Despite the hype surrounding the Internet of Things (IoT), its promise of enabling smart connected products, new business models, and delivering better customer experiences is undeniable. Combining physical products with sensors, software, storage, and connectivity will also enable exponentially more “products as a service.” Besides providing unprecedented opportunities for transforming brands’ relationships with customers, it’s also a promising portal to a more sustainable world – reducing waste, emissions and natural capital dependencies. Implicit is the hopeful and exciting potential for improving environmental and, in some cases, social footprints of both consumer and industrial products.
But with estimates from 100 billion to a half trillion connected devices by 2025, what about the waste, emissions and resources inherent in adding sensors, memory, and wireless networking components to products that were once dumb and unconnected? What about the enormous data center and hardware implications of all the computer processing required to communicate with these billions of smart connected things? What about the potential overreach of making too many things smart (smart socks – really?) that may not need to be anything other than the “dumb” objects that already serve their purpose well without a higher IQ?
Much has been written about “environmentally obvious” smart connected products such as smart thermostats and phone-controlled lighting at home, or sensor-based irrigation in precision farming, or smart factory equipment with predictive maintenance. But for every smart connected product, not just the environmentally obvious ones, two questions should be answered to the best of a company’s ability early in the product development decision cycle:
- First, at the front end of design, how can we make informed judgments on the degree to which a new product or feature is likely to be environmentally net positive or negative (and reap the business benefits that accrue to the former), given the components required to enable that product or feature?
- The second question is in the design phase, with huge environmental implications, confronting a decision that never had to be made with unconnected physical products: How much of this product’s (or package’s) functionality will reside in the physical product itself, and how much should reside in the cloud?
Let’s look through both these lenses at two pretty straightforward examples of IoT evolution. Below is a slide from a recent conference presentation of mine showing two legacy products – one industrial and one consumer – and their IoT replacements.
Top center is a smart industrial safety helmet; bottom center, a smart thermostat. (Disclosure: I have no connection to or financial interest in these manufacturers, and no special technical knowledge of their products.) On the right are glimpses of what’s inside these products that makes them so useful. On the left are older, simpler products that performed the same core functions, respectively, of protecting heads and controlling temperature.
On one hand, adding sensors and other technology to products that previously didn’t have them is clearly negative for the environment, given the sourcing, manufacturing and transportation requirements of a more complex supply chain. On the other, it’s certainly environmentally positive when a thermostat can radically improve energy efficiency or when a smart helmet can keep repair trucks off the roads (by allowing an on-site helmet wearer to fix something or do preventive maintenance with the help of augmented reality, projecting images of parts and how-to instructions).
But how can a company net out sustainability pros and cons of a new smart product or evolving a legacy product for IoT compatibility – especially before massive sunk costs in development and design? That’s a question I pose as a challenge to the sustainability and innovation communities for breakthrough thinking and better answers. Meanwhile, for products that will be smart and connected by virtue of only a relatively small number of additional parts (not hundreds), I have a couple of suggestions based on work we’ve done on other aspects of product development portfolio management.
First, bring together a carefully selected cross-functional internal team of technical, marketing, product and sustainability subject matter experts (augmenting the latter with external expertise, if necessary). In a structured work session, have them consider and discuss the nature and quantity of essential components that may be required to realize the fundamental vision for the product. Then, have the team score each of those components on a simple 5- or 10-point scale on the environmental KPIs that are most important to your company.
This is very much on the “80/20” principle: You won’t have remotely enough information yet to calculate emissions or have any environmental compliance-level data, but that shouldn’t stop you from making some informed subjective judgments on whether a particular component is likely to be carbon- or water-intensive in manufacturing, whether it will require chemicals of concern, whether it could likely be ethically sourced, and what its potential is for upcycling or reuse. Then convert those scale ratings to a “Sustainability Load” scorecard, weighting each component’s rating by the relative importance of each KPI. You may see, for example, that Component A is likely to have roughly three times the negative environmental impact of Component F (of course social KPIs can be considered, too, but we generally find that product-driven social impacts, such as labor practices, are more driven by company policies than by individual product decisions.). Then you can ask if the functionality that Component A enables is truly crucial to customer experience and competitive advantage. If it is, are there environmental advantages to designing in a way that Component A-enabled functionality can reside in the cloud rather than in the physical product, and is that feasible? Think of smart wireless sound systems controlled by smartphone apps that stream music so that all that is required in the physical product is a speaker and amplifier.
Now, what about the offsets on the positive side? This is where we consider the behavior that the product will stimulate downstream after sourcing, manufacturing and transport – in customer/consumer use and at end of life. Again, the same simple rating scale can be used for each IoT-enabling component, based on what is collectively known by the scoring team at the time. Convert those scale ratings to a “Sustainability Benefit” scorecard, applying the same principles applied above for the sustainability load. Yes, maybe getting that product to market is going to be significantly tougher on the environment because of its IoT enablement, but once it’s there it could radically alter downstream behavior to save energy or water, reduce waste, positively impact land use or biodiversity, or reduce non-GHG pollution and the toxic load on human health.
The key is that you are rating each of these components prospectively and imperfectly, but still applying some discipline and metrics-driven consideration before greenlighting a product’s IoT capabilities for commercialization. You’re also asking the question, before the precise specifications train has left the station, as to what the environmental and performance trade-offs may be if select functionality can be moved from the physical product to the cloud. In some instances, those won’t be trade-offs at all: consumers will value a simpler, lighter-weight, smaller-footprint product, and your supply chain will be more sustainable.
We can’t possibly have all the answers to making the Internet of Things net positive. But this should be a goal for all products for companies with their eyes on IoT, and these questions should be asked and answered as systematically and thoughtfully as possible. I look forward to your ideas on how to do that, and seeing where this conversation goes.
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Steven Cristol is founder and managing partner of Strategic Harmony® Partners and an Advisor in DBI Network, a global management consultancy.
Published Jun 21, 2016 2am EDT / 11pm PDT / 7am BST / 8am CEST