Just when consumers thought they had their 3G wireless gadgets all figured out, it’s now time to start getting a grip on the fourth generation of wireless technology — which will be much faster and far more disruptive than anything we have experienced before, according to Scott Snyder in his recent Wharton School Publishing book titled, The New World of Wireless: How to Compete in the 4G Revolution. In an interview with Knowledge at Wharton, Snyder, who is president and COO of consulting firm Decision Strategies International, predicts 4G will revolutionize the way we work and play by creating “one giant wireless ecosystem” that buzzes with innovation.
An edited transcript of the conversation follows.
Knowledge at Wharton: Let’s start with a very basic question. Why have most organizations failed to capture the value or the full potential of today’s wireless networks and devices?
Scott Snyder: A lot of it has to do with the general barriers in corporations to seeing emerging technology. Whether it was the Internet 10 or 15 years ago or biotechnology, it takes a long time for large organizations entrenched in their current way of doing business to see a new technology and figure out how it will affect their market and organization. Wireless is a great example. If you asked AT&T, which is in the [wireless] business, back in the mid-1980s how big wireless might be, it might have [predicted] a million subscribers overall. Today, it’s more than four billion. This is one of those things that happens behind the scenes, and in particular, it’s the socioeconomic signals that we miss the most. It usually takes early adopters to show what can be done with [new technology] …. Then large corporations start to see the benefit.
Knowledge at Wharton: Can you help our audience understand a technical issue? In the title of your book, you refer to “the 4G revolution.” What is 4G — or the fourth generation of wireless? How does it differ from previous generations?
Snyder: A lot of people are still scratching their heads. If I talk to my mother, she says, “I’m just catching up with 3G and you’re writing about 4G.” We’re a little bit ahead. But that’s partly the book being provocative. 4G is a couple of things. One is that it’s a lot more speed. Think of your cable modem at home today, which is anywhere between one to 10 megabits per second. That’s how much data travels to your home. 4G is promising speeds of 100 megabits per second and more. That’s to your wireless device.
The other big change is in thinking of [wireless technology] more like a cloud, or where many things will be able to connect across different types of networks. Today, it’s very hard if you’re a Verizon subscriber to use your phone on an AT&T network. You can’t. But in the future, 4G will allow different devices to talk on different networks.
The third big thing is what is happening below the surface now but will become very apparent: the connection of objects and things. A lot of people predict that there will be seven billion people on the planet, but there will be seven trillion objects that will be connected. Most of these will be wireless. If you think of what kind of network that is needed to connect all these things with all these people, it’s a different network than [what we have] today. From a user behavior standpoint, it will shift more power to users from network providers. That’s the kind of disruptive effect [4G will have].
Knowledge at Wharton: That brings us to one of the key ideas in your book, which is what you refer to as the “digital swarm.” Can you explain what the digital swarm is? How will it change consumers’ lives and how will it transform the way we do business?
Snyder: I was looking for an analogy for what I saw happening, which was that if you put this cloud out there and allow innovation to happen and people to organize around it, what would transpire? I thought of bees or birds. They have these communication mechanisms to organize themselves. They fly in a formation and they’re able to know what the objective is. If you think of anything that’s been wirelessly enabled — whether it’s Obama’s presidential campaign, where people were able to organize themselves very quickly around different events and objectives, or the coordination of a supply chain — they are a kind of swarm. You have distributed entities or people and they’re being organized by communication around a common goal.
I thought the word “swarm” and “digital swarm” was very appropriate. This paradigm shift goes to the heart of classic organizations, which tend to say, “My organization is not this defined boundary. It’s really a collection of distributed people.”
Knowledge at Wharton: What are some of the emerging factors driving the digital swarm?
