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Inspiration Award: Tony Hsieh

2015. május 19. - Kevin Jackson

When Nick Swinmurn went shoe shopping in 1998, he was simply looking for the right pair of shoes. After a frustrating experience of going store to store and not finding what he wanted, he created Zappos.com. At the time, most people could not imagine buying shoes online and thought the idea was crazy. As it turned out, Tony Hsieh was not most people and his company, Venture Frogs, invested in it. After the dotcom bubble burst, Tony later became the CEO of Zappos.com and from there has built one of the most productive and unique work cultures in the world.

What is really different about Tony Hsieh is that he cares more about how things are sold rather than what is actually being sold. In order to achieve the highest possible level of customer service, Tony realized that he had to create the right working culture at Zappos. It all started with the ten core values that were published from the very beginning:

  1. Deliver Wow Through Service
  2. Embrace and Drive Change
  3. Create Fun and a Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships With Communication
  7. Build a Positive Team and Family Spirit
  8. Do More With Less
  9. Be Passionate and Determined
  10. Be Humble

In 2003, Zappos brought in more than $70 million in revenue and all of its employees were flown down to Las Vegas from San Francisco to celebrate. It was during this trip that Tony decided to move the entire company to Las Vegas because he felt it better suited their company culture. Fast forward to October of 2013 when the Zappos headquarters was moved to the former City Hall in downtown Las Vegas. This move was based on Tony’s vision that companies should act more like cities and less like bureaucratic corporations. He contends that in a city, people are more self-directing and organizing, which gives them the freedom to grow and to do their jobs at a higher level.

While Tony Hsieh’s experiment has not been well received by everyone, he is a pioneer in creating a company culture that can deliver unparalleled customer service. Although his net worth is estimated to be close to $1 billion, one would never know it as he wears t-shirts and jeans, and sits in an open space in the middle of what is called “Monkey Row.” The Inspiration Award goes to Tony Hsieh for motivating his employees to give up old bureaucratic habits and embrace new ones characterized by community and flexibility. His example has now inspired companies around the world to rethink their own company cultures.

For more information on Leadership, please refer to the following articles:

The Zappos Family Story, http://www.zapposinsights.com/about/zappos/the-zappos-story

Why Zappos CEO Tony Hsieh Sits At The Same Size Desk As His Call Center Employees, Business Insider, Aaron Taube, October 21st, 2014 http://www.businessinsider.com/zappos-ceo-hsieh-sits-at-same-desk-as-call-center-workers-2014-10

Inside Zappos CEO Tony Hsieh's radical management experiment that prompted 14% of employees to quit, Business Insider, Richard Feloni, May 16th, 2015

http://www.businessinsider.com/tony-hsieh-zappos-holacracy-management-experiment-2015-5#ixzz3aPyTjUdU

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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The Communication Award: Sir Richard Branson

2015. május 12. - Kevin Jackson

In 1968, Richard Branson dropped out of school to start a magazine called “Student” to give students voice against the Vietnam War. Today, Sir Richard Branson heads the Virgin Group that includes more than 400 companies ranging from commercial spaceflights to healthcare. He is widely known as one of the most successful entrepreneurs and innovators in the world today. One of the principle reasons why Sir Richard Branson has been so successful is his incredible ability to communicate with people regardless of their backgrounds.

One of the best examples of Branson’s communication skills can be seen after the crash of the Virgin Galactic SpaceShip Two test flight last December. This crash tragically killed one pilot and seriously injured another. In vintage Branson style, he addressed the problem directly and immediately by flying to the U.S. and speaking to the media right at the crash site. His heartfelt words let everyone know his genuine empathy for the pilots and their families and that his organization did not take this accident lightly. He also effectively used social media to communicate to the entire world that how sorry he was personally for this unfortunate accident.

