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The innovator #12

12th Issue of The Innovator, Les Echos' anglophone publication on technology, innovation and digital transformation.

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The innovator #12

  1. 1. #12–January 2020 Special Edition for the World Economic Forum’s Annual Meeting in Davos FIGHTING BACKHow Corporates And Governments Can Succeed In The Digital Economy NEW BUSINESS MODELS A SURVIVAL GUIDE FOR LEADERS IN THE DIGITAL AGE BUILDING CYBER RESILIENCE
  2. 2. LETTER FROM The editor In our third annual special edition around the World Economic Forum’s annual meeting in Davos we tell you about new business models and approaches that can help companies and governments thrive in the digital age, and highlight incumbents who are starting to make some headway. We also give you a glimpse of what’s to come: quantum computing is expected to give us the ability to turn on a new teles- cope into nature, and in the longer term revolutionize drug design, portfolio optimization in finance and risk analysis for insurance companies. I will be moderating sessions on quantum computing and cybersecurity in Davos as well as one which will explore whether there is an opportunity to redefine the carbon economy. As every company is beginning to realize improving the bottom line can no longer be the only goal. Businesses need to reflect the values of their customers and do their part to help the world achieve the U.N.’s Sustai- nable Development Goals. In keeping with that Zeitgeist the Davos Manifesto 2020 will underpin this year’s meeting. This document builds on the original Davos Manifesto of 1973, which set out for the first time the stakeholder concept that bu- sinesses should serve the interests of all society rather than simply their shareholders. Jennifer L. Schenker Editor-In-Chief, The Innovator P.04 P.12 P.14 P.16 P.18 P.22 P.26 P.28 P.32 P.36 How Corporates Are Combating Super Apps Digital Leader’s Survival Guide Helping European Corporates Punch Their Weight Central Bankers Embrace CBDCs Reshaping Global Trade For The Digital Age How Trafigura Put Its Cybersecurity To The Test Protecting Critical Infrastructure From Cyber Attacks The Death Of Passwords Quantum Computing’s Potential How AI-Powered Knowledge Aggregation Could Help Cure Alzheimer’s Disease TABLE OF Contents The Davos Manifesto 2020 provides a vision for stakeholder capitalism that touches on a range of im- portant issues of our time, including fair taxation, zero tolerance for corruption, executive pay and respect for human rights. Building on the Manifesto 2020, this year’s program focuses on achieving maximum impact on the Forum’s platform for public-private cooperation across six core areas of activity: Ecology, Economy, Society, Industry, Technology and Geopolitics. More than 160 individual initiatives, each capable of delivering system-wide trans- formation, are active on the Forum platform. Significant advances in a number of these, especially in the fields of responsible business, the environment and social mobi- lity, are expected to be confirmed during the meeting. Initiatives to be launched at the Annual Meeting in- cludes one that aims to plant one trillion trees over the next decade and another to equip one billion people with the necessary skills in the age of the Fourth Indus- trial Revolution. Our readers can access the key takeaways from this year’s annual meeting in our January 24th newsletter. If you haven’t already subscribed to our weekly newsletter you can do so through our website at www.innovator. news. We pledge to do our best to give you 20/20 vision not just on what went on in Davos but to keep you up- dated weekly on the most important digital transforma- tion trends throughout 2020.
  3. 3. 4 5 Grab, a South East Asian ride-sharing app active in eight countries, has rapidly added financial services such as digi- tal payments, rewards, lending and insurance, on-demand services like food delivery, grocery delivery and package delivery as well as hotel bookings, on-demand video, a ticketing platform and health services to the list of its offerings. Now it is preparing its next move: obtaining a full banking license in Singapore in partnership with telecom operator Singtel. “With over 70 % of the region unbanked or underban- ked there is tremendous opportunity for us to grow our presence in payments and financial services in order to improve financial inclusion in Southeast Asia,” says Hooi Ling, co-founder of Grab, which operates in 339 cities, has a $14 billion valuation and boasts that it has added $5.8 billion to Southeast Asia’s economy. Since Grab’s founding in Malaysia in 2012 it has helped over 1.7 million micro-entrepreneurs open their first bank accounts, she says, noting that “our financial services business is now the only platform to have access to e-money licenses across all six major markets.” Super apps like Grab, along with WeChat, Alipay, Go-Jek, Paytm, Kakao, Line in Japan, or Rappi in South America, are examples of the platform business model on steroids and are especially applicable for mobile-first markets. Facebook, Amazon, Google, Microsoft, Apple incorpo- rated the platform business model years ago and, along with Tencent and Alibaba are the most valuable companies in the world, having taken over this position from the banks, oil companies and industrial conglomerates. Grab is just one example of how challenges to established companies are increasingly coming from unexpected places. Along with Grab and Ant Financial, an Alibaba spin-off, applicants for full banking licenses in Singapore include a platform play led by gaming hardware com- pany Razr, which has teamed up with a local supermarket operator, an insurance business, an Internet company and a regional wholesale marketplace for cars with the aim of creating a bank for millennials. Boundaries between industries have been blurring for some time. But few would have guessed just a short time ago that a ride-sharing firm or a gaming company could become a bank. The providers of super apps can come from anywhere as long as they do a good job identifying pain points, provide great customer service, add on adjacent offers within the same app, and do it seamlessly across geographies and industries. “Today if you smartly combine established and emerging technologies with a data-driven and customer-centric approach organizations have a major opportunity for exponential growth,” says Cristian Citu, the World Economic Forum’s Digital Trans- formation Lead. More than 80 organizations are participating in the Fo- rum’s Digital Platforms and Ecosystems executive working group, part of the Forum’s Digital Economy and New Value Creation platform, to learn about super apps and emerging business models in geographies as diverse as South Ameri- ca, Africa and Southeast Asia. COVER STORY Fighting Back How Corporates Are Combating Super Apps BY JENNIFER L.SCHENKER Grab was one of the star attractions at the Forum’s Digital Platforms executive workshop in Singapore last July and Grab CEO Anthony Tan and co-foun- der Ling are both invited to the Forum’s annual meeting in Davos this year. Thriving in the digital economy is top on executives’ minds and some are making bold moves to fight back. Examples include Sberbank in Russia, which is investing heavily in an ambitious integrated ecosystem of platform ventures across multiple adjacent verticals (see the separate story), Reliance Industries in India (see the separate story), China Merchant Bank (see the separate story) and retailer Magalu in Brazil, which is turning into an open platform business and growing its valuation like cra- zy, notes Simon Torrance, a member of the Forum’s Digital Platforms & Ecosystems Executive Working Group. Some established companies are considering breaking away from platforms controlled by tech giants. Ikea just announced that it will no longer work with Amazon and is rumored to be building its own platform. Others are partnering with challenger platforms. Berkshire Hathaway and JP Morgan have formed a joint venture in healthcare with Amazon while ICBC - the wor- ld’s largest bank in terms of assets – has partnered with China’s Alibaba and its spin-off Ant Financial. In Europe, companies ranging from Klockner, a distributor of steel and metal products, to energy com- pany Vattenfall are trying to build marketplaces of their own. Henkel, a 144-year-old German conglomerate, has launched HenkelX, an open innovation platform that seeks to help Eu- ropean companies be competitive in the platform economy. Europe is also home to Fightback, a new movement that aims to enable business leaders to leverage platform business models, digital ventures and the special skills of tech entrepreneurs (see the story) But it is still early days. Most companies have still not figured out how to turn themselves into platforms or figure out how to work with existing ones. At the Platform Economy Summit in September, an annual conference in Frankfurt on business model transformation for incumbents, successive panels of leaders from Europe’s chemicals, industrial manufacturing, financial services and automotive sectors, bemoaned the lack of true commit- ment to and breakthrough impact from digital investments and the fundamental human challenges they faced in turning around their supertankers, says Torrance, the or- ganizer of the conference and a senior advisor on business model transformation. Many said they felt like they were running fast just to stay still, but not making any major progress. “They increasingly recognize that they lack key capabilities that the ‘new, digital incumbents’, who have taken over their crowns as the world’s most powerful organizations with the most effective business models, have developed, says Torrance. “Their leaders have found COVER STORY
  4. 4. 7 it difficult to apply the habits of high performance to their position in a fast digitizing world: clarity of vision, ambi- tion, energy, productivity, influence, necessity, courage. They are trapped by out of date organizational structures, IT, product development methods, metrics, and find it harder and harder to attract the best talent.” Too often, he says, incumbents are resorting to keeping shareholders happy with share buy-backs and dividends, rather than investing in business model innovation and growth. “The good news is that incumbents have assets that are extremely valuable, if only they can be leveraged in new ways: customer bases, supplier relationships, trusted brands, cashflow,” he says. “My experience is that there are plenty of opportunities for incumbents to generate new growth and value, especially in complex industries where their domain knowledge and relationships are so deeply embedded... But they must be willing to fightback against old ways of thinking and acting.” Opportunities In many major industries such as consumer electronics, transport, advertising, entertainment and retail ‘challenger’ tech companies such as Apple, Uber, Google, Netflix and Alibaba have become the dominant incumbent, but not in finance... yet. Tech companies, entrepreneurs and VCs are eyeing up this $22 trillion global market right now, and fintech innovation is rife. According to a recent study by Google, Temasek and Bain & Company, almost 40% of Singaporeans are underserved by their banks, notes Grab. “Similar to our work in trans- port, we have taken it as our mission to make financial and banking services just as accessible to them as transport - all from the palm of their hand,” says a spokesperson. Grab says it believes the value proposition of digital banks is clear: Southeast Asia is significantly underbanked, but mobile penetration is high. Digital banks offer an opportu- nity to build a mobile-only platform offering deposits, loans, asset management and insurance that is well regu- lated for consumer protection, without being constrained by the need to establish a large physical branch network. “Today our focus is on the Singapore license application, but we always remain open to opportunities in other markets as they become available,” says a company spokeswoman. The risk for traditional banks and insurance companies is that, unless they start to make bolder moves right now, they become unprofitable legacy utilities with slowly eroding impact on the role and function of money, says Torrance. Research by the London Business School and University of Oxford supports that thesis. “Our study of the rise of super app platforms has revealed that its success hinges on a new source of firm value that is increasingly valuable in the age of the Fourth Industrial Revolution: payments data,” says Nina Teng, a Doctoral Researcher. “It’s important for incumbents to consider who will own and control this payments data when deciding whether to create their own platform or to partner with an existing one; in addition to being mindful of the great responsibility that comes