TiL Online in conversation with Mathias Burger, expert in Connectivity and Smart Lighting at Samsung.
Mathias began his career with Martin Professional as product manager after studying Technology and Innovation Management at the Technical University of Munich. After supporting the transition of Martin Professional from a conventional luminaire portfolio to an end-to-end solution portfolio, including controls and video products, Mathias went on to join Tridonic as product manager for LED drivers. In 2014, he took over the commercial lead of the connectivity and IoT initiatives within Tridonic.
Before he started at Samsung Semiconductor Europe in 2018, he joined the Tridonic management team as Director of Product Manager Controls. In his role at Samsung he drives, together with the product management team at the Korean headquarters, the strategy for the European smart lighting market. His expertise and interests are varied including innovation and transformation management in disruptive market environments.
His wide ranging experience puts him in the perfect position to give us his views on the lighting industry today, connected lighting and what we might see in the future.
Mathias B: After LEDification was more or less mastered, I was looking for a new endeavour within Tridonic. 2014 was when IoT was just a word you heard being buzzed around! But I wanted to help the company to turn it into reality and business. At the same time, we were a little bit blinded by what had happened with LED because it was so slow to take off in the beginning then suddenly it just exploded – so everyone thought it would be the same with digitalisation! It was the same story everywhere – digitalisation had arrived and IoT was set to permeate every industry, incredibly quickly, as IoT was thought to be driven from all industries, not just lighting.
Then reality kicked in pretty quickly because the technologies behind IoT were still in a ‘lab status’ and whatever you could achieve with the existing means was more expensive then the value that you could create with it. We made commitments of work that meant we had to step outside of our comfort zones to deliver, we started to work on the operating system for chipsets, not just some upper level of software code – so we had to change from a lighting electronics company to a software and IT company overnight.
We had to venture into areas that we‘d never really touched because we made promises that we then had to deliver. It is to a certain extent still the same today, but the ambitions have been partly adapted to the actual technology maturity and execution has slowed, partly due to a lacking progress in standardisation. Between Bluetooth, ZigBee, or any other communications protocols and ecosystems, customers still do not know who to invest in, how to work across connected devices and they especially do not want to get trapped. At least now in 2019, we finally see some light on the horizon, although we still have quite a way to go before our initial visions and promises are realised.
TiL Online: If so much can change in just a few years, how are people choosing products to invest in if the product does not have a long shelf life?
MB: Exactly, it is so tough because you have to marry products with applications that have contrasting product lives. IoT and connectivity is evolving in fast cycles, but what is installed today in a building normally has to have a lifecycle of 20 years and needs to be supported throughout this time. Therefore before someone decides to add IoT capability to a product they want to be as sure as possible that whatever they pick today has a similar longevity as the actual luminaire. Since there’s no automatic future-proofness of what you can buy today, you have to believe in the commitment of your vendor – that he will ensure those 15-20 years of lifecycle support for a product that he builds based to today’s state of technology. I understand why many drop that decision out of planning today.
TiL: From this state of ‘the unknown’ we have seen ‘light as a service’ model is becoming more popular, or at least being offered. These contracts should include a guarantee safeguarding from obsolescence, shouldn’t they?
MB: A lease-based business model can be a type of safeguard for the end customer since he doesn’t have to take the risk of ownership, but this can be left up to the existing business relationship of luminaire makers and electronics / system providers. However, this isn’t free. Most of the lighting business is still organised transactionally, not service led organisations. You see a growing amount of luminaire makers that are playing with business models and are seeing some success, but I think everyone agrees that it is not really changing the bottom lines, yet. And while the implementation of lease business models still see challenges in implementation, adding a customer insurance for connectivity to it, it raises the complexity and calculations of such offers. From experience I know that changing minor details brings major obstacles. The smallest changes in revenue stream require large investments and in an industry that is unstable at the moment, many companies understandably do not want to run that risk.
There is a consensus that our industry needs to get ‘agile’ to cope with the challenges out of the shift from hardware products to software enabled products and systems. But this organisation transformation that needs to be tackled to turn us into service providers is massive. I just read an article on ‘why agile will fail’. In it the author said that while we are all adopting agile methods in our business processes, and developing products in agile processes, these companies are run by traditional top down management approaches with fixed targets, that automatically lead to internal collisions and environments that conflict with agile working and thus are harming the actual required transformation.
TiL: You do see a lot of the very large lighting companies bringing in partners, who are ‘agile’ young companies, have you noticed this?
MB: Yes and this is definitely something positive. Nevertheless partnering is something the industry still needs to learn about. Often, for many decision makers, partnering still means bringing in people to do the work you don’t want to do yourself.
At the same time no one can fulfil the promises of IoT alone. Too many different ingredients are needed: from the pure silicon (chipsets) over electronics up to networking and software. Even at Samsung, an organisation that covers bare silicone to a vast product range and smart platforms, a perfect end to end solution can’t be delivered because the variety of customer applications is so big that you can’t do it all yourself and be the best at the same time. If you try to do it all yourself, your solution might be stellar in some parts, but just mediocre in other areas. And this is not a winning strategy.