Over his incredible career that transcends just his business ventures, Sir Richard Branson has shared the following tips on successful communication:

  1. Tell Stories: People respond to stories and not data or press releases.
  2. Be Creative: Experiment with new ways of telling stories and new tools for delivering them.
  3. Choose the right channel: Always match the right content with the right channel.
  4. Be truthful: Don’t pretend to be something you are not.
  5. Work together: Find the right people and organizations to collaborate with.
  6. Have fun: Work should be fun and making work fun leads to success.
  7. Do it yourself: Don’t let anyone speak for you, do it yourself.

Throughout history, great leaders are all great communicators. They have the ability to speak effectively when delivering good news or bad and always know how to personalize their communication for any audience. Sir Richard Branson is clearly one of the best communicators of his generation, who has built an empire by inspiring others. The Communication Award goes to Sir Richard Branson, a man who defines the word charming.    

For more information on Leadership, please refer to the following articles:

Sir Richard Branson – a great communicator, Cartwright Communications, 2015 http://www.cartwrightcommunications.com/blog/sir-richard-branson-a-great-communicator/

7 Tips from Richard Branson for effective communications, David Henderson, http://www.davidhenderson.com/blog/2014/03/18/7-tips-from-richard-branson-for-effective-communications/

Virgin Galactic SpaceShipTwo Crash: Full Coverage and Investigation, Space.com, Tariq Malik, December 19th, 2014 http://www.space.com/27629-virgin-galactic-spaceshiptwo-crash-full-coverage.html

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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The Accountability Award: Howard Schultz

2015. május 04. - Kevin Jackson

Howard Schultz stepped down as the CEO of Starbucks in 2000 when business was booming. While he stayed on as the Chairman of the Board, he did not fully realise the depth of the crisis at Starbucks until 2008 as its shares plunged by more than 50%. Due to the financial crisis and competitive market conditions, many “experts” forecasted that it was just a matter of time before Starbucks and its overpriced coffee went bankrupt. When Howard Schultz returned as the CEO of Starbucks in 2008, the first thing he did was to admit that the company had lost its way and that he would accept full responsibility for the company's situation. Instead of trying to blame others for the situation at Starbucks, he recognized his own failure as its chairman.

The plummeting share price of Starbucks brought huge pressure to dramatically change the strategy and business model of the company. One argument was for getting rid of company owned stores and moving to a total franchise system. Schultz rejected this on the grounds it would totally disrupt the culture of the company. Additional pressure was put on reducing the quality of the coffee by 5%, which could save the company a few hundred million dollars. Again, Schultz would not bow to short-term shareholder interests, as he was accountable to the customers of Starbucks who expected nothing less than a premium coffee and experience.

Schultz believed that the only way to save Starbucks was to rebuild trust between its customers and employees. In a bold move, he shut down every store for 3 ½ hours for retraining. He also took 10,000 store managers to New Orleans for a leadership conference where they spent over 50,000 hours helping to rebuild a city that was devastated by Hurricane Katrina. While the analysts were screaming that this was a waste of time and money, Schultz knew that public perception linked Starbucks and its expensive coffee to the financial crisis. The only way to change this perception was to restore the original company culture and to reconnect with customers in a more personal way.

Before Starbucks delivered its recent quarterly results, the “experts” were saying that Starbucks is slowing down and the company is overvalued. Howard Schultz and his team once again proved them wrong by delivering better than expected results. From the depths of the crisis in 2008 to the success of today, Starbucks has regained its position as one of the world’s strongest brands and as a company whose culture instills trust with both its customers and employees. The Accountability Award goes to Howard Schultz for stepping up in a crisis and taking responsibility for all of Starbucks’ problems. By doing this, he was able to rebuild what was broken and save the company that he started back in 1986 when the coffee revolution began. 

