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November 2015

State of the Industrial Internet - Part II

In my last post from Web Summit I discussed the advances in technology that is enabling the Industrial Internet and the financial benefits. The Industrial Internet will provide quality of life benefits for society as well. The Industrial Internet is enabling services to be delivered faster, and with less waste and pollution. The Industrial Internet is capable of impacting our lives in multiple dimensions including financial and environmental.

One of the concerns is will the Industrial Internet displace people. Dr. Salvo believes that the Industrial Internet will enable the expansion of opportunity for people. The Industrial Internet will allow devices to replace and eliminate many of the tasks done by humans today, but it will create new opportunities that were not possible previously. For example when was the last time you didn’t use a digital mapping application to decide how to get to a new address? Even for familiar addresses many people use an application like Waze to make sure they take the fastest route when considering current traffic, and construction detours. The more users and vehicles using the system the better the service which reduces travel time, and wasted fuel.

We then discussed the differences in how the Industrial Internet is being developed compared to previous major technology developments such as cloud. The Industrial Internet is integrated across so many industries and IICIndustryMemberstechnologies it will not be developed by one company but by a combination of private, public, and universities working together. These groups need to be able to openly collaborate together in a transparent manner which has led to the formation of several consortium's. The Industrial Internet Consortium (IIC) is one example. It was founded a little of one year ago and has grown to over 200 public, private, and universities in 28 countries.  

TBComponentsEMC’s Said Tabet highlighted one of the most successful projects sponsored by the IIC is the test bed program. EMC has teamed with Vodafone, and the Cork Institute of Technology (CIT) to sponsor one of these in Ireland. The test bed is a set of infrastructure services (cloud if you like) that is open to developers to prototype Industrial Internet services. The test bed provides a developer with a set of easily accessible building block components needed to get started with a prototype. More information in the Infinite Test Bed service including getting access is available here.

The Industrial Internet is here and the benefits are accelerating beyond just financial but to society as well through reduced pollution, and speed of service delivery. The Industry Internet is enabling new opportunities that we are now just starting to imagine. The Industrial Internet opportunity is so big and evolving so quickly it is requiring more collaboration between private, public, and universities. It has never been easier to participate through consortium's such as the IIC. How are you engaging in the development of the Industrial Internet?


State of the Industrial Internet - Part 1

This week I had the opportunity to host a panel on the state of the Industrial Internet at Web Summit. My two panelists were Said Tabet from EMC and Joe Salvo from GE. They are both heavily involved in the development of the IoT industry through their work on standards bodies, industry consortiums, and their roles at EMC and GE respectively. I will document the key points of our discussion in the next two posts.

The Internet of Things (IoT) was one of the top subjects at Web Summit this year. The commercial application of IoT in particular it will bring massive cost reductions from many small efficiency improvements in jet engine, and power generation efficiency improvements that will add up to trillions of dollars of cost reduction and quality of life improvements.

We started out the discussion with Dr. Salvo explaining the difference between IoT and the Industrial Internet. Essentially IoT originated from RFID and is primarily the network connection of single purpose sensors. The Industrial Internet is focused on the connection of intelligent devices where there is local intelligence on the device. The connectivity allows the individual device to leverage the intelligence of the rest of the devices to be smarter. For example an aircraft engine is now capturing data, analyzing it, and making near real time adjustments to maximize its performance. When the engine is connected to the Industrial Internet it is able to take advantage of entire community of engines to improve it’s efficiency and proactively plan adjustments based on things like weather condition data available via the Industrial Internet. 

Several recent technology advances are enabling the exploding growth of the Industrial Internet. The easy availability of ubiquitous compute through cloud computing. This has fueled the explosion in the collection, and processing of data across the globe and the rapid expansion in new software development. New analytics technologies (i.e. Spark, Splunk!) have emerged that are optimized to analyze streams of data in near real time as well as analyze massive stores of data to make better predictive decisions. Finally the cost reduction in sensors for a few pennies has allowed a massive number to be deployed with each device. For example, each GE Wind Turbine deployed today has several thousand sensors embedded. The more sensors deployed mean more data, and the more intelligent the device. The more intelligent the device the more efficient it will operate, enabling many small operating cost savings that will add up to millions of dollars a year.

The Industrial Internet has arrived. The cost savings, and quality of life benefits are being realized today. Consumers are being conditioned to expect functionality that can only be delivered by making devices smarter and more self aware to optimize themselves and able to participate in the Industrial Internet to contribute and leverage the collective knowledge of the larger community. In my next post I will review the societal impacts of the Industrial Internet.


Innovation Challenges

Innovation challenges at big companies was the topic of today’s CxO roundtable discussion at Web Summit. As we are transitioning rapidly to the Digital Economy, Innovation has never been more important and big companies are investing heavily.

Our group had senior leadership from startups through some of the largest companies in the world. We discussed some of the challenges Innovation leaders at big companies are struggling with today. We discussed four challenges and brainstormed solutions.

The first challenge we tackled was the natural defenses companies have in place to protect the status quo. Larger companies have often gotten large by being extremely efficient at producing and delivering their products and services. Innovation most often does not occur in a linear manner, which can trigger the protection defenses of efficient production and delivery. The most common solution was to separate the innovation resources from their production responsibilities. This was seen as the best way to protect the continued production and delivery. We did agree that production resources be able to transition in and out of innovation projects since they would bring unique experience to an innovation project team.

The second challenge we discussed is determining how to prioritize your Innovation investment. We settled on the analogy of a mutual fund manager managing a portfolio of stocks, and bonds based on the defined risk of the fund. A company’s innovation investment needs to be managed similarly. This assumes your company understands its risk tolerance and is honest with its expected return and success rate. As with financial investments high-risk projects most likely have a higher payback but lower success rates. The opposite is true as well, lower risk projects typically have lower payback and higher success rates. It is critical to understand the risk-reward of your innovation portfolio to set expectations with the business leaders that invest in your portfolio. Establishing a trusted relationship with your Innovation investors is critical to long term success and continued investment.

The third challenge we discussed is managing innovation projects. Innovation projects tend not to progress like other business projects. We used this taxonomy for our discussion.

Taxonomy

GoldengooseFor projects in leveraging existing technology and familiar customer markets quadrant those projects should be expected to progress predictably. For projects in the quadrants further out to the right those projects will need to be managed differently and they will not likely progress as predictably. These far out to the right projects tends to be the most challenging for a business to support. Having an appropriate mix of projects across all four quadrants is critical to the long-term success of the business. It is critical the business understand your Innovation project portfolio and specifically those golden egg projects that will need support from outside your traditional business lines.

The forth challenge discussed was inspiring innovation ideation in a large company. You do we encourage the hundreds and thousands of our employee’s to bring forth new idea’s. We agreed there were three key components that need to exist:

  • Time and resources to explore and develop idea’s
  • Belief the best idea’s would be incubated and developed into projects
  • Reward & Recognition

Many organizations say they encourage employee’s to dedicate time and provide resources to develop ideas. Many companies reference the Google 20% of time for innovation policy but it was clear from our discussion the culture of the company was more critical and management plays a key role in encouraging this investment. Rewarding employees not just for the successes but the failed attempts that often lead to the future successes.

These are not the only innovation challenges leaders at big companies are dealing with today but these are critical for successful innovation: incubation, managing expectations, efficient management of a spectrum of projects, and engaging all the companies employee’s to fill the ideation funnel are critical.