3 ways the Internet of Things will change every business

This article is published in collaboration with Smart Data Collective.

Have you entered the Internet of Things yet?

If you have a FitBit or other activity tracker that talks to your smartphone, you have.  If you have a thermostat, alarm system, or lights in your home that you can control with your computer or phone, you have.

But even if you haven’t got one of those devices yet, I’m betting you will within the next 5–10 years.

And I’m not making that prediction based on how useful or cool the current Internet of Things products are right now, but rather based on the fact that I believe the Internet of Things is going to change business at a fundamental level.

I believe there are three key ways in which the Internet of Things will change every business:

1. It will allow companies to make smarter products.

It used to be that we only expected our phones to be able to make phone calls.  Today, most consumers expect a lot more from the device they carry in their pocket.  So, while it might seem strange or unnecessary at first glance to have a smart tennis racket, an internet-enabled frying pan, or a smart yoga mat, these are just the first forays into the world of the Internet of Things.

Only time will tell which will stick and which will go the way of pet rocks, but the point is that businesses will have the opportunity — and eventually, the imperative — to make “smarter,” more useful, more connected products.

2. Enable smarter business operations and smarter decisions.

A big part of the Internet of Things isn’t so much about smart devices, but about sensors. These tiny innovations can be attached to everything from yogurt cups to the cement in bridges and then record and send data back into the cloud.  This will allow businesses to collect more and more specific feedback on how products or equipment are used, when they break, and even what users might want in the future.

Rolls Royce aircraft engines contain sensors that send real-time data on the engine’s function back to monitoring stations on the ground. This information can be used to detect malfunctions before they become catastrophic, and possibly to investigate — and hopefully prevent — the causes of aircraft disasters. Microsoft uses software that constantly collects data on what features are being used for its products, so it can strip away the least popular ones and focus on the most popular.

3. Change in business model

Above and beyond all this, I believe the Internet of Things will also signal the possibility of a change in business model for some businesses.

Take John Deere, for example.  For decades, they’ve sold the tractors that make farming on a 21st century scale easier and more profitable. But since 2012, they’ve added data connectivity to their equipment, giving farmers information about which crops to plant where and when, when and where to plow, and even the best route to take while plowing.  They are essentially now in the business of selling data as much as they are selling tractors.

Other similar business models will no doubt emerge.  Fitness trackers like FitBit and Jawbone already aggregate data about our fitness habits and health stats and share these their strategic partners.  There are certainly plenty of organizations that would love to get their hands on that kind of data for marketing and other purposes.

The most important thing to do when considering how the Internet of Things will affect your business is to think bigger — much bigger. It’s not just about what kind of products you can make “smart,” or how information could impact your business efficiencies, or how you might sell that data to customers and partners.

The Internet of Things represents a fundamental tilt in the lens through which we view the world.  The same way most of us would never want to go back to a phone that’s just a phone, soon we won’t be able to imagine going back to a world without smart cars, smart roads, smart infrastructure, etc.

In other words: The Internet of Things could change everything and every business needs to consider its implications.

Publication does not imply endorsement of views by the World Economic Forum.

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Author: Bernard Marr is a writer at the Smart Data Collective.

Image: Internet LAN cables are pictured in this photo illustration. REUTERS/Tim Wimborne.