Connected devices are definitely the things of the future, but when it comes to adoption and use, some industries are much further ahead than others.
According to IDC, companies in manufacturing and logistics top the connectivity spending list because they have direct connections between device data and business results on things like delivery times, product quality, predictive maintenance, and customer satisfaction.
These industries lead the way for Internet of Things (IoT) adoption and show what can be achieved when we connect people, processes, and things.
Here are some examples of how I believe businesses can use IoT to provide real-time visibility and drive informed decisions.
Planning before implementation
Most business leaders understand they need some sort of IoT initiative to stay relevant and beat competitors, but many are falling short in the planning stage.
It’s important to take the time at the beginning to really define how IoT can support your business goals and where it can potentially provide the most value from production to engagement with customers. Looking at business issues or challenges is always a good way to start – fixing or enhancing something that is not working well is often the best way to get internal support for change.
Also, using a design-thinking approach is a very effective way to figure out new methods to produce tangible business value. Your IoT plan should address topics like IoT security, streaming data capabilities, which IoT platform works best for your business, and what IoT-related applications, cloud solutions, or data management technologies make sense for your company.
Connecting people: talent matters
You also have to think about your people. Without the right development and training, IoT efforts can be tough to implement. Employees need to be trained on the collection of data, as well as the proper analysis of relevant information. Each step is important when it comes to tying IoT and business-process data together.
It may also make sense to look outside your organization to find the right skill sets to manage your IoT technology and data. Data scientists are becoming highly sought after in all industries. According to strategy firm McKinsey, global demand for data scientists is projected to exceed supply by more than 50% by 2018. These individuals are especially poised to draw actionable insights from the huge volumes of data produced by IoT.
Putting connected assets to work
Many companies have invested a considerable amount of money in smart devices and new technology solutions. Unfortunately, many of these solutions are unrelated and function independently of one another. This does not hold a lot of promise for IoT and certainly does not allow for the connection of things and business processes.
Instead, data must be shared. Information from sensors in a manufacturing setting can help plant managers monitor production and adjust processes in real time so that quality remains high, production and assets are optimized, and customers get the best products. Digital manufacturing insights tools can also help bridge the gap and ensure all systems are operating in alignment. Having technology work together leads to better business outcomes and potential marketplace innovations.
Executive buy-in: embracing an IoT culture
As I mentioned before, realizing the value from IoT will require a change in company culture. Just as devices are becoming connected, previously siloed departments must be connected as well – individuals and departments cannot operate in a vacuum. The good news is IoT inspires collaboration. Data is collected from many different sources, affecting every part of business operations. It’s important that this type of collaboration starts at the C-suite level to facilitate the change that is required across the organization. Demonstrating effective use cases is vital to C-level buy-in.
Selecting the right platform and applications
Not every IoT platform or application will work for every company. It’s really important to examine all the options and understand the fit and benefits for your organization. When considering IoT applications, technology must be able to capture, collect, interpret, and act on vast amounts of information – detecting connectivity gaps, handling interruptions, and meeting specific business and industry requirements.
IoT data management technologies are great for ensuring that the right data is collected at the right time, even when connectivity is interrupted. Take a look at your organization’s needs and work with different team members to make sure that whatever IoT platform you choose works for your business.
Many predict that the size of the digital market will double every two years; therefore, to ensure that no analyzed data or valuable insights get lost, it’s important to put in place a system that streamlines the process from collection to action. Ultimately, this ability to connect IoT with people, processes, and things will enable companies to really see the benefits of digital innovation.
Well, it’s that time of year again. Holiday decorations are everywhere you look. Starbucks is serving its drinks in festive red cups. And shoppers are gearing up for huge Black Friday and Cyber Monday sales.
Of course, if you drew the short straw like me this year, none of that matters. This Thanksgiving, while everyone else is out having a good time spreading and basking in holiday cheer, you’ll be spending your day in the kitchen.
But what if you didn’t have to? What if you and your guests could spend the day out and about while your turkey cooked itself? Imagine setting the bird in the oven, monitoring its progress, and even having it baste itself, all while you and your loved ones enjoyed one another’s company.
Not only would this eliminate unnecessary stress and increase your enjoyment of Thanksgiving, it would help ensure you cook the tastiest turkey.
Connected cooking through kitchen automation
If you’ve ever watched Star Trek, you’ve likely seen the food materializer. If not, here’s how it works: You simply press a button, and food magically appears in front of your very eyes – cooked and ready to eat. That’s how easy cooking should be.
