Connected Intelligence is Disruptive
This technology revolution is redefining every product and every industry
Almost exactly thirteen years ago I published a book about the Mobility Revolution. Although the iPhone had not yet been introduced when I wrote the manuscript, it was apparent to me that mobile technology was going to fundamentally change how we interact with the world around us and how businesses operate. As that revolution happened and the disruption became more apparent to many, I was often asked “what is the next technology revolution?”
For the past several years (e.g. see above) I’ve been talking about and writing about the Connected Intelligence Revolution. Earlier this year, in an article published here, I defined this latest revolution as “the collision of advanced data processing technologies with massive amounts of available data, resulting in new ways that we see the world, anticipate the future, make decisions, and take action”. I specifically called out four core building blocks of this revolution: the Internet of Internets, Networked Computing Infrastructure, Analytical Software, and Real World Interfaces.
As I work with and talk to companies and leaders across industries, the level of strategic challenge and disruption caused by the Connected Intelligence Revolution is becoming more apparent to more people. Over the coming days and weeks, this disruption will be a particular focus here at ClearPurpose, but I wanted to start by simply sharing a few observations of how the Connected Intelligence Revolution is changing how I, as a consumer, interact with the world around me, and what the strategic implications are for the companies involved.
A Smart Sprinkler
We’ve been blessed to have in-ground sprinkler systems in our last few homes. I think we’ve had three different brands of controllers ranging from very mechanical to highly electronic. One thing that really bugs me is when I see sprinklers going off in the rain, so a couple of homes ago we asked our irrigation service guy what we could do about it and he installed a rain sensor that automatically keeps the system from running if it has recently rained. We did the same at our next home, and when we moved into our current home, I asked our irrigation guy about it and got a slightly different answer.
He said he’d be happy to install a rain sensor for our system and it would cost $x, but he could also replace our current system with a Rachio smart sprinkler system for $x + 30%. Doing a little research, I found that the Rachio system is pretty simple to install and I could buy it for a lot less than I’d been quoted, so for about the same price as just a rain sensor would’ve cost me (installed), I ordered a smart sprinkler system and installed it myself.
When we first bought a house with a sprinkler system, the change was pretty amazing. The two obvious big changes were that my lawn stayed green throughout the summer and I didn’t really have to do anything to water the lawn. The controller that made that happen was relatively easy to program (although a bit tedious given the minimalistic user interface). I could tell it how long to run each zone, what time to start the complete cycle, and which days to run. Set it once and forget it. Thank you Microprocessor Revolution!
Rachio has truly embraced the capabilities of the Mobility Revolution. Unlike my previous systems, there are no dials, buttons, switches, or displays on the Rachio controller. Instead, the controller connects to our home WiFi network and everything is managed through the Rachio mobile app. I could go on and on about all the ways this makes managing the system so much easier, but I’ll just mention one big one.
Everyone with an in-ground sprinkler system is familiar with the testing process. You go in the garage and manually start zone number 1. You then run around the house looking for which sprinklers are going off and make sure that all the heads in that zone are working right. You then run back to the garage, shut off zone 1, and turn on zone 2 and repeat the process until you’ve worked through all the zones. With the Rachio system, you give the zones meaningful names instead of numbers. For example, one of my zones is called “Back Fence Rotors”. You can even take a picture of that zone with the app and your smartphone camera so you know for sure which sprinkler heads go with each zone. You can select “Quick Run Zone” for any zone from anywhere, any time. By default, the zone will run for 3 minutes, but it’s easy to make it shorter or longer or to stop it mid-run. So, for my system testing scenario, I don’t need to go into the garage at all. I simply walk around the house, selecting each zone as I get to that part of the yard, and do a quick run to make sure everything is working as expected.
But Rachio didn’t stop with the Mobility Revolution! The company has fully embraced the Connected Intelligence Revolution, combining information I provide about the plants, soil type, and ground slope in each zone with historical weather information for my area, and weather forecasts for the next couple of days, to decide which zones to run for how long each day. I simply tell it what time of day I want it to run (either start or finish time) and it does the rest. The company claims that my property is better watered (not too much, not too little) and that it uses less water than the historical “brute force” method (saving me money and maybe helping the planet a little bit too).
