When it comes to enhancing customer experiences and improving business operations, the future lies in the Internet of Things (IoT).
IoT is the ability to take an analog or physical capability and create a digital version of that experience. For example, the Nest thermostat helps lower energy costs by using sensors and your phone’s location to adjust the temperature when you leave the house. Samsung’s Family Hub refrigerator allows you to order groceries from FreshDirect right from its door.
From a business standpoint, IoT technology allows for smarter, data-driven models that enable higher efficiency and better outcomes. From a consumer standpoint, it can transform the way we think about some of our most routine daily actions. IoT technology requires elements of data science and analytics, product management, and user experience — and because of this, it’s a cross-functional industry with tons of opportunity for growth.
Amazon has long been an IoT trailblazer, on both the consumer-facing and operational sides of the business. Few know this better than John Rossman, a tech-industry veteran and former Amazon executive whose compelling book The Amazon Way (2014) offers insider insight on the leadership principles that make the eCommerce giant excel. In his new book, The Amazon Way on IoT, Rossman dives deep into where the field is headed, with actionable tips for introducing IoT technologies to your business. (Read an exclusive excerpt here.)
We spoke with Rossman, currently the managing director of the global professional services firm Alvarez and Marsal, about how IoT affects businesses, the companies at the IoT forefront, and the essential skills that define this emerging technology.
To learn more about Amazon’s IoT approach, join us January 9 at our Orange County campus or January 10 in Downtown Los Angeles for an intimate chat with Rossman about the IoT principles every leader needs to know.
On a very basic level, what is the Internet of Things?
On the business and society level, the Internet of Things creates new business and service models that integrate and reinvent the way business, services, and capabilities are delivered. It embodies the opportunity to transition from a transactional-based approach to a service- and outcomes-based guarantee.
From a technology standpoint, IoT is the combination of capabilities and technologies that improve cost, performance, suitability, and standards. Those components are sensory and connectivity technology, cloud capabilities, and analytics and machine learning. From a solutions standpoint, IoT is the combination and integration of those capabilities. On the use-case basis, IoT is about creating integrated experiences, digital heartbeats, and digital connections for everyday devices and capabilities that aren’t yet connected.
What are some of the most innovative uses of IoT?
Some really interesting examples are in the areas of worker safety and injury prevention. I’ve worked with companies where sensors are being used to measure the stress and strain that construction workers put on themselves. It allows them to measure and predict when accidents or chronic issues may happen. When there is injury, it’s possible to better reconstruct it, manage the worker’s-compensation aspect, avoid fraud, and investigate the claim.
Other great examples are industrial product companies that create pumps, pressurized containers, or other operating equipment. When you put sensors onto that equipment, you can better predict maintenance issues and take the next step toward evolving the business model. Instead of selling that one pump or air canister, they can provide a bigger-picture service the customer wants. Now the company is managing the delivery of the service and it can transition from a product sale to a subscription revenue model.
What IoT technologies do you think will have the biggest impact on businesses in the next several years?
The technologies that combine sensors and connectivity, then apply machine learning and AI, will reinvent customer experiences and improve operations. Amazon is a great company to look to for examples. The Dash Button — a single-purpose button that lets you reorder a product — is a simplistic but successful example of making it easier for your customer to say, “I need something.” The next evolution is the products that reorder for themselves so the customer doesn’t even have to think about when they need a replenishment order. It’s about the use case and the experience you want to create.
Which companies besides Amazon are leading the way in IoT innovation?
General Electric is a great company to look at. GE is transitioning its business to be a digital services and platform company as well as internally using IoT to think through the next steps in operational effectiveness. It is a world-class organization in terms of operations — it largely invented [the process-improvement methodology] Six Sigma and other great-quality programs, and it’s using sensor-based capabilities and IoT to go to the next level of operational effectiveness.
When it comes to IoT, what’s the biggest opportunity businesses are missing that’s easy to implement on a small scale?
I think it’s around internal operational improvements. It’s like, do you know where your critical inventory is? How do you improve quality within your own operations? Those are the types of operational improvements that IoT can help with. They reduce stress and strain on organizational change.
What roles are user interface (UI) and user experience (UX) designers playing in IoT innovation?
They’re playing a critical role. IoT is really where physical product design and technology UI come together to create one experience. With some devices the user won’t see a screen or digital interface, but the company operating it will in order to use the device’s data, so there’s some UI design involved in that. For example, a set of wind generators that are optimized with sensors and using algorithms to tune their positions to optimize the wind don’t have a user interface. But, the operator of the generators may have visualizations and interfaces to manage remotely. And in some cases, the product itself is going to have a user-facing electronic or screen interface, or a mobile application. One example of that is the alarm company Scout, which is creating a neat set of IoT security devices. Both the devices and the mobile applications are important components of making them easy for customers to use.
What skills should individuals be learning now to prepare themselves and their careers for the future of IoT innovation?
There’s a broad range of skills and disciplines needed to pull off any of these capabilities. There’s the stack of technologies: sensors, connectivity, cloud platform capabilities, and machine learning and analytics. Plus you’ve got product management and use-case development creating integrated scenarios across those technologies. Those teams are able to articulate exactly what problem we want to solve and how that happens across all those solutions. Great project management and communication skills are always essential in these complex endeavors.
What are the biggest takeaways or business strategies that people should learn from how Amazon works with IoT?
At the highest level, it’s that IoT is just another tool for improving the customer experience, driving internal operations, and building new business and service models. Without having a clear answer to “What problem am I trying to solve?” or “What value am I trying to create?” you’re just going to be fiddling with some cool technology. Figuring out where the value is, is always the hardest and most important part of strategy development. What I try to get people oriented to is the broad-based strategies: How do you get going on stuff like this? How do you build enthusiasm and clarity? How do you fight through the resistance of traditions to be able to innovate and create something new?
What advice do you have for people wanting to work in IoT technology? Where should they start?
There are so many different roles you can play. A good place to start is understanding both the scenarios and the component technologies at a high level. From a technology standpoint, you’ll likely pick one of those subsets to focus on — just make sure you understand the whole picture from end to end before you dive in.