Although we’re a few years away from an instant-order kitchen like this, technology does exist that can help simplify the meal-making process.
If you’ve ever prepared Thanksgiving dinner, you know it takes time. There’s prep work to do. You have to cut the vegetables. You have to make the stuffing. You have to put out the cranberry sauce.
But none of that compares to the constant monitoring your meal requires. You need to time everything just right. You need a plan for when to put things in and take things out of the oven. You need to remember to baste the turkey every 20 minutes. You need to keep an eye on the temperature of the oven so your turkey turns that perfect golden brown color. Frankly, it’s exhausting, and it really takes away from the excitement of your holiday.
With innovations in connected cooking, your meal can cook itself. Once you’ve completed your prep work, just pop your turkey and vegetables into the oven, place your cranberries and potatoes on the stove, adjust the cooking settings on your mobile device, and your work is essentially done. Smart basting tools, self-stirring pots, video-streaming capabilities, and auto-off push notifications all work together to let you actually enjoy your holiday.
Three ways innovations help in the kitchen
Technology is ushering in a brand-new age of cooking. In today’s modern world, the latest innovations will revolutionize what you can do in the kitchen by:
Increasing the uptime of your appliances: If your appliances are smart enough to cook your food, they’re smart enough to tell you when they’re going to break. The same self-awareness capabilities that help factory machinery predict downtime could be used to help your major household appliances predict when a failure is going to occur and provide you with the best options for repair.
Giving you a:
Set-it-and-forget-it option: With a smart kitchen, even the world’s worst chef can prepare a delicious meal. Food packaging now comes printed with scannable QR codes that allow you to auto-program oven settings and times. So you can pop your food into the oven and not even bother to check on it; it’ll come out perfectly every time.
Sending you regular cooking updates: Running behind schedule? Fear not. Just have your oven send a text message directly to you and all your guests to let everyone know there’s still 15 minutes left until dinner That way, you can continue talking to your guests instead of constantly running back and forth to the kitchen to check on the food.
The convenience of connected cooking
I’ve seen many articles recently that question whether connected gadgets are truly necessary. Between security concerns and other issues, I understand why people would be skeptical. But when it comes to pure convenience, connected devices can’t be beat.
The ultimate dream of connected cooking is to select a recipe, have your fridge dispense the ingredients, and send your food straight into the oven. Once there, an app would control the oven settings. When your food is ready, you’d receive a notification on your mobile device so you can take it out and enjoy the perfect meal.
What’s more appealing than a fridge-to-table dinner that requires minimal effort?
The Internet of Things is an amazing technology. So amazing, in fact, that it’ll help you make the perfect Thanksgiving dinner.
To meet the market’s expectations for increasingly fast, responsive, and personalized service, business speed will be everything. Find out how innovative processes can enable your enterprise to remain successful in this evolving landscape. Learn more and download the IDC paper “Realizing IoT’s Value – Connecting Things to People and Processes.
If you ever watched the cartoon series The Jetsons – or almost any other show set in the space age – you’ll notice that people often get around in personal spacecraft that they themselves drive. Well, the space age is almost here – at least in the form of flying cars. But we won’t be driving them. Instead, like cars, they will be controlled autonomously.
In my last blog, I talked about autonomous vehicles and how much safer they are than self-driven vehicles. To ensure safety in the air, flying cars depend on the same network-connected IoT technology pioneered first in autonomous vehicles on the road.
Is the space age really here?
Let’s first take a quick look at some of the leading organisations out there doing serious work with flying cars.
Lilium: A German startup, Lilium tested a full-sized prototype of its flying car in April 2017. The Lilium prototype is entirely electric. It can also take off and land vertically like a helicopter – but then change to forward flight for speeds of up to 300km/h, which is much faster than a helicopter. And it’s quieter than a motorcycle. Lilium has raised $100m in two rounds of funding from Tencent, Ev William’s Obvious Ventures, Niklas Zennstrom’s Atomico, among others.
EHang: A Chinese company with deep experience building drones, EHang is perhaps the furthest along. The company produces the EHang 184 – a one-passenger flying car that has already undergone 100 successful manned test flights. Reportedly, the city of Dubai is this year launching a pilot program for an autonomous aerial taxi (AAT) service using the EHang 184.
Airbus: The aircraft giant, Airbus, has developed CityAirbus, an electric vehicle capable of vertical take-off and landing for up to four passengers. Airbus Vahana aims in the same direction but for is for individual travelers. And let’s not forget the hybrid Airbus Pop.Up concept, this modular air and ground system involves a passenger capsule that can be connected to a propeller system on top for flying or to a wheeled conveyance system for driving on the roads.
