Good day everyone, this is Ed Maguire Insights Partner at Momenta Partners, with another episode of our Edge Podcast, and today we have a special guest, this is Rami Avidan who is the former CEO of Wireless Group, and Tele2 IoT, he’s an expert in a whole bunch of areas of technology and business, and highly accomplished. It’s going to be a pleasure to dig into his background, his views on the market today, and we’ll take a look at the future as well. So, Rami, thank you so much for joining us.
It’s my pleasure Ed, thank you for having me.
First of all, I’d like to dig in a bit on your background and get a bit of context. Could you share a bit of your background, what are the experiences that have shaped your view of the Internet of Things?
I’ll do a quick high-level CV summary for you, basically I’ve been an entrepreneur for the greater part of my professional career, I started several different companies, predominantly in tech, and predominantly in IoT. I started an IT security business many moons ago that I took to the city stock market that did encryption. I was also one of the founders of a company called Wireless, which was acquired by Core in the US a couple of years ago, and I sat on that board and was also the group CEO of the business for approximately two years. So, a lot of start-ups, and of course my last stint was roughly six years after Tele2, a Eurasian Telco that does cellular fixed line connectivity to both the consumer but also the business markets, across those markets. I started an IoT business for them which became a very-very large business basically, operating in the space of IoT. I left just close to three and a half weeks ago. So, it’s weird for somebody who’s been having the last 9 months detailed plans in the calendar. Now I’m having a few months of R&R before my next stint with the family here, which is nice. I’ve got two small kids and a lovely wife, and of course it’s nice for them to see me a little bit more, so that’s lovely.
Basically, an entrepreneur and intrapreneur, and I’ve done lots in the tech space, but more importantly in the IoT space. I’ve been in IoT now for close to 20 years, that was way before it was called IoT, way before it was called M2M, way before it had any name, so you could say I’ve been part of saving this industry. What’s shaped my view of this space, obviously what I realized very early-on is that businesses, but also a number of people like you and myself, we go through a lot of changes consistently in our lives. Businesses, especially in today’s world where the world is becoming much smaller, they are faced with very fast changing technology environment, fast changing competitive landscape, and of course to be able to cope with all of these things, companies and individuals need to become much more digital-like. So, I think IoT is going to play a significant role for many of those companies, to be able to stay competitive, long-term.
Then of course if you look at the much larger scale, if you look at the globe today, we live in a world where we have some significant problems, there are… I wouldn’t say the majority, but a very large portion on this planet that don’t have running water, they don’t have electricity, they don’t have enough food to feed themselves or their children. I think technology can do a lot to help these people, we should absolutely use technology where possible. We also see huge levels of urbanization happening around the world, and for countries and cities to be able to manage the level of organization that is taking place, I think digital solutions is going to be fundamental. We also have healthcare issues where not enough people have access to healthcare, but people who do have access to healthcare they might not get the right healthcare at the right time. I also think digital solutions will help in those areas as well.
So, for me, and I might come across as a bit altruistic here, but that’s not my point, my point is that I believe these technologies are going to help businesses to become much stronger, and make much more money, but also have an altruistic touch to it; should we be able to produce our products and solutions in a much more environmentally friendly way, i.e. using less of the world’s resources, we’re onto something interesting that is going to benefit everybody. Does that make sense?
Absolutely, and I think your point is resonating pretty broadly. Just at IoT Solutions World last week there was a presentation, it was a Deloitte’s study that had identified that 86 percent of businesses see the role of business improving the equality globally, that business will play a greater role in achieving real social impact, rather than governmental agencies of course. What’s interesting is that very few of them believe that they have the talent to achieve that, but absolutely seeing this, and there may be a bit of a generational thing too. But certainly, the blockchain community I’ve seen is very focused on social impact, one of our prior podcasts with Kelly Wanser focused on the use of technology to address environmental challenges, and the challenges of global warming. So, it’s encouraging now that we’re getting our focus way above just solving technology problems, and business problems, and looking more broadly.
Yes, and I think Ed, when you build a business today, any business is built up of people. Whether you’re the owner of a business, or whether you’re the CEO of the business, the single most important thing that you need to do is to ensure the people that are engaged in your company, be they employees, or suppliers, customers, partners, or whatever they may be, there is a higher goal than simply making a lot of money. As well, I think that goes a long way to be able to build a culture, a ‘We against the world’ mentality, something that brings that extra spice into any type of business. So, I think if the combination of that, and you rightly pointed out, a new generation; if you read the studies of the millennials that are coming out into the workforce now, these guys and girls they are not necessarily driven by working long hard hours, and making tremendous amounts of money; look, everybody wants money but, they also have an altruistic vein to themselves that perhaps my generation, and perhaps your generation doesn’t. That’s something we have to understand, and we have to adapt accordingly.