Snyder: One is going to be this technology platform, which will allow much more interconnectivity across the planet and organizations, which I think 4G will do. The second thing is the move from wireline [cable technology] to wireless networks now that wireless can do what wireline can at higher speeds. The third thing is the intelligence built into our devices — at a simple level, the fact that an iPhone device knows if I’m texting or talking and it knows my location. The other day, I had an application [that could show me] if I was in a high-crime area and would put my phone on a threat alert so I could dial 911 immediately if I needed to. It would do that without me even knowing it.
What I call “cognitive” or “smart devices,” coupled with this cloud, will create a much more intelligent backdrop for people to innovate and do more productive things.
Knowledge at Wharton: Your book developed some scenarios for an “unwired” future and examines their implications. Could you explain that?
Snyder: Any time you’re dealing with high uncertainty, it gets dangerous to make predictions. We can point back to all kinds of things, like the banking crisis, for that. Scenario planning represents a nice construct, and we use that here at Wharton in some of our work and outside to deal with future markets and environments that have a lot of uncertainty. In this case, you can point to the behavior of consumers. [Apple’s] App Store didn’t exist two years ago. We didn’t have two billion text messages flying across networks five years ago. We didn’t have peer-to-peer social networks. The things that have transpired in the last five years tell us that we’re not very good at predicting things. So I thought it was appropriate to paint some scenarios about how this might play out … and help decision-makers and leaders think, “What are the implications of the different scenarios for my organization, my market, my industry?”
Knowledge at Wharton: What is the swarm effect and what are its implications for companies?
Snyder: The swarm effect is leveraging the enablers I talked about before — smart devices, distributed organizations, higher speeds and the cloud of capability — to innovate new products and services. But the paradigm is going shift. It’s not the classic, “Develop a product and service and push it out to market.” The user will be very much part of the innovation process. If they’re not, you probably won’t be able to compete and succeed in this environment.
There are some great examples of user-centric innovation already. I mentioned App Store. But there are examples going on in other parts of the world, where you have fishermen in India who can quickly check prices at a market for their product on their cell phones before making the long trek to the market. Cell phones are now driving a more efficient market. That is all driven by users.
Knowledge at Wharton: You’ve developed a tool called WIQ. Could you explain what the tool is and how companies can use it?
Snyder: It sounds like a cute name. But the idea is to get a sense of what the capacity in an organization is to innovate with wireless. I go through a number of dimensions, which were developed by talking to leading-edge companies, or what I’d call the early adopters, and looking at what characteristics made them successful. Then I did a survey of executives to see where most companies [were]. It was no surprise that there was quite a gap.
Some of the dimensions include wireless social networking — how much of your company has networked wirelessly and shares information; do you have the latest technology; and do you have a network that interconnects your wireless and line network so that your organization can take advantage of 4G? Then [I looked at] things like how distributed your organization is in terms of decision-making and authority. That’s really where you can take advantage of the swarm effect, by allowing people at the edge to interact with consumers, vendors, partners and customers to think about how you innovate.
Knowledge at Wharton: How can companies develop strategies to gain sustainable competitive advantage in this emerging wireless environment?
Snyder: The overarching model they should think about is, how do I develop an ecosystem? The ecosystem includes the players I mentioned — customers, partners, vendors and even employees. Think of that as one giant wireless ecosystem, instead of the classic boundaries. The neat thing about wireless, much like the Internet, is that it gives you an opportunity to fail fast and cheaply — innovate new products and services, roll those out, test them, get feedback with a small group of users at a local level or virtually, incorporate that feedback, and iterate.
Some of your products will fail; some will succeed. As we’ve seen with the iPhone, not all those applications are going to succeed, so it’s a natural selection process. Yet the cost of testing those is very small. There is this idea of being more nimble, which is hard for large companies, and being able to create an ecosystem that you use as your test bed.
Knowledge at Wharton: You referred to the example of the fisherman using wireless technology. Are there any examples of companies that get the emerging wireless environment and are using it to generate value?