What all of these ventures have in common is connectedness. Using IoT technology, they’re all controlled remotely – with the vehicle in constant connection to home base along the lines of what is now a reality for autonomous road vehicles like those made by Tesla.
Of course, the networked nature of vehicles (flying or not) has relevance beyond safety. No surprise, then, that Uber is moving forward aggressively with plans to test an on-demand flying cars network by 2020 in the cities of LA, Dubai, and Dallas, and 2023 in Sydney. Here the network provides convenience – coordinating a ride-sharing service in the sky that allows passengers to hook up with flying cars on the fly.
Drones for passengers
Essentially, what we’re moving toward is a future of passenger drones. One obstacle to this reality is the need for keeping batteries charged. Because of battery life issues, for example, the EHang 184 can only travel 23 minutes. The Lilium vehicle, it is claimed, can travel up to an hour – enough to make it from London to Paris. This, and advances in battery power storage capacity will iron out most issues around range.
When we solve this problem – and get over some regulatory hurdles – flying cars will become a lived reality for people in cities everywhere. The benefits will be tremendous, too. Count among these benefits such as less pollution (both air and noise pollution) and less traffic congestion (with flying cars taking another route entirely). And when it comes to emergencies, first responders can be deployed faster and more efficiently than ever before – helping to save lives. And let’s face it, flying cars would just be fun.
Next time I get to Dubai I’ll have to try one out.
To meet the market’s expectations for increasingly fast, responsive, and personalized service, speed of business will be everything. Find out how innovative processes can enable your business to remain successful in this evolving landscape. Learn more and download the IDC paper “Realizing IoT’s Value – Connecting Things to People and Processes.”
Businesses share something important with lions. When a lion captures and consumes its prey, only about 10% to 20% of the prey’s energy is directly transferred into the lion’s metabolism. The rest evaporates away, mostly as heat loss, according to research done in the 1940s by ecologist Raymond Lindeman.
Today, businesses do only about as well as the big cats. When you consider the energy required to manage, power, and move products and services, less than 20% goes directly into the typical product or service—what economists call aggregate efficiency (the ratio of potential work to the actual useful work that gets embedded into a product or service at the expense of the energy lost in moving products and services through all of the steps of their value chains). Aggregate efficiency is a key factor in determining productivity.
After making steady gains during much of the 20th century, businesses’ aggregate energy efficiency peaked in the 1980s and then stalled. Japan, home of the world’s most energy-efficient economy, has been skating along at or near 20% ever since. The U.S. economy, meanwhile, topped out at about 13% aggregate efficiency in the 1990s, according to research.
Why does this matter? Jeremy Rifkin says he knows why. Rifkin is an economic and social theorist, author, consultant, and lecturer at the Wharton School’s Executive Education program who believes that economies experience major increases in growth and productivity only when big shifts occur in three integrated infrastructure segments around the same time: communications, energy, and transportation.
But it’s only a matter of time before information technology blows all three wide open, says Rifkin. He envisions a new economic infrastructure based on digital integration of communications, energy, and transportation, riding atop an Internet of Things (IoT) platform that incorporates Big Data, analytics, and artificial intelligence. This platform will disrupt the world economy and bring dramatic levels of efficiency and productivity to businesses that take advantage of it,
Some economists consider Rifkin’s ideas controversial. And his vision of a new economic platform may be problematic—at least globally. It will require massive investments and unusually high levels of government, community, and private sector cooperation, all of which seem to be at depressingly low levels these days.
However, Rifkin has some influential adherents to his philosophy. He has advised three presidents of the European Commission—Romano Prodi, José Manuel Barroso, and the current president, Jean-Claude Juncker—as well as the European Parliament and numerous European Union (EU) heads of state, including Angela Merkel, on the ushering in of what he calls “a smart, green Third Industrial Revolution.” Rifkin is also advising the leadership of the People’s Republic of China on the build out and scale up of the “Internet Plus” Third Industrial Revolution infrastructure to usher in a sustainable low-carbon economy.
The internet has already shaken up one of the three major economic sectors: communications. Today it takes little more than a cell phone, an internet connection, and social media to publish a book or music video for free—what Rifkin calls zero marginal cost. The result has been a hollowing out of once-mighty media empires in just over 10 years. Much of what remains of their business models and revenues has been converted from physical (remember CDs and video stores?) to digital.
