Rethink Podcast Episode #10 – What Risks Marketers Should Consider with the Internet of Things (IoT)
When marketers consider the Internet of Things, they’re likely to see a ton of opportunities (and the cash rewards those may bring).
By some estimates, there will be more than 24 billion Internet of Things (IoT) devices installed by 2020 (and according to other reports as many as 200 billion connected); and more than $6 trillion invested in IoT solutions over the next five years. Heck, we at Act-On recently wrote about the possibilities, here and here.
This investment will be split among businesses, consumers and governments, all of whom will be pursuing IoT with the benign goals to: save money or time, increase productivity, or enter new markets or introduce new products.
But there are also risks – some grave – that marketers should consider and raise up for discussion during conversations with executive and engineering teams as organizations consider adopting or rolling out of some new IoT gizmo or gadget.
Consider some of the news stories from the past year:
- More than 1 billion stolen passwords and other data from Yahoo accounts
- Hello Barbie and other toys that turned out to be potential surveillance risks
- The distributed denial-of-service (DDoS) attack that shut down much of the Internet along the U.S. east coast and was caused, in part, by hijacking malware utilizing devices such as DVRs, IP cameras and baby monitors
- And the alleged role Russia and other hackers had in the U.S. presidential election
In this episode of the Rethink Podcast, we interview Rob Wiltbank, the CEO of Galois. Galois (pronounced gal-wa) is a research and development computer science company serving customers, many in the Department of Defense, around the verification of software and “where failure can’t be resolved by a reboot.” Basically, and these are my words, they make sure stuff doesn’t get hacked.
“For us, safety and reliability and security are all entangled,” Wiltbank said. “In reality, if you build a system that works only as intended, it is safe, it is reliable, and it’s secure.”
It wasn’t a coincidence that “Internet of Things” as a search term peaked on Google following October’s DDoS attack that shut down the internet.
Prior to Galois, Rob was a professor at Willamette University’s Atkinson Graduate School of Management, where he ran the Willamette Angel Fund and entrepreneurship and innovation courses. He is also a co-author of the 2009 book The Catalyst: How You Can Become an Extraordinary Growth Leader selected by Business Week as one of the best books on innovation and design in 2009. He is also a recognized expert in venture capital and angel investing.
I hate glossy biographies in a blog post, but I mention all this because it shows Rob has credibility not just from the security aspect, but also as business innovator and venture capitalist. [Full disclosure: I received my MBA from Willamette’s AGSM, and Rob’s classes were among my favorite.]
While its natural to get excited about the market opportunities created by the Internet of things, I was also interested in getting Rob’s thoughts about the risks we marketers should consider as we dive into the great IoT unknown.
“When you think about trust and the Internet of Things, the consequences of failure aren’t normally what marketing people are thinking about,” Rob said. “But they do relate to the speed of adoption in an industry. And the decisions we make today will influence the correctness of these whole industries for decades to come.”
But what is the Internet of Things really? For this post, let’s use the definition from Econsultancy: IoT is the connection of physical objects to the internet and thereby to each other and the environment.
“It gets really challenging to think about what’s OK and what’s not OK; and how an industry deals with its own risks outside of regulation because all the good new stuff has virtually no regulation,” Wiltbank said. “That’s what makes it fun. How to make good marketing decisions that don’t rule out your future degrees of freedom for safe reliable secure operation of that thing.”
This is where the cliché, the Wild West, gets used a lot. It was tossed around during the dot.com bubble in the early 2000s, and I used it more than once while working in the electric vehicle industry. And it will be evoked more than once to describe the Wild West of the Internet of Things.
But already, folks are beginning to ask whether regulations are needed sooner rather than later. Recently, security experts testified before Congress urging more IoT regulations. According to MIT’s Technology Review, Bruce Schneier, a security scholar and lecturer on public policy at Harvard, said October’s DDoS attack that shut down much of the Internet – and relied on a botnet made of hacked webcams, camcorders, baby monitors, and other devices – illustrated the “catastrophic risks” posed by the proliferation of insecure things on the Internet.
And in November, the Department of Homeland Security issued the Strategic Principles for Securing the Internet of Things, which outlines guidance for companies to consider as they design, manufacture, and use internet-connected devices and systems.
“The growing dependency on network-connected technologies is outpacing the means to secure them,” said Secretary of Homeland Security Jeh Johnson. “We increasingly rely on functional networks to advance life-sustaining activities, from self-driving cars to the control systems that deliver water and power to our homes. Securing the Internet of Things has become a matter of homeland security.”
As marketers consider IoT solutions, we need to be mindful how and future regulations would impact our businesses, and our ability to do our jobs. This should be nothing new; just a good reminder to consider all the business table stakes when developing a product (SWOT analysis, first/second/thirds, scenario planning and so forth).
Innovation vs. Costs
As Wiltbank says, the great unknown of how IoT solutions will be developed and applied is the “marketing fun part.” For example, imagine a world of driverless cars. Now imagine scheduling an oil change for 1 a.m. That benefits me because I can get an oil change while I sleep and not have to take time from work to hang out at a Jiffy Lube (and say no to all those upsell questions). It also benefits Jiffy Lube because now they can operate that shop more efficiently running it at or near 24 hours a day.
And more close to home, imagine real-time tracking, communications, and attribution of buyers in your pipeline and have that scaled from 1,000 to 1 million to 10 million buyers all done with some IoT sensors, artificial intelligence, and your marketing automation platform.
“There are so many different ways creative people will to use these things,” Wiltbank said.
But there are costs associated with that innovation, and the price businesses will be able to charge consumers for the new conveniences and efficiencies. Having an Amazon drone deliver my groceries may make sense for me if they only charge a small fee for that convenience, but if the cost is higher (and I am price sensitive shopper), say $20, I may just stick to walking to the Safeway two blocks from home.
There are also costs associated with securing your future IoT solution. Just about anything can get connected to the Internet for as low as $5, and in a few years that could be as low as pennies. But that off-the-shelf technology was not built to be secure against hackers. As Wiltbank says, the only way to ensure your application is secure from hackers is to begin with that goal in mind, and not afterward. But that sophistication comes with a cost for businesses and consumers. What is the price for safety? It may depend on the end use of the product or service; but even then, who would have thought that harmless devices in our home, like baby monitors, would bring down the internet?
The co-founder of Automatic Labs Inc., which makes a device that can turn almost any car into a connected vehicle, said more important than adding IoT is asking why an IoT solution is needed in the first place.
As you would expect, there are market risks to a company that screws up IoT. This could be unknowingly exposing the company to data hacks, or having your IoT solution injure or kill someone.
Consider the following: 67% of consumers would stop buying from a company if their personal or financial information were stolen from it; and 39% say they would remember a major privacy or security breach forever, according to a report from Adroit Digital (now MediaMath).
As more and more companies place an emphasis on the customer experience, we should be mindful how our IoT solution will affect that experience. More and more IoT touch points will result in more and more collected data about our consumers. How will this be managed? How will it be protected? How will it be leveraged into better products, services, upsells and renewals?
As we start out the new year, this may be a great time to define our vision for how our respective companies will play in the IoT world (and we will have to play), and how we will provide value to our customers.