 

For more information on Leadership, please refer to the following articles:

 

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1

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Decisiveness Award: Indra Nooyi

2015. április 27. - Kevin Jackson

The CEOs of companies both big and small are constantly faced with uncertainty regarding the future of their businesses. It is no easy task to keep employees and shareholders happy at the same time. What makes a CEO extraordinary is their ability to not only lay out the company’s vision, but motivate all stakeholders to continuously embrace this vision. Decisiveness is an incredibly important attribute for a CEO because it must come from a deep understanding of the bigger picture. Indra Nooyi became the CEO of Pepsi in 2006 and her decisiveness is a key reason why the company is so successful today.

In 2010, Indra launched Pepsi’s long-term strategy called “Performance with Purpose.” The first main pillar of this strategy is human sustainability, which refers to the need for Pepsi to shift its entire range of beverages and foods towards healthier consumption. The second pillar is environmental sustainability that involves finding innovative ways to both cut costs and to minimize impact on the environment. The final pillar is talent sustainability and how to create a global working culture that is nurturing for employees and respectful to the markets it is serving. With over 300,000 Pepsi employees scattered around the globe, this is quite a challenge. 

Despite challenging conditions from around the world, Pepsi just posted solid results for the first quarter of 2015. This achievement is directly related to Indra’s ability to anticipate megatrends and shape Pepsi’s portfolio accordingly on a global scale. Since she grew up outside of the United States, Indra already had a far more global understanding of the world than the traditional white, male CEO. There is no doubt that she is a model for not just women leaders, but for the next generation of CEOs that can understand tomorrow’s world today.

Decisiveness is not something that is exercised once in a while. It is something that must remain a constant to support a successful a long-term vision. When Indra Nooyi created “Performance with Purpose”, she made it clear to her employees, shareholders, and customers what kind of company Pepsi must become in order to be successful in the future. The Decisiveness Award goes to Indra Nooyi for her unwavering belief in her vision and her ability to execute this vision on all levels.

For more information on Leadership, please refer to the following articles:

Indra Nooyi: The secret to Pepsi's innovation, CNBC, Abigail Stevenson, March 9th, 2015 http://www.cnbc.com/id/102489450

Indra Nooyi Leadership Lessons: Head, Heart, Hands, Enactus, January 2, 2014http://www.enactuscareerconnections.com/indra-nooyis-leadership-lessons-head-heart-hands/ 

"IT'S GOT TO BE A PASSION, IT'S GOTTA BE YOUR CALLING": INDRA NOOYI, Fast Company, Robert Safian, October 14, 2014http://www.fastcompany.com/3036581/generation-flux/its-got-to-be-a-passion-its-gotta-be-your-callingindra-nooyi

 

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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Confidence Award: Jeff Bezos of Amazon

2015. április 19. - Kevin Jackson

Throughout history, there have been a few individuals that have disrupted entire industries and even created new ones. A key quality all of these individuals share is their unwavering belief in themselves. The “Confidence” Award goes to Jeff Bezos of Amazon, who was one of the founding fathers of e-commerce and one who is obsessed with re-defining the status quo of nearly any industry he can get his hands on.

Jeff Bezos left a high paying job on Wall Street to move to Seattle so he could sell books online. Perhaps this does not sound that ridiculous now, but back in 1994 this was the equivalent of saying that I will be moving to a Mars colony next week. The legendary confidence of Bezos, however, managed to convince both early investors and key employees that selling books online was not a joke. After setting up a no frills operation in his garage, Amazon.com within thirty days sold books across the United States and in 45 countries with no press promotion. During its meteoric rise, Amazon has created the model for safe, online payments and popularized customer reviews to the dismay of the “experts.” Bezos was ultimately able to disrupt the book industry twice: once by making any book in the world quickly available and the other through the launch of the Kindle e-reader. In 2006, Amazon created a new model for cloud computing called Amazon Web Services whose revenues will hit $8.8 billion in 2015, up from $6.2 billion in 2014. This is yet another industry that Amazon has transformed.

