The average lifespan of a company is now just 15 years according to the S&P Index. The main reason for this? Failure to embrace innovation. Kodak is a classic example here – although it is the company responsible for inventing the digital camera, its failure to embrace it ultimately led to its demise.
All too often boardrooms focus on margins and not the future and, difficult though it may be, there needs to be a shift in boardroom mentality to invest in innovation in order to survive. Quite simply – those who do not, will not survive. One only has to look at Blockbuster’s fate at the hands of Netflix or Radioshacks end with the advent of Amazon to see that those who innovate and embrace change are the ones who succeed. Organisations such as Uber, Amazon, Tesla and Airbnb are all doing so well precisely because they disrupt normal conventions using technology and innovation as weapons to challenge said conventions.
Of course, there needs to be a balance between long term investment and short term financial challenges, but it is possible to satisfy both. DuPont’s new strategy from 2010 has been that 30% of all revenue must come from innovations no more than four years old, Google spends 50% of its profit on innovation and Amazon invests the entirety of its profit in innovation.
What does all this have to do with connected commerce I hear you ask? According to Gartner, Internet of Things (IoT) product and service suppliers will generate incremental revenue exceeding $300 million by 2020. ABI Research has found that last year there were 16 billion active connected devices – by 2020 this is projected to be 40.9 billion. That’s an impressive 75% growth.
But how will this technology actually be applied and what does it all mean for products and, ultimately, consumers?
Let me give you some examples. Imagine if your running shoes could track when they need to be replaced, using data collected each time you run and taking into account the distance you travel and the terrain you run in, and using this data to alert the shoe manufacturer’s commerce system to automatically order you a new pair of trainers, according to your personal specifications, just when you need them? In essence turning your running shoes into a subscription service.
In the same way, your car could automatically sense when, for example, your tyres need replacing and automatically book you an appointment to get them replaced. The applications in the home are huge too. Your online grocery shopping could become a thing of the past as your fridge could automatically order products for you as you run out of them. This could even be extended to things such as shampoo bottles, which could sense when they are nearly empty and then be automatically added to your grocery list.
Amazon is definitely a company to watch in this space. Its new Echo product is designed around your voice. It's hands-free and always on. With seven microphones and beam-forming technology, Echo can hear you from across the room. It also connects to Alexa, a cloud-based voice service, to provide information, answer questions, play music, read the news, check sports scores or the weather, and more.
The more you use Echo, the more it adapts to your speech patterns, vocabulary, and personal preferences. You can also use it to control connected devices with WeMo, Philips Hue, SmartThings, Insteon, Wink and more.
As the above examples show, the applications are infinite. In terms of B2C, key growth areas for connected commerce and IoT include home automation, home appliance, automotive, wearables, health, groceries and DIY.
It is not just the applications that are infinite, so to are the associated disruptions to business. Product design for example is going to be fundamental to connected commerce. It will also introduce another dimension to how consumers interact with the Internet. Where will the traditional website fit into this new eco-system? At the moment a brand’s website is at the forefront of its digital presence, the membrane between brand and consumer. While I’m not suggesting the traditional website is necessarily going anywhere any time soon, there will be a shift in its prominence.
However, content will remain king in the IoT and connected commerce world. Here it is all about utility and content can be hugely valuable in terms of helping consumers to effectively use their new connected eco-system. Content and commerce need to learnt to co-exist here and while content can perhaps initially get in the way of conversations, the story needs to be told to build relationships and add value to the user experience.
What these disruptions don’t necessarily mean, however, is that brands need to abandon their existing investment and digital ecosystem. Products may be changing as well as the consumer experience and business model but that does not mean you need to re-invent your digital estate.
Indeed, your CMS is often the only cloud-based asset you own, it’s the only single source of truth amongst all digital assets and content within your business. It’s also a component of your ecosystem that can handle scale and load and the only platform that is capable of managing your brand experience. In addition, it’s agile and is gathering intelligence – so why on earth would you start again? Instead, build on your existing investment.
The key here is the cloud. Not only is it a very efficient hosting environment, it is also possibly the only affordable way to actualise IoT. The challenge will lie in how businesses use the cloud to store instructions and manage data.
What brands need to really keep in mind though is that as we start to redesign products, they’re only going to be powerful if they mean something to people. Consumers want things that are actually going to make life easy and so there has to be a real utility to these technologies. Contextualisation will be very important here.
Organisations cannot simply approach connected commerce and IoT as a box to tick or a gimmick. Just getting products to turn off remotely for example will not cut it – there needs to be real innovation and use.
This is why it is so hugely important for organisations to carve out that time to be innovative, to think through not only what they want to happen and where they ultimately want to go with new technology, but how they’re going to get there.