Saturday, November 30, 2013

Innovation Today - Notes From The Road

I am back from Vancouver where attended the Cisco Connect Roadshow event where I was able to get a feel of what they think is innovation of today thanks to the excellent presentation of Victor Woo, General Manager, Industry Transformation at Cisco Canada: "Fueling Innovation with the Internet of Everything". Notes below are some thoughts arising from and illustrating Victor's talk and other sessions.

Thanks to widespread Internet adoption and over 10 billion connected devices around the world, companies today are more excited than ever about the Internet of Things. Add in the hype about Google Glass and the Nest Thermostat, and nearly every business, including those from traditionally low-tech industries, wants to get on the cloud, track a group of devices, and gather data. The question, however, is not if a device can be connected, but why the company is connecting a previously “dumb” product to the cloud. Or stated differently, if a company invests in making my toaster talk to my lawnmower, is that really a good business model and why?
Companies that are successfully adapting and innovating Internet of Things platforms are focused on identifying meaningful opportunities, not just technologies.

Various forms of post-implementation maintenance will become more common, and may change how you deal with your vendors. The Internet of Things (IoT) goes well beyond human Internet users. Some predict that by 2015, not only will 75% of the world population have access to the Internet, so will 6+ billion devices.
Traditional business models focused on the sale of an item, with post-sale revenue coming from maintenance. The maintenance was usually an on-call service without real-time monitoring. Many will still follow this business model, however this model is vulnerable to shrinking profit margins in very competitive markets.

The world we live in is becoming increasingly complex and increasingly connected.
More than 12 billion people and things are communicating today via the Internet; yet it is estimated that more than 99% of objects are still unconnected.
Advanced standardization of communication protocols and the consequent rapid global adoption of IP and the Internet is moving from the information age into the networking age. The Internet provides the technical and human network to connect people with processes with data and things. As the Internet of Everything (IoE) connects the unconnected, it is expected that more than 50 billion smart objects will communicate freely over the Internet by 2020 and early indicators show that it might be a conservative estimate.

Acknowledgement:  Victor Woo, Rick Huijbregts, Gary Audin

Friday, November 8, 2013

The History of Innovation - Part 2 "Christensen Effect"

Recently I was introduced to a series of lectures by a Harvard Business School Professor Clayton Christensen, who is considered an architect of the Disruptive Innovation concept.
I must admit, I got somewhat addicted to the Clayton's soft manner of speaking and often subtle humor hidden under his serious voice. Good example: Innovator's Dilemma.
The main idea he is promoting seems so obvious after you hear it, perhaps also due to the illustrative way he delivers it.
However, while it is very immersing to listen to Professor Christensen, and his ideas together with his illustrations seem to make sense, the terminology he is using appears to be arbitrary (what else would you expect from the economist? :) 
Sometimes however, he uses more technical language, e.g. simplify complexity, integration vs. modularity - then things become much clearer. In the recent interview at Davos he even talked about "common language" and "common framework" - which are exactly the words used to describe Systems Architecture.

Let's talk however for a while about the "Christensen Effect" as the former Intel CEO Andrew Grove called it. Professor Christensen asserts that there are 3 types of innovation.  "Sustained innovation" is when the existing products or services are getting better and better to serve the existing customers with "newer", "bigger", "luxury" products. This is what mostly big corporations are doing. It is a natural thing, but does not generate new jobs. "Efficiency innovation" on the other hand results in producing the same goods or services with fewer resources and cheaper. This is a "low-hanging fruit" sort of things, pays back quickly, and it creates capital rather than utilizing it, while it does not create new jobs - rather it needs less people. Finally, "disruptive innovation" results in a new generation of technologies, products and services. It generates jobs, moves the progress, but requires a significant investment of capital and time (in his estimate 5-10 years).

Prof. Christensen gives a number of examples in different industries - from steel manufacturing to cars and even stock investing (Learning to Pivot). Here is one of my favorite examples.

40-s and 50-s was the time of a lamp radio - big bulky and heavy box put on the table, with a speaker, lots of handles etc, - practically a piece of furniture. I still remember from my childhood (back in the Soviet Union) how my parents were discussing buying a radio as a big deal and finally we went to the store a bought one on credit, and everybody in a family was proud of the purchase.  At that time transistors have been in existence for quite a while, but they were considered impractical because they could not handle the power required by big radios. Then Sony came out with a tiny transistor radio, which could fit in the pocket and cost $2, so even a teenager could buy one. And it was okay (for a while) that the quality of sound wasn't great - it gave one unbeatable advantage - in addition to being affordable - mobility!

Christensen also almost invariably uses the example of computers. First computers were huge mainframe machines, taking entire room, costing hundreds of million dollars and requiring high level of skill to be able to operate them. Then came mini-computers, they were much smaller and much less expensive, so almost any company can have one (remember punch cards, remember Algol, remember Fortran?) Then came personal computer, and now iPhone fitting in your palm has more power then the first mainframes did. Did you notice the trend toward mobility?

Look at the telephone evolution - from turning the handle then talking to the "girl" asking her to connect you with the desired party on the other end, to rotary and dial phones, then Motorola came with the first mobile phone, 40th anniversary of which was celebrated recently - "the brick", heavy and exorbitantly expensive. Look at what we get now - light, sleek, multi- functional device easily fitting in your pocket. And again, mobility was the vector of evolution.

Let's turn now to the sustainable energy technologies (Clayton Christensen mentions in one of his interviews that he came to rarely use the word "innovation" because it used often so broadly that practically lost its meaning. For the same reason I am trying to avoid using the word "sustainable" - it is not only overused, but often abused, however for the lack of the commonly accepted alternative term I will have to use it). We know how progress in electric vehicles is slowed by the absence of light, compact and cheap batteries.  The progress in developing not long ago hyped fuel cell technology is disappointing to say the least. One recent announcement by Redox Power of them having developed a compact and inexpensive fuel cell technology worth mentioning. If proves to fulfill its promise, it may become one of those disruptive technologies.  

What about the Photo-Voltaic technology? Despite significant improvements in efficiency and a recent dramatic drop in price of the PV modules, they are still expensive, require huge unobstructed roof area and without ideal conditions unable to contribute anything significant into the building's energy demand (not even talking about the payback period of 15-20 years in the absence of subsidies !)

Solar thermal technologies, especially with the advent of vacuum tube collectors, due to their much higher efficiency do not require as big area as PV does. However they still require large enough space, not easily integrated into the building. And of course, the plaque of all solar technologies - they work only during the day, it has to be a sunny day and most of the energy we can collect during few hours around noon rather than in the morning or in the evening. There is a solution however. For example, we may try to use collimated light the way it is done in the SunCentral technology for day lighting. There are other technologies which nicely complement solar, like air-to-water heat exchange and high-efficiency thermal storage. Connected in the optimally configured way and controlled using adaptive algorithm, they can dramatically reduce the cost and the size of the system.  

Would such composite energy technology / solution utilizing principles of Systems Architecture, providing adequate performance in a compact, easy to handle, even mobile package, herald the ascent of the next "disruptive innovation" ?

I think so.