But we haven’t hit the trifecta yet. Transportation and energy have changed little since the middle of the last century, says Rifkin. That’s when superhighways reached their saturation point across the developed world and the internal-combustion engine came close to the limits of its potential on the roads, in the air, and at sea. “We have all these killer new technology products, but they’re being plugged into the same old infrastructure, and it’s not creating enough new business opportunities,” he says.
All that may be about to undergo a big shake-up, however. The digitalization of information on the IoT at near-zero marginal cost generates Big Data that can be mined with analytics to create algorithms and apps enabling ubiquitous networking. This digital transformation is beginning to have a big impact on the energy and transportation sectors. If that trend continues, we could see a metamorphosis in the economy and society not unlike previous industrial revolutions in history. And given the pace of technology change today, the shift could happen much faster than ever before.
The speed of change is dictated by the increase in digitalization of these three main sectors; expensive physical assets and processes are partially replaced by low-cost virtual ones. The cost efficiencies brought on by digitalization drive disruption in existing business models toward zero marginal cost, as we’ve already seen in entertainment and publishing. According to research company Gartner, when an industry gets to the point where digital drives at least 20% of revenues, you reach the tipping point.
“A clear pattern has emerged,” says Peter Sondergaard, executive vice president and head of research and advisory for Gartner. “Once digital revenues for a sector hit 20% of total revenue, the digital bloodbath begins,” he told the audience at Gartner’s annual 2017 IT Symposium/ITxpo, according to The Wall Street Journal. “No matter what industry you are in, 20% will be the point of no return.”
Communications is already there, and energy and transportation are heading down that path. If they hit the magic 20% mark, the impact will be felt not just within those industries but across all industries. After all, who doesn’t rely on energy and transportation to power their value chains?
The eye of the technology disruption hurricane has moved beyond communications and is heading toward … the rest of the economy.
That’s why businesses need to factor potentially massive business model disruptions into their plans for digital transformation today if they want to remain competitive with organizations in early adopter countries like China and Germany. China, for example, is already halfway through an US$88 billion upgrade to its state electricity grid that will enable renewable energy transmission around the country—all managed and moved digitally, according to an article in The Economist magazine. And it is competing with the United States for leadership in self-driving vehicles, which will shift the transportation process and revenue streams heavily to digital, according to an article in Wired magazine.
Once China’s and Germany’s renewables and driverless infrastructures are in place, the only additional costs are management and maintenance. That could bring businesses in these countries dramatic cost savings over those that still rely on fossil fuels and nuclear energy to power their supply chains and logistics. “Once you pay the fixed costs of renewables, the marginal costs are near zero,” says Rifkin. “The sun and wind haven’t sent us invoices yet.”
In other words, zero marginal cost has become a zero-sum game.
To understand why that is, consider the major industrial revolutions in history, writes Rifkin in his books, The Zero Marginal Cost Society and The Third Industrial Revolution. The first major shift occurred in the 19th century when cheap, abundant coal provided an efficient new source of power (steam) for manufacturing and enabled the creation of a vast railway transportation network. Meanwhile, the telegraph gave the world near-instant communication over a globally connected network.
The second big change occurred at the beginning of the 20th century, when inexpensive oil began to displace coal and gave rise to a much more flexible new transportation network of cars and trucks. Telephones, radios, and televisions had a similar impact on communications.
Breaking Down the Walls Between Sectors
Now, according to Rifkin, we’re poised for the third big shift. The eye of the technology disruption hurricane has moved beyond communications and is heading toward—or as publishing and entertainment executives might warn, coming for—the rest of the economy. With its assemblage of global internet and cellular network connectivity and ever-smaller and more powerful sensors, the IoT, along with Big Data analytics and artificial intelligence, is breaking down the economic walls that have protected the energy and transportation sectors for the past 50 years.
Daimler is now among the first movers in transitioning into a digitalized mobility internet. The company has equipped nearly 400,000 of its trucks with external sensors, transforming the vehicles into mobile Big Data centers. The sensors are picking up real-time Big Data on weather conditions, traffic flows, and warehouse availability. Daimler plans to establish collaborations with thousands of companies, providing them with Big Data and analytics that can help dramatically increase their aggregate efficiency and productivity in shipping goods across their value chains. The Daimler trucks are autonomous and capable of establishing platoons of multiple trucks driving across highways.
