As someone with a lot of experience developing digital products, I always felt there was an unnecessary rift between the processes of digital and physical innovation. It is easy to believe there is not a lot of crossovers when you think about each in isolation.
There is always been more overlap between digital and physical innovation than most people think, but new technologies are now making it even more relevant than before. The lines between digital and physical innovation are already blurring, and smart entrepreneurs will jump on the opportunity.
The rise of IoT
The Internet of Things (IoT) is really the catalyst bridging the physical and digital worlds. Like most disruptive technologies, it came seemingly out of nowhere over the past few years, and its trajectory is ever pointed upward. Industry experts estimate that there will be more than 50 billion physical objects connected to the internet by 2020. That is 2 years from now.
IoT involves utilizing devices that capture information about the physical world and using it to inform or automate changes in the digital world. It is already impacting the daily lives of many.
For example, the maps app on your mobile phone can suggest retail stores based on your search query and physical location. A thermostat can automatically adjust settings based on ambient temperature, time to bring your house to requested temperature and the weather outside. Smart irrigation sprinkler controllers Fitness trackers, GPS systems, and smart home devices are also all a part of the IoT network. They even make smart toothbrushes that track your brushing habits and offers suggestions for improvement. In our house, we have all of these systems working together to make our lives more better and more efficient.
What does this technology mean for businesses? Well, it opens the door to creating all sorts of new, innovative, connected products, and provides a wealth of data about people in the physical world.
Blurring commerce and ecommerce
IoT has lots of practical applications that can change the way we do business. Digital business have long been able to take advantage of consumer data insights to optimize their marketing and sales processes. Thanks to tracking cookies and analytics software, ecommerce businesses can monitor the effect of their marketing efforts, and use these insights to fine-tune their strategy elements, create more targeting audience segments, personalized messages, price points, advertising strategy, etc.
IoT now makes it possible for brick-and-mortar businesses to collect and operationalize data in a similar way. Google and Amazon are the big examples of leaders in this area. The Walmart app is actually a great tool that allows shoppers to pay digitally and avoid long lines. It also has a price matching tool to compare Walmart products to other store prices. Walmart is also rolling out Scan and Go technology, allowing people to scan their own products while they shop, then simply show their receipt to an associate on the way out.
Just as Walmart’s a traditional brick-and-mortar store entering the digital sphere, the biggest ecommerce player out there is entering the physical business space. Amazon has been experimenting with opening physical stores, blending the digital and physical shopping experience to deliver the best of both worlds.
The future of innovation
As you can see, there’s no longer anything close to a fine line between digital and physical business today. Big businesses are already taking advantage of this lack of distinction to develop innovative strategies to deliver their products and improve customer experience.
IoT and the massive amounts of consumer data it provides is poised to support innovation in all sorts of business areas. By bridging a gap between the physical and digital worlds, IoT makes it possible to store and transmit huge amounts of contextual data that businesses can use to inform product development, marketing, and other initiatives.
What makes this technology so potentially disruptive for innovation is the fact that the data can be provided and analyzed in real-time. Businesses who want a competitive advantage would be smart to operationalize these insights as they come in.
There are already plenty of services available that make it possible to derive insights and make marketing adjustments based on consumer behavior online and in the physical world through IoT. And the real benefit is not the ability to respond quickly to changes, but to easily and accurately predict potential outcomes based on historical data. The wealth of real-time contextual data available today makes it possible to improve back-end performance, customer service, community engagement, and other things based on what should happen.
Businesses using big data to predict inventory needs or airlines using online customer purchase behavior to improve their in-flight offerings are just a few examples of the many ways IoT and predictive analytics are changing innovation.
The bottom line
Most entrepreneurs today realize that the digital and physical worlds are beginning to overlap. The mistake they make is thinking that these technologies do not apply to their individual business. But if you do even a little research into the different ways IoT, big data, and advanced analytics are impacting innovation, you’ll see for yourself the immense possibilities. In reality, these changes have massive implications for every kind of company, and may even serve to create new industries themselves.