In lighting you have to partner and team up with specialists and players from different domains. Besides ensuring access to the different expertise that a full IoT solution requires, you also need horizontal partners. As we have said before, due to lifecycles and the lack of standards, you have to make sure you have inter-operability to avoid being locked into a single vendor solution where you are fully dependent on the commitment of a single company. And this is especially tricky because working and collaboration, horizontal partnering, between the competitors is not popular.
TiL: Do you think they should begin to collaborate now to avoid failure across the sector?
MB: Yes. It’s very important. The main issue is not that one partner gets more revenue than the other. It’s about unlocking it all, really delivering the market with a solution that is interoperable, giving choices to venders that fulfil their needs. Yes, one partner could end up with a larger revenue share but the first step to tackle is growing the market. To achieve this you have to have partnerships.
However, experience has also taught me that you can get so far down a developmental process with a partner, only to have a senior management change and for the work to be stopped because ambitions and direction no longer align with the new directors. Therefore a strategic partnership management is important to make your partnerships more robust and immune to short term changes.
TiL: The big companies have undergone a lot of senior management changes in recent years; each change brings in a new direction for the company. Do you think the industry is learning from the management change mistakes that have been made over the last 3 years?
MB: I’d like to think so – but it’s not always the case. Fundamental change takes years to have an effect. While changes occur faster than we can observe, the results would need to be improved based on these learnings. But everyone feels pressured to act fast. Still, a former colleague of mine created the perfect proverb: ‘direction is more important than speed’.
TiL: Coming back to connectivity and IOT. You talked about the need for standardisation; do you think the users will be considered in this process?
MB: My experience is a little more limited in that respect. I no longer engage in standardisation meetings for that very reason. There are ‘evangelists’ in organisations that try to drive standardisation to positively affect users and there are those that see standardisation as a way to provide their existing solutions and products with a ‘future proof’ stamp. This may conflict with the optimum solution for the client. Sometimes it needs disruptions from today’s practise for the best customer benefit. But disruptions normally mean higher development efforts and costs for manufacturers and thus may limit the speed of adoption. There are good reasons for both attitudes – and I understand both camps.
TiL: Thinking again about the user, do you believe the industry leaders have a responsibility to educate end users beyond their products?
MB: Certainly. It is not about products, it is about systems and you can’t divide systems up into lots of little parts. You need to let the big idea about IoT be shared. It needs to be made accessible. We made big promises concerning IoT and we have to educate people on how we will deliver them. End users need to clearly see where the value is in order to adopt it, because it comes with costs, it is unknown and it is change. But that also means fine-tuning our messages. Actually, I try to avoid the term IoT since its meaning is so fuzzy and mainly describes a technology concept, not a discrete solution for a customer problem.
Also, I won’t use the term “smart” anymore, because most of what we are seeing on the market is not smart, it’s just connected. We are seeing lots of dashboards of data visualizations, but what are they really doing for end users? Only if our solutions create meaningful insights for the customer that helps them to optimise their business, do our solutions create value for them that might outpace the cost of IoT solutions. And yes, then a solution deserves to be labelled as smart and IoT turns into a benefit for the customer. It’s that message that needs to be clearly shared.
TiL: How have you seen this affect lighting designers and architects’ choices?
MB: I have heard many times when talking to different stakeholders from the construction industry that when a building project is being delivered the largest risk is not in concrete or the physical structure at all; it is the technology installations. I can understand why people wish to limit that as best as possible. Also, lighting designers have such a limited amount of products to use today to deliver a smart system, so why compromise on the design and create additional risk? It is only when you can clearly communicate the value in connected lighting to the end user that the middle man, the developer, will chose to invest in it. That is still a point that has not been clearly addressed because the benefits and the value is not defined or tangible.
TiL: If we need to create a user focused ‘push’ in lighting, how do you do that?
MB: I’m glad you mentioned that. So far we have all been focusing on pull. We need have pull of course, but push is also required. IoT systems initially only focused on huge projects and systems because there it seemed easiest to justify the overhead that comes with an IoT based solution and for such projects it needs to have the pull from the end customer. But if we target a little bit lower, just ‘connectivity’ instead of full blown ‘IoT solutions’, we see the potential for pushing solutions via the existing market channels, e.g. in small retail and museum environments.
This kind of push for connectivity comes at a lower risk and price and enables us all to learn and to better understand the benefits– both for the manufacturers as well as the customers. To do this it again needs to come back to sharing real benefits to end users and this information has only now become available…if at all. If people do not understand the basics, then it will not take off.
TiL: Have you seen examples of a balanced push/pull regarding the IoT in lighting?
MB: If you go back three years, projects were all about full IoT, with lots of sensor nodes, cloud, dashboards etc. Now, the current market focus is more on wireless solutions. The reason is simple: IoT might be the ultimate vision, but there might be smaller steps that you can push into the market as their value is easier to embrace. The pull of the IoT required the push of understanding so companies are going back to the very basics again.
TiL: Do you think the industry can afford to wait for the users to understand the benefits of connected lighting?