It won’t be long before vehicles that navigate the more complex transportation infrastructures around the world begin to think for themselves. Autonomous vehicles will bring massive economic disruption to transportation and logistics thanks to new aggregate efficiencies. Without the cost of having a human at the wheel, autonomous cars could achieve a shared cost per mile below that of owned vehicles by as early as 2030, according to research from financial services company Morgan Stanley.
The transition is getting a push from governments pledging to give up their addiction to cars powered by combustion engines. Great Britain, France, India, and Norway are seeking to go all electric as early as 2025 and by 2040 at the latest.
The Final Piece of the Transition
Considering that automobiles account for 47% of petroleum consumption in the United States alone—more than twice the amount used for generators and heating for homes and businesses, according to the U.S. Energy Information Administration—Rifkin argues that the shift to autonomous electric vehicles could provide the momentum needed to upend the final pillar of the economic platform: energy. Though energy has gone through three major disruptions over the past 150 years, from coal to oil to natural gas—each causing massive teardowns and rebuilds of infrastructure—the underlying economic model has remained constant: highly concentrated and easily accessible fossil fuels and highly centralized, vertically integrated, and enormous (and enormously powerful) energy and utility companies.
Now, according to Rifkin, the “Third Industrial Revolution Internet of Things infrastructure” is on course to disrupt all of it. It’s neither centralized nor vertically integrated; instead, it’s distributed and networked. And that fits perfectly with the commercial evolution of two energy sources that, until the efficiencies of the IoT came along, made no sense for large-scale energy production: the sun and the wind.
But the IoT gives power utilities the means to harness these batches together and to account for variable energy flows. Sensors on solar panels and wind turbines, along with intelligent meters and a smart grid based on the internet, manage a new, two-way flow of energy to and from the grid.
Today, fossil fuel–based power plants need to kick in extra energy if insufficient energy is collected from the sun and wind. But industrial-strength batteries and hydrogen fuel cells are beginning to take their place by storing large reservoirs of reserve power for rainy or windless days. In addition, electric vehicles will be able to send some of their stored energy to the digitalized energy internet during peak use. Demand for ever-more efficient cell phone and vehicle batteries is helping push the evolution of batteries along, but batteries will need to get a lot better if renewables are to completely replace fossil fuel energy generation.
Meanwhile, silicon-based solar cells have not yet approached their limits of efficiency. They have their own version of computing’s Moore’s Law called Swanson’s Law. According to data from research company Bloomberg New Energy Finance (BNEF), Swanson’s Law means that for each doubling of global solar panel manufacturing capacity, the price falls by 28%, from $76 per watt in 1977 to $0.41 in 2016. (Wind power is on a similar plunging exponential cost curve, according to data from the U.S. Department of Energy.)
Thanks to the plummeting solar price, by 2028, the cost of building and operating new sun-based generation capacity will drop below the cost of running existing fossil power plants, according to BNEF. “One of the surprising things in this year’s forecast,” says Seb Henbest, lead author of BNEF’s annual long-term forecast, the New Energy Outlook, “is that the crossover points in the economics of new and old technologies are happening much sooner than we thought last year … and those were all happening a bit sooner than we thought the year before. There’s this sense that it’s not some distant risk or distant opportunity. A lot of these realities are rushing toward us.”
The conclusion, he says, is irrefutable. “We can see the data and when we map that forward with conservative assumptions, these technologies just get cheaper than everything else.”
The smart money, then—72% of total new power generation capacity investment worldwide by 2040—will go to renewable energy, according to BNEF. The firm’s research also suggests that there’s more room in Swanson’s Law along the way, with solar prices expected to drop another 66% by 2040.
Another factor could push the economic shift to renewables even faster. Just as computers transitioned from being strictly corporate infrastructure to becoming consumer products with the invention of the PC in the 1980s, ultimately causing a dramatic increase in corporate IT investments, energy generation has also made the transition to the consumer side.
Thanks to future tech media star Elon Musk, consumers can go to his Tesla Energy company website and order tempered glass solar panels that look like chic, designer versions of old-fashioned roof shingles. Models that look like slate or a curved, terracotta-colored, ceramic-style glass that will make roofs look like those of Tuscan country villas, are promised soon. Consumers can also buy a sleek-looking battery called a Powerwall to store energy from the roof.
The combination of solar panels, batteries, and smart meters transforms homeowners from passive consumers of energy into active producers and traders who can choose to take energy from the grid during off-peak hours, when some utilities offer discounts, and sell energy back to the grid during periods when prices are higher. And new blockchain applications promise to accelerate the shift to an energy market that is laterally integrated rather than vertically integrated as it is now. Consumers like their newfound sense of control, according to Henbest. “Energy’s never been an interesting consumer decision before and suddenly it is,” he says.