with data ownership with respect to safeguarding consumer data privacy and protection.” All these developments create even stronger imperatives for traditional banks and financial institutions to create bolder platform strategies, says Torrance. “If you look at Return on Equity (RoE) scenarios for incumbent banks, it’s not looking rosy,” says Torrance. “If digitization continues to bite, and more new entrants like challenger banks, fintechs, hyperscale platforms and super apps nibble away at the most profitable parts of their bu- siness, then you could see a slide into very unsustainable commercial positions. Even if interest rates rise, the global economy warms up and the banks get super efficient - and that’s a lot to ask - we’re looking at tiny RoE growth.” The only way forward to new growth and value is for banks to think beyond traditional banking with a three-part plat- form and ecosystem strategy, he says. The first step is to COVER STORY Grab, a South East Asian super app, started out as a ride-hailing app before branching out into finan- cial services. Sberbank, Russia’s largest financial institution, is doing the reverse. In November, Sberbank completed a joint venture partnership with Mail.Ru with co-investment of up to $1 billion in the food delivery and ride-hailing businesses Delivery Club and CitiMobil. The two companies also announced a separate partnership to “boost the development of the digital economy and AI-powered products in Russia.” Sberbank also extended its reach into the dri- verless vehicle market through a joint venture with Cognitive Technologies, an established player in the software industry that develops driver assistan- ce systems based on artificial intelligence. And, the bank is branching out into technology services. In 2019 it launched Sber Cloud, a cloud solutions marketplace that targets corporate clients ranging from SMEs to large enterprises. In a presentation to investors the state-owned bank claims its ever-expanding tech-lead digital ecosystem can now meet most of people’s non-fi- nancial needs, including e-commerce, education, entertainment and medical services. And like the so-called super apps, it is using these offerings as a way of onboarding customers and cross-selling products. Although Sberbank has a higher return on equity than most banks worldwide (23% compared to an average 8%), relying on pure banking services as a business model is no longer an option as margins are shrinking in the sector worldwide, says David Rafalovsky, Sberbank’s Chief Technology Officer. “In contemplating our future we decided that an ecosystem business model that leverages the strength of our brand and tech know-how would allow us to offer new and unique products to our 120 million + customers.” The difference between a holding company and an ecosystem is that in an ecosystem you “have a business glue and a technology glue and the indivi- dual components work seamlessly together,” says Rafalovsky. One example of that is to offer a single sign-off for everything from banking services to food delivery or a doctor’s appoint- ment. “We have roughly 30 services that glue these systems together and that is what makes the ecosystem more sticky,” he says. “The objective is to make people want to stay and use our services.” Today Sberbank’s digital ecosystem services contribute only about 1% to 2% of Sberbank’s ove- rall revenues but “it is rapidly growing and it is on the way to becoming a significant contributor to our bottom line,” he says. J.L.S. Sberbank’s Platform Play
  5. 5. 8 top management in place to enable them to adapt quickly to disruptive innovations—whether it means to collaborate or compete with, or even undermine, new entrants.” Success Factors Established companies in theory have the resources, the might and access to the customers but what keeps them back is their culture and lack of customer orientation, says Michael Jacobides, the Sir Donald Gordon Chair of Entrepreneurship & Innovation at London Business School, where he is Professor of Strategy. “They are more focused on functioning product lines which makes them less well suited to seize opportunities that are based on real customer needs. There is nothing in terms of business cal- culus that keeps them back. It is their inability to see the opportunities and even more so their inability to mount an effective response and to put into place the right organiza- tional structure to make sure that it happens.” The more successful ecosystems are orchestrated by an established market share leader, says Jacobides. These leaders are best positioned to attract partners with the right skills and funding. The idea of starting a digital ecosystem might seem strange to some large incumbent players, who are used to going it alone but it’s better for them to try and shape the new digital landscape, he says, especially if they have advantages that rivals just can’t match, most notably a strong user base. Research Jaco- bides conducted with consultancy BCG shows that 83% of digital ecosystems involve partners from more than three industries and 53% from more than five. The research showed that the more partners an ecosystem has, and the more industries they come from, the better that ecosystem will fare. While the average ecosystem has 27 partners, the most successful digital ecosystems have about 40, according to their research. The most successful also cut embed their financial services within other platforms – es- sentially a new approach to distribution. Then, banks need to create much more vibrant marketplaces for banking and non-banking services, to help retain customers by adding more value. The third step to create new platform-based ventures in ‘white space’ areas beyond banking. “This is about accessing new customers in new ways,” says Torrance. “If you can connect the dots between all three parts, then you can leverage much more data, play a stronger role in the digital economy, and create a path to RoE growth and shareholder value.” Sberbank is one of a relatively few banks that have de- cided to invest wholeheartedly in a dynamic platform and ecosystem approach (see the story) “It’s a good example of integrating bold platform thinking into an overall growth strategy,” says Torrance. “Sberbank is already one of the best RoE performers in the world, but they are not complacent. They have anticipated the threats of disinter- mediation and are now executing at pace a platform-ins- pired business model renewal.” Stepping Up The Pace But all too often incumbents from banking, transport and retail sectors have been too slow to act. Some have even allowed new entrants to take the driver seat, with their support. “Incumbents were well aware of disruptive innovations introduced by startups early on when these upstarts were just emerging in the industry and had a low market valuation,” says Teng, referring to her research at the London Business School and University of Oxford. “By the time the incumbents decided to invest in these inno- vative startups several years later, they had to pay a steep premium for partnering with startups that had become unicorns. The lesson here is that incumbents should be prepared to have the right organizational structure and support from COVER STORY Energy and petrochemicals conglomerate Reliance Indus- tries, India’s most valuable com- pany by market revenue, has created a plat- form for all of its digital businesses in order to better combat interlo- pers for control of the Indian market. “This new Company will be a truly transformatio- nal and disruptive digital services platform,” Mukesh Ambani, Reliance Industries’ Chairman and Managing Director, said in a press statement announcing the unit’s launch. “It will bring together India’s number one connectivity platform, leading digital app ecosystem and world’s best tech capa- bilities.” Reliance Industries is credited with having transformed the digital eco-system in India, cata- pulting the country from 155th rank in broadband penetration to the first rank in mobile data consumption within a span of less than three years by building out a high-speed fiber optic network and slashing prices on data plans. It is the second largest singlecountry operator globally and says it is trending towards half a billion customers, with net additions of 8 million to 10 million per month. Ambani said the new spin-out, Jio Platforms, will roll-in the Jio Infocomm infrastructure and focus on digital services in healthcare, education, agriculture, commerce, government-to-citizen services, gaming and manufacturing sector among others... Part of the plan is to win market share in India’s burgeoning e-commerce sector. To that end, Reliance Industries has started testing its online shopping portal, JioMart, to challenge e-com- merce giant Amazon and Walmart’s Flipkart Online Services. Reliance Retail serves more than 3.5 million customers each week through its nearly 10,000 physical stores in more than 6,500 Indian cities and towns. JioMart, plans to offer more than 50,000 grocery products and free home delivery. Ambani said his goal is to “completely transform” India’s mom-and-pop stores which account for the majority of the nation’s retail sector by linking producers, traders, small merchants, consumer brands and consumers. In an interview with The Innovator, John Cham- bers, the former CEO and Chairman of Cisco Systems, who is now working closely with Indian Prime Minister Narendra Modi on the country’s digitalization, says Reliance Industries is well-posi- tioned to succeed with its new digital platform «Ambani has built out the most advanced architec- ture in the world for digitization, says Chambers. “He clearly got it. [He saw that] voice will be free, then data will be free and then video will be free. He kept ahead of those trends and all the competi- tors not willing to take the huge risk that he took. He spent billions and billions of dollars of equip- ment and now he is the leader in this market with the best network in the world, much more complex and capable than the U.S. networks are.» Chambers predicts that Ambani will test the new technology transitions and leverage those. «He will do it in an ecosystem environment where he brings together the small companies, to compete against the big companies, and enable them in ways that others can not,» says Chambers. He takes risks, again and again and again. He’s done the same thing in the petrochemical market. So, if you look at Reliance, they’ve reinvented themselves on so many fronts, and out of all the companies in Asia, I’d put them at the very top in terms of reinventing themselves.» Chambers says he thinks Ambani is brave for going up against the biggest technology challengers while taking on the traditional players. «I think he is a great example,» says Chambers. «It starts with a leader, a clear vision, using techno- logy, getting the transitions right, understanding the trends that will occur, and that changes the game. That’s how you gain market share. There is no incremental thinking here. This is all out-of-the box, exponential thinking. This is all disruptive.» J.L.S. Reliance Industries Strikes Back