But personally, if you want my personal opinion here, I want to be able to leave a legacy for my children, I want to be able to tell my children when they grow up, ‘Your Dad, he might not have made an enormous impact, but he pulled his weight, he did what he could to help the world to become a better place’, and that’s something that I’m extremely proud of.
It really is just notable how important that’s becoming with people like you, entrepreneurs, and workers as well, it’s a real positive development. I want to go back and drill a bit into your experience, because as you’ve mentioned, you’d been in the connected industry M2M IoT business before there was a definition for it. Could you talk about some of the business problems early-on in your career that led you to develop solutions, or connected solutions, and talk about some of the challenges that you may have solved early-on in your career, and early-on in the industry, that you see resonating and building a foundation for some of the more significant value creation that we’re seeing today?
Well, first of all the IT space, it’s a pretty name for a lot of different things that come together. IT is typically built up by some sort of hardware that goes onto some types of assets, that hardware can communicate using multiple different barrier service, may that be cellular, or Wi-Fi, or fixed line, NFC or whatever it might use, and then it transmits that information into some sort of database. Then that database puts it into some sort of application layer, storage layer, and management and analytics layer. Somebody then has to put all of these things together, a bit of a system integrator, so application service providers and offer that as verticalized solutions if you may.
So, there are a lot of different components, and historically when we started off in this business, first of all it didn’t exist, there were no standards whatsoever, everything was proprietary, the pricing was I dare to say today extremely high, I will grant you that most of these components have dropped with close to 90 percent in costs, and of course that opens up a lot of new use cases that weren’t simply feasible at that point in time, you go back 20 years. So, what we had then was technologies that didn’t work together, every single piece of deployment was basically unique for that customer because I would argue that there were no standardizations, everything was proprietary, and the commercial developments had gone in the right way for everybody I would argue. The suppliers in the industry, including myself have obviously been monitoring the auto-reduction rate over the years, but obviously the reduction of price and cost for the customers opens up a lot of use cases, so instead you get volume. The IT space today is a volume space, it is not about being able to charge a lot for a little, you have to charge a little for a lot, and that’s the model where everybody has moved into.
What we are starting to see today, and that was probably prevalent in the beginning when we started as well, customers i.e. the people using these solutions at the end of the day, somebody has to pay for it. What we’ve been very poor at, and I think we’re still not good at it, and obviously when we started, we didn’t know how to handle it, was the fact that you have to be able to prove value. Nobody is going to invest in a technology or in a solution, or in an offering, or in anything unless they believe that they’re going to be able to extract some value. We’re now at a point where we can summarize the values, that the players that have implemented these solutions in their businesses have been able to extract, what type of cost optimization can I expect if I do x, y, or z? What type of new revenues can I expect if I take the new solution to market to our customers and have it in the Servitisation model for example.
We’re in a place now where there is a lot of reference cases that we can lean on, to prove the value creation that these technologies have. We didn’t have that in the beginning, and that of course posed huge problems, we have to really engage with the companies that were very novelative, not especially risk-averse, companies that basically took a leap of faith in wanting to dissect and understand this space. What we need to do today is to unlock all of that value from a communication perspective, and that’s something that most vendors especially are struggling big-time with, and I’m not different. Everybody’s talking about the great things that we’re connecting up and all of this stuff, but very rarely do we come down to nuts and bolts of the numbers, ‘This company implemented that 500,000 of these devices in their fleet of cars, or in their trucks’, or whatever it might be, and they actually say ‘x’ or made ‘y’ new revenue streams, and that’s where we need to get to. Does that make sense?
Oh, absolutely. When you’re thinking about communications, do you have a framework for looking at attacking a business problem, a connected industry problem from a communications perspective? What are the key considerations, whether it be technological or business flow that you look at, when assessing how to affectively address and advance real value creation?
Well first of all that depends very much on the customer, and a lot of the vendors or suppliers in this industry, the players in the ecosystem if you may, they focus very much on their technology, they focus a lot on their products and their offerings. I think frankly that’s one of the reasons why we’ve been successful at Tele2 IoT at late, that is we don’t focus on what we take to market because it’s irrelevant. The only thing that makes sense is to sit down and talk to the customer more on a consultative basis, and understand what are the business pain points, what are the issues that they want to solve in the future of this business, and then of course you then have to have an offering that you can cater to their requirements. This is where a lot of the businesses really go astray here, when they focus more on their own solutions than on the customers business pain points.
