As exciting as smart cities and buildings sound, and as big as the market is projected to grow, the path towards and through this promising future will be bumpy.

Before we dive into the risks, if you haven’t seen my post about the upside of IoT, please read it first. And, given the importance of data privacy, I’m dedicating a 3rd post to it in this series.

During the IoT panels I participated in this summer, my peers and I started off describing the upside potential of IoT applications for cities and buildings – centralized and remote control, thermal comfort, predictive maintenance, fewer car crashes, data for better decisions. Of course, the conversation inevitably turned to the downside risks. Cybersecurity vulnerabilities are by far the biggest, and they are way trickier to identify than IoT benefits.

Afterthoughts and unintended consequences
Tim Frick, fellow panelist and digital expert, explained that in his 20 years of working on websites and building applications that clients think of security as an afterthought.

Frick cited a 2017 study from Northeastern University that found 37% of websites have a known security vulnerability. There is a quick fix (download the latest version), but that gets ignored all too often. Lack of maintenance was the culprit in this study, but Frick was quick to point out that the big problem is design.

The warning bell has been rung for years and some product manufacturers will prioritize security at the start of product development. But for those that get cybersecurity wrong (even if they’re trying to get it right), damage from IoT security breaches will be physical and immediate compared to website breaches like Equifax. More on that later.

Despite how scary this topic can sound, I am a practical optimist. Many of the examples in this post are unintended consequences that could affect our physical, not just our virtual world. I hope it helps you ask new questions of your colleagues, partners, and suppliers.

The devil you don’t know
Data breaches are a good proxy to understand IoT vulnerabilities. The Target breach of 2013 happened because hackers infiltrated the system of an HVAC vendor for a Target store and were able to tunnel all the way to the company’s point of sale system to plant malware that swiped credit card details. It was a huge, poorly secured system with many points of entry and only a matter of time before a hacker found a vulnerability.

Sadly, companies of all sizes experience regular data breaches. The question isn’t IF you’ll be hacked, it’s WHEN. Data breaches are the devil we know, like the recent Equifax debacle or the Target fiasco. Having our identity stolen because of a breach is a nightmare. So is having your computer ransomed, but neither pose immediate physical danger.

What happens when your car gets hacked while you’re zooming down a highway at 70 mph or your office building systems get shut down when you’re on an upper floor on a sweltering day?

Immediate physical and psychological threats of IoT attacks create a different kind of risk including injury, illness, or even death. Then there’s the business consequences of skyrocketing insurance rates, legal liabilities, downtime, and lost economic activity. This is the devil we don’t know. At least not well.

Dude, who hacked my car?
You’ve probably heard news reports for a couple of years about people being able to hack moving cars. There are even competitions for car hacking to help improve security (perhaps because it was an afterthought in the original design). Car-makers have instituted fixes and learned from such vulnerabilities, but that doesn’t guarantee hackers won’t find a new way.

Imagine if your car gets hacked in the middle of nowhere and someone is not only messing with you, but demands ransom to give you back control of your car? I’ll leave movie-plot scenarios like attempted assassinations to authors such as Benjamin Wittes and Gabriella Blum.

The real answer on AVs depends on how seriously automakers take security as they design and test these cars. How demanding will they be with suppliers of equipment for navigation, machine vision, communications, etc.? How thoroughly are all of these companies searching beyond the hacks mentioned above to identify and fix vulnerabilities in the entire system?

Other smart city vulnerabilities
The smarter public transit gets, the bigger a target it will become. The San Francisco Muni was hacked last year, forcing the city to shut down payment machines and run the system free for a couple of days. This is more akin to a traditional data breach than the threat facing cars on the road today or the AVs of tomorrow.

Public transit infrastructure and system vulnerabilities are still possible. A teenager wreaked havoc on the tram system in Lodz, Poland in 2008 by tripping rail switches and redirecting trains. His stunt derailed four trains, injuring dozens. It’s systems like that we need to think through – rail switches, signals, brakes, doors, the list goes on.

Similar vulnerabilities are possible for systems controlling vehicular, cyclist and pedestrian traffic. What happens when traffic signals, street lights or digital highway signs are hacked? We’ll have to ask similar questions as we upgrade and expand our electric grid, and gas, water and wastewater systems. Hopefully the consequences will be mere inconveniences, not injuries, illness or worse.