The business tactics of Jeff Bezos are commonly referred to as ruthless and evil, and his management style has been described as demanding and relentless. All of these opinions, however, seem to fade away as the success of Amazon continues on its upward trajectory. While Amazon employees are pushed hard, they are also given stock options that have made many of them quite wealthy. Investors continue to want to own Amazon stock, even though the company shows no profitability and pays no dividends. Why? It is because they all believe in Jeff Bezos.

At the end of last year, the pundits were again questioning Amazon’s sky-high price to earnings ratio (above 500 at the time). Jeff Bezos, however, has always believed that paying taxes on profits is a far worse strategy than reinvesting them back into new projects that have the potential to drive revenue growth. On this scale, this is a business tactic that only works for Jeff Bezos due to the enormous credibility that he has built since his garage days back in 1994. With expected revenue growth in excess of 20% over the next 5 years, Amazon's $74.5 billion revenue is expected to balloon to over $185 billion. I think it is clear that the critics will once again be silenced and patient employees and investors will be amply rewarded. The “Confidence” award goes to Jeff Bezos for always dreaming big and never doubting himself for a single second.

For more information on Leadership, please refer to the following articles:

Amazon: Beyond The P/E Ratio, Seeking Alpha, October 16th, 2014

http://seekingalpha.com/article/2567065-amazon-beyond-the-p-e-ratio

How far can Amazon go?, The Economist, June 21st, 2014

http://www.economist.com/news/leaders/21604550-it-has-upended-industries-and-changed-way-world-shops-it-should-beware-abusing

The Boss That Is Jeff Bezos, Business World, Rajeev Dubey & Chitra Narayanan, October 17th, 2014

http://www.businessworld.in/news/corporate/the-boss-that-is-jeff-bezos/1573511/page-2.html#sthash.zxmJxJYf.dpuf

 

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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Honesty Award: “Burning Platform Memo”

2015. április 13. - Kevin Jackson

Honesty is a critical attribute for all great CEOs. The ability to sell a company’s vision to employees, customers, and investors is directly related to the credibility of the one who is delivering the message. This credibility cannot exist if there are doubts about the honesty of a CEO. My search for the winner of the “Honesty Award” has led me to Stephen Elop, the former CEO of Nokia and currently the Executive Vice President of Microsoft’s Devices and Services business unit.

Before an important analyst meeting in February of 2011, Stephen Elop wrote the famous “Burning Platform” memo and addressed it to Nokia’s senior management. Its message as brutally direct; Nokia’s business was going up in flames. This memo was released just before Nokia announced its new joint venture with Microsoft, where it exclusively adopted the Windows Phone Platform. Elop’s honesty did not make life easy for him as he received all sorts of criticism and skepticism both internally and externally. The ability to see beyond the short-term noise and look at the bigger picture is what makes this memo so powerful.

In 2013, Nokia was acquired by Microsoft for €5.4 billion. This merger was specifically designed to help Microsoft extend its Office suite to mobile devices and give Nokia access to the smartphone platform it desperately needed. Fast forward to 2014, when Microsoft’s quarterly results revealed a poor uptake of Windows Phone, fueling criticisms that the Nokia acquisition was a terrible idea. A few months ago, however, it was reported that Microsoft’s phone division “now contributes more than $2 billion in sales” as Lumia jumped 28% over the previous year. The pundits are no longer writing articles about the Nokia disaster.

While it is not fair to say that Stephen Elop is solely responsible for this turnaround, it is fair to say that it was his honesty and decisiveness that created the opportunity. When Elop jumped off of the oil platform into the invisible, icy waters below, there was no way to know what would happen upon impact. This leap of faith proved to be the right move as it is highly likely that Nokia would gone bankrupt without the Microsoft lifeline. The “Burning Platform” memo will go down in history as one of the best examples of honesty by a CEO, and for this Stephen Elop receives the        “ Honesty Award.”