Although there are times the system is “too smart” (e.g. when I plant new plants in a bed and want to give them extra water, but the system doesn’t run as expected because the algorithm doesn’t think the plants need it), in general the impact on how I interact with this aspect of my life has truly been revolutionary.
But what are the strategic implications of this new approach to the companies in the irrigation industry?
Let’s start with Rachio’s direct competitors. When I search Home Depot for irrigation system controllers, there are 61 matches from companies including Rain Bird, Hunter, Orbit, and Galcon. These well established competitors have had to respond to offers like Rachio’s by adding “smart” features. Twenty-four of the products are considered “smart” (although I’m sure there’s a wide range of what that means), but only Rachio, Orbit, and Rain Machine have mobile apps to control them. Rachio and Rain Machine are new entrants while Orbit has been in the lawn and garden business for decades and has launched the B-Hyve sub-brand for its smart irrigation products. All of the other players in the industry are having to play catch-up. Later this week we’ll talk about some of the challenges in doing so.
Next, let’s talk about the service industry. Sprinkler systems are surprisingly uncomplicated. The controller is connected by wires to electronic valves scattered around the property. The controller sends a signal to a valve to either open or close. When a valve is open, water flows to all the sprinkler heads in that zone, and those heads spray water. Most sprinkler heads can be adjusted by hand to alter the spray pattern to best cover the area that needs to be watered. Although the system is pretty simple, I’m not very handy, so I tend to be happy to pay someone who knows what they’re doing to replace a broken head or rebuild a valve (e.g. replace the gaskets). They’ll do it faster and better than me. I also don’t have an air compressor, so I’m happy to pay someone to blow out my system so it doesn’t freeze during the winter months.
But I also used to lean heavily on my service technicians to set my zone timings in the spring and to tell me how to change them during the summer and fall. I trusted their judgement. I was willing to pay a little more for a more experienced and sophisticated service company. Today, I no longer need their analytical skills, I only need their ability to physically maintain the system. My Rachio system has commoditized my irrigation service needs. I can feel pretty comfortable going with a lower cost provider.
Finally, let’s talk about Rachio themselves. Not surprisingly, the company was started by a software engineer. Chris Klein saw a problem that he could solve with software and married that elegant software solution to the simple and robust irrigation infrastructure that people already had buried in their yards. But there are other elements of the solution that might be a bit trickier to solve.
The most obvious need is network connectivity so that the controller can communicate with the mobile app and with servers using weather data to provide irrigation schedules. To accommodate the wired connections to the valves, irrigation controllers tend to be mounted on the outside wall in a garage — probably not an area of the home you otherwise would need or want to cover with WiFi. When I visit the help section of Rachio’s website, there are three main topic areas: Hardware, Thrive (more on that in a second), and WiFi. I think that indicates that network connectivity is one of the biggest customer support issues for the company.
The second element of the solution that might be a challenge is security. Sprinkler systems and the data associated with them may not be the highest risk connected systems, but the issues of data security and access control cannot be ignored. In a recent study, global security lab Riscure found that every smart home device they studied had some security vulnerabilities that should be addressed. I’m sure this has been an area of focus for Rachio and, as new threats emerge, will continue to be for as long as the company is in business.
Finally, unlike a traditional product company, Rachio has ongoing operating expenses associated with every unit they’ve sold. Each controller is regularly communicating back to Rachio’s servers looking for the weather data that drives the system’s smart scheduling. However, Rachio has adopted the traditional industry business model of charging one up-front purchase price with no recurring revenues. In order to create recurring revenues, Rachio has introduced Thrive, a lawn treatment subscription program. Initially, you receive a kit with everything you need to apply their Lawn Champion product to your lawn and enough product for two treatments, each lasting 45 days. The ongoing subscription then delivers additional product as you need it.
Connected Intelligence is Disruptive
And you thought watering the lawn was a simple task. If the Connected Intelligence Revolution has already been this disruptive to residential irrigation, imagine what it is doing to more sophisticated industries!