Smart building blindspots
Cybersecurity frameworks have largely ignored building management systems or building automation systems (BAS). BAS centrally control all the systems in one building or across multiple campuses through a distributed network of electronic devices.

The tradeoff for all the upsides for companies using a BAS (savings, convenience, comfort, predictive maintenance, etc.) is when an issue arises due to a device malfunction or attack, vulnerable systems include mechanical, security, fire suppression, lighting, HVAC and humidity control and ventilation.

What it comes down to in any system is that devices are hackable. More devices means more points of entry to attack (and more to maintain). They key with BAS cybersecurity is to look at vulnerabilities posed by the entire system, not just by single devices. This requires increasingly complicated testing to check for vulnerabilities.

My toaster broke the internet
Smart homes also have vulnerabilities, but until we have widespread adoption of home operating systems, the risks will be lesser than commercial BAS.

Most “smart” devices in the home aren’t yet connected to each other, just your router. Once a home OS is widely available, think about all the internet-connected devices that could serve as points of attack in a home (TVs, thermostats, smart assistants like Amazon Echo or Google Home, appliances like refrigerators and dishwashers, security cameras, etc.).

In addition to being attacked, your devices can be used in an IoT distributed denial-of-service (DDoS) attack. That’s right, we’re in the age of bottoasters.

Who is going to pay?
The short answer is we all are in some form or another. Hopefully IoT security will improve and hacks will be limited, falling more into the category of an inconvenience than immediate physical danger.

That said, hoping is never a good strategy. Preparation is. You don’t want to be the infamous CEO (or IT worker blamed by said CEO) responsible for a flawed design or unpatched vulnerability that results in illness, injuries or fatalities.

We don’t know how damage from IoT attacks will play out and how far the blame will stretch up the supply chain. What we can safely assume is the damages will be broad and expensive. Insurance rates will rise. Litigation will ensue. PR departments will run on overdrive.

I predict that after one or two high-profile IoT hacks, we are likely to see three things: 1. The insurance industry will hedge its bets (and boost revenue) by creating new products to protect as many parties as possible from the risks (customers, manufacturers, suppliers, etc.), 2. Legal teams will fight over new contract structures between companies supplying and buying IoT equipment with the aim of shifting potential future blame to the other party, and 3. Government bodies will push regulations to protect consumers (perhaps later on or only after a serious consumer product mishap).

What can we do?
Listen to Tim Frick’s cautionary tale of the U.S. being 25+ years into the commercial internet and yet 37% of web pages have known, patchable security vulnerabilities. Where are we headed with IoT? We have to do better.

Doing better is a tall order with the accelerating pace of change.

Some solutions are simple. Start engaging manufacturers about their product security so they hear how important it is to customers. Request security protocols of relevant service vendors. Map out and test your system of connected devices. It you’re working on IoT projects, push for security to be included as a driver of project success from design to meticulous testing.

New technical solutions may emerge. Blockchain may be one such solution. It offers promise, but is also hyped up. Blockchain isn’t guaranteed to be secure – its security depends on several factors, especially network architecture. If you haven’t heard, it’s currently terrible for the climate. Machine learning and behavioral analysis is another combo to watch.

For now, stay tuned. If you haven’t started seriously questioning what’s happening with the security of the things around you at home, at work, and when you’re out and about, it’s probably time to start.

IoT is a gold rush. These products are coming whether we’re ready or not. It’s incumbent upon all of us to work within our organizations to look up and down our value chains and get the right people involved to consider implications of a more connected car, office, warehouse or transit system.

JD Capuano leads sustainability strategy projects for Third Partners. He has 18 years of experience in strategy consulting and data analytics across industries and sectors. He has broad experience with sustainability, data and technology, and marketing. JD teaches about data at Bard College’s MBA in Sustainability.

The internet of things (IoT) is red hot.

Forecasts vary, but most put the smart building market in the tens of billions of dollars in three to four years. Strong demand from cities and states has attracted tons of capital to companies developing smart infrastructure and transport solutions.

Because it’s so hot, I was invited to speak on two IoT panels in the past month – organized by USGBC Illinois and the Delta Emerging Leaders. Professionals in different fields want to know what changes connected devices will bring to smart buildings and cities, including cybersecurity.