MB: It’s a catch 22. First of all, in times where we see an erosion of revenues in the common lighting market the budget for such developments get tighter. So if you can’t invest today, the chances of funding these developments will be less likely tomorrow. At the same time, companies have to invest today but that means you have to sacrifice today’s business and revenue because we can’t build on top of the existing budgets and resources to do this. If you invest in IoT and connectivity today –it won’t deliver the revenue you need today, but it might, tomorrow. This is especially hard for existing companies and a little easier for start-up companies as they don’t have any legacy business to hedge against the new business. But independently of this, you have to have a well communicated strategy supported by a management who believe it in it and then deliver it.
It will not be pain free and a decision has to be made about which pain you want to suffer.
TiL: When it comes to adapting, budget is key. Do you think there is space in the market for the more expensive solutions that are available?
MB: At today’s prices, it is limited. There is always a market of early adopters who are willing to pay a premium for being able to get early access to new technologies. It is about finding these customers in the beginning because they are helping you to mature your offers and direct your next steps in the right direction. But for achieving greater adoption we need to decrease the price point. And this is just about product costs alone: It’s also about related costs for bringing such connectivity or IoT solutions to life and supporting them during operation. Lower overall costs naturally mean that there are more applications where the solution costs are lower than the benefit that you create so that the investment pays off. It was the same with LED’s: initially they were not picked because of their price, but despite their price as they enabled designers to have new luminaire shapes and design possibilities. But LEDs only started to replace the other light sources when they achieved similar costs.
The good news is that there is huge potential for streamlining but it does not come overnight. The main enablers for cost-downs are, first of all, volume and optimisations – but both require a wider market adoption. This does not mean that we need to keep searching for new applications, but rather we should focus on identifying those applications where we can create a benefit with what we have on hand today. Otherwise we are stuck.
TiL: If you are an architect or a lighting designer and you have to incorporate smart lighting into a city design, what can you offer if lighting is just connected and collecting data?
MB: It depends on the application. Sometimes it is better to target lower: in many cases, connectivity on its own can already deliver a benefit to the end user. Take museums, for example: enabling the curator to intuitively alter light using their phone is not smart, but it is useful connectivity because it raises the usability of lighting. It is the same inside retail design environments. There are many use cases when connectivity raises the value of the lighting for the end customers. They, of course, have nothing to do with AI, smart lighting, or IOT, but it is a step towards that destination. It is a more realistic application that will gradually take us to an intelligent world.
TiL: Do you think the big companies will learn from the existing adopters and users?
MB: They have to. It’s especially the newer players who are showing early success with connectivity. But what they are learning, they are, of course, not necessarily sharing. Nevertheless, their success factors might also help existing players to transform into successful ‘IoT players’. Therefore it is important for our industry not only to talk about advancements in technology and products, but also what it needs organisationally to be able to be successful in that field. It is not a surprise that we see big companies like Airbus, Merck etc. running incubators and corporate start-ups to lead that type of transformation from the inside.
TiL: If the big companies are selling ‘IoT’, but what they are delivering is connectivity, can the user trust in the products they are being sold?
MB: The expectations that are being raised by industry as a whole need to be managed. We need to clearly state what we can do now and what we hope to achieve in the future. Believing in the larger vison is important, but we need to target for smaller, but usable steps in developing. We tried to run before we could walk. There is no reason to give up on IoT, but we need to accept the reality: that we need to crawl before we can walk. You can’t connect a whole city, if you haven’t successfully wired up a museum. It just will not work. The market needs honest messaging to avoid the users losing heart and interest. And it needs guidance on how to embrace this path of innovation, step by step. Most stakeholders, meanwhile, will know if it’s just marketing and they would appreciate the honesty if they heard it. No one benefits if everyone is keeping up an illusion. Planners’ lives are made much harder by having to deal in products that do not really live up to their promises and trying to meet customers’ expectations. They are much happier if they know they can factor into a product system that delivers more basic benefits today, but will still enable a future solution. If you deliver a connected system today it does not mean you will not be heading towards the IoT. It is a step that can be scaled up and have an ‘IoT’ roof placed on top of it at a later stage.
TiL: You have spoken before about start-ups and incubators bringing about change in the industry because they are small enough to be agile, to move from connected to truly smart. Could these incubators be inside architecture and lighting design firms?
MB: For sure. The main idea is to create spaces where innovation without legacy can happen. As I have mentioned before, no architect will want to use new systems in the projects without reassurances. If an architecture practice or a design firm wants to be on the cutting edge then sure, it’s a good idea to run it in an incubator. It can be where they can give certain teams’ total freedom to explore and experiment with new and innovative technologies without conflicting with the existing business and processes. It can be a way to make them distinguished and to stand out if they can offer unique connectivity and IoT understanding. Of course they then have to build a value structure around this. It can be a great way for the teams to understand connectivity and lighting. They can build projects internally to work, live and use connected lighting giving them user insights which are very valuable. And it can help them to build their own partner network around IoT and connectivity which allows them to offer unique solutions and thus, unlock new opportunities
This is the beauty of IoT: it will change the markets and businesses that we used to serve. This is an offer for us to reshape who we are and what we do tomorrow. It’s about creating this vision and breaking it into small executable steps that both, we ourselves, as well as our partners and customers, can embrace and live up to.