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An Introduction to
Smart Systems

As the physical world continues to dovetail with machine learning and artificial intelligence, Smart Systems will enable previously unimagined capabilities for both the B2B and B2C worlds. After years of frustrating fits and starts, the technology is here to integrate people, processes and data in ways that enable collective awareness and better decision making. The question is whether business leadership is ready to make the leap and grasp its potential.



We have entered an era where people, businesses and social organizations are beginning to understand the profound impacts awareness, intelligence and collaboration will bring. Today, hundreds of millions if not billions of individuals, organizations and businesses are interacting  with billions and soon trillions of smart communicating devices, that will blur the boundaries of today’s business and social systems and radically change the way we learn, work and innovate.

Simple, Compound and Complex Smart Systems Applications

Simple, Compound & Complex Smart Systems Applications

source: Harbor Research

While it’s still early in this market and technology shift towards a pervasively connected society and economy, make no mistake about this: the train’s “out of the station” and this evolution is inevitable. Because this era-defining sea-change involves a sweeping paradigm shift from human-centric computing to “ubiquitous” computing, we call this transition “the Ubiquity Shift.”



Multiple parallel technology developments appear now to be increasingly reinforcing and accelerating one another. Cloud infrastructure resources are providing unprecedented computing scale. Higher performance wireless networks and mobile computing devices are extending the reach of computing. Machine learning and AI are bringing intelligence to diverse things, including at the edge. And embedded systems and IoT technology are connecting and integrating a broad array of physical and digital applications.

Each of these technologies is powerful on their own, but creative combinations of these capabilities are multiplying their impacts. Human-connected devices and machine-connected IoT devices enable exponentially more data. The cloud then enables us to capture and analyze all that information through its computational capacity. Which, in turn, sets the stage for AI and machine learning tools to analyze and capture new insights. With the emergence of spatial computing and augmented reality, the technologies to interface with this data is evolving as well.

Smart Systems Innovation

Smart Systems Innovation

source: Harbor Research

Harbor Research uses the term “Smart Systems” to describe this phenomenon — a new generation of innovations and information architecture that looks very different from classical computing, telecom and automation systems. The convergence of pervasive or embedded computing with the packet-switching “network of networks” called the Internet describes a new generation of computing, control and data architecture that looks very different from classical computing and information systems and represents the emergence of complex adaptive systems.

What does this mean?

The many “nodes” of a network may not be very “smart” in themselves, but if they are networked in a way that allows them to connect effortlessly and interoperate seamlessly, the data they produce begins to give rise to complex, system-wide behavior. This allows an entirely new order of intelligence to emerge from the system as a whole—an intelligence that could not have been predicted by looking at any of the nodes individually.

In Smart Systems, the physical world dovetails with machine learning and artificial intelligence to produce previously unimagined capabilities for both the B2B and B2C worlds. After years of frustrating fits and starts, the technology is here to integrate people, processes, and data in ways that enable collective awareness and better decision making. The question is whether business leadership is ready to make the leap and grasp its potential.

We believe this is driven by several interrelated trends:

  • Catalytic Innovation where core networking, computing, software and device technologies are being creatively combined (“combinatorial innovation”) into new systemic innovations assembled from earlier technologies (for example, the GPS and navigation systems we take for granted in smartphones combine the predecessor technologies of satellites, computing, radio receivers, transmitters and atomic clocks into a new unified and infinitely more valuable technology).
  • Distributed Intelligent Systems where powerful distributed technologies such as IoT, edge computing, blockchain and more are demonstrating the power of decentralized systems, relationships and interactions and enabling a new era of large-scale collaboration and problem solving.
  • Smart Complex Adaptive Systems where data from sensors, machines, video streams, maps, people, news feeds and much more become an integral part of all information systems to enable intelligent real-world physical systems to be integrated with virtual digital systems.
  • Invisible Business where high-performance networks, AI and machine learning are creating multiple parallel systems that are replacing applications previously managed by computer-assisted humans with autonomous complex adaptive systems that do not require human intervention.
  • Citizen Designers and Developers where we no longer need specialized people in “white lab coats” to develop software and specialized systems (for example, climate scientists who are not “software people” can now model complex weather systems with no need for direct involvement by computing technologists and software developers).
  • Creative [Business Model] Destruction where companies become ecosystems with diverse value delivery networks consisting of a disassembled set of business functions and entities—some owned directly, many sub-contracted, but all requiring orchestrated data and information and where the “technology architecture” becomes ever more tightly coupled to the “business architecture” and, in turn, the two “architectures” must be mutually supportive without inhibiting one or the other.

Embedded intelligence, networking and software innovations are all in some way trying to break from today’s computing and telecom paradigms to enable real-time, state-based, context-sensitive capabilities.

In 2005, we coined this intersection of technologies “Smart Systems” and believe it will enable previously unimagined capabilities for both the B2B and B2C worlds. After years of frustrating fits and starts, creative combinations of new technologies will integrate people, processes, and data in ways that enable collective awareness and better decision making. The question is whether business leadership is ready to make the leap and grasp its potential.