If I’m purely focusing in on the connectivity side, the beautiful part of IoT is that without connectivity there is no IoT, it’s really that simple, you can’t connect up a hardware if you can’t connect it. A car or a payment terminal, whatever it might be needs some sort of barrier service to be able to transmit its bits and bytes. There are a few of these parts of the ecosystem that are must-haves, and connectivity happens to be one of them, so if you focus in on connectivity then when you tell it to IoT or wireless, or any of the other connectivity players approach a customer, you need to understand the customer’s pain point, and on the back of that you need to understand what connectivity, and what type of solutions do they require to solve those pain points. I’ll give you a typical example.
If you’re a fleet company, you own 10,000 trucks or so in your fleet, and you… the whole concept around that is two things, one, you want to be able to know if the truck is not feeling especially well, and you need to send it into the garage for a fix-up, and you want to be able to communicate with the driver where to pick goods up, and where to leave goods. That’s basically the nuts and bolts of why fleets want to connect up their assets. Now, in that environment you can understand that the amount of data is not massive, but it’s not small, a typical fleet company uses anywhere between five to twenty, fifty megabyte per month depending on what type of solutions they’re running in the vehicles, but of course you can’t go LPWA, you can’t implement Think Fox, you can’t implement LoRa, those solutions are simply not catering to the business problems, the business requirements of that business. The only real viable solution for that specific customer is a cellular solution, and it’s typically moving, as it needs to utilize a little bit more data.
But of course, on the flip side of that, should you want to connect up the goods that are in the back of that truck, well maybe then the cellular network isn’t the right type of barrier service for that, that may very well be some sort of NSC solution that the customer might require. Does that make sense? You basically need to understand the customer, to be able to package the solution that you’re going to offer the customer.
Yes, there’s no doubt that there’s no ‘one size fits all’, in communications technology certainly.
No, there isn’t.
Can you share some significant events, or people you’ve worked with, that have had an important impact in shaping your view of the world?
I think it’s more events rather than people. What became prevalent for me before starting Tele2 IoT back in 2013 was that the industry was extremelyfragmented. There isn’t a single player under the sun, not Google, not Apple, not Amazon, not Microsoft, not IBM, nobody that in their own right can deliver an end-to-end IT solution, they have to work with a whole host of players. So, I started very early-on speaking to all of these players about ecosystems, about partnership, and needless to say, today I would argue that probably Tele2 IoT’s ecosystem programme, and partnership structure that they today take to market, is probably one of the best in the world. The events that led up to that was that I spoke to a variety of customers, and basically all of them said, ‘Look, who do we engage with? How do we do this? There are 10,000 different hardware manufacturers, there are hundreds of different connectivity providers, there are numerous databases, and platforms, and solutions, and applications, how do we do this?’
So, what that led to for me was the understanding that what you need to do is to be able to create an ecosystem, where a variety of players work together to create solutions together, to be able to offer that to customers. The underlying thinking here is this, if you build an ecosystem that basically help each other, and Steve Bulmer at Microsoft coined the concept, ‘Synergetic symbiosis’, they built the Windows platform, and then Office on top of that, and then of course you had all of these ISVs that could build their software plug-ins to their solutions, so they lived off each other. Windows and Office wouldn’t be the same without all of these plug-ins, and of course these plug-ins wouldn’t be able to sell their solutions if Windows and Office weren’t there.
So, it’s a very synergetic and symbiotic relationship, and that’s basically what the ecosystem in IoT has become today. The IBMs of the world, Watson and Microsoft Azure platform, without hardware manufacturers out there, they’re producing connectivity devices that can connect up as, there will not be any data to be managed in those platforms. Without operators and other connectivity providers there won’t be any ability to transmit that information into the database from the hardware. So, the events that led me to be a strong advocate of the ecosystem of what was a number of dialogues with a lot of CXOs on the customer side, they basically told me, ‘Look, this is very complex for us, how do we put this all together?’ So, if you then have an ecosystem where you can point into, ‘Well, here are five hardware manufacturers that are really great. Here are three platform providers that are great, you do introductions to those, and they can then sit and pick n’ mix by those that you have introduced to the table’, the customer is very happy because you’re steering them in the right direction. But also of course, the power part is that you introduce to the table, they’re very happy, which means they introduce you into their customer base, and here you go, all of a sudden, you’ve got this cycle that is happening, where everybody is gaining from working together.
