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Markets: Smart Systems Drive New Innovation Modes

As the price of embedding intelligence and connectivity into devices continues to fall, smart networked devices will push further and further into the mainstream.   This process is self-reinforcing making smart systems and services increasingly prevalent in our lives and businesses.

To understand the future of networked information, it helps to remember that the Internet of Things is about machines making better use of human data, either through the use of the emerging network intelligence or through new applications of sensing in embedded things to make them more contextual and adaptive. Smart devices will be better able to understand where they are and the role they play, and adjust themselves based on human needs and desires. The Internet will be the platform for moving and sharing this data, but people interacting with smart devices and systems will extend these values.

Obviously, such systems cannot be “designed” in any ordinary sense. Certainly, they cannot be designed “topdown.” And yet Smart Systems must be designed in some sense. In the future, Smart Business solutions in areas like healthcare and energy could easily rank among the biggest technical achievements in the history of humanity.  New modes for conceiving and realizing these types of solutions must be in place to guide the development of such vast, distributed and complex systems as they evolve according to a logic all their own. It demands that we think about systems and business design not just devices and networks.


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The solutions we are describing here have no managerial hierarchy, command and control decision making, or proprietary ownership of ideas. These networks will be self-organized by people who are motivated to explore and develop ideas they care deeply about. Collaborative innovation between people and smart things will extend beyond traditional ideas about new products and services to the very manner in which business is conducted.

We believe there are indications that this era of Smart Systems is fostering new types of innovation and design. There are several phenomena already happening that can potentially drive significant new modes of value creation. Some important forces evident in the marketplace include:

Collaboration and Crowdsourcing Are Real:  It is becoming increasingly clear that “crowdsourcing,” meaning that a large group of people can create a collective work whose value far exceeds that provided by any of the individual participants, including building applications that literally get better the more people use them; and, designing participatory systems that harness network effects not only to acquire users, but also to learn from them and build on their contributions.

Sensors & Social Networks Converge:  The integration of sensor technologies and social networks is upon us.  Feedback and information from sensors along with information from social networks and the web will creatively combine. While this integration and interaction is still decoupled the online integration of the physical world and the virtual world is progressing.

Service Delivery Platforms Extend To All Connected Devices: The usage measurement, recording and billing system associated with wireless cellular networks is one of the most complex systems ever built in human history. The complexity and cost of these so-called OSS systems makes it possible for great flexibility in services delivery and pricing models, and as they extend to integrate new types of sensors, smart devices and machines, the ability of these platforms to support new innovation modes will increase exponentially.

Smart Phones Are Driving Innovations In User Experience and Sensory Systems: Many people fail to understand the significant sensor innovations that are being designed into smart phones. Today’s smart phones contain microphones, cameras, motion sensors, proximity sensors, and location sensors. As the design innovation from smart phones extends to new sensor-based systems, they can be designed to get better the more people use them, collecting data that creates a virtuous feedback loop that creates more usage.

Analytics Drive New Values:  Data analysis, visualization, and other techniques for seeing patterns in data are going to be increasingly valuable.  Sensors and monitoring programs are not acting alone, but in concert with their human partners and an increasing number of machine learning algorithms.  The continuing promises of an Internet of Things will finally produce tangible value via a hodgepodge of sensor data contributing, bottom-up, to machine learning applications that gradually find more patterns and make sense of the data that is handed to them.

The Network Becomes More Intelligent:  As more and more microcontrollers and sensors are embedded in everyday objects, encoded information in physical objects will also create pervasive information “signatures.”  Seen in this way, a printed bar code, a CD or DVD disc, a house key, or even the pages of a book can have the status of an information signature on a network. A product on the supermarket shelf, a car on a dealer’s lot, a pallet of newly produced food sitting on a loading dock– all have information signatures now. In many cases, these information signatures are linked with their real world analogs by unique identifiers: an ISBN or ASIN, or a part number.  Take the smart grid as an example–neutral web services back-end for energy-related sensor data and will combine smart meter and power device data from homes and businesses to discover unique energy signatures.  It will be possible to determine not only the wattage being drawn by the device, but the make and model of each major appliance or any electrical device plugged into any wall socket. Signatures will combine with data fusion technology to drive rapid advances in systems awareness.

B2C Drives B2B and Visa Versa: The Smart Systems phenomenon is not limited to consumers with smart phones. Cisco’s Connected Communities initiative and its “planetary skin” project with NASA as well as IBM’s Smarter Planet program demonstrate how the B2B world is being transformed by the sensors on the Internet.  Factories, refineries, steel mills, and supply chains are being instrumented with sensors and machine analytics that we see in mobile consumer applications.

The Internet of Things and People will depend on managing, understanding, and responding to massive amounts of user and machine-generated data in real time. With more users and sensors feeding more applications and platforms, innovators and developers are able to tackle serious real-world problems. As a result, the Smart Systems opportunity is no longer growing arithmetically; it’s growing exponentially.

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