The Internet of Things

Jim Euchner, From the Editor, Vol 61.5

Give ordinary people the right tools, and they will design and build the most extraordinary things.

—Neil Gershenfeld

The Internet of Things (IoT) has taken on many meanings. In manufacturing, it means instrumenting and informating factories so that data can be used to improve quality and productivity. In logistics, it means a unique identifier for individual items so that supply chains can be made more intelligent. In new product development, it means the development of smart, connected products that provide information about their state so that information can be used to improve the operations the products support. It can also mean the use of information to broaden the traditional design space for a product. Finally, for manufacturers, IoT means the proliferation of data-based business models, especially those that sell products as services.

Today’s IoT implementations are mostly part of what Neil Gershenfeld, who helped originate the concept, would call the BITNET of Things. The applications generally involve sensors connected in some way to a central controller, which does the analysis and sends alerts or instructions. The devices themselves are not directly connected to the Internet. To Gershenfeld, being on the Internet directly, as opposed to attached to a server on the network, is a crucial distinction, one that affects the potential for innovation. In his view, IoT “means IP [Internet protocols] embedded in devices” (Gershenfeld and Euchner 2015Gershenfeld, N. G., and Euchner, J2015Atoms and bits: Rethinking manufacturing. Conversations. Research-Technology Management 58(5): 1621.[Taylor & Francis Online][Web of Science ®][Google Scholar], p. 16). In this model, devices can communicate directly with other devices, with users, and with the wider network, making innovation possible without access to the central server.

As an example, there are commercial applications that use sensors on tires to gather information about tire pressure and then use that data to predict and prevent roadside failures. Now those sensors do little more than send a stream of data to a central server; applications on that server analyze the data and relay the results to others—users, service providers, fleets—as directed by the central algorithms. In Gershenfeld’s vision, this limits innovation. If, instead, those devices had their own embedded IP capabilities, anyone could innovate with and around them:

The tire might want to talk to an electric motor driving the wheel to convey torque information; it might want to talk to the other tires to convey information about relative loading on the car; it might want to talk to the UI for the driver to let the driver know the tire needs attention; it might want to talk to the highway to convey information about where on the highway, for example, load is being applied. Beyond that, it might want to send information to manage the inventory of tires as part of a work process. (Gershenfeld and Euchner 2015Gershenfeld, N. G., and Euchner, J2015Atoms and bits: Rethinking manufacturing. Conversations. Research-Technology Management 58(5): 1621.[Taylor & Francis Online][Web of Science ®][Google Scholar], p. 17)

With true IoT, as Gershenfeld conceives it, innovation can happen at the edge—at the device itself. Anyone can access the device’s IP stack, so anyone can innovate, which creates unimaginable potential to increase the power of these devices and accelerate the introduction of new services.

This future is still on the horizon, but there is a lot of exciting work going on today. This issue includes articles on different aspects of current IoT practice as it moves into the mainstream. In “Smart Factory Implementation and Process Innovation,” David Sjodin and his coauthors discuss a maturity model for implementing smart factories, which they define as factories that use data from the factory floor “to support dynamic adaptation and maximize efficiency.” Based on their study of five factories in two automotive manufacturers, they identify and discuss the challenges associated with implementing the smart factory concept in practice.

In “A Straightforward Route to Sensor Selection for IoT Systems,” Paul Jones and his collaborators discuss a three-sieve process for selecting sensors for IoT applications based on sensor requirements, environmental constraints, and economic factors. Their approach optimizes the final sensor selection for the particular application, which is a common need at this stage in the evolution of a new technology.

In his Point of View piece, “Substitute or Synthesis?,” Ulrich Lichtenthaler considers the interplay between artificial intelligence and human intelligence in interpreting IoT (and other) data. He argues that there are four categories of AI applications and that the most potent applications will be built on a partnership between human and machine. Both of these discussions will help practitioners implement IoT applications based on the centralized model (though one suspects that AI partnerships with human intelligence may require a more intelligent edge).

Finally, in “Improving Usage Metrics for Pay-Per-Use Pricing with IoT Technology and Machine Learning,” Timon Heinis, Christoph Loy, and Mirko Meboldt discuss advanced services business models. These models generally include a revenue model based on usage of the product (like the Power by the Hour model pioneered by Rolls Royce). The authors of this article argue that usage metrics that better reflect the true costs of using a product can be developed with the help of data from IoT. Their belief is that these more sophisticated metrics have the potential to broaden the scope of businesses for which servitization makes economic sense.

This issue’s Conversations interview is with Steve Blank, godfather of the Lean Startup movement. Both his interview and the profile of Gary Gray, vice president of product management at Indian Motorcycle, emphasize the importance of customer insight in innovation. Technology—even a technology as powerful as the IoT—is just an enabler. Steve Blank, who has likely observed the dynamics of more Lean Startup initiatives than anyone else, discusses the collection of capabilities that has evolved into Lean Startup and provides insight into the successes, failures, and prospects for the approach in large corporations.

