Some readers might recall that in 1995 I released one of the first e-books published and sold online, The Smart (aka Small) Business Guide to Internet Marketing. Publishing this e-book was a great adventure and was a good experiment in online marketing itself — I didn’t get rich from it, but it did pay the groceries for the Bredenberg family for a few years.
A conversation earlier today with some of the innovation folks at IBM about their Smarter Planet initiative has got me revisiting some research we’ve done at the ILO Institute on a concept know as the “Internet of Things.” The essential idea is that objects in the physical environment around us are increasingly being embedded with networked technology, interacting with the larger network, and creating data. In fact, a video by IBM (shown below) suggests that there already might be more objects connected to the Internet than people.
I first encountered the Internet of Things concept in 2006 working on a report on the future of RFID (radio-frequency identification). RFID is a technology used to embed miniature wireless communications in objects of all kinds, such as packaging, boxes, equipment — even humans and animals. At that time I was in touch with some people working on the Internet of Things concept at MIT.
On a product level, says Murray, each item would be tagged by “a sort of Web page for each item” coded in HTML. “Thus, all products could be identified anywhere, instantly.” Plans include migrating from sticky tags to RFID devices embedded in cardboard cartons during the manufacturing process.
Murray speaks of this emerging Internet of Things in terms of the supply chain. However, the eventual possibilities go far beyond keeping track of products for supply chain management. If miniature Web pages and servers could be embedded in building materials, components of vehicles and aircraft, furniture, appliances, apparel, and other places, this could have huge implications for marketing, communication, and provision of services, not to mention changing the very nature of the world around us.
Wanting some further insights, I had a phone conversation with MIT’s Sanjay Sarma, an RFID expert at MIT. Sarma stressed the impact the Internet of Things will have on business:
MIT’s Sanjay Sarma tells ILO researchers that this Internet of Things is “going to have a huge impact,” and that RFID is one of the key enabling technologies. He points out that RFID creates a greatly increased connection between the physical world and the world of information by connecting more data to physical things and transferring it at much greater speeds in much greater volumes. “We used to connect data to the physical world through keyboards, but there’s only so much data you can get in through the keyboard. But with RFID it’s automatic and it’s happening all the time.”
Sarma says that the Internet of Things will allow you to “have control in your enterprise in a way that is completely unprecedented.” Sarma calls this control “high-resolution management—management with eyes everywhere, as opposed to management by gut reactions and guesswork.”
Earlier this year, we completed a report on how the Smart Grid is likely to affect the shape of the electric utility business in the future. If the smart grid initiative rolls out as anticipated (and utilities are working on this very aggressively right now), the electric grid in the U.S. will be transformed from the traditional century-old dumb one-way transmission utility into what Thomas Friedman has called an “Energy Internet” (see his book Hot, Flat, and Crowded, chapter 12, “The Energy Internet: When IT Meets ET”).
Under the Energy Internet paradigm, networked technologies will be embedded all through the electricity delivery system — in control facilities and substations, in smart meters at homes and businesses, in home appliances that will shut on and off in response to grid conditions, in electric vehicles and their charging systems, in home-based generating systems that will sell electricity back to the grid, and much more that we probably can’t imagine.
Friedman maintains that the smart grid will enable “a great energy transformation.” On page 286 of his book, he outlines what this could mean for utilities companies:
Utilities, instead of limiting their vision from the power plant to your home electricity meter, would be wholly transformed. Their universe would stretch from the generation of clean power on one end right into your home appliances, your car battery, and even the solar panels on your roof. Rather than just being a seller of dumb and dirty electrons, it would be an enabler of this whole smart grid-Energy Internet system. And it would make money from optimizing this system.
