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[Part 3/4] IoT Essential Truths: Close the Loop

Executive Summary

By using real-time cyclical data to close the loop, you no longer have to be in the dark about how your products work for your customers, or if they are working at all.

  • When you’re stuck with limited, linear data, it’s not possible to get fast and accurate feedback about your product’s performance.
  • Real-time data can help you spot defects in your product or inefficiencies in its performance before problems become acute.
  • Utilizing cyclical data can help you improve the design of your products, how you manufacture them, how well they perform, and how efficiently you service them.

— Part 3 / 4 —

It used to be that you’d push the last washing machine straight off the assembly line onto the truck, close the door, and then lose all contact with it and the eventual owner until she bought a new one—or called complaining about a broken part. You really didn’t have any idea about how your products worked (or didn’t) once they were sold and went into use.

That Collective Blindness analogy mentioned earlier [in The Future Is Smart] is an apt description of the problem. What little feedback you did receive from customers probably skewed your perceptions. Because it was so difficult to communicate with you, those who really loved or really hated the product and therefore were motivated enough to contact you were overrepresented.

What about those in the middle, who probably represented the vast majority of customers? Even worse, the limited information you did get was anecdotal, not specific data on the product’s operations. Communication was one-way, extremely limited, and linear.


The third critical attitudinal shift to fully capitalize on the IoT, closing the loop, is closely related to the second oneand directly addresses that problem: not only do you need to share the data with everyone who needs it to make better decisions or to do their jobs more efficiently, but you must change policies and procedures to make certain that the data flows in cyclical fashion, not linear.

Cyclical data flows will help you get fast, accurate feedback on how your products really work. They will facilitate upgrades and immediately improve operations through tools such as automatic M2M controls that don’t require human intervention. That’s a long way from the linear, industrial past.


Nothing capsulized that era better than Henry Ford’s behemoth 1.6-x-1-mile River Rouge plant: Iron ore came in one end. Finished cars came out the other. The entire plant would be idled frequently when a critical part wasn’t resupplied in time, and those at one end of the process had little idea what those at the other end were doing.

By contrast, consider GE’s Durathon battery factory in Schenectady (which the company shut down when it got out of the battery business in 2016 . . . ).

GE put sensors in the Durathon batteries to monitor their condition in the field, similar to the sensors on the Grundfos water pumps mentioned earlier in this chapter [of The Future is Smart], because the massive batteries were used as backup power for cell towers that might have been as remote as the water pumps. It could take days for a repair person to reach them so owners needed to know as soon as possible about impending problems.

Rather than tacking on the sensors at the end of production, GE built them in at the beginning. That provided another variation on sharing the data: in this case, the sensors didn’t just report the batteries’ operating status in the field, but also the status of the complex chemical reaction that produced them in the factory. Instead of product-testing practices dictated by the lack of real-time data (such as plucking every xth product off the assembly line and testing it), GE could monitor every battery throughout the entire production process, remove defective ones, and be certain that each one that completed the chemical process works. The factory is closed, but the lessons are still inspiring.


The continuous circular data flow changes how we design things, how we manufacture them, how we service them, and even how we market them: all because we have a continuous data loop for the first time.

Consider these benefits:

  • Product Design

“G.E. is adopting practices like releasing stripped-down products quickly, monitoring usage, and rapidly changing designs depending on how things are used by customers. These approaches follow the ‘lean startup’ style at many software-intensive Internet companies. ‘We’re getting these offerings done in three, six, nine months,’ [William Ruh, the company VP of Global Software] said. ‘It used to take three years.’” Caterpillar’s design process is refined because, for the first time, it knows how its heavy equipment is actually being used in the field.

  • Precision manufacturing

A major reason Siemens achieves 99.9985 percent quality at its “Factory of the Future” is that the real factory is paralleled by a “smart factory digital twin: representing a production system . . . which is completely connected to the main PLM [Siemens’s proprietary software] data repository via sensors, SCADA systems, PLCs and other automation devices. In such a smart factory, all the events happening on the shop floor during production are recorded and the relevant ones are pushed back to the PLM system either directly or through the cloud.”

  • Predictive maintenance

Instead of doing scheduled maintenance as in the past, in which maintenance intervals were as much guesstimate as science, with the IoT, maintenance is dictated by the product’s actual status. The repair is scheduled at the first sign of an issue, before it becomes acute. Because of the real-time data from actual operations, the mechanic knows in advance what the problem is (imagine how much time and testing is required to diagnose a problem if the machine is turned off to protect the mechanic) and the replacement parts are already delivered by the time it enters the repair facility.

  • Selling services instead of products

Because of the incredible amount of data that jet engines send to the ground, the turbine manufacturers have been emboldened to switch to a totally new marketing strategy. GE, with its “OnPoint” program, doesn’t sell the engines but leases them, with the airline’s cost determined by how much thrust they generate. That means if they’re sitting in the repair facility they aren’t generating revenue, so the manufacturers have a powerful incentive to make the repairs as quickly and cheaply as possible.

  • Additional income sources

Even better, as mentioned previously, the turbine manufacturers have created new revenue streams: airlines can pay an additional fee to get access to the flight data, which they can mash up with variables such as weather data and fuel prices to maximize their planes’ flying efficiency.

We will discuss all of these advantages at length later in the book [The Future Is Smart]. It’s not hard to imagine a day in the near future when companies realize that maximizing precision requires sharing that real-time data with their supply chains, distribution networks, and customers, and that such a continuous data loop will mean just-in-time resupplying and distribution. Customers (if they opt in) may get real-time suggestions on how to fine-tune their equipment’s operations for maximum efficiency and minimum operating costs.

Adapted with permission from The Future is Smart: How Your Company Can Capitalize on the Internet of Things--and Win in a Connected Economy by W. David Stephenson, copyright W. David Stephenson.

Bring It Home

We all love to be in the know. No one wants to be in the dark—especially when it comes to our products or how they’re performing. Why wait for negative customer feedback to find out how we’re doing when we can help prevent problems by utilizing real-time data to hone your product’s design, production, and performance?

Have you ever found out about a problem with your product after-the-fact thanks to being stuck with outdated linear data? Comment below to share how you fixed the problem and prevented it from happening again. We’d love to hear your solution!

W. David Stephenson

W. David Stephenson develops strategies and theories around the Internet of Things, Enterprise and E-Gov 2.-3.0, data, homeland security and crisis management. Stephenson empowers the public with tools like personal communication devices and Web 2.0 social media to engage with private sector companies and organizations.

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