 

For more information on Leadership, please refer to the following articles:

Was Nokia worth it to Microsoft?, Tech Republic, Patrick Gray, July 28th, 2014

http://www.techrepublic.com/article/was-nokia-worth-it-to-microsoft/

Full Text: Nokia CEO Stephen Elop’s ‘Burning Platform’ Memo, February 9, 2011http://blogs.wsj.com/tech-europe/2011/02/09/full-text-nokia-ceo-stephen-elops-burning-platform-memo/

Microsoft gets hardware foothold as Surface, Lumia sales jump, CNET, Nick Statt, January 26th, 2015  http://www.cnet.com/news/microsoft-finds-foothold-in-hardware-as-surface-lumia-sales-soar/

Microsoft buys Nokia: Q&A, Telegraph, James Titcomb, September 3rd, 2013

http://www.telegraph.co.uk/technology/nokia/10282717/Microsoft-buys-Nokia-QandA.html

 

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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The Leadership Litmus Test

2015. április 05. - Kevin Jackson

As a news junkie, I regularly hear about CEOs of companies from around the world. From an outside perspective, these CEOs often appear to be quite different. Moving in a bit closer, however, reveals that successful business leaders from a wide range of industries have many key qualities in common. During this process, I became curious about who are the world's best CEOs and why. To answer this question, I have created a  “Leadership Litmus Test” in order to evaluate these business leaders. For future blogs, I will select the CEO that best exemplifies each quality before writing a final blog where I select my top business leader. This CEO will then be invited to Corvinus as a guest lecturer and presented with this prestigious award. 

The Leadership Litmus Test

  1. Honesty: It all starts with trust. Integrity in any organization has to be demonstrated and constantly reinforced by the CEO.
  2. Confidence: Good leaders are not only confident in good times and bad, but they also make everyone around them more confident in good times and bad.
  3. Decisiveness: Extraordinary leaders do not hesitate to make tough decisions when facing uncertainty. Natural intuition is an important quality when making these decisions.
  4. Accountability: Top CEOs know how to not only evaluate the performance of their employees, but also their own and adjust accordingly.
  5. Communication: Knowing what you want to accomplish is one thing, but effectively communicating it is another. All great CEOs are masters of communication.
  6. Inspiration: The act of setting high standards does not make a good leader. The ability to inspire employees to embrace these standards does.
  7. Focus: The ability to prepare, establish, and execute strategies is critical to the success of any business leader. 
  8. Creativity: Uncertain conditions often push strategies off course. The ability to think outside of the box in critical situations is a mark of a good CEO.
  9. Ability to delegate: It is not enough for employees to trust a CEO. A good CEO must also trust those who support their efforts by sharing key responsibilities.
  10. Sense of Humor: Things will go wrong. Challenges will emerge. The ability to avoid panic and instill positive energy is a trait great CEOs possess. Sometimes lightening the mood can be the best medicine.

For more information on Leadership, please refer to the following articles:

Top 10 Qualities That Make A Great Leader, Forbes, Tanya Prive, December 19th, 2012,  http://www.forbes.com/sites/tanyaprive/2012/12/19/top-10-qualities-that-make-a-great-leader/

What Makes a Leader?, Harvard Business Review, Daniel Goleman, January 1st, 2004   https://hbr.org/2004/01/what-makes-a-leader

The 9 Traits That Define Great Leadership, Inc., Peter Economy, January 24th, 2014  http://www.inc.com/author/peter-economy

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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High Speed Trading

2015. március 30. - Kevin Jackson

When Michael Lewis’ best selling book, Flash Boys, went on sale last year, it sent a shockwave through the financial industry. Lewis’ premise is simple: the stock market is rigged. One year later, the topic of high speed trading (HFT) is still raging on as lawmakers and the public try to understand and untangle this very complex web. The bottom line is that the stock market has quickly evolved and is dominated highly sophisticated, high-speed computer technology. The question that needs to be answered is whether or not this is benefitting the few at the expense of the many.

