In this episode of The McKinsey Podcast, McKinsey partners Michael Chui and Mark Collins share their thoughts with Roberta Fusaro on the findings of McKinsey’s latest Internet of Things report, including how to successfully integrate IoT, the situations in which the most value is being created, and what companies continue to get wrong.
After, it’s expected a piece of space debris hit the moon on March 4, 2022. Hear about the implications of all the other pieces of space junk in orbit from McKinsey associate partner Chris Daehnick and podcast managing producer Laurel Moglen. The following transcript has been edited for clarity.
The McKinsey Podcast is cohosted by Roberta Fusaro and Lucia Rahilly.
Defining the Internet of Things
Roberta Fusaro: How do you define the Internet of Things?
Michael Chui: The Internet of Things, or IoT, is when you embed digital technologies into the physical world. For example, we’re seeing digital technologies embedded in cars and in buildings. You connect those physical objects through digital network connections back to computers, and that simply is it. That’s the Internet of Things.
Roberta Fusaro: Mark, compared with McKinsey’s previous research on the technology, what were some of the most surprising findings from the new IoT research? What were the areas where you found great uptake or where the use cases were more prevalent than in others?
Mark Collins: Looking at the settings or physical locations where IoT is deployed, of 99 individual cases, we found five represented 52 percent of the value in 2020. So a really big concentration in terms of where value is created.
The second thing that I found surprising is the massive growth of the connected home. Rewind the clock back five years ago, and the average American house had one connected device in it. We fast forward five years, and homes have over five connected devices on average.
Read more: IoT comes of age