Now that our environments are increasingly embedded with sensors and overlaid with software, digital is extending its reach beyond the domain of ones and zeroes and into the physical world.
This shift is bolstered by a new breed of startups with broad visions for how to mix digital and physical services for the first time. The speed with which these pioneers have been able to achieve scale and mainstream success is one of the most startling aspects of the emerging trend.
The origins of this new wave of digital disruption of course lie in the purely digital domain, WhatsApp and Instagram being some examples.
What we’re witnessing now is the emergence of companies like Airbnb that have found ways to make physical objects go digitally viral. They operate under a glowing, data-driven service model which both predicts and responds to customer needs.
As the physical world becomes integrated into the digital one, an increasing number of once-ordinary physical interactions are becoming data driven services. Starwood Hotels and Resorts, for example, introduced virtual doors, made unlockable via smartphone. You’ll no longer have a door key, yet will be able to let anyone into your room with a tap of your screen, no matter where you are.
On an even more technical level, the chassis, seats and tyres of the Tesla S may remind you of the physical object known as the car, but that’s where the similarity ends. The Tesla’s power plant, drivetrain, suspension and cabin control systems are extensions of an operating system that can intelligently respond to human input and update automatically to changing conditions.
For example, in early 2014, the US National Highway Traffic Safety Administration (NHTSA) issued a “recall” to Tesla based on the likelihood that a charger plug could start fires. Within days, Tesla issued an “over-the-air” update to all 29,222 owners that updated the car’s operating system and resolved the issue.
Even industrial companies are starting to monitor human behaviour and signals from the surrounding environment, conjuring recommendations that optimise performance or avoid unnecessary mistakes. For example, the data collected from monitored sensors on an oil rig led to the detection of an under-performing part, proactively avoiding $7.5 million in production losses.
As one global CEO recently said: “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.”
Companies can no longer assume that just because their assets are physical, bulky, and expensive, that they are immune from digitally-led disruption. It’s clear that in the race to sense and record the world, two types of winners will emerge: those with the market lead in smart devices and those with the market lead in collecting and analysing measurable human action.
Companies that integrate devices and data understanding will seize the early lead in staking out the future of commerce and human interaction.