HFT utilizes sophisticated technology and algorithmic tools to rapidly trade securities. Flash trading is a type of HFT and involves sending an order to a market center that is not quoting the industry’s best price or one that cannot entirely fill that order. This order is then flashed to those who have access to that market center’s data feed to see if anyone wants to take the other side of that order. This is great news for the market center since they can facilitate the buying and selling of stocks before they reach the rest of the market. This is also referred to as a “dark pool.” It is in these dark pools where Michael Lewis argues that predatory trading occurs and fortunes are being made by a privileged few.

As one can imagine, Wall Street did not take kindly to Michael Lewis’ claim that the stock market is fixed. Many experts say that he is nothing more than a novelist looking to peddle his story to the world. More specifically, critics say that retail investors only use HFT so they can execute orders on behalf of small investors in the quickest and most cost effective manner.  It is also pointed out that profits from HFT are currently about $1.3 billion, down significantly from its peak of $7.9 billion in 2009. Finally, they say that Lewis widely criticizes Wall Street, but fails to adequately acknowledge that the real disruption caused by speed trading has come from outsiders and not insiders. While most experts agree that the system of trading securities needs to be improved, they think that it is ridiculous to believe that the stock market has been rigged.

I do not agree with Michael Lewis that insiders have deliberately fixed today’s markets. This is not to say, however, that today’s stock market operates in a way that benefits everyone equally. I think technology has evolved so quickly that regulators cannot keep pace with the innovations and ambitions of the marketplace. This gap creates windows of opportunities for those who have the brains and resources to exploit them and it does sometimes come at the expense of the small investor. Still, the ability of investors to cost effectively access stock markets all around the world for a reasonable price far outweighs the damage done by those looking to exploit the system. Let’s hope this balance can remain.

For more information on High Speed Trading (HFT), please refer to the following articles:

What Michael Lewis Gets Wrong About High-Frequency Trading, Bloomberg, Matthew Phillips, April 1st, 2014

http://www.bloomberg.com/bw/articles/2014-04-01/what-michael-lewis-gets-wrong-about-high-frequency-trading#p2

Michael Lewis Reflects on His Book Flash Boys, a Year After It Shook Wall Street to Its Core, Vanity Fair Magazine, Michael Lewis, April 2015 http://www.vanityfair.com/news/2015/03/michael-lewis-flash-boys-one-year-later

You’d Better Know Your High-Speed Trading Terminology, Investopedia, Elvis Picardo, http://www.investopedia.com/articles/active-trading/042414/youd-better-know-your-highfrequency-trading-terminology.asp

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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Is Technology Making Us Smarter or Dumber?

2015. március 23. - Kevin Jackson

I had a horrible dream that I woke up one day and my smartphone wasn’t there. After taking a deep breath, I furiously searched for my tablet. Unfortunately, I could not find it either. Finally, I sprinted to my laptop only to find that it was missing as well. A sense of panic shot up my spine as I suddenly realized that I was no longer digitally connected to my world. Now, take a moment and imagine what your reaction would be like. This scenario bring up very interesting questions regarding whether our dependence on technology is making us smarter or dumber.

Psychologists have identified two distinct parts of human intelligence: fluid and crystallized. Fluid intelligence represents our ability to acquire and process information, where our average ability has been increasing for decades. This is directly related to the digital age we live in and how we are exposed to greater amounts of complex data. I can distinctly remember the days when I shuffled through a dusty, old, card catalog to find the whereabouts of a particular book. It was entirely possible that the book was already checked out and that I would have to wait until someone returned it. Now, this same book can be simultaneously accessed by lots of people and this is clearly a benefit from technology.

Crystallized intelligence does not refer to our ability to collect information, but rather on our ability to use what we actually know. Due to all of our connected gadgets, we no longer feel the need to store data in our heads. The term “hyper link economy” describes a world where knowledge is only related to where information can be found. Advocates of technology argue that making students memorize lots of data that can easily be accessed digitally is a complete waste of time. Others will argue that our over dependence on technology is making us lazy and inviting us to use less and less of our natural brain capacity.

