monitor glucose levels (a serious problem behind the wheel) and monitor allergens in the air for asthmatics.
Smart Retail: I’ve written before about the future of retail and it’s clear that the Web of Things is already transforming the shopping experience. Major retailers like Wal-Mart and Target already have apps to help consumers navigate the store. Nieman Marcus just released one that alerts salespeople when a regular customer enters the store and gives them an account history.
My Best Fit does full body scans to suggest the optimal size in various brands. Kraft is experimenting with technology that can suggest what you might want to buy for dinner based on information gleaned from a facial scan. Disney has a mirror that lets kids try on virtual outfits.
Another hotbed of innovation is payments. For example, Starbucks recently inked a deal with Square to implement mobile payments in its stores. Cash registers will soon be the exception rather than the rule. Wherever you look, the Web of Things is turning everyday experiences into a mash-up of data and physical objects.
A Tale of Two Systems
In the former Soviet Union, heating is often centralized. The idea is that, much like the “central nervous system” vision of the Internet of things, heating is something that is best automated. So when it gets colder a thermostat automatically turns up the heat for the whole city, without anybody having to do anything.
It’s a good idea in theory, but in practice it leaves something to be desired. Different buildings trap heat differently, people’s preferences are not the same and it takes a while for a system to generate heat throughout a whole city at once.
The result is that when it gets cold, the heat doesn’t really ratchet up for a few days, by which time the weather has often warmed up. So people are often freezing for a few days and then sweating in 90 degree apartments once the heat ratchets up.
The automated system is somewhat counteracted by the second “central nervous system.” When it gets colder, thousands of people use electric heaters, which are dangerous and inefficient, and when the temperature drops but the heat goes on they open the windows to cool their apartments to a reasonable level.
The moral: People will hack. That’s the beauty of the new Web of Things.
From Push Marketing to Hack Marketing
It used to be that you would research the market to find needs, build a product to address them and then blast out 30 second ads on TV to build demand. Much like Soviet planners, corporate planners would determine what got produced, at what price and for what purpose.
Compare that to what Microsoft did with their Kinect game system. When hackers started taking apart the game system in order to build new things with it, they didn’t call their lawyers, they released a software development kit (SDK) to help them along and offered funding for the best ideas.
Marketers will have to think in terms of SDK’s and API’s as much as GRP’s and CTR’s. Platforms like Sync and entune will be powerful not for the ideas that Ford and Toyota dream up, but for what outside developers and consumers hack together. What used to be the exclusive domain of white coats in research labs is now giving way to an era of open innovation.
Everybody from LEGO to Nike to cosmetics and financial services companies are getting into the act as well, using the Web of Things to co-create products and services with their consumers. A revolution, albeit a quiet one, is at hand.
In the new era of the Web of Things, if you want to build a better mousetrap, you’ll need to ask the mouse.
image credit: tucsoncitizen.com
Greg Satell a consultant who concentrates on media, marketing and innovation. Check out at his site, Digital Tonto and follow him on twitter @digitaltonto