Wednesday, March 30, 2016

Internet of Things and Other Disruptive Technology

For this week’s blog assignment, I decided to focus on the McKinsey article titled “Ten IT-Enabled Business Trends for the Decade Ahead.” One trend I found particularly interesting was the emergence of Internet of Things (IoT) technology and its ability to connect processes and systems in an intuitive way. As described in the article, “tiny sensors and actuators, proliferating at astounding rates, are expected to explode in number over the next decade, potentially linking over 50 billion physical entities as costs plummet and networks become more pervasive” (Bughin, Chui, & Manyika, 2013). I wanted to better understand the role of IoT technology and how companies are currently adapting to such a disruptive idea. I ultimately stumbled on Donald Norman’s The Invisible Computer, a seminal literature which aptly illustrates the emergence of IoT. 

In The Invisible Computer, Donald Norman describes the genesis of disruptive technologies and their effect on the industrial landscape. As the author describes, “technological industries [generally] pass through many generations. Most are incremental, offering better technologies for doing the same work within the old paradigm. Some are disruptive, changing the entire course of the industry. Disruptive, revolutionary changes are the ones that change people's lives, and these are the changes most difficult for companies to cope with (Norman, 1998)” In this context, companies often fail to fully comprehend the threat posed by disruptive technologies--a failure reflected in diminishing profitability and diminishing market shares.

In relation, Norman describes a number of “relevant factors” that cause companies to casually ignore these technological shifts. These include (i) initial product inferiority, (ii) initial issues with scale (i.e., size of the market), (iii) the time value of money related to investment, (iv) the shortsightedness of financial markets and company executives, (v) cross-division cooperation within the company (i.e., cooperation required to make the product or technology “work”), and (vi) “a gravity well...exerted by the existing product stream (Norman, 1998).”

The author then relates these relevant factors and general corporate hesitance to the current acceptance (or non-acceptance) of information appliances (i.e., “enchanted objects”). Indeed, companies taking note of these technological shifts have positioned themselves well to leverage the coming IoT revolution. That is, “information appliances offer ease of use, convenience, and simplicity. They offer to simplify life. Although expensive and limited in power today, with time they will improve in performance and decrease in cost. They will become more effective. And when there is a variety available that can communicate with one another, their power will grow rapidly (Norman, 1998).” And once that power grows, so will profitability.

Companies like Google, Apple, and Amazon continue mapping new and disruptive technologies and they have made significant headway into the Internet of Things. These technologies are “on their way,” and once they achieve full capacity and full consumer acceptance, companies like these will claim even greater market share (Norman, 1998). In relation, “there is a huge chasm between people who first buy a product just because it's a new technology and the vast majority of folks who wait until it helps them in their lives. Technology companies sell to that first group; successful companies [(like those above)] learn how to sell to that second group (Norman, 1998).”

Sources

Bughin, J., Chui, M., & Manyika, J. (2013). Ten IT-Enabled Business Trends for the Decade Ahead. McKinsey Quarterly. Retrieved from https://docs.google.com/document/d/1L-enW6kPrNImCh1adYNNTwaPKHCAFQ6ah-yo8OOUn8w/edit

Norman, D.A. (1998). The Invisible Computer. MIT Press, Cambridge, MA, USA.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.