So, for me in the IoT space, having those very early-on conversations with those customers, really shaped my thinking of how one needs to act in the space of IoT, and how as a player in the ecosystem, how you need to build your solutions, how you need to construct your company from an organisational perspective, how you need to be able to package the solution to take them to market. And by the way, I’m not saying that I’m right, I’m just saying that it absolutely works for a lot of companies that have implemented that type of strategy today.
Are there any best practices, or approaches that you’ve found effective in managing an ecosystem over time? Because the challenge of course of having to deal with a lot of different types of suppliers, partners, and vendors over time… how do you ensure that an ecosystem is cultivated in, and ensure that partners are actively engaged?
Yes, that’s a very good question. It’s compartmentalized into a couple of different areas; number one, to get something you have to give something, so I think you have to build a model that allows your partners that interact with you, to not only come with business your way, you have to come to them with business as well. That means orchestrating marketing events, and joint customer dialogues, you have to invest in the ecosystem to be able to get anything back from it. So, that’s the baseline of it, this notion of just signing a partner document with a company, and then hope that they’re going to give you a lot of business, that simply does not work anymore. So, that’s the baseline.
Then of course you have to have a technology that allows for a variety of partners to interact with it, so it needs to be open, you are not necessarily talking about open source here, but you need to be integratable, and you need to be able to integrate other types of solutions with your solution. I think a lot of the solutions out there today are very proprietary and very hard to work together with, and if you look at the technology world, especially within customers today, they have a myriad of different IT solutions within the organization that they want to be able to work with. So, you need to have a technology stack that is very easy to work with by external parties, that’s a second thing that is very important.
Then thirdly, you need to find a commercial model that allows you to work in that specific way. That means in an ecosystem like this, you typically work in many different dimensions, sometimes you may have a direct customer contract, and you send an invoice to a customer i.e. the end user, that very often you also potentially sell to a system integrator, reseller, distributor, or system… whatever it might be, that means that you’ve got to have a commercial model that allows you to sell through multiple different types of channels, and that’s also very complex, especially for Telco, that’s why Telco in the beginning of IoT they, excuse my French, they sucked that because Telco’s come from a, ‘Let’s invest in a big network, and then we package it in small, medium, large, and everybody who doesn’t fit into small, medium, large, well basically they can’t buy from us’.
That’s why you had a myriad of IoT connectivity resellers such as Core for example in the US, that popped up, and wireless for that matter, because they saw a need to fulfil the segment that the Telco system simply couldn’t or didn’t want to interact with. So, you have to have all of those three components in an ecosystem, and then of course you need to spend time with the ecosystem, its time consuming, you need to build an indirect team that manages that, and it’s about relationships, it’s about solidifying those relationships, it’s about making sure that we bring as much value to them as they bring to us. That’s how you drive an ecosystem long-term.
Now, a few words of warning, because a lot of people think that building an ecosystem goes really-really quickly; it takes a long time before you get the snowball rolling probably. It takes time to educate the ecosystem of where you play in it, and how you operate with other ecosystem players. It takes time before you have solidified your position there, it takes time before enough players in the ecosystem have recognized you as a player they want to interact with, and then of course it also takes time before you, together with the ecosystem, have been able to cultivate their customers that ultimately are going to pay for it. So, it does take time, but I would argue that it’s a very cost-efficient long-term model of how to drive and act in the space of IoT.
That’s really insightful. One of the points you just made was the emergence of connectivity resellers filling a gap in the market where the carriers were missing, or they were failing. From your experience, could you talk about how the larger carriers have evolved, and ultimately what were they doing wrong in the early days? Is that changing, and is there hope for some of the bigger carriers? What do you think they can do well, and are there some other areas where there’s still opportunity for players in the market like Core and others, to continue and add value? And how do those players continue to evolve given the evolution in the market?
Well, first of allthere are different breeds here. In the early days, it made sense for the big Telco’s, such as Tele2, and ATT and Vodafone, not to cater to the customers that didn’t fit into their model, because they were scared of building up a huge legacy of businesses that they couldn’t manage, in their OSS/BSS. So, I understand why it started off the way it did, and then of course that gave enough space for the likes of Wyless and Core, Wireless Logic, and some of these other VARs out there. Now of course if you look at it today, the Telco’s have got their act together, most of them at least have understood that this is a place that you need to be able to control as much of the connectivity landscape as you possibly can, which basically means that a lot of the larger Telco’s don’t necessarily work with many of those resellers, there are fewer and fewer of those around, but larger. Some of their operators have both, some of them are a lot smaller VARs, some other VARs have merged together, so the landscape has radically changed radically over the last 2 to 4 years, and I think it’s going to continue to evolve in that direction.
