There have been serendipitous product calamities. Janet Jackson’s infamous “wardrobe malfunction” is still amongst the Top 10 halftime shows in Superbowl History according to CBS News, and “led to the creation of YouTube.” To this day, the “most valuable thing in existence by weight and volume” is a misprinted Swedish Trestkilling Yellow stamp, worth an estimated £1.6m. And, of course, the Leaning Tower of Pisa attracts 1+ million visitors per year. Who knows, maybe even Steve Harvey’s failed teleprompting will increase the viewership of The Miss Universe Pageant or viewership of the Academy Awards.
Yet, most CEOs don’t wish to release calamities with possible user frustration, decreased sales, or safety issues. They want idiot-proof. So an obvious answer is the IoT (Internet of Things) where product sensors communicate back on usage patterns and errors, and permit software downloads eradicating design mistakes. When IoT is combined with the other catch phrase, “Big Data,” this can afford the product/experience owners an informed pathway towards iterative enhancements.
The trick, though, is the word “afford.” How does one pay for this connectivity? Yes, it might be possible to piggyback on a smartphones or Wi-Fi, but this assumes the customer has connectivity, consents to its usage, understands pairing, and sustains it. For instance, home broadband has dropped during recent years in the United States due to the rising popularity of smartphones. Bluetooth has either been the No. 1 complaint within JD Power automotive studies and/or Apple’s #1 reason for releasing six tries of its iOS 8 in 2014-2015. And OnStar eventually relented to privacy advocates about its probe data, causing the national press to broadcast the revocation. So “free” information isn’t guaranteed. Any product owner considering the data gold mine must consider how to pay for the miners.
Here I proffer four good strategies on funding your product’s IoT connection, but I assert only one gets a “high” ranking for getting executives onboard with the upfront investment.
Capturing the Opportunity Costs
One strategy can be to use whitepapers about usability to explain how hidden frustration is costing the corporation big bucks. A study … found that users rated ease of use second at 6.8 out of 10, while ease of learning was rated fourth at 6.4 on a scale of important purchase factors.” (Bias & Mayhew, 1994) “A bad design can cost a [company] 40% of repeat traffic. A good design can keep them coming back.” (Kalin, 1999) The most famous case of these was the $300 million button, where the company supposedly unearthed a massive opportunity cost by originally forcing the user to register prior to shopping. That said, this strategy requires a leap of faith by your executives since it is invisible to them and, since it requires a spend-now-realize-the-benefits-later, they are typically not incentivized to act upon it. Personally, I have never seen this strategy work.
RANKNG: Low. This spend-now-realize-the-benefits-later strategy requires a leap of faith by your executives since it is invisible opportunity.
Eliminating the Current Costs
“Downtime” for electro-mechanical equipment can be expensive for businesses via servicing costs, lost production, and stunted customer relationships. So a great example of using IoT to improve costs is prognostics. How? The engineer knows from sensor data when a part has to be serviced before anything fails. A good example of this is the United States Army and Honeywell both report via Intelligent VHM (vehicle health monitoring), “ … enhanced safety, reduced maintenance costs [by up to 50%], and increased aircraft availability [by upwards of 10%].”
Also, there are also real-world costs within poor user experiences. 59% of Americans would switch brands to get a better experience with customer acquisition costs being 6-7 times that of keeping a current customer happy. Such poor customer experience/support has been estimated globally at a cost of $338.5 billion.
RANKING: Medium. You usually have to spend money to prove these very real costs exist since they are already considered the “cost of doing business,” so getting the green light for that spending requires a visionary.
Avoiding the Future Costs
This might be the hardest to prove, but generates the greatest exposure. Recalls. Brand degradations. Legal fees. Today’s failure modes were not yesterday’s, and tomorrow’s costs are the great unknown.
Maybe the best example is cybersecurity. The average firm reportedly has a global cost of $7.7 million per year, with American firms doubling that ($15.4 million). “The most costly cybercrimes were those carried out by malicious insiders, DDoS, and Web-based attacks,” per a survey of more than 2,000 executives worldwide. Possibly the most famous among these was the “Love Bug” virus in 2000, which cost $10 billion globally and was eventually traced to a 27-year-old student in the Philippines. Other attacks, though, have been more Target-ed (e.g. Target’s credit card info hack admittedly cost them $167 million), and still do significant damage despite no DDoS.
So how to avoid being prey? You guessed it: Over-the-air updates via an IoT connection with software updates when new wormholes are discovered. This could be patching your OnStar-enabled car, securing your Google phone from a drain-your-battery virus. The bridge to protecting tomorrow’s security has an IoT column.
RANKING: Medium. Usually product owners don’t want to spend money until they’ve been burned. Once again, you need a visionary beyond just yourself.
Adding Services to Pay for the Connection
All cost avoidance? Really?? What about additional revenue? Of course there is. In fact, both Google Play and the iTunes Store have over 1.5 million app’s, most of which provide some cellular avenue for revenue.
The non-obvious avenue additional revenue using IoT within UCD (user-centered design). If said features are designed and validated around the customers’ needs, they will get the expected revenue. “64% of features are either never used or rarely used” per Jim Johnson, CEO of The Standish Group. UCD via the IoT data is a way to iteratively maximize the revenue.
RANKING: High. Product owners tend to focus on adding new revenue streams, so getting on board with this mindset is the best way to sell the other three strategies.
Now that you are the wiser, find the budget, find the champion, and take the IoT golden-brick road. Your product shall not suffer, your users shall not suffer, and your balance sheet shall not suffer. Realize, though, I’m not suggesting you abandon the first three strategies—not by any means. They are pathways towards staying differentiated, but bundling the value proposition with a revenue generator is the way to go.
Do it. Don’t be an idIOT.
Steve Tengler is a senior director with the Honeywell Automotive Software group, where he oversees a global team of engineers, data scientists, and designers. To date, he has more than 90 patent applications.