The competitive ecosystem: thinking ahead about networking
In 1982, Carnegie Mellon, Michael Kazar, and David Nichols graduate students developed an early IoT (Internet of Things) experiment. Kazar recalls, “There was a Coke machine on the third floor of this eight-story building, and people didn’t like it when they went down to the third floor and found the Coke machine was empty. Someone said, “Hey, why don’t we set up the cola machine to be on the internet?”
They set up a serial line connecting the cola machine to a terminal concentrator from which they happened to have control over the source code. It could check the supply to the coke machine 10 times per second.
In many ways, this early prototype shows what the IoT is all about – in principle, the coke machine could automatically reorder supply when inventory is low, or dynamically change prices based on inventory or demand. Coke suppliers would know in advance that supply needs to be increased as demand for vending machines increases. Indeed, the interconnected vending machine had the potential to impact bottlers, distributors (for companies that supply vending machines), repair and maintenance companies who service the vending machines, and even the demand for coffee in the building’s cafeteria, that could benefit from vending machine inventory. Outs. And the list goes on.
A simple idea of connecting vending machines to the internet had the potential to affect several industries. This type of interconnected ecosystem is what makes today’s economy so unique. An action affects several value chains in several high and low tech industries.
From internet-enabled vending machines in 1982 to traffic lights in 2018
In December 2018, Larry Page, Google co-founder and CEO of Google’s parent company Alphabet, attended a meeting of about 200 of the country’s top CEOs in New York. Before this group, he was asked what he would do with the $ 86 billion in cash that Alphabet had at the time (mostly overseas) when tax policy changed so he could bring that money back to the US for cheaper tax treatment. His answer was surprising and yet meaningful: “traffic lights”. In fact, he was asked two more times in the next 10 minutes about topics that had absolutely nothing to do with traffic lights, and each time his answer was “traffic lights”.
Page went on to explain that he is at his desk in Mountain View, California in the morning and that his employees are at a traffic light waiting to get to work. Often no traffic is moving in any direction. He sees this as a waste of time that reduces productivity and harms the environment when the engines idle for minutes.
With his answer, however, he wasn’t really talking about traffic lights. He thought many steps ahead and looked to a future in which cars would be automated and talk to each other. Cars automatically slow down for other cars and do not stop. Accidents will be avoided and traffic will flow smoothly and unhindered. We don’t need any traffic lights at all.
To do this, however, an ecosystem must be built. Cars must increasingly be autonomous and communication between vehicles must be predictable and secure. The removal of traffic lights would be the result of successfully connected vehicles, not the goal of connecting them together. It’s about building all the components of the ecosystem in such a way that we don’t need traffic lights.
Think about the requirements for our infrastructure to fully understand the implications. For example, there are constant and never-ending calls for more roads to reduce congestion in urban and suburban areas. In a world where most traffic is autonomous and interconnected, we would actually have an overabundance of roads. The impact of autonomous, interconnected vehicles extends well beyond automotive (and related) production and affects road construction companies and industries – from asphalt and pavement companies to heavy machinery to workers and local municipal and state highway budgets.
All of this requires thinking many steps ahead. In fact, the only people who speak publicly about strategic checkpoints in interconnected markets are Larry Page and Sergey Brin, the two co-founders of Google. You clearly understand.
All of this suggests three things to think about about products to platforms and platforms to ecosystems:
1. Think ahead. The traffic light is not about traffic lights, but about not needing traffic lights anymore. The linked cola vending machine did not have to go down several floors of the building to check inventory levels.
2. Know the underlying needs. Saving time is a basic need in both stories.
3. Think “right to left” rather than “left to right” and avoid incrementalism. Think about where you want to be (the “right” end of a timeline) and work back to today (the “left” end of a timeline). Then ask what you can do today (hook up a vending machine, turn off traffic lights) to get to the vision you have at the end of that timeline.
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This is a contribution from Dr. William Putsis, Professor of Marketing, Economics, and Corporate Strategy at the University of North Carolina-Chapel Hill and Faculty Executive Program Fellow at Yale University. He is also President and CEO of Chestnut Hill Associates, a strategy consulting firm that offers a range of online leadership development courses. His new book is The Carrot and the Stick: Harnessing Strategic Growth Control (Rotman-UTP Publishing, Feb. 3, 2020). Learn more at Chestnut Hill Associates * * *
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Posted by Michael McKinney at 12:47 AM
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