As the price of solar equipment continues to drop, homes, offices, and factories will become like nodes on a computer network. And if promising new solar cell technologies, such as organic polymers, small molecules, and inorganic compounds, supplant silicon, which is not nearly as efficient with sunlight as it is with ones and zeroes, solar receivers could become embedded into windows and building compounds. Solar production could move off the roof and become integrated into the external facades of homes and office buildings, making nearly every edifice in town a node.
The big question, of course, is how quickly those nodes will become linked together—if, say doubters, they become linked at all. As we learned from Metcalfe’s Law, the value of a network is proportional to its number of connected users.
The Will Determines the Way
Right now, the network is limited. Wind and solar account for just 5% of global energy production today, according to Bloomberg.
But, says Rifkin, technology exists that could enable the network to grow exponentially. We are seeing the beginnings of a digital energy network, which uses a combination of the IoT, Big Data, analytics, and artificial intelligence to manage distributed energy sources, such as solar and wind power from homes and businesses.
As nodes on this network, consumers and businesses could take a more active role in energy production, management, and efficiency, according to Rifkin. Utilities, in turn, could transition from simply transmitting power and maintaining power plants and lines to managing the flow to and from many different energy nodes; selling and maintaining smart home energy management products; and monitoring and maintaining solar panels and wind turbines. By analyzing energy use in the network, utilities could create algorithms that automatically smooth the flow of renewables. Consumers and businesses, meanwhile, would not have to worry about connecting their wind and solar assets to the grid and keeping them up and running; utilities could take on those tasks more efficiently.
Already in Germany, two utility companies, E.ON and RWE, have each split their businesses into legacy fossil and nuclear fuel companies and new services companies based on distributed generation from renewables, new technologies, and digitalization.
The reason is simple: it’s about survival. As fossil fuel generation winds down, the utilities need a new business model to make up for lost revenue. Due to Germany’s population density, “the utilities realize that they won’t ever have access to enough land to scale renewables themselves,” says Rifkin. “So they are starting service companies to link together all the different communities that are building solar and wind and are managing energy flows for them and for their customers, doing their analytics, and managing their Big Data. That’s how they will make more money while selling less energy in the future.”
The digital energy internet is already starting out in pockets and at different levels of intensity around the world, depending on a combination of citizen support, utility company investments, governmental power, and economic incentives.
China and some countries within the EU, such as Germany and France, are the most likely leaders in the transition toward a renewable, energy-based infrastructure because they have been able to align the government and private sectors in long-term energy planning. In the EU for example, wind has already overtaken coal as the second largest form of power capacity behind natural gas, according to an article in TheGuardian newspaper. Indeed, Rifkin has been working with China, the EU, and governments, communities, and utilities in Northern France, the Netherlands, and Luxembourg to begin building these new internets.
Hauts-de-France, a region that borders the English Channel and Belgium and has one of the highest poverty rates in France, enlisted Rifkin to develop a plan to lift it out of its downward spiral of shuttered factories and abandoned coal mines. In collaboration with a diverse group of CEOs, politicians, teachers, scientists, and others, it developed Rev3, a plan to put people to work building a renewable energy network, according to an article in Vice.
Today, more than 1,000 Rev3 projects are underway, encompassing everything from residential windmills made from local linen to a fully electric car–sharing system. Rev3 has received financial support from the European Investment Bank and a handful of private investment funds, and startups have benefited from crowdfunding mechanisms sponsored by Rev3. Today, 90% of new energy in the region is renewable and 1,500 new jobs have been created in the wind energy sector alone.
Meanwhile, thanks in part to generous government financial support, Germany is already producing 35% of its energy from renewables, according to an article in TheIndependent, and there is near unanimous citizen support (95%, according to a recent government poll) for its expansion.
If renewables are to move forward …, it must come from the ability to make green, not act green.
If renewable energy is to move forward in other areas of the world that don’t enjoy such strong economic and political support, however, it must come from the ability to make green, not act green.
Not everyone agrees that renewables will produce cost savings sufficient to cause widespread cost disruption anytime soon. A recent forecast by the U.S. Energy Information Administration predicts that in 2040, oil, natural gas, and coal will still be the planet’s major electricity producers, powering 77% of worldwide production, while renewables such as wind, solar, and biofuels will account for just 15%.
