In the past two years, the market capitalization of Tesla has gone up about 15-fold, to $593 billion. The value of Apple Inc. has increased by 20 times since the 2008 launch of its App Store. This was the critical addition to its iPhone, introduced a year before. Signify, maker of the smart home lighting Hue, has seen its share price triple just in the past year.
Aside from these stunning accelerations in value, what do an electric car maker, a computer company, and a vendor of managed lighting systems have in common? The answer is that all of these companies exemplify a little-noted revolutionary trend in products, which is to create 360-degree experiences for consumers, built around what I call “empathetic devices.” Indeed, these companies have changed lives, making and destroying business fortunes in the process. And now they are now coming to the industrial sector, promising even more disruptive consequences.
Empathetic devices are experience-driven machines that come off their manufacturing lines fully engineered, ready to go, and yet in a critical sense incomplete; they await interaction with their owners to exist fully as products. Our Teslas, smartphones, and lights are all virtually identical when we buy them. A month later, however, they are vastly different, having logged and accommodated our preferences and habits, or downloaded different apps. Some of this is from permission-based personalization, and some is from over-the-air software adjustments that may happen without our knowing.
Personalization and software updates in themselves are nothing new, of course. Devices engineered to create experiences for the consumer, though, are designed to change, and seem to seek interaction with their owners. It’s probably why a Tesla’s handles open as a rider approaches, or why a smartphone is fully charged and welcomes you when you first turn it on, or why Hue connects easily and recontextualized lighting for everything from gaming devices to a patio and garden. For the car and the smartphone, even the buying was upgraded, from an impersonal dealership and a nondescript electronics store, to a carefully planned experience that created excitement around ownership itself.
This is more than just good customer service. This is a focus beyond the devices themselves—to the experience of using devices, thanks to the way these products are able to wirelessly connect to cloud computing systems that gather and deploy data, make predictions, and change an object’s behavior to have it better match its owner. That means thinking about products far more broadly than before, drawing on user experience more intensely, and thinking harder about the software and infrastructure upstream, where the hard work of making this look easy really happens.
Increasingly, this experiences revolution is coming into the industrial world. It’s no longer enough to make an industrial machine; in many cases it must be an empathetic machine that wants to learn about its owner and its operator, to better realize the value creation of the business it serves. Even the path to purchase with industrial machinery may change, so that end-users feel better understood, and have more interaction and excitement in buying and using machines, enabling more satisfaction (and use). What can manufacturers do to be more like these leaders, so they aren’t relegated into the laggard position in the market?
One success story is Sandvik, the Swedish multinational that makes, among other things, machines that precisely cut metal so it can be used in making other things. Metal cutting machinery hadn’t received a lot of attention over the years, and though these systems were computerized, learning to operate them proficiently could take up to two years. Working with Google Cloud, Sandvik created a more software intensive, cloud-connected machine. The new equipment can be operated with a tablet, the basics learned in an hour or two, and new software available that enables the machine to do more specific tasks for the customer. Likewise, Signify, originally a part of Philips, has created new businesses around industrial lighting, which learns and adapts to individual corporate needs in a dynamic way that saves energy, and promotes retail sales and personal safety.
The benefits of creating 360-degree customer experiences out of empathetic machines extends beyond more dynamic products. They can also end the disintermediation that currently bedevils so many industrial companies, creating a closer relationship with customers. The dividend isn’t just in greater responsiveness and loyalty. It can also create new customer understandings that help manufacturers in both product creation and competitiveness.
For over two centuries, industrialization has spread across the world, creating new economies, enabling rapid advances in material life, lowering prices, and increasing choice. If there was nostalgia for the world before, it was for an artisan time, when makers understood their buyers personally and crafted with their needs in mind. As new experiences created from empathetic machines usher in the next stage of the Industrial Revolution, there’s the possibility we’ll be able to have the best of mass manufacturing and feeling well understood, in a whole new way.