Internet of Things (IoT) is the next big thing – and it’s simple to understand.

I bet I can explain all the talk about the Internet of things (IoT) and the phrase “smarter planet” in a few short paragraphs.

Thirty years ago, I co-oped at GE. Our goal was to improve the efficiency of a fluorescent lighting assembly line. We implemented a four-step process:

Step 1: Install Sensors: we installed 200 tiny sensors at 200 different stages of the assembly line; the sensors detected whether the fluorescent tube on the assembly line was defect free or not.

Step 2: Network the Sensors: we created a local area network that enabled connectivity between the sensors.

Step 3: Let Sensors Share Intelligence: our sensors sent a signal to the next stage of the assembly line telling it whether the fluorescent tube was still defect free or not. If the signal said the tube had gone bad, it told the assembly line to do nothing to it and let the tube move on. On the last step of the assembly line, the defective tube was automatically pulled out to a defective tube bin.

Step 4: Make Data Productive with a Machine: a computer captured all the sensor data and generated an automated report on the throughput, the cost savings, and the steps on the assembly line that were causing most of the failures.

GE saved millions (ka-ching) during its first year of operation of this smart assembly line. The lineman would study and change the defect-causing steps.

This co-op assignment contains all the elements of the IoT and smarter planet revolution. It embodied (a) sensors, (b) a network to gather all the data and (c) computers that measure and take steps to improve the efficiency of the entire process.

Implemented today, this co-op assignment would still rely on sensors, but would rely on the cloud instead of the local area network, and utilize more sophisticated algorithms that juggle between automated decisions and human intervention.

The same exact principle is driving the smart planet revolution with smart homes, smart buildings, smart cars, smart retail, smart manufacturing, smart healthcare, and smart everything else.

In today’s world, a sensor is embedded in every appliance in our home, office and everything in between – and the currency of conversation is phrases that include words such as sensors, intelligent agents, predictions, algorithms, automated recommendations, intelligent systems and manual intervention.

The pendulum in the man vs. machine battle continues to swing towards the machine, but ultimately the machines are serving the humans and improving our lives.

Stay tuned for more blog posts related to IoT and the smarter world we live in.