Who will power the IoT economy?

By Peter Hirst, Associate Dean, MIT Sloan Executive Education

IoT

From driverless cars and sensor-laden industrial equipment to connected kitchens and smart cities---the Internet of Things (IoT) is cropping up everywhere, or so it seems. Recognizing the tremendous economic potential, tech giants and startups are investing heavily in IoT products and platforms. A recent report estimates that "the IoT will result in $1.7 trillion in value added to the global economy in 2019." Yet many employers are struggling to find the talent to propel the rapidly developing IoT economy towards the full extent of its promised value.


At last year's Internet of Things Word Forum in Chicago, Jeanne Beliveau-Dunn, Vice President and General Manager of Cisco Services, presented startling findings based on data from CareerBuilder, IBSG, and the U.S. Bureau of Labor Statistics:

  • One-million shortage of qualified workers in the Internet security industry in the next five years
  • Two million jobs needed in information technology and communications in the next ten years
  • Over 11 million people unemployed in the United States at that time
  • 45% of employers unable to find qualified candidates for open jobs

As of this August 2015, the number of unemployed people in the U.S. dropped to 8 million. However, according to the U.S. Bureau of Labor Statistics, job growth came primarily from healthcare, social assistance, and financial services sectors--not technology companies.

Where are the IoT jobs?

A patent portfolio can be used as an indicator of where a company is putting its focus and R&D dollars in hopes of future growth. According to a recent report by LexInnova, an IP and technology consulting firm, IoT-related patent filings with the United States Patent Office "overshadow all other technologies." The leading categories listed in the report are:

  • Wired and wireless networking
  • Algorithm, encryption, and memory management computing
  • Control systems, power management, and hardware infrastructure
  • Other patents in applications, testing, and measurement

Featured in a Forbes article, the LexInnova report lists the major players in IoT and how they compare in their U.S. patent filings. The chart below shows the relationship between Portfolio Quality Score, which is based on a proprietary algorithm that estimates the "value" of a patent portfolio, and Portfolio Filing Score, which measures the total number of issued and pending IoT patents in the U.S. by each company.


Portfolio Score 2

Source: LexInnova; Internet Of Things: IoT Tech Landscape And Rankings - New Report, Forbes, July 30, 2015, by Lisa Brownlee

These are the companies that make the top of the list in terms of IoT R&D as indicated by patent filings. But they are just a handful of the companies that are competing aggressively for the best and most capable people. Moreover, charts like this might be misleading, as they could suggest that the most action and greatest need for talent in IoT is among the "tech giants."

In reality, startups are shaping the IoT economy just as much as enterprises. According to Gartner’s Maverick Research, "By 2017, 50% of IoT solutions (typically a product combined with a service) will originate in startups that are less than three years old." Pete Basiliere, a Research Director at Gartner, points out that "individuals and small companies that span the globe are developing IoT solutions to real-world, often niche problems. They are taking advantage of low-cost electronics, traditional manufacturing and 3D printing tools, and open- and closed-source hardware and software to create IoT devices that improve processes and lives."

Of course, this is great news for the semiconductor industry because someone will need to make the brains for all these increasingly smart things around us! A recent study by Pricewaterhouse Cooper calls the semiconductor companies "enablers of the IoT ecosystem" and predicts "anywhere from 30 to 50 billion connected devices by 2020" worldwide. According to the report, consumer electronics, automotive, and healthcare will lead the way, which is not as surprising as the growing IoT adoption by industries that traditionally have been somewhat slow to adopt the latest technologies--energy, industrial manufacturing, and construction. 

Industry Forecast

It's clear that the opportunities and impacts of IoT are starting to affect almost every industry, in every sector, and at every level--yet the big question of who will drive the IoT economy remains largely unanswered.

Where are the IoT workers?

Many of the jobs that are difficult to fill in the IoT space require scientists and engineers, to be sure. It is interesting to note, therefore, that a study by the Economic Policy Institute (EPI) posits that the notion of STEM worker shortage is a myth. The EPI study found that the U.S. has "more than a sufficient supply of workers available to work in STEM occupations." Somehow, nearly half of these people have chosen to work in other fields because they couldn’t find jobs in the tech sector (IT jobs account for 59% of STEM workforce, according to the study.) Despite sustained investment in STEM education and programs nationwide, the tech sector, it seems, is losing talent to other industries.

Within IT, the demand-supply ratio in key IoT specialties is nothing short of dramatic, as Beliveau-Dunn demonstrated to the attendees of IoT World Forum in Chicago recently, using data from CareerBuilder. 

demand supply ratio

Source: © 2014 Cisco

So why aren't tech employers hiring when IoT appears to be so critical to their future success and the need for talent is clearly dire? The answer seems to be, at least in part, the widening gap between industry needs and available, qualified people who, increasingly required to manage their own careers and professional development, are prepared for these new roles.