The IoT is exploding today. Visionaries see a future in which trillions of connected devices serve billions of connected people. As exciting as today’s applications are, the future of the IoT may be even more compelling. Very few of today’s IoT devices are full-fledged citizens of the Internet. When these devices start to incorporate simple IP stacks, the IoT could give rise to the same sort of distributed innovation that the Internet has, enabling anyone to innovate at the edge. What is happening with the IoT today may be analogous to what happened pre-Internet with networked computing. Companies implemented (and controlled) entire applications, from the edge to computational centers. When the connections were opened up with the IP architecture, innovation exploded. Perhaps the future of IoT will follow the same path and lead to the same kind of generative growth as the Internet itself.

The Parable of the Soil

Jim Euchner, From the Editor, 61.4

“A sower went out to sow his seed. And as he sowed, some seed fell on the path and was trampled, and the birds of the sky ate it up. Some seed fell on rocky ground, and when it grew, it withered for lack of moisture. Some seed fell among thorns, and the thorns grew with it and choked it. And some seed fell on good soil, and when it grew, it produced fruit a hundredfold.”

Luke 8:5–8, New American Bible


An innovative culture is one in which radically new things can happen with some consistency. That culture is rare, and it requires nurturing. Like the seeds in Luke’s version of the parable of the soil, innovation requires the right conditions to thrive and produce fruit. Without those conditions, innovative impulses may crop up, but like seeds scattered in the wrong place, they won’t grow to maturity. The parable of the seeds offers a useful analogy for the factors in the corporate environment that can stifle innovation—or allow it to thrive.


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The Emergence of Innovation in China

Jim Euchner,  From the Editor, RTM 61.3

“Let me speak frankly: the advantage of innovation for multinational companies has shrunk substantially since the early 2000s.”

—Professor Hengyuan Zhu, Tsinghua University


I was invited to visit China for the first time in 1989, to speak about expert systems, then at the forefront of practical AI. At that time, technology transfer from the West to China was a one-way street, and it was expected to be so for some time. My visit was canceled by the tragic events at Tiananmen Square in June of that year. The emergence of a vibrant culture of innovation and entrepreneurship in China seemed very far away.

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Innovation Succession

Jim Euchner,  From the Editor, RTM 61.1

“To everything there is a season, and a time to every purpose under the heaven.”

—Ecclesiastes 3:1

I have always been intrigued by the notion of forest succession. Following the burnout of a forest, the trees that grow are not (at first) the ones that were burned. The soil and the light are not proper for these trees. Instead, first-generation vegetation—mostly mosses and grasses—begins to grow, almost as soon as the ashes cool. Over time, as these plants grow, they change the composition of the soil, making the conditions right for a second-generation forest composed of bushes and small trees. Next, fast-growing evergreen trees take over. These trees love the sun and quickly become the dominant species. Soon, trees that thrive in the shade—the large, deciduous trees that will be the dominant species in the mature forest—begin to grow in their understory. The canopy they produce creates an environment in which the shade-intolerant pines cannot thrive; the climax forest is primarily composed of large, long-lived, shade-producing trees.

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A New IRI for the Future of Innovation

by Edward Bernstein, IRI president; published in RTM, Vol 60, 6

Five years ago, IRI celebrated its 75th anniversary by looking back over the accomplishments of the Institute and its members and envisioning what the next 75 years will bring. While much has changed in the field of innovation management over IRI’s lifespan, these shifts are modest compared to those that are coming. IRI is no stranger to change; in fact, we champion it by facilitating the incredible innovation endeavors of our members and by making smart pivots as an organization.

Through the decades, our organization has kept a steadfast focus on creating value that keeps pace with the continuously evolving needs of our members. The IRI of the 20th century focused on the leader of the central R&D laboratory; while the company was the unit of membership, our programs and services were geared toward providing value to the Chief Technology Officer. This value centered on the relationships developed at semiannual meetings held at top-tier venues. As R&D has become more distributed, IRI has evolved along with it, creating new ways to serve the new value creation units emerging in member companies. These new avenues included our networks, more open online content, and an increase in the number of complimentary registrations included with organizational memberships, to encourage broader participation in our network and ROR programs.

Now, our brand and the experience we offer need to catch up with that evolution, to communicate a cohesive vision that is relevant to the times and strategically mapped to how companies will realize growth into the 21st century. As we prepare to lead into the future, we know that the functions we support are more often referred to as innovation than as R&D—a permanent change that is more than semantic. Furthermore, the term industrial research, the core of our name, is anachronistic, belying our forward-thinking approach and creating a barrier to the organization’s adoption by “new economy” industries. For these reasons, the Industrial Research Institute is repositioning itself in the market with a new name: the Innovation Research Interchange. This change reflects our new value proposition, better defines the unique collaborative experiences we foster, and aligns with how our members achieve growth.

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