  6. 6. 11 across a great number of industries and have advanced in a lot of different countries. Their analysis shows that 90% of ecosystems involve participants from more than five countries, and 77% of ecosystems span developed and emerging markets. The orchestrator of a winning ecosys- tem must successfully manage dozens of partners, across multiple industries and countries, and different types of relationships, says Jacobides. Grab is doing just that. It has partnered with Toyota, Hyun- dai, Booking Holdings, Microsoft, Mastercard and national champions and industry leaders such as Singtel, Thailand’s Central Group and Malaysia’s Maybank, and the Philip- pines’ SM Group. Some, like Toyota, opted to invest. The Japanese automaker bought a $1 billion stake in Grab in June 2018. Grab says each partnership has its own unique benefits. “The interest of our partners demonstrates the great opportunity they see in Southeast Asia, as well as Grab’s ability to capture it,” says a company spokesperson. The super app’s ability to forge such partnerships allows it to scale at speed and bring a broader set of services and an even better user experience to its platform, strengthe- ning its network effect. Financial services expert Chris Skinner scoured the world to find the most innovative banks while researching his new book, Doing Digital, which is scheduled to be published in February. He settled on five. China Merchants Bank (CMB) was among them. CMB started as a technology-led bank in the 1980s, was one of the first to offer Internet banking in China and describes itself today as a “fintech bank”. It has more recently created a tech-led digital ecosystem that customers can use to do everything from getting typhoon alerts to making a dentist appointment, a move that is benefiting its financial services products and its bottom line. In “Doing Digital” Skinner recounts how CMB got where it is today. The bank has 1,830 branches and over 136 million retail customers. As far back as 1993, it realized that it had too few physical outlets to compete with large state-owned banks. So, it decided to develop e-banking to expand its business. CMB, in the early stage of development, selected technology as its differentiated competi- tiveness, and it was the pioneer in issuing debit cards in China. Then, in 1996, it completed the re- tail e-banking service system of online banking and telephone centers. It launched its ‘Mobile Priority’ service in 2015 so as to transfer all kinds of banking services to its apps. Today, the number of monthly active users of CMB apps has exceeded 81 million, the book says. More than 70% of its wealth management product sales and over 50 % of consumer finance activities are conducted through CMB’s apps. The apps can also be used for taking the subway and bus, ordering food, booking movie tickets and using government services. Some 26% of traffic of the CMB app ser- ving debit card customers and 46% of the flow of the CMB Life App for credit card customers come from these non-financial service offerings. CMB Customers can view about 1.6 billion pages via its mobile banking service, which the bank says helps it to accumulate a lot of customer behavior data, according to Skinner’s book. In the book CMB says it set up more than 3,000 customer categories and over 220 personalized recommen- dation models by integrating customer account transactions and customer information. Every day it provides customers with more than 200 million personalized advertisements via mobile banking, with a response rate of 1.04 %, equivalent to crea- ting two million sales opportunities for the bank. While most banks are still lagging behind when it comes to adopting new business models “China Merchants Bank has been smarter and a lot more focused, concentrating on offering the best banking service through digital technology and data mining and creating a digital ecosystem that serve the needs of its customer base,” says Professor Ben Shenglin, Dean of Zhejiang Univer- sity International Business School and Academy of Internet Finance, China. J.L.S. How China Merchant Bank Is Leveraging The Platform Economy Incumbents need to decide what is in it for them and be clear about whether it makes sense to partner with super apps like Grab or start their own platform. “Ask yourself what value do you think you can add? Where do we play? What is the role we want to undertake? Who do we want to combine with? Is it likely that our organization is decentralized enough to take the right decision?” advises Jacobides. “Delegation of authority is an important issue. What is the organizational structure that will allow – not as a PR exercise – real value to be added? The challenge is to develop a strategy, understand what the key questions are and build in the right way for the organization.” J.L.S. COVER STORY
  7. 7. 12 13 Digital Leader’s Survival Guide Five key steps to renew your business model and compete effectively in future COVER STORY ACOVER STORY Simon Torrance Senior Advisor, Business Model Transformation and Co-Author of FIGHTBACK - how to win in the digital economy with platforms, ventures and entrepreneurs, a new book being launched in Davos. The digital leaders survival guide tips are an edited extract from FightBack and based on the RENEW concept created by Torrance for his New Growth Playbook (www.newgrowthplaybook.com). Torrance advises boards and leadership teams on business model transformation, platform strategy and digital ventures. He is a member of the World Economic Forum’s Digital Platforms & Ecosystems executive working group and co-founder and Chair of the Platform Economy Summit, an annual global conference that explores new business models. BIOGRAPHY Reset how you think about sources of growth and value. «If ever there was an industry ripe for disruption... it’s every industry» 1. The way you think determines how you act, which determines what you get in terms of performance. This is where leaders need to start. 2. Re-educate yourself and your teams on the types of business models that perform best in a digital economy. Without this, you won’t make the breakthroughs that will unleash your growth potential. 3. At the same time, optimize every aspect of the current business, including decision-making, with software and data intelligence. Envision new ecosystems and your role within them. «If you don’t have a platform strategy, you don’t have a strategy» 1. McKinsey has forecast that 30% of global economic activity will be mediated by platforms within new ecosystems in five years’ time. What ecosystems will you be operating in and which could you orchestrate? 2. You’ll need a very different approach to market analysis to understand the new opportunities and threats. 3. What types of platform strategy do you need to be successful in this different world? There are ten different types. Work through them to find which would suit you best. Nontraditional approaches to capital allocation «Put your money where the money is» 1. Capital allocation is the most effective way of translating strategy into action. Share buy-backs and ‘innovation theatre’ won’t move the needle. It’s time to be bold. 2. Invest in the business models that can make the difference; don’t just digitize existing out-of-date business models. 3. Create a portfolio of digital investments and platform-based ventures. Be sure they are strategically relevant, not armslength investments. Allocate 10% of your budget to them. Execute with entrepreneurs, within an ambidextrous organization «Tech entrepreneurs are your biggest untapped resource» 1. It’s time to start co-creating with proven tech entrepreneurs – the best people to work with to execute new business models. 2. Build an ‘ambidextrous organization’: a separate ‘Fast-Track the Future’ business unit, reporting to the CEO, with new people, skills, metrics and incentives. Attract entrepreneurs to lead your digital ventures and incentivize them with equity. 3. Create a governance model to bridge the gap between the core business and the Fast-Track the Future unit. Ensure the latter drives demand for your core business and use it to transfer learning. Widen your appeal and wow your customers «Leverage others to serve your customers better» 1. The most customer-centric businesses on earth leverage others to serve their customers. You needn’t own all the assets. Think of all those third-party developers and merchants supplying Apple’s App Store and Alibaba’s platforms. 2. Reconceive yourself as orchestrating an ecosystem of innovation, not just as a supplier of products and services. 3. Incentivize others to work with and through you. The most important third parties to leverage are entrepreneurs and developers – your key resource to create new growth and value.
  8. 8. 14 15 Helping European Corporates Punch Their Weight In The Digital Era Q: In the Fightback book you and your co-author note that fewer than 20% of the investments in digitization made by large companies in Europe and in the U.S. have had any positive impact on financial performance once the cost of capital is taken into account. Why do you think this is the case? FS: On the whole, their initiatives have been limited to incremental modernization of the core business, rather than radical transformation. The main problems include a rate of adjustment that is too slow, the false assumption that adopting a range of digital tools and interfaces will be enough to put things right and the failure to match digital initiatives with the necessary cultural and business model changes. Q: The book talks a lot about the platform business model and its power to leverage new technologies, economic and social trends and the hidden value of the abundant and detailed data they generate. Why haven’t more traditional companies adopted this model? FS: The big opportunity for the incu- mbent leaders in almost every sector is the possibility of creating a hybrid business that successfully exploits both existing strengths, physical assets and human skills and expertise, and the networks, platforms and technologies that the digital revolution is making available. The problem, of course, for the incumbent businesses is that they just can’t throw the cards up n the air, walk away from their traditional sources of revenue and profit and bet the farm on their ability to pull it off and create an equally profitable and durable digital platform business from scratch. And it’s not that easy to make the kind of change that Apple, Amazon and Microsoft did and build the platform model into your strategy. Our research shows that while there’s plenty of awareness, interest and experimen- tation, only 2% of established com- panies have effectively incorporated a platform strategy into their overall plans for the future. So, there is a long way to go. Q:Europe seems to be further behind than the U.S. and China. How can Euro- pean companies fight back? FS: We have seen substantial parts of the European economy lag behind because of an inability or unwillingness to see that yester- day’s success offers no guarantees for tomorrow. The stage is set for a digital recession, home-grown and self-inflic- ted, caused by the hubris that has led our nations to ignore the radical impact of digital transformation. But if the digital revolution poses threats it also offers solutions. Europe has some 2000 world-leading specialist companies, with the advanced skills and knowledge to potentially lead the way once they have grasped digital. We are seeing some signs – especially in recent months – of a new European determination to take the actions and make the investments that will be needed. COVER STORY Q: How can the Fightback movement help? FS: Fightback is a true call to action, to fight back against inertia and the old way of doing business. Instead, we want to enable business leaders to use the digital economy to their advantage by leveraging three powerful strategic tools – platform business models, digi- tal ventures and the special skills of tech entrepreneurs. Fightback is also about sharing the best practices of global entrepreneurs, academics and corporate and digital leaders to actual- ly get going. The movement brings everyone together in order to identify the biggest topics and challenges and then closely cooperate to take joint action: which solutions, platforms and ventures can be used to effec- tively fight back. Q: What is the relationship between FoundersLane and Fightback? FS: FoundersLane and Fightback are connected by a shared purpose. The Fightback movement pursues the overall mission, and the book explains the reason why we have started Foun- dersLane: It provides the foundation for the daily operations and business there. Established companies and govern- ments have amazing but untapped assets and our entrepreneurs have Felix Staeritz co-author of Fightback: How To Win In The Digital Economy With Platforms, Ventures and Entrepreneurs​, a new book being launched in Davos, is a serial entrepreneur, investor and adviser. After building several successful companies from scratch, and ultimately, to IPO, he co-founded FoundersLane, the founders driven corporate venture builder, which helps corporate clients such as Sweden’s Vattenfall and Germany’s Trumpf create new entities with the help of experienced entrepreneurs. Staeritz is a board member of the World Economic Forum’s Digital Leaders group and the initiator of Fightback a new movement which aims to bring together decision-makers to reshape the world for a sustainable, digitally-enabled future. BIOGRAPHY make the investments that will be needed. broad experience in plat- forms and ventures. Examples include Vattenfall, one of Europe’s largest producers of electricity and heat. FoundersLane connected them with entrepreneurs who helped them set up a decentralized, large-scale solar analytics business to generate expo- nential growth. We are also helping Trumpf, a German high tech company, transform into an integrated provider of hardware, software and services. I am a very purpose- oriented guy and I believe hybrid models that pair entrepreneurs with big companies are very necessary. This approach – and our movement – is for companies that don’t want to just think about the future but to act upon it and seize opportunities offered by Digitization. Q: How do interested companies join the Fightback movement? FS: Our movement is just as dynamic as digitization, so this is the right time to join Fightback, gaining valuable insights in order to benefit from digital change. As a first step, on Fightback. com, you can learn about the latest developments and join online. Al- though we are starting with Europe, the movement is open to established companies based elsewhere. Our goal is to scale the movement in 2020.