I am digitally connected to the world from the moment I wake up to the moment when I fall asleep. Is this because I absolutely cannot function offline during this time? No. Digital dependence goes way beyond need and can evolve into a bad habit. While I believe that technology has certainly made us smarter in many ways, at the same time it also makes us dumber as we often fail to look up from our screens and notice the world around us. 

For more information on technology making us smarter or dumber, please refer to the following articles:

Is Technology Making Us Stupid (and Smarter)?, Psychology Today, Tomas Chamorro-Premuzic, May 7th, 2013,  https://www.psychologytoday.com/blog/mr-personality/201305/is-technology-making-us-stupid-and-smarter  

Are Our Smartphones Making Us Dumber?, Tech Cheat Sheet, Jess Bollyut, March 20th, 2015 (http://www.cheatsheet.com/technology/are-our-phones-making-us-dumber.html/?a=viewall)

Does Technology Makes Us Smarter Or Dumber?, CIO, Michael Friedenberg, March 28, 2013,  http://www.cio.com/article/2387382/leadership-management/does-technology-makes-us-smarter-or-dumber-.html

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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Internet of Things (IoT)

2015. március 16. - Kevin Jackson

The Internet of Things (IoT) is a network created from connected physical objects. To provide some perspective, it is forecasted that by 2020 there will be 40-80 billion connected objects or 10 connected objects for every one person on the planet. The term “IoT” was coined by Kevin Ashton back in 1999 while he was working for Procter & Gamble, but it has only been just recently that the world’s biggest players are giving it their full attention. Whether we like it or not, we are already living in a connected planet and IoT has only just begun.

Last year, Google bought Nest Labs for $3.2 billion. The Nest system offers a thermostat that can actually learn the homeowner’s daily routines and then adjust itself accordingly. The best part of Nest is its mobile device app that allows users to easily check thermostat settings and change them from anywhere. Sounds cool, but why did Google buy Nest for this huge sum of money? It is directly related to the statistic from the previous paragraph: “10 connected objects for each person by 2020.” Google is using Nest as its entry into home automation and IoT.

The long anticipated Apple Watch launch on March 9th this year was not really about a watch or smartphones. The real play for Apple is its emerging ecosystem of IoT services. The Apple Home Kit is a framework for controlling connected devices in your home, while Car Play allows you to easily connect to your car using an Apple device. Let’s not forget how Apple Pay enables convenient, cashless payments. Whether it is with your iPhone or Apple Watch, the real growth will come from connecting people to their environments and it is well underway.

During the past twenty years, the focus has been on connecting people to people. In the next twenty years, it will be about connecting people to things. This will create enormous amounts of data that will generate a lot of new challenges. The companies can best harness the power of Big Data will be the ones leading their industries in 2020 and beyond. I truly believe our world will significantly change in the next five years as the connected planet concept transitions from theory to reality. For some people, this is quite scary as literally everything one touches is somehow connected to the Internet. Only time will tell, but there is no stopping the IoT.

For more information on IoT, please refer to the following articles:

Infographic: The Future of the Internet of Things

Apple Emerges As A Promising Internet Of Things Platform At CES 2015, Forbes, Aaron Tilley, January 9th, 2015 http://www.forbes.com/sites/aarontilley/2015/01/09/apple-homekit-ces/ 

Apple Watch: It's an Internet of things play, ZDNet, Larry Dignan, March 10th, http://www.zdnet.com/article/apple-watch-its-an-internet-of-things-play/ 

What Does Google's Purchase Of Nest Mean For The Internet Of Things?, Forbes, Drew Hendricks, January 20th, 2014, 1/20/2014http://www.forbes.com/sites/drewhendricks/2014/01/20/what-does-googles-purchase-of-nest-mean-for-the-internet-of-things/ 

For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.

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