Then if you look at the existing VARs, what I think they have to do, and most of them have understood that not everybody has ventured and pivoted towards that yet, but I think they have to, and that is more into IT services side. That doesn’t necessarily mean verticalized solutions, that can be a lot of other solutions in the IT space around connectivity and around in the IoT space; analytics, billing, and data management, data storage, and security, there are a whole host of other solutions one can get into, it doesn’t necessarily have to be verticalized. So, I think that’s what the VARs need to do.
The Telco’s on the other hand, some of them have gone down the vertical route, and that makes sense for some; if you’re an ATT and you predominantly basically operate in one continent where there are four other operators, it makes sense for you to have a vertical approach. But if you’re a Tele2 for example, operating in a confidant where there are four operates, you need states, it’s completely different dynamics. And then you have to be thinking differently, and I don’t think it necessarily makes sense for that type of an operator to go down the vertical routes. There it makes sense for that type of operator to work with an ecosystem that can take verticalized solutions to market. So, operators have to find the model that suits them.
I had a conversation the other day with another operator in Asia, we had a conversation and they said, ‘So, what’s the strategy that should be implemented if you’re a Telco?’, and my answer is this; there isn’t a strategy for the Telco market, there is the strategy for that specific player. So, you have to build the strategy for the Telco, depending on who they are, what are their strengths, what are the weaknesses, what is the competitive landscape in the markets where they operate? I think they’re fundamentally going to differ from each other, it’s really that simple. Then there’s a whole host of regulatory aspects that is coming into play now as well, I’m not necessarily thinking of GDPR, but more about on a global scale we’re seeing a huge influx of security geared regulations, talking about data generated in a market, complete the market, basically a whole host of data privacy aspects.
That of course puts a huge toll on all players in the connectivity space, large as well as small, how do you cater to that? How do you connect up on a global scale an automotive manufacturer for example? And he wants to be able to connect up vehicles in Saudi Arabia, in Brazil, in Russia, as well as across Europe and the US, and there is a whole host of different regulations here; Saudi Arabia for example, data that is generated in Saudi Arabia is not allowed to leave Saudi Arabia, the same happens in Russia. I know that Germany is talking about the same thing. What that means is you are then faced with regulatory barriers that you need to overcome, using technology. That’s why for example Tele2 IoT launched together with Nokia the distributed cloud core infrastructure, which basically allows customers to connect up assets anywhere in the world and deploy a Telco grade core in that market to allow for the data to never leave.
I’m not here to sell Tele2 IoT solutions, as you rightly said I’ve just left the CEO position of Tele2 IoT, I’m just stating that there are a lot of things happening on the regulatory side that is going to drive technology adoption, both within the Telco community, but also the reseller community.
There’s a lot of difference by industry too of course, and the requirements for healthcare, and financial services, and consumer, are all going to be informed by different regulations in the different regions. As you look at some of your experience in different industries, I’d be interested to get your take, your insights on some of the dynamics that differ in terms of the adoption rates, and the technology savvy, and the willingness to change across different industries, in your view; who’s doing well, who may be lagging, and where are there some big opportunities ahead?
I think there’s not going to be one answer here, because I think it’s going to differ. But if you think on a global scale, there are a couple of verticals that are growing very-very fast and keep on gaining momentum. The whole connective car space of course is the one that is leading the way here. All the car OEMs and truck OEMs are connecting more and more their assets as we speak, for a number of reasons, and diesel-gate is only one recent event that is driving that, how can you de-risk your business at the same time that you’re lowering your potential costs, and increasing your revenues? I think the car OEMs are definitely looking at that. Many of them are doing a really good job, some of them I think potentially not, and the place that are successful here, they have a very clear strategy, they know what they want to achieve, they know how they’re going to do it. They don’t necessarily know exactly when they’re going to achieve what, but they know what they want to do, and how they want to do it. I think that’s very important.
This goes across all implementations, if I look at all the thousands of customers that I’ve interacted with over the years, there are a couple of red lines here for those customers, the overwhelming one is, the customer that knowswhat they want, and how they want to do it, i.e. they don’t look at technology, they look at strategy, ‘What is it that we want to do with our business long-term?’ They are the ones who are going to be successful. The companies that start looking at technology immediately, rather than look at the business values, they are the ones that fail. It sounds very simple when I say it, but it’s so easy to get sucked in to talk about technology, because it’s easy; ‘What hardware do we need, what type of connectivity do we need, which platform should we be using?’ but it’s irrelevant, its completely and utterly irrelevant.