These are big topics so both panels only scratched the surface, but provided a good foundation for lay audiences. Here are some of the gems worth sharing, divided into two posts:

1. This one is about the positive potential of IoT developments in buildings and cities.
2. Stay tuned for the next about cybersecurity and data ethics.

Smart buildings
Many of us have been exposed to elements of IoT in buildings for years, such as light and occupancy sensors, and real-time energy monitoring. IoT is becoming far more advanced.

Commercial buildings have electrical and mechanical systems that are increasingly efficient. While much of that efficiency comes from design improvements, part is driven by connectivity and system intelligence. Lights, thermostats, HVAC systems, window treatments and more can all be centrally controlled and connected to building management systems (BMS).

Add light, occupancy and other sensors, and the BMS has more data to allow facility teams or algorithms to make smarter decisions to reduce energy consumption (and emissions), increase occupant comfort, and perform predictive, as opposed to reactive, maintenance.

Employees constantly battle over office temperature settings. Newer technologies allow for greater precision in delivering conditioned air down to an individual workstation. One notable example is Comfy, an app that allows occupants to request a 10-minute blast of cool or warm air to their location.

Connectivity and device intelligence is about to evolve for residential (and commercial) spaces. Bluetooth announced its Mesh standard in mid-July. Mesh uses low energy signals to better connect devices and extend a network beyond typical wi-fi range. Imagine your network using your devices to extend its signal farther while using less energy.

Smart cities
So much focus in the news is about automated vehicles (AVs). While they are being tested on roads, the timing of when they’ll arrive or legally be allowed in large numbers is tough to predict. More on that in my next post.

Cities are quickly adopting new, connected technology. One widespread example is efficient, connected street lights. Chicago is following the lead of other cities by installing LED street lights that can be controlled centrally. One benefit cities always want to deliver is safety. Instead of relying upon complaints, a city can immediately identify a burned-out or broken light and replace it. When a storm darkens daytime skies, an operator or an algorithm can switch on lights. Some can even be dimmed. Lights can use patterns to signal a safe evacuation path during an emergency.

Smart lights can be equipped with solar panels and battery packs, either grid-tied or not, capable of supplying emergency lighting. Lights can also be equipped with low energy cameras to monitor and manage traffic, pedestrian flows, public safety and more. (I’ll address the negative implications in my follow-up post). The jury may be out on light pollution. Manufacturers claim reduced light pollution, but residents complain about glare.

Copenhagen has one of the smartest traffic control systems in the world. It prioritizes cyclists and buses to help traffic flow better and reduce emissions. About 40% of its inhabitants commute by bicycle and the city established green waves – corridors with protected bike lanes where traffic signals are timed for cyclists moving at 12 mph. New signals have systems that not only monitor and adjust to bike traffic patterns, they also communicate with city buses. Buses beam data with their position, number of passengers, any delays. Green lights can be extended eight to 30 seconds to keep the buses moving. The system can also be used to more quickly clear cars after large events.

According to the U.S. Energy Information Agency (EIA), there were 57 million residential, 7.3 million commercial, and 310k industrial smart meters installed in the US through the end of 2015. Smart meters allow utilities and consumers to track energy in real time and are poised to serve as energy management systems that will allow customers to respond to real-time price changes such as rebates during peak-energy periods. We’ve seen this sort of demand response for massive buildings, but opening it up to smaller commercial and residential customers will help manage the grid during times of peak demand, like on the hot days.

The company Street Light Data uses travel patterns from ~10% of the US population to help urban planners inform new transportation projects. They purchase location data from everyday apps we use and combine it with various sources of navigation data and contextual data. Not only can they show origin destination patterns, they have variables such as trip purpose. Their system then paints a picture of our patterns of movement. Their software allows urban planners to conduct transportation analyses and the retail and real estate industries to figure out who shops where, when and insights on why. We’ll revisit this data usage in the follow up post.

It’s all about the data
The real value of the internet of things is in the data collected by all of these devices and the decisions those data allow us (or a computer) to make. We can track patterns over time and learn from user behavior, whether that’s the thermal preferences of building occupants or commuting behavior of a city’s residents.