New breed of interdisciplinary talent

Something particularly striking that we are hearing from larger companies is that the skills and experience shortages they are struggling with go beyond finding people with particular technical proficiencies. We are learning that many crucial IoT roles require people who have complementary skills in adjacent—or even disparate—disciplines. For example, we need:

  • Data analysts who also have a deep understanding of privacy and data stewardship
  • Network engineers who also understand hardware and security
  • Technical specialists who understand the business domains they are working in
  • Engineers with business acumen and the exceptional soft skills required to work in agile, multi-disciplinary teams that can combine these skills and experiences across individuals, industries, and cultures

Moreover, it is not just engineers and technical talent who are in short supply. We also need leaders in business, government, and the third sector who are able to understand the potential and the challenges of IoT so that they can create and lead organizations that will make IoT a reality, and do so in a way that maximizes the benefits and avoids the many potential pitfalls.
Thus IoT and digitization demand different experiences and new skill sets from today's workforce, changing every job before our eyes. We need to prepare for job functions and qualifications we don't even know exist yet. How can we optimize the training-to-job path? How can people build on the skills they already have?

Finding the talent supply-demand balance

According to the ManpowerGroup 2015 U.S. Talent Shortage Survey, engineers and IT professionals are among the top ten hardest jobs to fill. Yet, less than half of the companies surveyed are "adopting new people practices to overcome the hiring challenges." Of those, only one in five uses "non-traditional employment practices" and only one in ten is "exploring new talent sources; providing additional training and development to existing staff; and implementing alternative work models." 

The disconnect between employers and the educated, skilled, and smart workforce is both obvious and concerning, and needs to be addressed if we want to keep pace with rapidly accelerating needs of the IoT economy. The raw material for the talent is surely out there--we just need to figure out how to put it to work. The "how" though is not trivial, as the traditional processes of fulfilling and managing talent supply appear to be simply too slow to meet our current and anticipated needs. Moving a person through academia and into the professional world takes years and that is proving unsustainable and inefficient for the tech industry in general and for the IoT field in particular.

top 5 reasons for difficulty filling jobs-Manpower

Source: ManpowerGroup 2015 U.S. Talent Shortage Survey

Next-generation talent development model

In a blog post following last year's IoT World Forum, I raised the question of what leading higher-education institutions and technology companies could do to help fix this supply-demand disparity?

We need a new model that will ensure that people become not only specialists in their field, but more important, lifelong learners. As they progress through careers, existing skills must be honed and new ones acquired, and at a much faster pace. We need to shift our thinking from a linear process of school-to-job to a more spiral-like approach where people continually acquire new skills, as the market demands them. Some industries like medicine and architecture require continuing education from its professionals to be able to continue to practice. This would be a start, but the change we need in the technology-enabled industries to shape the workforce of the future must be much more dynamic.

Of course, it would be optimistic to simply expect people to spontaneously acquire new skills in the hopes of landing a dream tech job--the lack of transparency and visibility (especially over the career horizon) is a fundamental problem. That's why industry, education, government and non-profits must work closely to develop a new approach to talent cultivation. Together, we could set new standards and develop new processes to match talent supply with skyrocketing demand. Cross-sector collaboration will be essential to achieve meaningful change, as individual players can't do it alone. Yet such a systemic and collaborative approach to meeting future industry talent needs has always been elusive.

Enter the IoT Talent Consortium

In 2014, the second annual Internet of Things World Forum brought together a group of leaders from the tech industry, academia, government agencies, and non-profits who recognized the need for creating such a collaborative body of cross-sector stakeholders. The IoT Talent Consortium was founded soon thereafter as a nonprofit collective devoted to solving the problem of the economy’s need for a new breed of interdisciplinary talent. Its mission is to become the go-to reference for IoT professional qualifications, career development, and talent acquisition. The Consortium’s founding members include globally prominent companies and institutions, like Cisco, GE, Rockwell Automation, the New York Academy of Science, and MIT Sloan School of Management. I am proud to represent MIT and MIT Sloan Executive Education in this dedicated group! 

Get your share of influence in the IoT talent supply chain

We all have a role in fostering an environment that will propel talent into a dynamic IoT economy because without the right talent, the potential social and economic benefits of the Internet of Things will not be realized. That's why the IoT Talent Consortium is seeking like-minded organizations to join our vision of enabling the workforce of the future to realize the value of IoT. Our primary goals are to accelerate the trained talent pool by:

  • Growing an IoT-specific talent ecosystem
  • Establishing a leadership voice and standards for preparing the emerging IoT workforce
  • Helping build capability to match qualified talent to jobs within our developmental sphere

As IoT Talent Consortium members, organizations can become an integral part of the hub for IoT talent definition and development. They can have direct influence in shaping the educational and recruitment solutions that accelerate IoT workforce preparation, participate in organizational policy and program development, and gain incremental leverage from accessing Consortium learning and talent exchange resources. 
The IOT Talent Consortium is just getting started, and yet we're already seeing examples of how this new approach can work. Members of the Consortium will be presenting some of these initial "lighthouse" projects at the third annual Internet of Things World Forum, which will take place December 6-8, 2015, in Dubai. 

Email admin@iottalent.org or visit the IoT Talent Consortium website for more information about the organization and how to become a member.

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