Whatever it is that you want to achieve today, you can do so with technology. What you need to figure out is, what do we want to do, and why do we want to do it, then you look at exactly how should we do it? So, that’s an important takeaway, and so whenever I speak to customers, I never want to talk technology, I want to talk about strategy because that’s the only thing that matters to them long-term. They get the strategy right, everything else they can fix; they get the strategy wrong, basically they’re screwed. So, I think that’s a very important takeaway.
Now, coming back to the verticals and the various industries, as I’ve said, the car OEMs and the truck OEMs of course are leading the way here, but utilities is another that has done a lot in this space for many, many, many years. That was obviously driven originally from a regulatory perspective, and of course today it’s a cost-driven exercise for them, how can we ensure that we deliver the quality of service, and the control over our infrastructure, but with less people? It’s really that simple, and the answer is connecting up smart meters and the grid, and whatnot, and how do we do spot trading in the best possible way to ensure that we retain our margins, or we increase our margins?
Then of course there’s a couple of industries that have latched onto that, and security is another with home alarms and business alarms, CCTV cameras, and whatnot. But that vertical is now extending into connective doors, door locks, fire alarms, all of those types of things. So, that industry is also growing nicely, not to mention the fleet industry, I think fleet, which is accurately connected with truck OEMs, but the fleet industry is growing nicely, and here you should know that on a global scale you’re looking at… I read a report the other day that said, around the world there’s less than 20 percent of all the trucks on the roads that are proactive. Can you imagine? Just think about the massive opportunity on the existing vehicles that are out there, it’s just massive opportunities.
Then we come into the industries that are going to make a difference long-term for this planet, healthcare is one, healthcare is going to absolutely require revamping of how we deliver it. We are going to have to be much-much smarter, and healthcare is going to have to adopt the digital era, whether they like it or not, and I’m not necessarily talking in the OR, I’m talking about other things, if you’re a diabetic person you should be able to have real-life monitoring on yourself, your kids, or whoever it is suffering from it. If you take medication you should be able to have it digitized so that it’s automatically ordered when you take the second to last pill, so you have the stock you require to stay healthy. All of those types of things are going to have to happen.
Then what coming back to what we talked about in the beginning, the urbanization. I think a lot of these cities that are faced with a lot of new people moving into them, they’re going to have to look at digital solutions to improve environments in the cities, and I’m not necessarily talking purely about emission and the infrastructure, I’m talking about everything from schooling to hospitals, to transportation included. There’s a whole host of areas that the digital space is going to be able to create real value for those cities. So, that’s basically where I’m at here.
I wanted to circle back to a point you are making, which I think is critical, which is the idea that solving problems isn’t about chasing bright shiny technology objects, but really understanding business problems, and being able to shepherd through digital transformation. This broader theme of whatever you want to call it, digitalization, digital transformation, it is strategic, it encompasses the organization and very rightly technology is important, but it’s not really a primary factor in determining success, like the technology choices aren’t as important. From your perspective, as you’ve looked at some of your clients that have successfully been able to navigate a transformation, and if you’re talking about say a business that’s introducing connected products, or connected services for the first time, are there some common characteristics of an organization, or the role that leadership plays in helping to align an organization to think differently than they may have, sometimes for decades or even longer?
Well first of all, you hit the head of the nail there, because it is about leadership. With Tele2 IoT we did a very large study of hundreds and hundreds of our customers, we looked at the ones that were both successful and not so successful. We looked at is there some sort of a red line here, between the ones that are successful and the ones that are not? What we realized was, the companies that were successful, they did a couple of things;
- They were very clear this is a strategic discussion, not a technology discussion. This is going to fundamentally impact every single piece of our business.
- They didn’t start the digital discussion, the IoT discussion in some sort of technology division, somewhere down in the cellar of the business. This was a CXO discussion, this was in the leadership team, this is the CO, the CFO, the CTO, the COO, this is their discussion, they all have to be aligned on what they need to achieve here, because if you don’t have the leadership team behind you 100 percent when you do digital transformations, you’re simply going to fail. It’s enough that one person in that team doesn’t stand behind it and doesn’t support it fully for it to crack. So, that’s the second thing that we realized, you need full and up their commitment.
