The Interop Internet of Things – Out of the lab & ready for scale

The Interop Internet of Things – Out of the lab & ready for scale

The economic explosion of the Industrial Revolution in the late 1700s was driven, in part, by interchangeable parts. Signifying the shift from craft to industry, interchangeability of standard components allows for quicker assembly, greater reliability, and smooths the path of invention.

The web followed a similar growth curve in the early 2000s, but we called it “interop.” It became possible to simply combine reusable, interoperating technologies for all kinds of solutions, big and small.

When people ask me what’s special about the Internet of Things, I answer: Interop. It’s not just about software finally escaping the screen and bringing sensors and automation to the real world. It’s about taking advantage of interchangeable parts, to allow for solutions to be assembled far quicker and with far less effort than ever before.

One such interchangeable part is DIGISEQ, enabling contactless payments when incorporated in wearables and other IoT devices.

DIGISEQ have been part of our IoT Venture Studio, a program of startup investment and support run by R/GA Ventures between February and May 2017. Early in May we wrapped up the program with Demo Day, an opportunity for our nine startups to share their pitches and get out into the ecosystem of customers and investors.

Watch DIGISEQ’s pitch below. What you’ll see is a way to include Apple Pay-like functionality in watches and wearables, as an entirely managed solution. It comes not just with technology, but the necessarily relationships and certifications from Visa and Mastercard.

By doing the heavy lifting and bundling it together as a product, DIGISEQ has made an interchangeable part for all those device manufacturers that haven’t achieved the scale of Apple.

Another startup in the cohort, Flock, has also produced a reusable part. Its risk intelligence engine analyses the flight paths of drones, together with factors like weather and nearby buildings, producing an easy to compare score. It has future applications in everything from delivery to agriculture.

Long term the value is large. Today the starting point is in insurance: The engine slots neatly into an existing value chain, automating away the human underwriting, allowing for reliably quick per-trip insurance.

Flock is tackling what I like to call a Deep Value Chain Challenge. Let me explain. The ultimate value is seen by the drone operator, whether by reducing the cost of insurance, or in the enterprise with safer flight routing and more efficient fleet maintenance.

However the core innovation is the risk intelligence engine, and this is several links away in the value chain. Fully realising the value of the innovation will require changes in operations, re-training, new software, new integrations, and potentially new business models.

The innovation is buried deep in the value chain. The result is that the market is hard to enter, and Flock’s job is to find partners who are willing to adapt to take advantage.

Now Flock is by any account a complex and future-facing business. But in IoT, even the easy to understand innovations face the Deep Value Chain Challenge.

Take, for example, ScreenCloud.

The offer is incredibly clear: Offices, retail, and hospitality locations are littered with wasted big screens. ScreenCloud uses commodity hardware to link these screens into a fleet with a web-based content management system. It makes it easy to keep the content fresh and relevant.

The pitch is clear. The founder highlights one customer, a mobile phone retail chain in the US. They use the screens in the back-office across 500 stores to share live sales data, and coordinate messaging. They are delighted with the ROI.

And, personally, I have run across several companies who have attempted to build this solution themselves. It’s a real pain point, and for $20 per screen per month, ScreenCloud have a compelling offer.

Yet I ask myself: If it’s so simple, why didn’t one of ScreenCloud’s big customers do this before?

It’s back to the Deep Value Chain Challenge. The ultimate value, in the retail chain example, is for the sales managers. But the initial innovation is in the use of IoT technologies to fleet manage screens using the web, many links of the chain away. In-between there is not only hardware and connectivity, but also required is updated internal comms, buy-in from management, new ways to measure return on investment, and skills in data visualisation.

A startup may package up an impressive product in a simple and easy-to-use way, however, there is still a lot going on behind the scenes for a corporate customer or partner.

For a corporate, innovation means technology of course, but also up-skilling and organisational change. Working with startups means adapting to a different culture and cadence, and mundane work such as updating the procurement rules. And identification of the opportunities to be found in IoT is a matter of broad scouting from employees across all business units, and a willingness to listen to ideas, no matter the seniority of the originator.

Only with this kind of broad innovation strategy can the Deep Value Chain Challenge be short circuited.

At R/GA Venture, we support startups through programs. Each program comes with creative and growth support, and capital investment.

The programs also include commercial partners. Our partners use their involvement as part of the broad innovation mix, helping with culture, foresight, and for early access to new opportunities.

To sum up what I’ve learnt from this recent program, it’s that the Internet of Things is truly out of the research lab, and ready for scale. For corporates it will still take some effort. But the value, although deep, is there.

If you’d like to talk about partnership on future IoT programs, or on other program themes, do get in touch.

You can find the pitches from all of our nine startups in the first R/GA IoT Venture Studio UK cohort on this YouTube playlist.

Matt Webb
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