Skeptics also say that renewables’ complex management needs, combined with the need to store reserve power, will make them less economical than fossil fuels through at least 2035. “All advanced economies demand full-time electricity,” Benjamin Sporton, chief executive officer of the World Coal Association told Bloomberg. “Wind and solar can only generate part-time, intermittent electricity. While some renewable technologies have achieved significant cost reductions in recent years, it’s important to look at total system costs.”
On the other hand, there are many areas of the world where distributed, decentralized, renewable power generation already makes more sense than a centralized fossil fuel–powered grid. More than 20% of Indians in far flung areas of the country have no access to power today, according to an article in TheGuardian. Locally owned and managed solar and wind farms are the most economical way forward. The same is true in other developing countries, such as Afghanistan, where rugged terrain, war, and tribal territorialism make a centralized grid an easy target, and mountainous Costa Rica, where strong winds and rivers have pushed the country to near 100% renewable energy, according to TheGuardian.
The Light and the Darknet
Even if all the different IoT-enabled economic platforms become financially advantageous, there is another concern that could disrupt progress and potentially cause widespread disaster once the new platforms are up and running: hacking. Poorly secured IoT sensors have allowed hackers to take over everything from Wi-Fi enabled Barbie dolls to Jeep Cherokees, according to an article in Wired magazine.
Humans may be lousy drivers, but at least we can’t be hacked (yet). And while the grid may be prone to outages, it is tightly controlled, has few access points for hackers, and is physically separated from the Wild West of the internet.
If our transportation and energy networks join the fray, however, every sensor, from those in the steering system on vehicles to grid-connected toasters, becomes as vulnerable as a credit card number. Fake news and election hacking are bad enough, but what about fake drivers or fake energy? Now we’re talking dangerous disruptions and putting millions of people in harm’s way.
The only answer, according to Rifkin, is for businesses and governments to start taking the hacking threat much more seriously than they do today and to begin pouring money into research and technologies for making the internet less vulnerable. That means establishing “a fully distributed, redundant, and resilient digital infrastructure less vulnerable to the kind of disruptions experienced by Second Industrial Revolution–centralized communication systems and power grids that are increasingly subject to climate change, disasters, cybercrime, and cyberterrorism,” he says. “The ability of neighborhoods and communities to go off centralized grids during crises and re-aggregate in locally decentralized networks is the key to advancing societal security in the digital era,” he adds.
Start Looking Ahead
Until today, digital transformation has come mainly through the networking and communications efficiencies made possible by the internet. Airbnb thrives because web communications make it possible to create virtual trust markets that allow people to feel safe about swapping their most private spaces with one another.
But now these same efficiencies are coming to two other areas that have never been considered core to business strategy. That’s why businesses need to begin managing energy and transportation as key elements of their digital transformation portfolios.
Microsoft, for example, formed a senior energy team to develop an energy strategy to mitigate risk from fluctuating energy prices and increasing demands from customers to reduce carbon emissions, according to an article in Harvard Business Review. “Energy has become a C-suite issue,” Rob Bernard, Microsoft’s top environmental and sustainability executive told the magazine. “The CFO and president are now actively involved in our energy road map.”
As Daimler’s experience shows, driverless vehicles will push autonomous transportation and automated logistics up the strategic agenda within the next few years. Boston Consulting Group predicts that the driverless vehicle market will hit $42 billion by 2025. If that happens, it could have a lateral impact across many industries, from insurance to healthcare to the military.
Businesses must start planning now. “There’s always a period when businesses have to live in the new and the old worlds at the same time,” says Rifkin. “So businesses need to be considering new business models and structures now while continuing to operate their existing models.”
He worries that many businesses will be left behind if their communications, energy, and transportation infrastructures don’t evolve. Companies that still rely on fossil fuels for powering traditional transportation and logistics could be at a major competitive disadvantage to those that have moved to the new, IoT-based energy and transportation infrastructures.
Germany, for example, has set a target of 80% renewables for gross power consumption by 2050, according to TheIndependent. If the cost advantages of renewables bear out, German businesses, which are already the world’s third-largest exporters behind China and the United States, could have a major competitive advantage.
“How would a second industrial revolution society or country compete with one that has energy at zero marginal cost and driverless vehicles?” asks Rifkin. “It can’t be done.” D!
About the Authors
Maurizio Cattaneo is Director, Delivery Execution, Energy and Natural Resources, at SAP.