Snyder: Some easy ones to point to are companies like UPS and FedEx, which have embedded wireless in the way they do business. It drives huge efficiencies and advantage because it’s a living part of their whole service structure. There are next-generation examples happening all over. For instance, Qualcomm has just partnered with Scripps Health in San Diego to create West Wireless Health Institute. It’s a giant place to innovate…. Wireless is going to be about bringing players together that typically don’t talk to each other and using this platform — whether it’s in health care, energy, security or transportation — to drive innovation.
Knowledge at Wharton: You also referred to the way the military is using it. Can you explain that?
Snyder: The military, by necessity, has to be an early adopter of wireless technology. If you think of soldiers patrolling the mountains of Afghanistan, they have a couple of issues. One is that they’re typically not tethered to wireline communications. They have to use wireless to communicate. They’re constantly moving. They have objects moving in and away from each other. They have to use very interesting technologies and they don’t know what frequencies will be available. So they have developed software-defined radio, which today is very expensive in the military world, but some day could be very cheap for consumers. It can find what frequencies are available, wherever they are. It can determine how to communicate. It can figure out where all the people in the group are and design a communication network on the fly, and it’s all wireless. Some of those technologies … will make their way to a lower price point for consumers. That’s pretty exciting.
Knowledge at Wharton: How is it possible that organizations like UPS or FedEx or the military are able to use wireless in ways that others have not been able to?
Snyder: In [UPS’s and FedEx’s] case, the business value proposition – or in the case of the military, the benefit proposition — was so great for wireless that it was an obvious thing for them to do. They saw it and ran with it. In the typical organization — whether it is a publishing company or a utility – it sometimes takes a jarring [event] in the environment [for them to adopt wireless]. For instance, at utilities, they mostly have wireline infrastructure from the meter back to the control room.
It may take something like smart grid [technology combining IT with electrical infrastructure] driven by the government and a green-conscious consumer [movement] to jar the industry into saying, “Wireless is the right way to connect all these meters and communicate with consumers about their energy usage.” Sometimes you need a major disruption.
It’s why I often look to developing countries like India, China and even Africa, which has the highest mobile phone growth anywhere in the world, for innovation. They’re not burdened with the current infrastructure. They can start with a fresh sheet of paper and say, “What’s the best way to do this?”
Knowledge at Wharton: If you picked a few industries in which a lot of value through wireless could be released, which would those be?
Snyder: One is retail. There is an [opportunity] to change the retail experience for consumers, from knowing where they are in a store to having other pertinent [information] such as their health profile or what kind of home they have so you can recommend products. Changing the whole virtual and physical shopping experience with wireless could be dramatic.
Another industry is transportation. With devices in the navigation space, users become sensors all of a sudden. It’s not just pushing GPS information to a “Sat Nav” device. It’s saying, “All these drivers represent sensors. They’re going at a certain speed. They can tell me what the traffic is like on that road. I can use the power of the group to make me smarter.” It’s the idea of intelligent highways and routing to reduce everything from gas consumption to pollution to cars on the road.
The other big one is health care. We’ve been hearing plenty about its dramatic costs and the need for change. Wireless can be a huge enabler…. If we can drive remote patient care, patient compliance and clinical-trial monitoring with wireless devices, we could take huge costs out of the system.
My last one would be energy. It is another [industry] with national issues. The ability to drive behaviorial change with the four billion wireless devices that are out there to allow consumers to engage in their own energy use could be dramatic.
Knowledge at Wharton: I’d like to come back to the concept of the swarm. One of the interesting questions about the swarm is: Who sets its direction? Which brings me to how you set the leadership agenda for companies that want to succeed in the wireless world….
Snyder: This tugs at the heart of classic organization design, in that as a leader in a swarm environment, you almost have to lead from the back. You have to accept the fact that innovation will bubble up. Even strategy will emerge from the organization and it will be less about top-down direction. I would argue that Google is very much in that model….
In a swarm-like environment, with wireless as a catalyst, you have to accept the fact that a lot of the organization will be adaptive [as opposed to] top-down command and control. That’s a big mindset shift, which may be very difficult for a lot of organizations today.