5 Ways “The Internet of Things” Will Disrupt Business in 2014

After much hype and promise, the Internet of things (IoT) looks set to become much more tangible in 2014. While most of us have moved beyond speculating about the value of an Internet-connected fridge, many of us are yet to see the truly disruptive power that technologies such as Bluetooth Low Energy will have for product and service design, the customer experience, value creation, and marketing.

Never has the business mantra: “Innovate or Die” been more true. With the IoT, change is not only imminent – it’s armed and dangerous. Especially if you’re big, bureaucratic or built around protecting “business as usual” – traits that describe too many Asian businesses.

Here are 5 predictions around how the disruptive force of the Internet of things will impact businesses in Asia:

1. When everything is connected to everything, existing markets will fragment and new markets will emerge.

The segmentation of markets is largely a function of the technology used to service and identify them. The Internet of things promises to remove the technology side of this equation paving the way for business models, which can focus more freely on customer needs and pain points.

The effect of this will be to saturate customers with touch points for brands. This will compel businesses to innovate in terms of how they deliver their existing products and services.

The pace of this change will exceed the expectations of most.

2. Services will become the new product.

Across much of Asia, business activity remains firmlyfixated on the manufacture of digital and physical products. This “tunnel vision” has made it difficult to see how services have been replacing “products” as key business outputs and market differentiators.

As the Internet of things comes to prominence, producers of traditional products and services will need to fundamentally change the way in which they create and deliver value.

In a world where all things are connected, new services will act as sensors making narratives and “way-finders” for customers to map and navigate the emerging landscape. Brand stories will be constructed and experienced through services in ways we’re only just beginning to sense.

3. The conversation will advance from usability to user experience.

As the touch points that characterize a customer’s relationship with a brand become increasingly interconnected, we’ll see a shift from interface design to experience design.

Most discussions and perceptions about unconnected (or “off the grid”) products are typically focused on the aesthetics and/or usability of the product. With hyper-connectivity, this object-centric view of the world is fundamentally challenged. Products that are inter-connected will be perceived differently, necessitating broader conversations about service and experience design.

One example is the Nest temperature control system, where perceived value is less about the physical product and more about the experience of the service. Design smarts will need to consider the spaces between things, as well the things themselves.

4. Marketing, customer experience and information technology departments will begin to converge.

Experiences will become the standard by which customersjudge businesses in Asia.

These experiences can’t be created in silos or by an isolated department. Businesses that continue to expose their internal dysfunction to customers when they interact with them will lose customers to smarter competitors.

The shift in focus from product to service, and from utility to experience will also necessitate fundamental changes to business roles and functions. The convergence of experience design, marketing and technology is an inevitable consequence of business models that are becoming increasingly customer-centric. This will cause the lines between marketing, experience, and technology to become blurred even further.

5. Most large businesses in Asia will not see the change that is about to consume them.

Unfortunately, many large businesses in Asia will probably miss these emerging opportunities.

Digital technology continues to remain a source of novelty for many businesses, relegated to a function of marketing, where digital products may be disconnected from the rest of the business. The effect of this is to impede the ability of many businesses to innovate at scale.

Until businesses in Asia internalize a capacity to innovate around what they do and why they do it, (not just the how) – they’ll be compelled to react to the environment around them, instead of inventing it.

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