  9. 9. 16 17 Central Bankers Convene In Davos To Discuss Digital Money The introduction of a government-backed retail digital currency is predicted within the next five years COVER STORY “Central banks are responding to the reality that digital currencies, either privately or publicly-issued, will be an unavoidable part of the global monetary system, the report says. It is in central banks’ best interest that they are neither left behind nor displaced.” The Forum sees its role as helping central banks to decide how to best respond and remain relevant in a digital age. “There is a demand and a perception from institutions and consumers to look into systems that will make things more efficient but really more fair,” says Sheila Warren, the Fo- rum’s head of blockchain and distributed ledger. “There is a lot of concern about the traditional banking and financial system. There is a perception that it is rigged in favor of certain kind of payers and the barriers to entry are very hard to overcome. These are real problems and there is a sense of a potential here that CBDCs could help level that playing field and I think that is compelling. If there is a way to do that that is not seen as overly risky why wouldn’t you take a look?” Challenges And Opportunities The OMFIF report says policy makers and regulators can’t afford to sit on the fence. Libra and cryptocurrencies such as bitcoin give individuals the ability to store, spend and move value en masse without relying on fiat currency. “It is a direct challenge to the sovereignty of the state and financial stability,” Philip Middleton, OMFIF’s Deputy Chairman, said in an interview with The Innovator. The Libra announcement highlights the opportunity avai- During the World Economic Forum’s annual meeting in Davos central bankers from around the world will meet for breakfast with Forum Founder and Executive Chair- man Klaus Schwab to discuss government-backed digital currencies. The Forum has convened this global community from both emerging and developed economies to exchange best practice and learn about how CBDCs work. CBDCs, short for central bank digital currencies, are digitalized instruments issued by a central bank that can serve as an electronic extension of a form of cash. Facebook’s announcement of Libra, a privately-issued stablecoin that could challenge the traditional global re- serve currency system, has helped move CBDCs to the top of central banks’ agendas. The challenge of privately-issued digital currencies is not the only factor driving the discussion of CBDCs. Compe- tition-driven innovations in cross-border transfers, mi- cropayments and new payments instrument offerings are profoundly affecting the way people pay, save and transfer value. The application of these new technologies to financial services and the desire of monetary authorities to address perceived weaknesses in payments infrastructures are rapidly combining to transform the prospects of central bank digital currencies from a theoretical abstraction to a practical proposition, according to a 2019 report on retail CBDCs by the Official Monetary and Financial Institutions Forum (OMFIF), an independent forum for central banking, economic policy and public investment. lable to central banks to address the failures in existing payments systems for consumers, understand how digital currencies may address these shortcomings, and take the initiative to deliver their own digital currencies, according to the OMFIF report. One potential advantage of CBDCs is that they can in- crease government seigniorage – the revenue generated by monetary authorities through the process of money creation – in the face of declining use of cash by redu- cing distribution and management costs, according to the report. These savings would be especially helpful for emerging markets, where low financial inclusion hinders growth. Since CBDCs can integrate national identity, they could reduce the cost of remittance by alleviating concerns about money laundering and terrorist financing. These improvements in the reach and stability of money, along with potential digital features that enable negative interest rates and smart contracts, could dramatically enhance monetary policy implementation. “There is a strong incentive for governments to get rid of cash and move to a fully digital payment system,” says Middleton. “It is a lot cheaper and it does make the exer- cise of monetary policy easier.” It is likely a fiat retail digital currency will be introduced within the next five years, either as a complement to or as a substitute for notes and coins, according to the report. “It is improbable that the first such issuance will come from a G20 central bank; it is considerably more likely to be launched in a smaller and less complex economy in response to a specific policy objective and use case,” says Middleton. The move may be fueled by a desire to improving the overall effectiveness and resilience of a national payments system by reducing the prevalence of cash, says the report. Alternatively, it could be associated with extending financial inclusion; reducing the size of the dark economy; countering financial crime; or for a specific purpose, such as transforming the cross-border transmission of migrant worker remittances. Which central bank will be first out of the gate is an open question. Press reports that China is ready to issue its own CBDC have so far proven unfounded. While in most instances, the development of CBDCs is most likely going to be nationally driven, OMFIF predicts that increasing co-operation and collaboration between monetary authorities is likely to become the norm. OMFIF also expects extensive private-public sector partnerships to emerge, with the private sector providing or running technology, infrastructure and operations for central banks on an outsourced or collaborative basis. Its report predicts that there will be a growing number of studies, use cases and pilot programs as both sectors “explore, design and test the art of the possible and desi- rable.” J.L.S.
  10. 10. 18 19 Reshaping Global Trade Internet platforms that facilitate financial interactions, capture data and physically help move goods are playing an increasingly larger role in global trade, directly impac- ting and even competing with countries. So much so that Sangeet Paul Choudary, a member of the World Economic Forum’s Digital Platforms & Ecosystems group, calls plat- form- led trade “one of the defining shifts of our time.” As platforms such as Alibaba and Ant Financial create an electronic silk road and benefit from winner-takes-all scenarios, governments risk losing control over global trade. “Platforms like Alibaba can drive the growth of small and medium-sized businesses and financial inclusion for a third-party country and have direct bearing on its develop- ment,” says Choudary. “This gives these platforms incredible negotiating power. It also raises geopolitical concerns, especially when the platforms are closely moni- tored by the home-country government.” Governments in India, Singapore and elsewhere are busy devising plans to combat the growing power of such platforms by either banding together to use public goods to create a common financial services infrastructure or by developing separate government-as-a-platform strategies, says Choudary, a platform business model expert and the author of an upcoming Forum white paper on the topic. Digitalizing Trade And Logistics E-commerce marketplaces have already enabled signifi- cant cross-border flows by aggregating huge selections and making pricing and comparisons more transparent. says a new McKinsey Institute report entitled Globalization in Transition: The Future of Trade and Value Chains. It cites Alibaba’s AliResearch projects that cross-border B2C e-commerce sales will reach approximately $1 trillion by 2020. B2B e-commerce could be five or six times as large. While many of those transactions may substitute for traditional offline trade flows, e-commerce could still spur some $1.3 trillion to $2.1 trillion in incremental trade by 2030, boosting trade in manufactured goods by 6% to 10%. Alibaba is positioning itself to grab a big percentage of that trade by operating as a vehicle for public-private coo- peration that can incubate eTrade rules and foster a more effective and efficient policy and business environment for cross border B2B and B2C electronic trade. The Chinese company’s Electronic World Trade Platform (eWTP), which was conceived by Albaba founder Jack Ma and launched in 2016, aims to help small and medium sized enterprises (SMEs) participate in global trade without investing in their own supply chains by easing “global purchase, global sales, global payment and global logistics.” It already COVER STORY How Countries Can Combat The Growing Power Of Internet Giants operates or is building logistic hubs in Malaysia, Rwanda, Ethiopia and Belgium. According to a survey conducted by the World Trade Or- ganization and the Organization for Economic Cooperation and Development (OECD) on SMEs’ access to cross border trade, the major challenges they face include access to information about export opportunities, access to trade finance and logistics costs. Cross border eTrade is proving to be a game changer for SMEs to participate in global value chains. It creates direct access to international customers and highly efficient digitalized flows of pro- ducts, data and money. Many institutions which previously focused on global trade are working to facilitate eTrade. But there is no forum to bring together these disparate efforts around eTrade, nor to bring the perspectives of the diverse sets of private and public constituencies, e.g. SMEs, regulatory entities, vendors, consumer associations, industry associations, business intermediary organizations, and enable these parties to assess existing regulations and best practices, and incubate and advocate rules to foster eTrade. At a 2016 meeting of the G20 eWTP offered to step into the breach and incubate rules for the development of eTrade in terms of industry standards and rules, simplifi- cation of regulations and customs processes, evolution of consumer protection, lowering of tariffs, harmonization of taxation, development of internet and logistics infrastruc- ture, facilitation of flow of goods, finance and data. EWTP said it “will identify and share best practices, for ins- tance around the development of efficient infrastructures such as cross-border eTrade hubs and experiment zones, smart logistics, credit payment, and technical assistance for emerging markets, with a view to influencing policy making and promoting inclusive eTrade.” A Shift In The Balance Of Power While digitalizing trade will improve efficiency and help SMEs it is also giving the Chinese Internet giant unprece- dented power over global trade. “In Africa or in countries like the Philippines or Pakistan they don’t have infrastruc- ture to facilitate SMEs and plug into the global economy, Alibaba offers infrastructure -in-a-box to help them exploit their potential,” says Choudary. While Alibaba is digitali- zing trade and logistics at cost or even for free, Ant Finan- cial, which got its start powering Alibaba’s e-commerce platform and was later spun-out as a separate business, is taking much bolder steps to dominate payment wallets in almost every major country in Asia, Latin America and ACOVER STORY