When we apply context to historical behavior, like precipitation events to changes in commuting patterns, then we can help our systems predict future events. Predicting adverse events is particularly important for keeping people safe, things running smoothly and unexpected costs down.

There is tremendous upside potential for the IoT as it relates to smart buildings and cities, but as with all new technology, we must pay close attention to the downside risks. I hope you check back in a few weeks for my follow up post exploring those risks posed by cybersecurity and data privacy.

Co-authored by John Haugen, WELL AP

Workspace designers over the past half century have habitually undervalued their role in human health and wellness. Many of the spaces we work in actually impede not only our health, but also our productivity.

For corporate leaders focused on human resources, wellness, productivity, and operations, designing your workspace for human health is a major opportunity to create value. This opportunity is especially important if your organization relies on employees at high levels of cognition, e.g. legal, medical, finance, professional services, technology, etc.

There’s a plethora of new research on this topic:

• STALE AIR makes employees less productive. Low ventilation rates affect decision-making and cognitive functioning. In a controlled study that compared workers in spaces with varying VOC and ventilation rates, the best quality air – i.e. low VOC and high ventilation rates – produced major gains in cognitive functioning. The group with access to high-quality air produced cognitive gains of 131% in crisis response, 288% in strategic thinking, and 299% better information usage.
  [ Source: TH Chan School of Public Health ]
• OPEN OFFICE PLANS are despised by employees; sound complaints are three times more common than visual privacy complaints. And no, it’s not a matter of forcing your employees to adapt. “A 2014 study by Steelcase and Ipsos found that workers lost as much as 86 minutes per day due to noise distractions.”
  [ Source: Harvard Business Review ]
• Increased VENTILATION rates decrease absenteeism and associated costs from lost output by $400 per employee per year.
  [Source: Harvard School of Public Health ]
• Humans are intrinsically and biologically drawn to NATURE. This is referred to as biophilia, introduced by Edward O. Wilson in his 1984 book Biophilia . It has been included in green and healthy building standards because design that reconnects us with nature can reduce stress, improve cognitive function and creativity, improve our well-being and expedite healing.
  [ Source: Terrapin Bright Green ]
• “A decrease in HEALTH COMPLAINTS, such as tiredness and coughing, has been reported in office and hospital workers when plants were added to the work environment”
  [ Source: Journal of Environmental Research & Public Health ]

Where to begin?

Understand the current health of your spaces and establish the right goals for your new or existing space.

1. Take stock of the health attributes of your existing portfolio. Conduct a wellness survey or employee satisfaction survey, and determine which facilities are in line for some changes.
2. Discuss with your leadership the goals you’d like to achieve: increased worker productivity, reduced absenteeism, increased engagement, higher recruitment and retention rates, etc.
3. From there, determine how your facility improvements can help support those goals: better air quality, healthier food, democratized access to natural light, free address for temperature and sound control, etc. Look into certification systems for help: the most accessible and comprehensive is the WELL Building Standard , which is similar to LEED but focused on human health and productivity.
4. Bring in an expert to work alongside your design team in a support and advisory role – landlord, internal real estate team, architects, designers, engineers – to make it happen. At Third Partners, we are passionate about helping our clients achieve productivity and wellness goals in their facilities, to the benefit of their employees and guests.

It’s quite simple: buildings affect our health, and healthy people make better decisions. Organizations have many available options to improve productivity in both new and existing facilities by simply improving how their occupants experience air, water, sound, and light in the space around them.

John Haugen is a co-founder and principal at Third Partners. He is a WELL AP, a LEED GA, and is passionate about creating healthier and more efficient workplaces. John and his team will help you identify opportunities and make smart decisions that achieve your wellness, health, and productivity goals in your spaces.

JD Capuano is a consultant, MBA professor and member of Third Partners’ network of experts. His work ranges from setting and operationalizing sustainability strategies to using data analytics to achieve meaningful outcomes. He also works with clients to achieve healthy, efficient office spaces.

ReScore Group, a collaborative research group of which Third Partners is a member, conducted a benchmarking study on best practices in sustainability data management.

Methodology

The study is based on survey responses from 60 global companies from various industry sectors (manufacturing, food, chemicals, logistics, energy, aviation, finance, apparel), of different sizes (from $1M to >$90Bn in revenue) and from different countries (26 North America, 23 Europe, 11 Asia).