- The majority of those companies that were successful, they intubated the digital transformation, they didn’t push it out into the line immediately. What they did was that they started… you can call it center of excellence, you can call it innovation on the Edge, you can call it a startup within a large company; what they did, they gave a small team with a very strong leader the ability to innovate, and to work under different processes and structures than the general business. Why? Because when you’re in that space you need to be very agile, and typically the larger companies, even if they want to, all become agile, and similarly they will, they don’t have a choice, but they still have their processes of reporting and structure of everything, basically. So, if you want to transform your business, you have to give them a very clear mandate to a small number of people, to start that transformation outside of the business, or on the edges of the business.
When you’ve started understanding the benefits and how you are going to change the entirety of the business, that’s when you push it across the entire business. When I say the entire business, I mean the entire business, the best way to digitize a business is not to start digitizing your offer that you sell to customers, it’s to become a more digitized business yourself; putting in software robotics, or digitizing the way you do your salary payments, so how you do your time management, how you book rooms. That’s the best way to digitize the business, because you’re doing it inside and out, rather than outside and in.
That’s what we also saw very much on these businesses, they don’t only try to sell digital solutions to their customers, they adopted the solutions themselves to drive the digital thinking in every single piece of the business, from the finance department, to the HR department, to the sales team and to the technology obviously.
So, that’s the final piece. Then what we also saw was, a very important driver here, companies that looked upon this digital transformation as costs, rather than investments, they all simply faded. Why? Because if you look at it as a cost, it’s going to have a very negative connotation, and people are going to simply save dollars and euros every single day, which I’m not saying is a bad thing by the way, you should be bootstrapping for as much as you can, but the way to look at it is, unless we do this investment and we can pivot our business, and that doesn’t mean that if we’re a trucking company, I’m not saying though you shouldn’t be a trucking company, but you should be a digital trucking company, and that is about pivoting your business. Now that demands investments, it’s not about increasing your cost rate, it’s about investing in the future health of your business.
So, those were the common denominators that we saw amongst all of those businesses that were very successful. Now, you take one of those out, and it fails.
That’s a great insight, I guess you must have learned a lot from that study.
We did, yeah.
Despite our focus on the importance of organizations and priorities, I also would like to turn to technologies and future technologies, just because there has been a lot of discussion about the potential impact of AI, machine learning, and blockchain, as potentially transformational technologies, and of course the hype machines are working overtime, there’s a lot of people raising a lot of money and jumping into new projects with certainly a lot of optimism, and some trepidation that we may have some disruption down the line; but I’d love to get your impressions of what the impact of particularly in AI and blockchain can be, in at least enabling new types of value and business models going forward.
Needless to say, all of these technologies are going to be long-term, very important in this digital transformation that is happening across the world, there’s no discussion. Now, the interesting thing is, when we started off with M2M and IoT, it was a very standard long sort of industry, I wouldn’t say structured, but it was very clear, you had hardware, you had connectivity, you then may have had some application that ran that. But of course, all of these technologies are merging into some sort of digital mesh now, where they’re all interacting with each other in one way or another, and we’re going to see much more of that happening.
Machine learning, we’ve had machine learning for many-many years, it’s just that we didn’t coin concepts around it, and as you rightly put it, we didn’t hype it. AI and machine learning are something that is growing exponentially, simply because there’s a lot of value in it. I’ll give you a typical example here, what is it that AI really does? Basically, AI is taking a lot of human knowledge, you put it into a database, and then you allow it to self-learn, you allow it to extrapolate and become much faster in making predictions, and determinations of what is going to happen, depending on its history that its seen. If you look at what Google is doing with Captcha… are you familiar with that?
The interesting thing with that of course, is Google is using Captcha to solve what they talk about are problems, which when you go onto a website you identify yourself that you’re not a robot, and to be able to do that you get these questions, ‘Please identify all the road-signs’, or the trees, or the vehicles on the various pictures. You do that, and they say, ‘Thank you very much, you’re not a robot, you can buy your register on this website’. Now, what they’re doing at the same time which they haven’t told anybody, is that they’re crowdsourcing the world’s largest database for autonomous driving machine learning and AI solutions, because of course what they realize is the more real information they have from us humans, the better the AI and machine learning solutions will become long-term. So, they’re educating their own system with us.
I think we’re going to see a lot more on this going forward, we’re going to see a lot of companies solving a problem, but also generating a lot of data into those systems going forward. Which are the use cases? My god there isn’t a single use case under the sun Ed that won’t utilize AI and machine learning going forward. If you think about vehicles, if you think about the industrial space, if you think about healthcare, they’re all going to be there, you’ve got healthcare solutions today that are running purely on AI. There are a couple of startups that have implementing these AI solutions that basically you take a photo of your face, or your leg, whatever it might be, and they come back and tell you how you’re feeling, on the back of an AI-driven database. I think that’s pretty damn phenomenal actually, and I think we’re going to see a lot of those use cases.