  11. 11. 20 21 “Widespread coopera- tion on public goods and standards development can help countries work together to create a more inclusive platform eco- nomy, without becoming overtly dependant on the infrastructure offered by private firms.” Africa. “The strategy is to invest in payment wallets and ecommerce companies across the globe and invest on the condition that the investee companies move their tech to the Alibaba Cloud,” he says. Meanwhile, Ant Financial is approaching banks in emerging markets to help them expand their business and target the unbanked population. “It promises them something they could not do themsel- ves – expand the potential customer base by targeting the cash economy and help with the digital transformation of the bank by offering a whole suite of AI capabilities for credit scoring of the unbanked population,” he says. The end result is that a growing list of clients around the world are sharing the same back-end infrastructure for everything from fraud mitigation to e-commerce and banking, with payment wallets being built on top of the Alibaba Cloud, allowing the Chinese Internet giant to amass better and better datasets, he says. “The big picture is the top payments wallets and banks are using the same credit scoring models and are increasingly dependent on one company at the backend. The end goal is to create a common standard for financial services and trade backed by the world’s best credit scoring model,” says Choudary, “And as these platforms get bigger we may see control points over trade shift from political countries to digital platforms.” Creating Digital Public Goods So how can governments regain control? India has deve- loped one approach. IndiaStack is a set of APIs that allows governments, businesses, startups and developers to utilise a unique open source digital Infrastructure which is treated as a public good. The Open API team at the Indian Software Product Indus- try Roundtable (iSPIRT) has been a pro-bono partner in the development. As of 2019, the services that IndiaStack offers are proving identity, completing KYC, making digital payments, signing documents digitally and sharing of data. Morocco is now working on using the IndiaStack to intro- duce the common infrastructure necessary to enable an open source financial services ecosystem, says Choudary. Meanwhile, with the encouragement of UN Secretary-Ge- neral Antonio Guterres; Norway, Sierra Leone, UNICEF and iSPIRT are collaborating closely with other stakehol- ders to in a group called the Digital Public Goods Alliance to implement a UN recommendation that a platform be created for “sharing digital public goods, engaging talent and pooling data sets, in a manner that respects privacy, in areas related to attaining the SDGs”, such as financial inclusion. The group’s guiding principle is that software, content and data must be possible to use independently of any particu- lar vendor to be considered as digital public goods. COVER STORY Government As a Platform In a 2018 article he co-authored, Choudary proposed a government-as-a-platform approach that Singapore could use to establish itself as a hub for digital trade. The approach, which Choudary says could be adopted by other governments, involves first using technologies like blockchain to help SMEs to conduct digital business securely, and seek new business partners and distributors, while managing a common audit trail. Once the success of the SME trade platform is demonstrated, the country could open its platform technology, know-how and pro- cesses to emerging economies that are seeking to boost digital SME trade but don’t want to become over-reliant on commercial platforms such as Amazon and Alibaba. When multiple countries start using the same platform, they start subscribing to the same data standards, leading to greater cooperation and interoperability among them. In order to create the right control points and be a hub for digital trade, countries that want to become digital hubs must invest in creating unique intellectural property that other countries using the SME trade platform find va- luable. To gain competitive advantage, a country needs to create and control unique IP that adds value to users of the SME trade platform. By creating regulatory sandboxes, countries like Singapore and Switzerland are already encouraging innovation in fintech and could use these as a value-add plug-ins to SME trade platform. Examples include developing a data-driven credit scoring system that could be used to extend trade financing to SMEs based on their trade activity data gathe- red on the platform. As more countries use the platform, other IP creators could find it more attractive to create IP for this platform, owing to the higher demand. This growing IP, in turn, is likely to lead to greater usage of the platform, amplifying the network effect and positio- ning a country that moves to do this as the central and most powerful point for processing digital trade data from participating countries, making it a hub for digital trade. A country that turns itself into a platform for digital trade, could also leverage its neutral position to create a free data port that positions it as a neutral country for proces- sing global trade data. A free data port would allow data from other countries to be stored and processed in a country like Singapore, but in accordance with their individual country-specific data jurisdictions. Singapore is in the early phases of developing a country- as-a-platform model. Choudary is meanwhile also working with other countries, encouraging governments to consi- der adopting the model. There is an opportunity to counter the power of Internet platforms. Governments just need to seize it, he says. J.L.S The country as a platform model AI CAPABILITIES (NATIONAL AI STRATEGY) STANDARDS DEVELOPMENT AND MULTILATERAL AGREEMENTS DIGITAL PUBLIC GOODS COUNTRY AS A PLATEFORM COVER STORY
  12. 12. 22 23 How Trafigura Put Its Cyber Security To The Test The global commodities trading firm replicated the NotPetya worm, strengthened it and then unleashed it on its production environment to assess its ability to fight back Mark Swift was sitting in his third floor office at global commodities trading firm Trafigura in the Mayfair district of London’s West End when he first started hearing reports about Not- Petya, a computer worm attack. The worm rapidly spread around the world in June, 2017, crippling multinational companies including global shipping company Maersk, pharmaceutical giant Merck, FedEx’s European subsi- diary TNT Express, French construc- tion company Saint-Gobain, food producer Mondelez, and manufacturer Reckitt Benckiser, among others, causing an estimated $10 billion + in damages. “It was clear there was a major pro- blem; we got a very early understan- ding that something was going on that was much more significant than the usual ransomware but no one had a clear picture of what was happening,” says Swift, Trafigura’s Chief Informa- tion Security Officer. “There was a huge amount of confusion and quite a bit of angst. It was incredible that so many companies were being hit at the same time and extremely worrying because you can’t defend against what you don’t understand.” Swift’s job it is to ensure the company can effectively play defense against cyberattacks. Trafigura manages more than $54 billion in assets and moves over $170 billion per annum of commo- dities around the world by ship, barge, truck, rail and pipeline. While Swift believed the company was reasonably safe he could not quantify the risk. “The questions I kept asking myself is how does the worm get in, how does it move and would our de- fenses hold out?” he says. “The difficult thing is you don’t have a way to test. Working on assumptions is not a good way to be measuring your defenses.” There was only one way to be sure: do the unthinkable. With the help of NCC Group, a global firm specializing in cybersecurity and risk mitigation, Swift hatched a plan to replicate the Notpetya worm, strengthen it, and then unleash it on the company’s production environment, with the full support of the CEO and the board. The audacious move was deemed to be an acceptable risk because Trafigura had standardized the way it exercises cyber hygiene, something the World Economic Forum’s Centre For Cybersecurity has been encoura- ging companies to do. Swift, a speaker at The World Econo- mic Forum’s Centre For Cybersecu- rity’s annual meeting in Geneva last November, agreed to an interview with The Innovator in the hopes that Trafigura’s experience will help other large enterprises better prepare their cyber defense. CYBER SECURITY Deconstrucing NotPetya It was one of Trafigura’s lead engineers that first suggested testing how well the company’s defenses would stand up to the NotPetya worm under controlled circumstances. Swift liked the idea and approached NCC Group. They struck an agreement: If the cy- bersecurity firm could help develop a replica of the worm Trafigura would test it and- if all went well – NCC could use the case as a reference to sell the service to other big corporate clients. Oliver Whitehouse, NCC Group’s Global Chief Technology Officer, remembers the first discussion about replicating Notpetya with Swift, whom he has known for 20 years. “We were coming off a busy summer in the U.K. We had two major worms, the last of which was NotPetya. Mark [Swift] was getting questions from his chief execu- tive about whether it would have an impact on Trafigura. Mark could just say ‘we think our controls would limit the impact’ but it was very much a theory and he could offer no definitive assurance. When he outlined that he would like to run this test to quantify the risk I told him ‘we can do that.’ I had the confidence that we could replicate NotPetya by deconstructing it and then reconstructing it,” says Whitehouse. Swift’s team and NCC Group started the work in November of 2017. “We decided to rewrite the worm so we knew exactly what every line of code did,” says Swift. “We discovered a co- ding mistake in the way it moved and stole tokens and the way it scanned. It wasn’t as efficient in moving as it mi- ght have been so we corrected those mistakes to make it even stronger.” The team also installed kill switches to ensure the worm didn’t proliferate outside of Trafigura’s network and ac- cidently infect suppliers and partners. The process was supposed to take three months but took a year. “The complex bit was having the confidence that the controls would work and that it would not go awry and be disruptive,” says Whitehouse. “ We worked on the principle that if there was any doubt the first instruc- tion was to shut itself down, ensuring that it would only spread to computer networks directly under Trafigura’s control. There were key systems in the industrial operations technology in areas such as mining and fuel termi- nals that had to be excluded but all the corporate assets could be included. Then we built in various other safe- guards, such as the rate at which it could propagate so it would not overload the system. We did three full environment tests before we even got near the production and were confi- dent that the controls could do what they said they are going to do.” Getting Sign-Off Getting the company’s leadership to sign-off was an important part of the process. Trafigura stores and delivers the commodities it trades, which includes approximately six million barrels of oil a day. In order to buy the assets that it later trades it has establi- shed access to credit from 155 banks. It has to manage credit risks, legal risks, IT risks and liquidity risks and all of these risks are integrally linked. “We are a high volume, low margin bu- siness,” explains Christophe Salmon, Trafigura’s Chief Financial Officer. “Our business is based on arbitrage, we fight for the last cent per barrel. Any basis point matters in terms of protection of our margins. If the inte- grity of our system was compromised it would have consequences in being able to conduct our business and in ACYBER SECURITY