Key Findings

• A majority of respondent companies are publicly disclosing sustainability data
• Companies disclose sustainability data primarily to improve image with stakeholders
• Materiality analyses are increasingly common, but not all companies are satisfied with the exercise
• Almost all respondents follow a sustainability standard (e.g. GRI) and/or respond to rating agencies (e.g. CDP)
• Defining the right content is the main challenge in sustainability reporting, even for experienced sustainability practitioners
• Sustainability reporting is increasingly focused on the supply chain

Download the Report

Bumping passengers already seated on a plane is a bad enough decision. Physically removing a paying customer against their will is incomprehensible. If you haven’t yet watched the video, you should. It should be no surprise United’s stock took a nose dive. After another incident in late March, both having caused social media firestorms, United has a steep hill to climb to win over customers.

It all comes down to leadership

How United got here is really a story of culture, governance and corporate responsibility. For all the claims United makes about customer service and being a responsible corporate citizen, those claims are clearly not reflected in its policies and procedures. Actions are dictated by governance, governance is embodied by policies and procedures, policies and procedures are guided by culture, and culture is set at the top.

So how did the top respond? The CEO, Oscar Munoz, made a first attempt at addressing the situation by taking a sterile tone that put the company’s fear of litigation ahead of customer service. He blew it. His tone was wrong and he did not apologize to the passenger who was forcibly removed (or the other passengers who either agreed to be bumped or bore witness). The PR team also botched the tone of their initial attempts at crisis management. Munoz finally had to go on Good Morning America to get the tone right. During that interview Munoz blamed the incident on a system failure.

The failure Munoz referred to is a policy for a very low-probability situation that doesn’t seem like it was well-thought through. At any company, governance and policy are reflections of culture. Bumping passengers already seated on the plane, while legal, was a terrible business decision driven by a bad policy. Not sincerely apologizing during the first attempt at crisis management was an even worse decision.

Good policies create solutions to low-probability challenges

A lot of us understand why United and other airlines overbook flights. Unsold seats are lost revenue. And I can only image how low of a probability this event seemed: an overbooked flight, all passengers show up, four crew members need a lift, no passengers take the vouchers offered during pre-boarding. But it’s the low probability events that matter most. If United handled this well, there’s a good chance no one would have heard about it. We saw what happened when handled poorly. And this mishandling was by design because of bad policies and procedures.

It will be interesting to see how United changes this policy. Maybe they’ll increase or change the incentives they give. If they had offered a voucher worth more than $400 before people boarded and got comfortable, I bet some passengers would’ve taken the offer. Change the policy to draw a line of bumping to pre-boarding, or allow passengers to say no if asked to leave (especially when they say they have patients to treat early the next morning).

This situation not only reflects United’s culture, but must have damaged it further by putting customer-facing employees in an very difficult position. Who wants to bump a passenger who’s already seated on the next flight while all the other passengers are watching, listening and filming or live streaming? What pilot or crew member wants to catch a ride to their next gig only to be heckled by surrounding passengers?

Leadership, trust, and the bottom line

United leadership needs to do some soul searching because competition for customers and talent is fierce. The search for talent now and in years to come will be exacerbated by a looming pilot shortage. Will United get the picked over pilots or cut into their bottom line to offer higher salaries to attract and retain good pilots? Trust also matters when attracting customers who are willing to pay a little more than the lowest fare to feel better about the purchase. Beyond trust, more of us seek purpose in our work. While United has had some good stories in the past few years, the bad seems to drown out the good, highlighted by recent events suggesting a culture that doesn’t provide a strong sense of purpose.

Munoz has been at the helm of United for over a year and a half. This is his legacy. It’s also his opportunity to change that legacy by taking the necessary steps to earn trust and reinvigorate the purpose behind the brand. The responsibility you display as a corporate citizen isn’t just about your charitable giving or sustainability measures, it’s reflected in all choices, both large and small. How you plan for low probability events—like the one United mishandled this week—speaks volumes about who you are and what you stand for as a company. While investors may get over this quickly, passengers are less likely to, and that would be the most serious repercussion of this debacle.

United has a long road ahead if it’s serious about turning around perception. That road involves figuring out what they stand for and making changes to satisfy stakeholders, not just shareholders.