What is an IoT ecosystem and how does it work?

Internet of Things devices work better together, the more IoT devices that link up the better. So which devices and which apps should yours connect to?

In the Internet of Things (IoT), the more devices that connect with each other then the more perspectives and capabilities there are to be shared. More data from different sensors and data suppliers; and more ways to change the real world. Like operating cars, home appliances and other machines or getting really useful options from screens or bots.

If you are a device manufacture or an app developer the problem then is: which devices and apps should yours connect to? If you can potentially link to any device and any app then which are most appropriate?

How do you avoid confusing your users when they use your product? How do you avoid confusing yourself? What to connect to is not a problem for the user. The device manufacture or the app developer needs to figure this one out. Just give users a simple list of high quality options that are personalised to their current situation.

Your product cannot link to every other device on the Internet. So which devices have the most useful perspectives and capabilities? You need a strategy that helps your product to be better at its purpose.

And don’t forget security.

Next, having chosen which other potential devices or apps should work with your product you then need to persuade their makers to partner with you. There might be an API to help you connect but close data sharing and brand associations needs discussions and agreements. And that means you need to get noticed, get taken seriously and get a mutually beneficial deal.

The prize is that the first products to build up their IoT ecosystem of partners will get more data and features to build into better services. As my son knows very well, a bigger and more varied pile of Lego bricks means he can build a more interesting spaceship or a more secretive secret base.

There is a lot of talk about business ecosystems and an ecosystem of IoT devices is a lovely thought in principle, but what actually is it and how do you build one? Looking at natural ecosystems might help us.

Natural ecosystems are glued together by ‘nutrient pathways’

The glue that binds together natural ecosystems, like rain forests, deserts and even a single puddle of water is their nutrient pathways.

What we think of as natural ecosystems are actually the ‘pathways’ that recycle scarce resources. The essence of natural ecosystems are nutrient flows along pathways which are based on the natural activities of many different organisms.

Whatever the ecosystem, the quality that makes a natural ecosystem stand out; the thing that makes people say ‘that collection of organisms and stuff is an ecosystem’ is how it moves resources around itself. Microbes, insects, larger animals and plants and other living things move resources around just by living their lives.

The animals, plants and other organisms can come and go, die off or just move to another ecosystem. The pathways need not be dependent any particular organism or even a single species. But the thing that makes an ecosystem appear to us as an ecosystem is the way it recycles scarce resources.

For example, rain forests actually have relatively few nutrients, the soils are very poor. When leaves fall to the ground they are broken up by tiny organisms. Then the nutrients are absorbed by fungi and quickly recycled back into the trees by their roots.

Recycling and reusing nutrients along specific pathways is what makes one natural ecosystem different to another. Different organisms have different ‘roles’ in the pathways and each role might be performed by several different species.

Business ecosystem pathways glue together the IoT ecosystem

If pathways that recycle scarce resources are the essence of ecosystems then what are the scarce resources that business ecosystems can recycle?

The scarcest resource for most businesses is customer knowledge. Customer knowledge about the situation any individual customer is in at the exact moment when they use your product; and knowledge about how all customers have used the product in different ways and in different situations.

Knowing the situation which an individual customer is in as they are using the product enables the product to be more responsive to the customer. And it enables the customer to get better advice and suggestions for using the product.

Learning about how all customers have used the product in different ways and in different situations helps a firm to improve the design of the product with software upgrades or with hardware redesigns. Or it helps to suggest solutions to common problems that customers find as they use the product. These solutions can even be suggested to customers by the product itself.

For example, Sat Navs make travel route suggestions and cooking apps make recipe suggestions. Knowing more about the bigger picture of the users life – the reason for the journey or the reason for the meal – would suggest more personalised options. Knowing what other users have chosen in similar situations would help generate more options as well as a more accurate link between a suggested option and a given situation.

This sort of information was scarce before devices connected to the Internet because the direct relationship with users was mainly with retailers rather than product manufacturers. Also, an Internet connection enables products to record how they are used and then to send this information back to their manufacturer.

Product usage information can be combined with information from different products and other information about users’ lives. A deep understanding of the wider situation that a product is used in helps it to be used more successfully.

The IoT technology stack is a good way of explaining how smart products can connect up and share data. But how do you build ecosystem’s pathways?

Building an IoT ecosystem by choosing devices to partner with

To start building your ecosystem, first ask ‘What customer knowledge do you need to make using your product more successful as it is used and also as you design and (re)design your Minimum Viable Product?’ Do this for every stage of your users’ journeys.

Next you need to choose the data suppliers who can share the data you need to manufacture this customer knowledge. The data suppliers who you partner with (the devices, apps and other sources) will be the components of your ecosystem pathways. The order in which they work together is the flow plan of the pathways.

And how do you persuade them to do it? Just explain to them how it all works using the logic behind your flow plan of ecosystem pathways. Your flow plan describes how each device or app plays its small part in the wider scheme of your ecosystem’s work just by doing its job.

Each device or app has a job to do, its role.  So your flow plan of ecosystem pathways is also the business model of why your new ecosystem will work.