  13. 13. 24 25 the daily reporting to our financial partners,”, a factor that could impact Trafigura’s access to both credit and its liqui- dity. “This was why, in discussing with Mark, testing the strength and integrity of our system – and identifying any potential vulnerabilities – was so important,” says Salmon. Unleashing The Worm On November 8th, 2018 the worm was unleashed. Swift, together with Trafigura’s lead engineer, Whitehouse and an NCC Group developer huddled around a group of compu- ter screens. “We looked at each other and said ‘should we run it?’, remembers Swift. “I paused for a moment and wondered ‘What on earth am I doing?’ before giving the green light. And then we waited for the havoc to begin.” Thirty minutes went by. Nothing happened. Then the worm found its way in through an unpatched computer in Switzerland and exploited that entry to gain privileges. At that point the team thought it would spread like wildfire. But to their surprise it didn’t, due to a security configu- ration Trafigura had made that they had not fully appre- ciated. So the team launched different scenarios, purpo- sely infecting different ‘patient zeros’ increasingly notching up the level of exposure. Eventually a misconfiguration in a software development network lit the fuse and the worm started to spread aggressively throughout the develop- ment environment, moving from machine to machine and location to location. “We tracked the various ways the worm jumped between systems and were able to create a good map and a good understanding of its speed and its ferociousness,” Whitehouse says. The value of the test data can’t be overstated, he says. Trafigura used it to make adjustments to its network. “This one configuration change by Trafigura significantly disrupts the speed at which worms can propagate even if they can access highly privileged systems,” says Whitehouse. To Swift’s great relief unleashing the worm in this controlled manner had no operational impact on the business. None of the company’s computer users noticed a thing. CYBER SECURITY “I paused for a moment and wondered ‘What on earth am I doing?’ before giving the green light. And then we waited for the havoc to begin.” Key Takeaways NCC Group is eager to run similar tests for other big corporates but so far there have been no other takers. Al- though a number of big companies have expressed interest in doing so they have had trouble getting internal sign-off. Whitehouse says that often organizations think they have a picture of what their computer networks look like. Howe- ver, 99% of the time this does not reflect reality. Knowing who is connected is one of the first things a company has to do to ensure its cyber security. The map needs to be accurate “at any point in any week,” he says. “When I ask what is on their network, who is responsible for it, what each device does and what business operation it underpins they look at me quizzically and say they don’t know. If you don’t know then you don’t know what your risk is. You have to understand the material risks before you can unleash tests like Trafigura’s.” Swift agrees. “One of the reasons why we were more capable of running this was we know where the edge of our network boundary is,” he says. “You have to fundamen- tally understand how many machines you have and where they are to be able to sign off on something like this. We spend a lot of time standardizing our environment because we believe you need to do things to standard and enforce things to standard.” One of the key takeaways from the test was that having hard data and being able to really measure risk is key, says Swift. Trafigura thought that being 99.9% compliant in some areas was good enough. It was not. “So now we understand that and if anybody says we are being overly cautious we can demonstrate why we need to do what we do. We believe it is worthwhile to get better at testing and measuring the effectiveness of security in our internal network, but is only worth doing if you also have an appe- tite to introduce major controls.” Swift says he has no illusions. Controls or no controls the attacks will keep coming. The next worm, the next virus, is likely to be more virulent. And no matter how good its cyber defense is, Trafigura – like any other company on the planet – will have to continue to be vigilant in the never- ending battle to keep its systems safe. J.L.S.     Negotiates off-take agreements with oil producers, refiners, mining companies and smaleters. It owns mines and smelters and ivnests in logistics that improve market access for its suppliers. It stores petroleum products at owned and third-party tankage. It stores metals and minerals at terminals and third party-owned facilities. It moves commodities by barge, truck, rail, pipeline and vessel in support of its core trading activities and for third parties. It blends physical commodities to regional, market and owner specifications in strategically located terminals and warehouses around the world. SOURCE STORE BLEND DELIVER WHAT TRAFIGURA DOES
  14. 14. 26 27 En Garde The World Economic Forum is helping providers of critical infrastructure defend against cyber attacks It’s every company’s nightmare: the IT system is infected by trojan malware or ransomware, causing millions of dol- lars in lost business or reputational damage. The problem is magnified for electricity companies or air- lines because risks could have cascading effects, potential- ly resulting in major economic losses, industrial disruption and, in some cases, human casualties. The Forum’s Centre for Cybersecurity is helping providers of critical infrastructure by convening communities of different industries such as electricity and aviation to de- fine the most salient challenges and systemic risks, strate- gic approaches that could mitigate them, and increase the level of cyber resilience across the various ecosystems, says Georges de Moura, Head of Industry Solutions at the World Economic Forum’s Centre for Cybersecurity. Collaboration is more important than ever because new technologies in the Fourth Industrial Revolution offer both opportunities and greater risks. Physical and digital things are becoming increasingly connected, from critical in- frastructure assets to people and data, by harnessing tech- nologies such as biometrics, artificial intelligence, machine learning, and the Internet of Things, says de Moura. The power system is one the most complex and critical infrastructure since any major impact to the electricity grid could generate massive blackouts and have disastrous financial and societal consequences. For example, a winter blackout in mainland France for just six hours would result in losses of over €1.5 billion, according to a simulation cited in a Forum report. Complicating matters is that the electricity sector has some unique challenges, says Rosa Kariger, Global Chief Information Security Officer (CISO) at electricity firm Iberdrola and the co-chair of the Forum’s electricity sector cyber resilience community. Among them is the complexity of the ecosystem, which includes highly interdependent infrastructures operated by retailers, distributors and generators. As the sector becomes more decentralized an increasing number of new actors – iincluding homeowners who are able to produce and sell electricity directly – are entering the ecosystem. “Our security is dependent on the weakest link,” says Ka- riger. “This is not about our data. This is about protecting our assets and continuity of an essential service to society.. The highly interdependent and increasingly complex na- ture of our industry makes it necessary to address cyberse- curity beyond the boundaries of our own companies.” Fragmented company practices and government regula- tions make it difficult to have a global and harmonized approach. The same is true in other industries, which is why the Fo- rum envisages to use this pilot with the electricity sector to templatize the approach and scale across other industries, De Moura says. At the annual meeting in Davos in 2019 the Forum electri- city working group on cyber security presented a guide for board members of electricity companies. During the past year the Forum’s Cyber Resilience commu- nity has been focusing on influencing organizational change by promoting the effective implementation of the board principles for cyber resilience in the electricity ecosystem published in Feb. 2019; enabling dialogue on policy between industry and policy makers to support a more streamlined approach; and improving supply chain resilience by establishing common expectations regarding cybersecurity roles and responsibilities between the diffe- rent actors of the industry’s value chain. “It is crucial for all stakeholders in the value chain to embrace a collaborative and risk informed cybersecurity approach to adapt and ensure a secure ecosystem,” says de Moura. “We cannot do it alone as it takes an ecosystem to address cyber risks,” says Christophe Blassiau, CISO and head of digital security at Schneider Electric and a member of the Forum electricity cyber resilience community. “The indus- try needs to collaborate.” The Forum’s ability “to bridge all of these parties and the regulators and political and geographical differences is fairly unique,” says Floris Van Den Dool, Managing Direc- tor, Information Security Services, Europe, Africa and Latin America at Accenture, a founding partner of the Centre for Cybersecurity and anchor partner of the Cyber Resilience in Electricity program. “The trick is figuring out how to get everyone mobilized.” J.L.S During Davos 2020 The Forum plans to convey the message that it is the responsibility of all public and corporate leaders to take ownership of the challenge to ensure global cybersecurity and digital trust. Board and C-Suite members need to gain a better understanding of the cyber risks to which their organization is exposed and of the degree of the organization’s cyber readiness. Leaders may need to rethink organizational structures and gover- nance to enable a better cybersecurity posture. Both public and private organizations need to improve their cyber crisis management, develop holistic response and recovery plans, including a crisis communication strategy, to limit economic, reputational and legal consequences. Global coo- peration across the public and the private sectors is vital. Among the dimensions to be prioritized are information-sharing, business cooperation with law enforcement agencies, and skills and capacity development, particularly in emerging economies. And, the Forum plans to tell leaders that innovation in cybersecurity and rapidly evolving technologies, such as AI, identity management and quantum computing, call for greater investment to stay ahead of cybercriminals who are adopting those technologies even faster and to their advantage. The World Economic Forum’s Top 10 Messages On Cyber Security In Davos CYBER SECURITY
