Fixed is better than broken. And it can be cheaper too. That’s why it’s good that machines can now talk to each other to say when a part is failing and can be replaced before catastrophe strikes. Running the air conditioning exactly how and when you want it is also better; and cheaper too.
If only there were a way to talk to your air conditioning, or better yet have it read your mind. That future is here.
In our new book, “Big Bang Disruption,” we describe the radical ways technological innovations are now entering the market, often appearing as better and cheaper alternatives to existing goods, right from the start. The impact of such disruptors on incumbents and their industries can be devastating.
Why now? One of the main drivers of Big Bang Disruptors is the constantly improving price and performance of information technologies. For years, computer processors, memory, and communications capacity have experienced regular, even predictable, growth that is nearly exponential. Everything gets twice as fast and half as expensive every few years. That’s a recipe for what we call the “innovator’s disaster.”
That explosive combination is now entering a new phase, where embedded digital technology is finding its way not just into smaller and more powerful computing devices such as smartphones and tablets but into, well, everything else.
In what our friend Kevin Ashton, General Manager at Belkin, long ago coined “The Internet of Things,” every one of over a trillion everyday items will someday include at least some ability to store and process information. And, more important, to share that information over the global Internet with the other trillion items.
We’ve been hearing about intelligent refrigerators and product packaging for years, but now, thanks to relentless price/performance improvements in the enabling technologies, the IoT has finally arrived.
Of course we’ve long had connected computing devices and, more recently, connected television sets and connected cars. In the last few years, an explosion of wearable sensing and monitoring devices, such as Fitbit, Jawbone Up, and Nike FuelBand, promises to revolutionize health care, fitness, child monitoring and services for the elderly. We’re on our way to the connected self.
At an IoT event produced by Techonomy Labs that we attended earlier this year, we heard from industry giants as well as entrepreneurs working on everything from personal satellites to intelligent cash, connected roads and smart band aids. If these innovations haven’t disrupted existing markets already, it’s only a matter of time before they do—and probably less time than incumbents are telling themselves.
Indeed, the IoT has the potential to disrupt and reconstruct the supply chain of every industry, radically improving the efficiency of manufacturing, distribution, retailing, and customer service. Marketing, for example, can become truly scientific, not based on sample data but on complete data. What items are bought together? How are they actually used, and by whom, and when, and in what combinations?
Manufactured goods will diagnose their own problems and contact the manufacturer for solutions. When products break, we can determine immediately why and how. We’ll be able to predict failure in advance, turning maintenance from a reactive to a proactive function. According to a recent report by economist Michael Mandel of the Progressive Policy Institute, the IoT could stimulate the rebirth of manufacturing in developed countries.
Though privacy issues will need to be carefully considered, in the IoT, post-purchase information will be the most valuable data of all. Which means consumers will have new leverage in everything from design to pricing. Consumers will become collaborators.
While many IoT applications are still several generations of technology improvement away, the next major disruptor is already massing at the borders: making homes and offices intelligent and networked. We’re entering the age of the connected building.
Early market experiments have already begun, some of them with the potential of Big Bang Disruption. Appliances, sockets and switches are being upgraded with sensors and antenna, making it possible to collect vast information about the performance and energy usage of device that draws power.
Once collected, that information can be sliced and diced to improve energy efficiency, building maintenance, security, and future product design.
The connected building will obviously disrupt real estate developers and property managers, as well as manufacturers of appliances and lighting fixtures. But the impact of having near-perfect information on the performance of so many “dumb” (and often expensive) pieces of infrastructure could reach far beyond the obvious–and deeply into the energy sector.
It’s no exaggeration to say that connected buildings could change where and how we live and work, or even how we distinguish between the two, especially for an aging population.
Real-World Example: How Verdigris Uniquely Tracks Every Power User in the Building
To make this more concrete, let’s look at a real-world example. Recently, we paid a visit to a connected building start-up called Verdigris. Its CEO, Mark Chung, is no wide-eyed Silicon Valley kid chasing a half-baked idea. Chung, a Stanford engineer, has worked as a hardware designer at some of the leading chip companies in the world. He’s a serial innovator, and his current idea is an especially scary one.
Verdigris is building technology that will monitor the performance of every electric device in a building and report the information back to the building’s manager.
But rather than attach computing and networking equipment to every socket, Verdigris is collecting information using a technique known as non-intrusive load monitoring. In its prototypes, Verdigris gathers utilization information directly from the circuit box, sampling electricity loads in the building several thousand times per second. (Belkin is working on a similar approach, known as Echo Electricity.)
That data is transmitted to the cloud for processing, where Verdigris applies a proprietary algorithm to uniquely identify the signature of each appliance and device in the network. Verdigris knows the maker, model, and wattage of everything in the building that draws power.
(The algorithm, Chung explained, began life in work the founders did with Internet traffic optimization. Verdigris has adapted a technique known as deep packet inspection, which identifies patterns in the pieces of Internet communications that travel over the network. The company is using the same technique to sort out which appliances are using energy, how much, and when.)
Once the information has been collected, the company has developed analytics to make sense of the mountains of information generated by the building’s devices. Right now, the system can recommend changes to facility maintenance schedules, and to the operation of internal systems including lighting, HVAC, ice makers, electrical vehicle chargers and space heaters.
In an early test at a major San Francisco convention center, for example, the Verdigris technology was able to determine malfunctions in a large chiller plant. During cold weather conditions the chillers were still running even when they didn’t need to, leading to significant energy waste. The existing building automation system hadn’t noticed that.
As with many of the disruptive technologies we’ve studied, most of the hardware components Verdigris is using are off-the-shelf commodity parts, originally designed for specialty uses. The current version is now being used in large office buildings, including those of Netflix, Autodesk, and the City of San Jose.
In the future, the company hopes to “push information back to automate simple things like thermostats, light timers, PCs and other ‘smart’ devices,” Chung told us.
And that’s just the beginning. Chung says the next revision of the product will be focused on enterprise facilities of greater than 50,000 square feet, but the basic technology could equally apply to factories, apartment buildings, retail locations, and homes.
The disruptive potential of the connected building, as this example suggests, is enormous. Consider the obvious benefit of reducing energy waste, a key goal both for cost reduction and environmental sustainability. According to industry experts, our buildings consume 11,700 terawatt-hours of energy per year, half of which is wasted.
Even if connected building technology “only” saves a few thousand TWh through simple monitoring, the savings will easily add up to billions if not trillions of dollars. And imagine the impact of that reduction on every link in the energy supply chain—generators, distributors, building managers, electric device manufacturers, consumers.
Verdigris is just one of dozens, perhaps hundreds of companies working on real-world solutions for connected building products and services. Once the price and performance of the technology gets cheap enough for mass deployment, these early experiments will quickly turn into rapid and widespread adoption. From smart buildings to smart grids, the transformation of energy may come, to paraphrase Ernest Hemingway, gradually and then suddenly.
We call that adoption model “catastrophic success.” Whether you’re a building manager, an energy provider, or just a tenant, if you aren’t paying attention to these developments now, in other words, it is going to be too late when the disruptors get the formula right and go mainstream.
Scared? Or better yet, inspired?
“Big Bang Disruption” goes on sale Jan. 7, 2014 – a mere four months after we finished drafting the manuscript. Who says publishing can’t adapt to the world of better and cheaper? Pre-order now!