I think what you’ve highlighted is absolutely on-point, particularly the AI implications in healthcare, hugely transformative.
Absolutely, it’s going to take a few years before you and I, and everybody else is using that widely day in and day out, but we’re already using it without actually knowing it. But it’s going to come more and more day by day. When you talk about blockchain it’s a little more convolutive, I personally believe in that type of technology and what it solves, and the use cases here are going to be endless. It’s going to take a little bit more time before its widely adopted everywhere for a couple of reasons; what do the commercial models look like? How do you implement it? And the technology constraints of some existing systems to operate together with it. So, there are some of those constraints, but that’s going to be ironed out over the next three to five years. Then you’re going to see many more blockchain solutions coming into effect. I think you’re going to see that in the financial industries, you’re going to have automated payments happening left, right, and center.
I saw a very interesting talk by a futurist the other day, he had met with Tesla, he said Tesla is thinking about implementing block-chaining their cars for payments. I was thinking about tolls on the highway, but he said, ‘The interesting thing is in spaces, big cities for example, if you think about San Francisco, New York, you have these big highways with four or five, sometimes six or more, lanes, and of course everybody’s driving everywhere. Now, if you’re in a hurry and you drive in the fast lane, you can actually automatically push a button in the Tesla, that will tell the car ahead of you to move over for $10, so that you get a free lane! That’s the cool stuff that blockchain will bring to the table, these automated transactions between assets without us even potentially knowing about it, but sometimes actually acting upon it ourselves by pushing a button or something.
That’s pretty incredible! Are there any interesting application areas, or startups that you’re keeping your eye on, which are at least worth highlighting?
When you’re the CEO of the business, as is Tele2 IoT, or Wyless for that matter, you have to be paranoid at all times. So, you have to keep an eye out on what’s happening in the start-up community on where they’re focusing, and where some of the players are focusing right now is on these standardizations, there are a couple of very interesting startups that are looking at, how do you create middleware solutions that allows for a variety of different types of solutions, to talk to right about the solutions, without having to have people doing API integrations? How do you simplify all of that? So, a space in general that I’m looking at heavily is, the simplification, because I think the IT space needs simplification, especially on the technology side. So, there are a couple of interesting startups out there that are simplifying how you connect up asset, but also how you integrate the data flow from different systems into other systems, with almost like interpreters that are interpreting one protocol into another protocol and transmitting the data into the new protocol on the fly. Those are extremely interesting areas, and I think those companies are going to be bought up very-very quickly, so that’s one very interesting space.
Another interesting space, and this might not be as interesting to the listeners of this pod, is the space of testing. Having built a number of businesses where you basically have a lot of engineers building a lot of cool stuff, what people tend to forget is, the thing that really takes a long time is the actual verification of the codes in the product, the testing part. There are a lot of interesting startups that are building these automated testing solutions, not only automating them, i.e. finding a fault and reporting the fault, but they’re actually fixing the fault. I.e. writing code by itself, fixing the problem that it found depending on what it is that they wanted to do. So that’s another extremelyinteresting space which I think is going to take off big time.
So, those are two of the very interesting areas, but of course there are many-many-many more.
Of course. This has been a hugely informative discussion, I really appreciate all your insights Rami, and I always like to close out the podcast with a question about a recommendation that we could share for our listeners, either a book or a resource that you would find worthwhile in sharing.
I did talk about being paranoid, so it is a book called, ‘Only the Paranoid Survive’, written by Andrew Grove, one of the founders and the CEO of Intel. The book talks about the fact that the world is moving really, really fast around you, and if you don’t move faster than the world around you, you are simply going to die. It is about being paranoid, it is about understanding how you adapt what is happening around you, and how you have to think, and how you build businesses and drive that part of mentality within organizations. It’s an excellent read, and it gives good insight into how Andrew built Intel, and how he fought around it. So, my recommendation of the day.
That’s fantastic, I’ve heard of it many times, but never got a chance to dip into it. This is a great incentive.
It’s a must read.
Well, this is wrapping up our conversation here. We’ve been speaking with Rami Avidan who is an early pioneer in M2M, and IoT, and former CEO Wireless Group, and Tele2 IoT. This has been Ed Maguire, Insights Partner at Momenta with another episode of our Edge Podcast, and I want to say, Rami thank you so much for your time, I really appreciate all your insights.
It’s been my pleasure Ed, thank you for having me.