  15. 15. 28 29 The Death of Passwords New Forms Of Secure Authentication Are Key But What Happens If Our Biometrics Get Hacked? Passwordless authentication is the next big breakthrough in secure digital communication. That news will make consumers and employees who have trouble remem- bering multiple passwords happy. Companies are also likely to welcome the change because the average glo- bal cost of a data breach in 2019 was $3.92 million – a 1.5% increase from the year before. According to the 2019 Data Breach Investigations Report, 80% of hacking-related breaches involved compromised and weak credentials, and 29% of all breaches, regardless of attack type, involved the use of stolen passwords. But the technologies that are replacing passwords have vulnerabilities of their own. What happens, for example, if our biometrics get hacked? That is the title of a panel discussion at the annual meeting of the World Economic Forum in Davos this year that will include exe- cutives from Walmart and Facebook and be moderated by The Innovator’s Editor-in-Chief Jennifer l. Schenker. The Forum is releasing a white paper during the conference that outlines some crucial issues that need to be resolved to ensure passwordless au- thentication is truly secure and factors in privacy, sustainability, user expe- rience, scalability and inclusiveness. “We need to put the word out there that there is a need to gather a com- munity of CEOs and leaders around the topic of implementing a more secure means of authentication and to do so sooner rather than later,” says Adrien Ogee, lead for technology and innovation at the World Economic Forum’s Centre for Cyber-security. Why now? To stay competitive corporates across industries are increasingly building, buying or joining digital platforms (see the cover story of our Davos issue). Authentication systems are the first contact customers have with digital platforms and ease of use is a compe- titive differentiator, notes the white paper. Passwordless authentication can potentially significantly improve user experience and give platform businesses ubiquitous authentication at a fraction of the cost, allowing for cross-platform interoperability and multinational expansion and increase security by seriously hindering the ability of criminals to access and CYBER SECURITY "There is a need to gather a com- munity of CEOs and leaders around the topic of implementing a more secure means of au- thentication and to do so sooner rather than later." ACYBER SECURITY exfiltrate data, says the white paper. It concludes that from a risk management perspective transitioning to passwordless authentication could allow companies to cut the budgets associated with their breach risk exposure by 4/5, translating into lower cyber insurance premiums. Another plus is that passwordless authentication makes it easier to comply with international regulations, which is key to expanding digital businesses across geographies. “Many companies are already moving down this path,” says Kelly Bissell, Accenture’s Senior Managing Director and Global Lead of Security. “This will give confidence to other companies, including banks and retailors, to imple- ment passwordless authentication. I see a wave coming to stronger security. We are at the early stages but I believe it will pick up very quickly.” Technology Options A range of technology alternatives to passwords are already available. Biometrics Recent technological advances in smartphone cameras and machine-learning models mean facial recognition and document scanning can now be used to verify people remotely and at scale. By using biometrics, such as face scans, as an authenticator, users no longer need to asso- ciate a password with their account. Hardware Keys Extra security with hardware keys is another approach to passwordless authentication. Security keys come in a variety of form factors ranging from a small USB, NFC or Bluetooth device to something built into a user’s mobile phone that can securely authenticate when they need to sign into a new device. These approaches require that the device be physically and locally present when authentica- tion happens. QR Codes Complex, animated QR codes can also be used to authen- ticate without passwords. Users logging in scan a QR code with a smart device to bind the session to their user iden- tity. A confirmation message is then displayed in an app on the device verifying the authentication and a bio- metric scan is triggered on the device, confirming that the users are who they say they are. At that point, an authenti- cated session is passed to any relying party and the user is logged in. Zero-Knowledge Proofs Zero-knowledge proofs (ZKP), provides yet another alternative. A ZKP authentication process can transform a password into a complex and unique abstract string, like a Rubik’s cube with a completely random pattern. The abstraction is transferred to a server and stored, allowing authentication of users in such a way that a password never leaves the user’s device or browser.
  16. 16. 30 31 The FIDO Open Standard The FIDO Alliance, an open industry association has created open standards for passwordless authentication to online and mobile services. Its most prevalent standard, FIDO2, was developed with the World Wide Web Consortium (W3C) and became a web standard in March 2019. Such authentication leverages public-key cryptography, i.e. a public key that can be shared with anyone, and the associated private key that is held by the owner securely within the ‘authenticator’ on their device such as a mobile phone, a computer or a security key. When users authenticate to a site supporting FIDO, they first verify their identity or their presence with a simple action, such as scanning a fingerprint or touching a security device. Then, the website and the user’s authenticator conduct a challenge-response to verify that the user is in possession of the correct private key. Each service uses a unique key pair, and the private key never leaves the user’s device. Proceed With Caution While these new technology alternatives to passwords are promising there is a need to proceed with caution, says Bissell. “I am eager for the introduction of the passwordless era but I also know that with every new innovation comes things we didn’t think about. If biometric technologies such as facial recognition and fingerprinting are comprised it is not like having your password hacked. I can’t choose another one. I am who I am. I am a little worried about that. Some security experts are saying ‘let’s jump right in.’ I say ‘let’s go’ but let’s be very cautious and thoughtful about the way we do this and not deploy without testing innovation and having compensa- ting controls.” What should companies be thinking about when considering a move to passwordless authentication? “The technology teams, business leaders, and even regulators need to understand that this is different from what they are used to with passwords and they really need to be aware that new technologies like biometrics need to be protected diffe- rently than passwords,” says Bissell. Companies should factor in the geographical spread of their customers because juris- diction matters as privacy and security rules differ not just by region but in some cases by country. They also need to think about how and when they want to phase in the new technolo- gies, recognizing that passwordless authentication might have to - at least temporarily - co-exist with legacy systems. “You should understand how this may impact the user expe- rience,” he says. “I suggest companies work out all the kinks internally and get it right before using it with customers. And when you get it right, test it by attacking the new solution as bad actors would. Remember, just because you think you got it right doesn’t mean you actually got it right.” J.L.S. CYBER SECURITY
  17. 17. 32 33 Quantum Computing’s Potential The technology’s impact on business will be discussed at the World Economic Forum’s annual meeting in Davos Builds quantum computers and the superconducting quantum processors that power them. Its quantum computers are avai- lable to users through Amazon Braket, an Amazon Web Services solution that allows researchers and developers to begin expe- rimenting with computers from quantum hardware providers in a single place. rigetti.com Named a 2018 World Economic Forum Technology Pioneer, it is developing cybersecurity solutions for the era of quantum computing. quintessencelabs.com WHAT IT DOES STARTUPS TO WATCH WHAT IT DOES In October Google and NASA an- nounced that they have achieved ‘quantum supremacy’, i.e. the ability of quantum computers to perform certain tasks that a classical compu- ter simply cannot do in a reasonable timeframe. They claimed that their quantum computer solved a problem in 200 seconds that would take the world’s fastest supercomputer 10,000 years. While critics say the problem that was solved was without any practical merits or implications, the Google experiment demonstrated the huge potential of quantum computing, a form of computing that taps into COMPUTING RIGETTI COMPUTING QUINTESSENCELABS UNITED STATES AUSTRALIA Developing a unique IP that aims to make quantum processors of much better quality by reducing the number of physical qubits needed to build powerful quan- tum computers. meetiqm.com Building a general purpose sili- con photonic quantum computer. PsiQ believes it can harness pho- tonics to build a commercially viable quantum computer much sooner than competitors using more common approaches. psiquantum.com Produces ion-trap quantum pro- cessors, and offers access to its quantum computers via a cloud service. AQT supports both Cirq and Qiskit, the two most prominent quantum computing programming languages. aqt.eu WHAT IT DOES WHAT IT DOES WHAT IT DOES the unusual behavior of atomic and sub-atomic particles to perform far more complex calculations at a mas- sively increased speed compared to today’s computers. Some companies, like German auto manufacturer Volkswagen, are already cooperating with Google and D-Wave Systems, a Canadian quantum compu- ting pioneer, to use the technology to try and handle large optimization is- sues, such as simultaneously charting the best route for vehicles in cities like Beijing and Lisbon, a puzzle that would be too tough for normal computers. If industry pundits are right the best is yet to come. Productivity gains by end users of quantum computing, in the form of both cost savings and revenue opportunities, are expected to surpass $450 billion annually, within the next couple of decades, according to aMay 2019 study by Boston Consulting Group. A precipitous breakthrough in the technology could happen at any time, warns the study, so companies should start experimenting now. IQM PSIQ AQT (Alpine Quantum Technologies) FINLAND UNITED STATES AUSTRIA COMPUTING “When we talk about material design, drug design, portfolio optimization in finance and risk analysis for insurance com- panies, these are areas where there are strong indications that quantum computers will revolutionize the market.” A view of the quantum computing technology being developed by Austria’s AQT.
