We are moving from a world in which physical products are separate to one in which they are connected. Computers were just the beginning. Appliances and engines now send alerts when they need to be serviced. Cameras upload their photos automatically. Vending machines trigger their own restocking. Crops feed and water themselves.
This shift has many monikers: “The Internet of Things” and “The Internet of Everything” are two of the most popular. But the history of the Internet suggests that this is just the beginning. The real change will happen when products aren’t just connected, but social. Instead of the Internet of Things, we should be thinking about the Social Network of Things. To take advantage of this shift, you need to start thinking about the social life of your products.
What makes the Internet of Things possible is the confluence of multiple technologies: inexpensive sensors, wireless networks, and cloud computing. The ability to access data and computing resources from anywhere means that products don’t need to have computers and memory built into them. They can just use the cloud. Put sensors, a simple processor, and a wireless connection together and you have the makings of an intelligent and connected product.
The Internet of Things is already expected to transform customer service, business models, and advertising. But we should remember the evolution of the Internet. The early days (Web 1.0) was about computers talking to computers. A few years later (Web 2.0), people started talking to people. The Internet was disruptive as a connected infrastructure, but it became explosive when it got social.
Today, most of the discussion about the Internet of Things is about products being connected. But just because your product is connected doesn’t make it social. For products, the real revolution will come when objects aren’t just passing information back and forth, but collaborating around a shared purpose.
This insight is behind Google’s recent acquisition of Waze for $1.1 billion. Google already has the best map and traffic program, so why would they want another one? Was it just to keep it out of the hands of Apple or Facebook? We think not.
Among other things, Waze cracked the code on social products. Google Maps is a data network, while Waze is a social network, in this case of cars, phones and people. Waze creates a constantly updating repository of traffic information, much like Wikipedia creates a dynamic repository of encyclopedic information. However, in this case, it is cars, phones and people who are collaborating to create the body of knowledge. Waze provides a glimpse of how the car can become a social device by using the little data created by each individual car and driver. According to the head of Google Maps, the goal is “to harness the power of Google technology and the passion of the Waze community to make it easier to navigate your daily life.”
Waze shows us how the cars of the future will not only connect to each other but also leverage the collective intelligence of that community of connected cars. We can see this in other areas as well. Connected e-readers already help every individual reader benefit from the actions of the community. Nike is betting on a future with connected shoes, where each individual shoe learns from the data aggregated from a network of connected shoes. Social products leverage the power of the community to learn from other products.
So how do you create a social product?
First, you need a product that is smart and connected. You can build your own (like the thermostats and home alarms from Nest) or use someone else’s device. It might be a smartphone (think Waze), a consumer device with open APIs (like Nike’s FuelBand), or a commercial device with a strategic alliance (likeOpower and electric utilities).
Second, you need to make the product social. This requires a platform where people and products are connected in a collaborative network. Each individual product and each user benefits from being part of a community of fellow products and users. For example, Nest’s thermostat and smoke detector work together. When the alarm detects carbon monoxide, it tells the thermostat to turn off the furnace.
In the case of Waze, each car and driver benefits from the information gleaned and aggregated from the community of cars and drivers. That’s not all. A Department of Transportation study demonstrates how cars of the future will talk to each other. Cars within 1,000 feet of one another will send out their speed and location to the others, which will then notify the driver as needed. Google’s driverless cars will be able to make adjustments automatically. In this future state, is it the cars that are driving, or the social networks?
If you are considering building a strategy around social products, you have a few choices. You need a connected product, a social network of people, a social network of products, and a collaborative platform for interaction, data exchange, and analytics. The good news is that you don’t have to do all of this yourself.
- Instagram leveraged an existing connected product (smartphone camera) and an existing collaborative platform (Facebook) to create a social network of connected camera-phones.
- Qualcomm Life is creating a new collaborative platform to transform existing connected devices (for mobile health and fitness) into social products. Recognizing they also needed a social network of people, they recently purchased HealthyCircles to help physicians, patients, and families coordinate care and support.
- Nike is creating an entire ecosystem of connected products (Hyperdunk+ shoes), social network of products (FuelBand), social network of people (Nike+), and collaborative platform (Digital Sports).
The Age of Social Products will change the basis of competitive advantage. Companies have traditionally focused on product supremacy, outdoing their competitors with better features and attributes. In an age of social products, competitive advantage comes not from product features but from network effects. Companies succeed by having products that better leverage the intelligence of the network of other connected products. This is a shift in mindset from standalone-product thinking to connected-platform thinking.
The Age of Social Products is dawning. Companies that create products that are smart, connected, and, most importantly, social, will not only survive, but thrive.
Mark Bonchek is the Founder and CEO (Chief Epiphany Officer) of Shift Thinking. He works with leaders and organizations to update their thinking for a digital age. Sign up for the Causeit, Inc. newsletter and follow Mark on Twitter at @MarkBonchek.
Sangeet Paul Choudary is a C-level advisor to executives globally on platform business models, an entrepreneur-in-residence at INSEAD and the co-chair of the MIT Platform Strategy Summit. He has been ranked among the top 30 emerging business thinkers globally by Thinkers50. He is also a co-author of Platform Revolution (W.W. Norton & Company, 2016) and the April 2016 HBR article “Pipelines, Platforms, and the New Rules of Strategy.” Follow him on Twitter at @sanguit.
Originally appeared on Harvard Business Review. Reproduced with permission from the author.