There is a lot of talk and excitement in the telecom industry about the Internet of Things. There is a strong belief, a quasi certainty, that we are undergoing a revolution that will significantly transform our lives and our planet.
After all, the signs are already there: computers, smartphones have been connected for quite a while now, machine-to-machine solutions have brought productivity and many other gains to many sectors of our economy, and it looks like lately, every day brings to light new innovations and use cases.
There are two major factors that accelerate this evolution:
- as is now customary since Moore formulated his infamous law, increases in processing power and miniaturization enable adjunction of low cost, yet powerful computing capabilities to virtually any device
- the ultra-fast development of cloud, data centers and broadband connectivity enables linking these devices to software intelligence and applications in a highly flexible and scalable way
In his recent works, that he presented at IoT World USA in San Diego, Professor Michael Porter of Harvard Business School uses the expression Smart Connected Products (SCP) to describe the above, and goes on to study their impact on competition and company organizations. Without going into the details of his exposé, suffice it to say that SCP bring their share of opportunities and threats to existing players, shift the bargaining powers and reshape the value chain, while in some cases drastically lowering the barrier to entry for new players. One example he used was Tesla, as the automotive company does not rely on a dealership network. I think we can all add our own list of names to illustrate the profound changes we are in midst of (e.g. Apple changing the music industry – and soon the automotive industry? -, or Amazon, or Netflix, etc.). What really struck a chord with me was the second part, and the organizational transformations brought about by SCP, rejoining some of my recent thoughts.
Professor Porter explained how SCP affect the very notion of product, as it is moving from traditional hardware and software to more complex systems of products, and ultimately to the concept of experience, when combined with multiple systems and company services. As a consequence, almost all the activities of an organization are impacted, from product design and development, to manufacturing, customer service, marketing and sales and human resources. Professor Porter even introduced new functions bridging traditional organization silos such as Dev-Ops, Customer Success Management and Chief Data Office, and admitted this was just the beginning, the early innings of a vast movement..
He did leave the Marketing function in his organization chart though, albeit necessarily transformed by the appearance of a Customer Success Management function.
When I started looking deeper into the implications of IoT for businesses, I came up with a much more radical intuition: Marketing, as we know it, will ultimately disappear.
This is as bold and premature a statement as I can make, yet it is based on a certain logic and observations found in both Professor Porter’s work and the Bell Labs Future X network book. What the latter adds to the notion of individualized customer experiences is a demonstration that the technology fundamentals to deliver these experiences at a massive scale are right around the corner, for example with the cloud infrastructure becoming highly distributed and moving closer to the network’s edge.
As a result, experiences will be designed for individual customers (persons or businesses) and delivered directly to them. If you look at the definitions (the old ones) of market and marketing, both become obsolete as the economic landscape reverts into a bipolar producer / consumer world. Exit the marketplace, as the farmers and hunters regain their lost bargaining power.
Time for some nuance now. The marketing function has been around for very long and has changed over the years to include the 4P’s approach (product, promotion, price, placement) or later the 4C’s (consumer, cost, communication, convenience, or, if you prefer, commodity, cost, communication, channel). In that sense, marketing as the aggregate of functions involved in moving goods from producer to consumer, will not go away. But it also needs no longer be called marketing – it’d be confusing.
The expression that comes to my mind is Customer Experience Management (although not with its traditional CRM meaning) and it could be comprised of the following four sub-functions:
- Customer Experience Design and Development (product management)
- Customer Experience Delivery (placement, multi-channel outreach)
- Customer Success Management (I like Professor Porter’s designation, for communication and/or promotion)
- Customer Experience Monetization (cost, price, this would explore new business models, for example leveraging all this new data collected by SCPs)
In summary, we can probably all agree that the Marketing function will be greatly transformed in an Internet of Things world. Lucius Cary once said: “where it is not necessary to change, it is necessary not to change”.
So let’s make this an existential and survival question for my marketing colleagues, to ensure we all measure the extent of changes that IOT will bring to our professional lives and the limitless opportunities.