In effect, Friedman maintains, smart grid will bring utilities, businesses, and consumers together into an interactive energy market. Taking the reader forward in time, he projects how such a market might function (pages 277-278):
[N]ow that we’ve moved to the Energy Internet – the smart grid – utilities can run your refrigerator or adjust your thermostat in line with when the wind is blowing or the sun is shining. It can match the supply with the demand. Therefore, it can use more of these renewable power sources at much lower cost. When clouds block out the sun or the wind dies down, the utility’s smart grid lowers demand by raising prices (so your SBB [Smart Black Box] decides not to do the laundry then) or by adjusting your home temperature settings. And when the sun is shining brightly and the wind is howling, the utility runs your dryer at the lowest price. So there is now a direct correlation between how smart your grid is, how much energy efficiency it can generate, and how much renewable power it can use.
…. When the smart grid extended into a smart home all the way to a smart car, it created a whole new energy market on the other side of your electric meter. In the old days, there was no market beyond the raw dumb electrons that came into your house. Everything stopped at the meter, and you just paid the price calculated at the end of the month. But once your appliances became smart, and a Smart Black Box was introduced into your house, a market was also created beyond your meter and throughout your home, and, more broadly, inside every factory and business around the country.
How will the Internet of Things, a Smarter Planet, transform the world? My guess would be that what eventually emerges will surprise us all. As humans, our predictions tend to be vastly oversimplified. In our smart-grid report, we wrote,
It is good to remember that 20 years ago, experts were referring to the Internet as an “information superhighway” – not wrong in itself, but a vast oversimplification. How many pundits at that time could have foreseen today’s massive World Wide Web and e-commerce activity – not to mention Google or Facebook?
The implication, then, is that utility companies need to become generators not just of power but of innovation – watching for potential new ventures and business models that will surely arise out of such areas as smart-metering, electric vehicles, and renewables. Utilities need to start now building the organizational capabilities necessary to exploit the opportunities that will emerge in this networked energy marketplace – which means expanding R&D and internal venture funding, establishing entrepreneurial units and innovation teams, and building a new culture of innovation.
For some insights into the Internet of Things concept, I invite you to watch this thought-provoking video from IBM:
Not only has the music group the Grateful Dead created a musical and cultural phenomenon, but as a very successful business, they make a good case study in management.
Green’s article is inspired by the recent announcement that the members of the Grateful Dead would be donating their archives to the University of California at Santa Cruz. UCSC will be using the archives to create extensive publicly-available resources. The institution is currently processing the materials, but you can read about their progress at The Grateful Dead Archive. Initial materials from the archive are on exhibit now through July 4, 2010, at the New-York Historical Society — see “Grateful Dead: Now Playing at the New-York Historical Society.”
Green reviews the curious and controversial history of academic scholarship focused on the Grateful Dead but highlights an interesting truth of the Dead’s story — they were and are a very successful business, and much of that is due to their enlightened focus on providing customer value. Green writes that,
Without intending to—while intending, in fact, to do just the opposite—the band pioneered ideas and practices that were subsequently embraced by corporate America. One was to focus intensely on its most loyal fans. It established a telephone hotline to alert them to its touring schedule ahead of any public announcement, reserved for them some of the best seats in the house, and capped the price of tickets, which the band distributed through its own mail-order house. If you lived in New York and wanted to see a show in Seattle, you didn’t have to travel there to get tickets—and you could get really good tickets, without even camping out. “The Dead were masters of creating and delivering superior customer value,” Barry Barnes, a business professor at the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University, in Florida, told me….
As Barnes and other scholars note, the musicians who constituted the Dead were anything but naive about their business. They incorporated early on, and established a board of directors (with a rotating CEO position) consisting of the band, road crew, and other members of the Dead organization. They founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales. According to Barnes, the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. The Dead became one of the most profitable bands of all time.
With physical goods, there is a direct correlation between scarcity and value. Gold is more valuable than wheat, even though you can’t eat it. While this is not always the case, the situation with information is often precisely the reverse. Most soft goods increase in value as they become more common. Familiarity is an important asset in the world of information. It may often be true that the best way to raise demand for your product is to give it away….