Smart Systems Core Technologies & Venues

Core Technologies and Key Venues for Smart Systems

source: Harbor Research



We’re trying to build a future on inadequate structures from the past. It’s as if we’re wandering through the uncharted jungles of the 21st century with reconnaissance reports and walkie-talkies from about 25 years ago.

For all the silicon-based “intelligence” permeating every aspect our lives, we still live in a brutally dumb world. That dumbness is starting to cost us—dearly. Every day, executives valiantly try to conduct smart business in a dumb world of wretchedly inadequate information and antiquated communications.

The vision we need is not in itself new. It has been freely available at least since the 1950s, when such thinkers as Jay Forrester (System Dynamics) and MIT’s Norbert Weiner (Cybernetics and The Human Use of Human Beings) wrote landmark books describing a world transformed by automation, machine intelligence, and optimized systems.

If you applied this vision in a practical way to business, it might simply be called “electronic commerce.” But the e-commerce we have today still fall’s short – simple mechanisms that make certain B2C and B2B transactions, performed by human beings, somewhat easier, somewhat more convenient.

Genuinely Smart Systems should re-think the whole relationship of people, machines, and devices to business systems. It must be built upon true, across-the-board digital automation, accomplished by enabling everyday electronic devices to communicate with and control each other, along with a whole new generation of information tools (“killer apps”) for managing rich, vast streams of meaningful data. The goal is to integrate people and devices into a new generation of systems that are self-sensing, self-controlling, and self-optimizing—automatically, without human intervention. It would not be far-fetched to call them “self-aware.”

But how will all this really unfold; where are the truly transformative opportunities?

  • Most business observers and technology innovators agree that the future of enterprises will be shaped by efficiently designed, pervasively connected systems. The opportunity lies essentially in a new realm of services based upon ubiquitous information and collaboration.
  • Increasing connectedness of owned and non-owned assets, combined with increasingly open technologies will enable more fluid data sharing and interactions between and among systems, users, businesses and institutions.
  • Increasing connectedness and openness means great opportunity but also great risk, including the possibility of commoditization, the possible dilution of identity and leverage, and the possible loss of customer account control. Security and privacy remain large concerns that could severely inhibit open data sharing and large-scale collaboration.
  • Collectively, these forces have the potential to drive massive new business opportunities but require new business strategies, technologies, solution designs and corporate cultures.



As we end the second decade of the 21st century, many of our biggest challenges and issues in business still originate directly from our inability to cooperate and collaborate. We continue to live in silos of our own making, despite digital technologies and global networking that offer more opportunities to cooperate and create new business concepts than we’ve ever seen before.

Large established corporations have tried to embrace many new technologies, of course, but with marginal success.  Most of their efforts have really just focused on achieving new operating efficiencies. Business leaders have spent the last 30 years optimizing functions and sucking the fat out of the enterprise, making their businesses as lean and profitable as possible. The problem was that in their zeal they didn’t know where to stop. They vacuumed up all of their investments in new innovations as well.

Today those leaders are pouring their past “savings” into digital transformation, trying to chase the innovation they missed in previous economic cycles. So, how’s that working out?  We believe most observers will tell you that an extraordinarily high percentage of those investments and programs have failed to meet their stated goals. Some say the number is close to 90%. That’s a trillion dollars down the drain.


In times of radical change, crises of perception are often the cause of significant failures, particularly in large companies.  Such failures result from the inability to see emergent discontinuities.  We believe this to be the case with most large established manufacturers and services providers whose assumptions about future competitive strategy and value creation are being shaped by the past and are being extrapolated into the future in a linear fashion.  Most “old economy” businesses appear to be stuck in a tyranny of replication.

But before delving any further into this thinking, let’s talk about why it’s necessary at all.

Don’t most large manufacturers and services companies continue to grow and create shareholder value?  Haven’t many of these players embraced “digital” already?  Don’t we already have vast connectedness between and among institutions and enterprises via the Internet?  Didn’t the Web completely revolutionize human communications?

Almost everyone will answer with a resounding “Yes!” But consider this analogy from Buckminster Fuller: suppose you are traveling on an ocean liner that suddenly begins to sink. If you rip the lid off the grand piano in the ballroom, throw it overboard, and jump on it, the floating piano lid may well save your life. But if, under normal circumstances, you set about to design the best possible life preserver, are you going to come up with the lid of a grand piano?

Current corporate development protocols and strategies for growth and value creation are like that piano lid.  In a period of great change and tumult, they might work—in the sense that it could keep us afloat. But that does not make it the best possible design or qualify it to be something that we should plan to use forever.

Global expansion; re-engineering; lean practices; mergers and acquisitions.  For most companies, these strategies for growth and value creation are finally reaching the point of diminishing returns. Even more challenging however, is the simple fact that Smart System technologies are far more disruptive than previous generations of technology. ◆

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