  18. 18. 34 35COMPUTING “Since quantum computing is a step- change technology with substantial barriers to adoption early movers will seize a large share of the total value, as laggards struggle with integration, talent, and IP,” the report says. Such projections are provoking anxiety. No company wants to fall behind when a technology shift trans- forms industry. Yet, there are enough unknowns about quantum computing and enough fundamental scientific riddles to solve that no one can say for certain when it might be ready to make an impact. So how will quantum computing change business? Which sectors will be impacted first? What should every executive know about the technology and what should they be doing to prepare? Participants in a panel on the potential of quantum computing at the World Ecnomic Forum’s annual meeting in Davos, January 21-24, mo- derated by The Innvoator’s Editor-in- Chief Jennifer L. Schenker, will try and answer those questions. The first impact of quantum compu- ting capabilities is likely to be felt in the businesses that are dependent on simulation of quantum mechanical processes, such as materials, chemi- cals and scientific research, says panelist Scott Aaronson, a theoretical computer scientist and David J. Bruton Jr. Centennial Professor of Computer Science at the University of Texas at Austin. That alone will likely have a monumen- tal impact on society. “Think of it as the ability to turn on a new telescope into nature,” he says. But businesses need to manage their expectations says panelist Chad Rigetti, CEO of Rigetti Computing, a California-based company that designs and fabricates quantum chips, integrates them with a controlling architecture, and develops software for programmers to use to build algorithms. “The potential of quantum computing is significant but there are major challenges to un- locking its value,” he says. That’s a point of view shared by most in the industry. Quantum computing’s impact on machine learning and optimization in the short term is more speculative, but possible, says Davide Venturelli, who manages Science Ope- rations for Universities Space Research Association activities at the Quantum Artificial Intelligence Laboratory located at NASA’s Ames Research Center. “As of now the world has still to invent an algorithm that would be worth using in current challenges in finance, logistics, data science,” he says. “However, there is a grounded optimism that when we will have ac- cess to more and more sophisticated quantum computers empirical research in the next five years will en- able scientists to invent non-rigorous methods that will have qualitatively different features with respect to the best known algorithms and possibly a compelling speedup.” Technology Bottlenecks The main bottleneck to quantum computing today is hardware, says Ekatrina Almasque, a partner at ven- ture capital firm OpenOcean, which participated in a $13 million invest- ment into Finnish quantum computing company IQM last July. While pioneers in quantum computing such as IBM and D-Wave Systems provide software companies with cloud access to their data centers for early testing of narrow use cases, the cost of using these machines in a commercial environment remains prohibitive, she Says. “What we need is some hard- ware that works and that costs less so that we have enough qubits to solve real problems like drug discovery.” Even if hardware is available, a sui- table software based on algorithms that offer a speed-up compared to classical algorithms needs to be developed for specific applications. “Neither can impact existing industry without the other,” says Thomas Monz, Co-founder and CEO of Aus- trian quantum computing company AQT. That said, “quantum computing promises to have an extreme impact on any business that’s limited by classical computing capabilities where we have quantum algorithms and hardware that offer an advantage,” he says. “This means the resolution on a video will not change due to quantum computers, this is already fairly effi- cient. But when we talk about material design, drug design, portfolio optimi- zation in finance and risk analysis for insurance companies these are areas where there are strong indications that quantum computers will revolutionize the market.” How Companies Should Prepare There won’t be a shift. Quantum com- puting resources will be seamlessly in- tegrated on the cloud and made avai- lable transparently when needed, says Venturelli. If the business is related to chemistry or material science it might make sense to hire specialists, setup partnerships with quantum compu- ting manufacturers and top research groups to steer the entire community towards the correct questions and problems that might have a chance to be addressed by quantum computing in the short term. If the business is a perspective enduser further out in the future the best way for executives to prepare is to make sure that their technical team leaders are not fooled by the hype and understand the state of art as it progresses, he says. Ven- turelli recommends focusing more on hardware and theory than on software. “If the core business strongly relies on computational performance then it mi- ght be worth it to have an internal task force experimenting with the concepts or funding academia or specialized startups on spot projects in order to gain some timing advantage against competitors in detecting opportuni- ties,” he says. “But it is important to recognize that this is still science research and we are likely years away from having production value.” AQT’s Monz also recommends compa- nies create internal teams that receive training on the potential of quantum computing in their sector, figure out who is developing a full application for challenges in that field and then do a proof of concept trial. “This will essen- tially give you internal know-how on quantum computing, in combination with a proof-of-concept realization that both explains the underlying diffe- rences to classical computing but also shows the real state-of-the-art,” he says. “Follow and extend on this initial proof-of-concept once a year and you can be sure not to miss out.” J.L.S. D-Wave System’s 2000Q system. Enterprises can get started learning how to code their early quantum applications using the Canadian quantum computing pioneer’s quantum cloud service and begin to incorporate the technology into their workflows.
  19. 19. 36 37 How AI-Powered Knowledge Aggregation Could Help Find A Cure For Alzheimer’s Privacy-preserving federated learning could overcome a big stumbling block: data-sharing friction Over the last two decades the biotech industry has conducted over 156 clinical trials and spent hundreds of billions of dollars on the discovery and testing of these drugs, and yet, not one clinically impactful drug has been brought to market in that time. There is no cure and no treatment to slow down a disease, which in the U.S. alone is expected to impact 16 million people by 2050, generating $1.2 tril- lion in medical and hospice care costs. “The economic impact of this disease is mind-boggling,” says Barak Berko- witz, co-founder of this project. He is also the Director of Operations and Strategy at the MIT Media Lab where he came in contact with the power of federated learning systems. It is estimated that in the U.S. more than 16 million Americans provide unpaid care for people with Alzheimer’s or other dementias. That is almost 10% of the working age population. “Alzheimer’s is a growing global catastrophe tied to aging in a world that is aging and the scale of the catastrophe is right up there with climate change,” he says. Careful evaluations of key research in- sights driven by data, most notably the recent announcement of the revival of a drug developed by U.S. drug com- pany Biogen called Aducanumab, offer some hope. “This possible break- through raises many questions,” says Berkowitz, “One of the most pressing is whether there are more meaningful insights hidden in the failed drug trial data.” One of the most valuable assets created by these trials is the data col- lected. While there has been progress, the vast majority of this data has yet to be shared or, more importantly, aggregated, Berkowitz says. Data ag- gregation could turn one hundred fifty relatively small data sets into a truly massive data asset of more than one hundred and fifty thousand subjects. “There is a robust scientific basis for believing this aggregated data could provide meaningful insights into these trials, reasons for failures, missed efficacy, and possibly clinically meaningful treatments,” he says. also significant forces slowing or stopping such in-depth data sharing. Chief among them are privacy concerns and competition issues. Berkowitz will be in Davos during the annual meeting of the World Econo- mic Forum January 21-24 to recruit potential partners in a new federation that seeks to overcome these hurdles by removing data sharing from the equation. The federation is seeking firms that have conducted clinical trials focused on Alzheimer’s and those that specialize in helping artifi- cial intelligence (AI) filter out “noise”, i.e. extraneous information. MIT’s Connected Science Group will serve as a data trustee to the federation, which means it will be responsible for making sure the AI is not doing things or passing data it should not. HEALTH «It is time to try new approaches to stop this slow-moving epidemic.» How AI Could Help The new federation will harvest insights from AIs that run locally on each dataset, explains Berkowitz. After local analysis, generated knowledge- not data- are aggregated from each AI into a combined set of findings that could both uncover previously weak signals and inform further areas of inquiry and treatment. “What we are talking about is privacy-preserving federated learning,” he says. “Now we can say to drug companies ‘you do not need to share your data.’ An AI can sit on your local server and analyze the data and simply share the insights that come from that analysis.” Sharing research insights is a principle that has been used for the critical advancement of science for decades, at scientific conferences and congresses, leading to new understandings of disease and new areas of inquiry. “It is not just listening to reports, but the discussions that they stimulate, that make congresses so valuable,” says Ber- kowitz. In the same way, new technologies enable AIs to share their insights with other AIs in a secure mode. “No AI sees raw data, so it can not be shared. Instead, the AIs col- lect correlations and other data signals they may ascertain, and these signals then create knowledge. The knowledge is then aggregated from multiple AIs and is combined to amplify or muffle these signals,” says Berkowitz. “This methodology can remove noise, improve confidence, and uncover new areas of exploration without ever sharing sensitive and proprietary raw data. “ By iterating a few times, the AI that has aggregated knowledge can dig into these signals and gain greater clarity. “In this system, the consistency of data becomes less of an issue. We aggregate the generated knowledge, not the data. Noise can be filtered out, and we can turn the data from two decades of research into knowledge that, when aggregated, will lead to clinically meaningful insights,” Berkowitz says. The federation will work on encrypted data eliminating critical privacy concerns; the AI will focus on local data servers, so raw data never leaves its owner’s site; aggre- gate insights to amplify weak signals and identify new correlations and correct for small-sampling bias. Members of the federation gain value in three critical ways, says Berkowitz. The federation will share insights related solely to a specific trial on a proprietary basis with the data creator. It will share generated insights around the data creator. It will share generated insights around obvious key questions with all federation members. And all Federation members can interrogate the aggregated Computer illustration of a broken brain’s neural network represented by lines and dots. Some areas are not connected, depicting dementia and Alzheimer’s disease.
  20. 20. 39 knowledge with proprietary questions whose answers are shared exclusively with the integrator. All these services will be provided free of charge to Alzhei- mer’s federation members and will serve as a key proof of concept for this. Berkowitz says he thinks it will be a compelling proposition to biotech companies working on Alzheimer’s drugs. Take the case of Biogen. Initial trials of its drug Aducanumab failed when it was judged to be futile” and the trials were stopped, causing Biogen’s stock to drop and costing it over $20 billion in market cap. Then new data surfaced, which when added into the drug trial data, indicated that the drug could actually work. The company had a discussion with the U.S. Food & Drug Administration (FDA) and is soon submitting the drug for approval, causing its stock to rise. Biogen then reported the findings of its study at conference and its stock soared yet again. “The reason for the massive swings in valuation is that the data shows they might have a drug that works a little bit on Alzheimer’s, which has nearly immeasurable economic value,” says Berkowitz. “The other thing they proved is that there is interesting data in the drug trial base.” There is a huge data store that is locked up that has very meaningful insights on what could be effective treatments, says Berkowitz. “We are aiming to recruit significant neurological disease biotech companies to share insights to accelerate treatments for this horrible and stubborn- ly untreatable disease. With an insight federation, the opportunities far outweigh the risks. It is time to try new approaches to stop this slow-moving epidemic.” J.L.S To receive in-depth analysis of digital transformation trends every week subscribe to our newsletter: www.innovator.news 38

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