In regard to my own soft product, rock ‘n’ roll songs, there is no question that the band I write them for, the Grateful Dead, has increased its popularity enormously by giving them away. We have been letting people tape our concerts since the early seventies, but instead of reducing the demand for our product, we are now the largest concert draw in America, a fact that is at least in part attributable to the popularity generated by those tapes.
True, I don’t get any royalties on the millions of copies of my songs which have been extracted from concerts, but I see no reason to complain. The fact is, no one but the Grateful Dead can perform a Grateful Dead song, so if you want the experience and not its thin projection, you have to buy a ticket from us. In other words, our intellectual property protection derives from our being the only real-time source of it.
Insights from thinkers like Barlow led me to write my 1995 e-book, The Smart Business Guide to Internet Marketing, one of the first e-books published and sold online (now archived for free at Optimization Marketing). In fact, Barlow was one of the people who bought a copy, although I don’t flatter myself by thinking there was much in it that he hadn’t already thought of.
I think a key insight from the Grateful Dead case study is that a successful business ultimately has to rest on customer relationships. Interactive media and technologies place unprecedented control in the hands of customers, and the smart business these days is the one that realizes that the success of its brand will rest on its customer experience.
In the Atlantic article, Barlow tells Green,
What people today are beginning to realize is what became obvious to us back then—the important correlation is the one between familiarity and value, not scarcity and value. Adam Smith taught that the scarcer you make something, the more valuable it becomes. In the physical world, that works beautifully. But we couldn’t regulate [taping at] our shows, and you can’t online. The Internet doesn’t behave that way. But here’s the thing: if I give my song away to 20 people, and they give it to 20 people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced. That was the value proposition with the Dead.
According to The Wacky Top 40, by Bruce Nash and Allan Zullo, The Kingsmen, who recorded the song in 1963, were surprised to learn that people thought they heard obscene lyrics when listening to the song. The group’s drummer is quoted as saying, “At one time we saw 35 different copies of the lyrics and they were all completely different, depending on what part of the country you were from.”
He says the lyrics were so hard to understand because the lead singer was too far away from the microphone in the recording studio.
According to The Straight Dope, the author of the song, Richard Berry, told an interviewer that the song is meant to be “the lament of a seafaring man, spoken to a sympathetic bartender named Louie.”
One thing I learned from this insider’s perspective on advocating for your dying precious is that writing a letter (or an email) these days will have no more effect than it did in 1965 — and probably even less.
Engler says that even a few thousand written pleas are nothing:
[T]oday EVERY canceled show has a write-in campaign, often accompanied by some clever item… Jericho fans sent peanuts, Lexx fans sent dragonflies, etc. It’s so pervasive that it’s become background noise. People even start write-in campaigns if we change a show’s timeslot, or if an actor leaves a show.
Letter campaigns just won’t make a difference, he says. Interestingly, according to Engler, today’s media environment offers a way to campaign for keeping a show alive — and social media can play a role:
If a show isn’t successful with 900,000 viewers, it’s not going to start working with 950,000 viewers. It’s going to take a few hundred thousand new viewers to make an impact.
The way to do that is to go big. Instead of talking to us, talk to the critics and TV bloggers out there who have the most readers and try to get THEM to talk about the show. Do something so unique that your “save the show” campaign gets covered on the homepage of CNN. Find a way to get Jon Stewart to joke about your campaign on his show. Use tools out there like Twitter and Facebook that let you reach people on a mass scale. If you’re sending letters to the network, send them to your friends too. And send them to your friends’ friends.
But all this has to be done quickly, Engler cautions, because once a show’s cancellation is announced, entropy has already set in — actors and crew get fired, sets get struck.
What really works, Engler thinks, is to be a real fan of the show and advocate for it before trouble starts:
“Save our show” campaigns rarely work in reality, so ideally you don’t want to let it get to that point. You want to get in early with “pre-save” campaigns, because once a show is perceived as needing to be saved, viewers become a lot more reluctant to tune in. The best “save the show” campaign I’ve seen is the one you don’t have to use.
A Thinking Person, a.k.a. Cogit8R 