Joerg Ferchow is Senior Utilities Expert and Design Thinking Coach, Digital Transformation, at SAP.
Daniel Wellers is Digital Futures Lead, Global Marketing, at SAP.
Christopher Koch is Editorial Director, SAP Center for Business Insight, at SAP.
My child’s elementary school focuses on skills they believe support children in becoming changemakers. Through use of an integrated, project-based curriculum, they explicitly teach and assess “learner values” such as iteration, risk, failure, collaboration, and perspective. Their philosophy is that these attributes long considered “soft skills” have become the crucial educational priorities for this generation.
Why do they believe this? Much knowledge is now easily accessed and readily queried, such that the acquisition of specific content or know-how is far less important than how to apply that content in different situations and how to interact with others in the pursuit of goals. This holds true in the workplace as well as the academic environment. When I think about how I operate in my job at a large technology company, it’s not really what I know but what I do with what I know, and whom I engage to get things accomplished.
Watching the school teach these skills just as they do math or language has made me stop and consider what they look like for an employee. I wanted to share my thoughts on five qualities beyond relevant academic skills or professional experience that are just as important (if not more so) in predicting top work performance. These are more qualitative skills that managers should hire for, employees should develop, and organizations should optimize for.
Empathy – the ability to see and integrate multiple perspectives and to understand the impact of how others think. Empathy can also mean advocating and showing empathy for oneself and for others. Empathy is assuming a good intention even when someone has said or done something we dislike – to stop and pause, attempt to understand, and respond compassionately in a difficult workplace situation. Empathy also extends to intuiting beyond just the professional environment to more of a personal level to truly understand what drives a colleague or employee.
Resilience – the ability to take risks even when you know you may fail and then to bounce back, sometimes repeatedly, from failure. Inherent in resilience is the idea of iteration – that it is often essential to try things multiple times, in multiple ways, from multiple angles, before achieving a desired outcome. Resilience is receiving difficult yet constructive feedback from a manager or peer and resolving to act positively on it instead of wallowing or harboring a grudge. Resilience is maintaining a sense of optimism even in a down quarter at work.
Creativity – the ability to think differently or expansively and to approach a problem from multiple angles. Sometimes it’s called “thinking outside the box.” Creativity often includes inquiry, the act of questioning and satisfying one’s curiosity about particular topics. Torrance defined it along several parameters – number of ideas generated, number of categories of ideas, originality of ideas, and how detailed each idea is elaborated. We see it in action during brainstorming phases of projects, but it’s also possible to apply creativity on a continual basis, by pushing colleagues to expand on their thoughts, by not being satisfied with a less than stellar answer, by taking time to understand how multiple approaches to an issue could be combined, or by simply trying something new in a familiar situation.
Collaboration – the ability to interact and work productively with others, in all size groups. Effective collaboration requires empathy, especially when collaborators have different backgrounds, styles, or thought processes. Collaboration also requires exemplary communication skills, both oral and written, as well as reflective listening. So much of our tasks on the job require collaboration with others, whether to inform, persuade, learn, or engage, and these interactions form the bedrock for innovation. It’s tough to innovate without collaborating.
Flexibility – the ability to adapt or change course if that is what the situation demands. Flexibility includes letting go of one’s idea in the interest of attaining a goal more quickly. It can also include development a comfort level with uncertainty or ambiguity, especially in times of change. Flexibility is a willingness to absorb feedback objectively and course correct as needed without personalizing the information or demonizing the provider of it. Expounding on another’s idea (not our own) in a brainstorming session demonstrates flexibility, as does remaining calm while an org change takes effect and roles are temporarily unclear.
When employees exhibit these qualities, they are better able to understand their purpose at work and to unleash their passions in the pursuit of that purpose. When teams exhibit these qualities, achievement and employee engagement are higher. I wager that retention and innovation will improve as well. It’s heartening that as a society we’re beginning to consider how to best prepare our children educationally for the kind of work environments they will encounter after they finish their academic journey.
Do you also see these qualities as valuable in assessing employee fit? How can managers and organizations better identify, train and reward employees for living these qualities?
The Digitalist Magazine is your online destination for everything you need to know to lead your enterprise’s digital transformation.
Read the Digitalist Magazine and get the latest insights about the digital economy that you can capitalize on today.
About Carmen O'Shea
Carmen O’Shea is the Senior Vice President of HR Change & Engagement at SAP. She leads a global team supporting major transformation initiatives across the company, focused on change management, employee engagement, and creative marketing and interaction. You can follow Carmen on Twitter.