The Power of IoT at Chatham House
I had the pleasure of speaking at Chatham House this week about the transformative power of the Internet of Things and the public policy challenges we need to get right in order to maximise the opportunities digitisation presents. I started by setting the scene on how digitisation is affecting companies right across the economy. According to the Global Centre for Digital Business Transformation, digital disruption will displace nearly 4 of the top 10 incumbents by industry over the next five years. And there are some clear benefits to those companies that do embrace digitisation – the MIT Center for Digital Business, for example, estimates that digital companies achieve a 12% higher market valuation than their competitors and GE thinks that IoT could add $10-15trn to global GDP over the next 20 years. It was also a great opportunity to set out some practical examples of how IoT is transforming businesses – I talked about how Daimler Trucks are using IoT to fundamentally change the way they manufacture to deliver much more tailored products, for example.
The event not only looked at the transformative nature of digitisation but also what public policy approaches are needed to ensure the benefits of this can be realised in the UK. Chatham House – or to give it its full title, the Royal Institute of International Affairs – is one of the leading think-tanks globally on foreign policy issues – and it proved an appropriate venue to discuss this. The event made clear, for example, that IoT needs an effective, coordinated and innovation-friendly approach to policy at the international level to ensure IoT can be used effectively and customers have confidence in the technology. For example, harnessing the data from IoT that will allow companies to adapt business models, create new products and react to market transformations more quickly requires companies and governments to take their responsibilities seriously in allowing that data to flow freely across international borders and to ensure the analysis and storage of this data adheres to high standards.
Cyber security was another policy area that Professor Michael Huth from Imperial College London – who joined me on stage – focused on. The event recognised that the growing number of connected devices expands the internet’s ‘threat surface’ and that it’s never going to be possible to 100% guarantee security given the different approaches companies – especially at the consumer end – take in this space. However it was a useful opportunity to set out the importance of a comprehensive approach to cyber security as an enabler to realising the benefits of IoT. Right up there for me on this are ensuring security is integrated throughout the approach Cisco takes to its products and the need for an adaptive and collaborative approach to security – spotting vulnerabilities quickly, learning from breaches and sharing understanding of this with companies across the industry to strengthen the collective cyber security effort.
The event highlighted for me how important it is to get across how digitisation and IoT are radically transforming businesses and that engaging on this transformation needs to be at the core of board-level strategies. It also pressed home the importance of understanding and engaging with the public policy environment – how policies on data flows and network security are geared up and how businesses interact with those is going to be central to making sure we collectively realise the benefits of digitisation.