TheInnovator #12 | Davos 2020

#12 – January 2020 Special Edition for the World Economic Forum’s Annual Meeting in Davos NEW BUSINESS MODELS A SURVIVAL GUIDE FOR LEADERS IN THE DIGITAL AGE BUILDING CYBER RESILIENCE FIGHTING BACK How Corporates And Governments Can Succeed In The Digital Economy

TABLE LETTER OF FROM Contents The editor P.04 How Corporates Are Combating Super Apps In our third annual The Davos Manifesto 2020 provides a vision for special edition around stakeholder capitalism that touches on a range of im- P.12 Digital Leader’s Survival Guide the World Economic portant issues of our time, including fair taxation, zero Forum’s annual meeting tolerance for corruption, executive pay and respect for in Davos we tell you human rights. P.14 Helping European Corporates Punch Their Weight about new business models and approaches Building on the Manifesto 2020, this year’s program P.16 Central Bankers Embrace CBDCs that can help companies focuses on achieving maximum impact on the Forum’s Jennifer L. Schenker and governments thrive platform for public-private cooperation across six core P.18 Reshaping Global Trade For The Digital Age Editor-In-Chief, The Innovator in the digital age, and areas of activity: Ecology, Economy, Society, Industry, highlight incumbents Technology and Geopolitics. More than 160 individual P.22 How Trafigura Put Its Cybersecurity To The Test who are starting to make some headway. We also give initiatives, each capable of delivering system-wide trans- you a glimpse of what’s to come: quantum computing is formation, are active on the Forum platform. Significant P.26 Protecting Critical Infrastructure From Cyber Attacks expected to give us the ability to turn on a new teles- advances in a number of these, especially in the fields of cope into nature, and in the longer term revolutionize responsible business, the environment and social mobi- P.28 The Death Of Passwords drug design, portfolio optimization in finance and risk lity, are expected to be confirmed during the meeting. analysis for insurance companies. P.32 Quantum Computing’s Potential Initiatives to be launched at the Annual Meeting in- I will be moderating sessions on quantum computing cludes one that aims to plant one trillion trees over the and cybersecurity in Davos as well as one which will next decade and another to equip one billion people P.36 How AI-Powered Knowledge Aggregation Could Help Cure explore whether there is an opportunity to redefine the with the necessary skills in the age of the Fourth Indus- Alzheimer’s Disease carbon economy. trial Revolution. As every company is beginning to realize improving the Our readers can access the key takeaways from this bottom line can no longer be the only goal. Businesses year’s annual meeting in our January 24th newsletter. If need to reflect the values of their customers and do you haven’t already subscribed to our weekly newsletter their part to help the world achieve the U.N.’s Sustai- you can do so through our website at www.innovator. nable Development Goals. 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- In keeping with that Zeitgeist the Davos Manifesto 2020 dated weekly on the most important digital transforma- will underpin this year’s meeting. This document builds tion trends throughout 2020. 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.

TABLE LETTER OF FROM Contents The editor P.04How Corporates Are Combating Super Apps In our third annual The Davos Manifesto 2020 provides a vision for special edition around stakeholder capitalism that touches on a range of im- P.12Digital Leader’s Survival Guide the World Economic portant issues of our time, including fair taxation, zero Forum’s annual meeting tolerance for corruption, executive pay and respect for in Davos we tell you human rights. P.14Helping European Corporates Punch Their Weight about new business models and approaches Building on the Manifesto 2020, this year’s program P.16Central Bankers Embrace CBDCs that can help companies focuses on achieving maximum impact on the Forum’s Jennifer L. Schenker and governments thrive platform for public-private cooperation across six core P.18Reshaping Global Trade For The Digital AgeEditor-In-Chief, The Innovatorin the digital age, and areas of activity: Ecology, Economy, Society, Industry, highlight incumbents Technology and Geopolitics. More than 160 individual P.22How Trafigura Put Its Cybersecurity To The Testwho are starting to make some headway. We also give initiatives, each capable of delivering system-wide trans- you a glimpse of what’s to come: quantum computing is formation, are active on the Forum platform. Significant P.26Protecting Critical Infrastructure From Cyber Attacksexpected to give us the ability to turn on a new teles-advances in a number of these, especially in the fields of cope into nature, and in the longer term revolutionize responsible business, the environment and social mobi- P.28The Death Of Passwordsdrug design, portfolio optimization in finance and risk lity, are expected to be confirmed during the meeting. analysis for insurance companies. P.32Quantum Computing’s Potential Initiatives to be launched at the Annual Meeting in- I will be moderating sessions on quantum computing cludes one that aims to plant one trillion trees over the and cybersecurity in Davos as well as one which will next decade and another to equip one billion people P.36How AI-Powered Knowledge Aggregation Could Help Cure explore whether there is an opportunity to redefine the with the necessary skills in the age of the Fourth Indus- Alzheimer’s Diseasecarbon economy. trial Revolution. As every company is beginning to realize improving the Our readers can access the key takeaways from this bottom line can no longer be the only goal. Businesses year’s annual meeting in our January 24th newsletter. If need to reflect the values of their customers and do you haven’t already subscribed to our weekly newsletter their part to help the world achieve the U.N.’s Sustai- you can do so through our website at www.innovator. nable Development Goals. 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- In keeping with that Zeitgeist the Davos Manifesto 2020 dated weekly on the most important digital transforma- will underpin this year’s meeting. This document builds tion trends throughout 2020. 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.

4 COVER STORY COVER STORY 5 Fighting Back How Corporates Are Combating Super Apps BY JENNIFER L.SCHENKER Grab, a South East Asian ride-sharing app active in eight banks, oil companies and industrial conglomerates. Grab was one of the star of steel and metal products, to energy com- countries, has rapidly added financial services such as digi- Grab is just one example of how challenges to established attractions at the Forum’s Digital pany Vattenfall are trying to build marketplaces tal payments, rewards, lending and insurance, on-demand companies are increasingly coming from unexpected Platforms executive workshop of their own. Henkel, a 144-year-old German services like food delivery, grocery delivery and places. Along with Grab and Ant Financial, an Alibaba in Singapore last July and Grab conglomerate, has launched HenkelX, an package delivery as well as hotel bookings, on-demand spin-off, applicants for full banking licenses in Singapore CEO Anthony Tan and co-foun- open innovation platform that seeks to help Eu- video, a ticketing platform and health services to the list of include a platform play led by gaming hardware com- der Ling are both invited to the ropean companies be competitive in the platform its offerings. Now it is preparing its next move: obtaining pany Razr, which has teamed up with a local supermarket Forum’s annual meeting in Davos economy. Europe is also home to Fightback, a new a full banking license in Singapore in partnership with operator, an insurance business, an Internet company and this year. movement that aims to enable business leaders to leverage telecom operator Singtel. a regional wholesale marketplace for cars with the aim of Thriving in the digital economy is top platform business models, digital ventures and the special “With over 70 % of the region unbanked or underban- creating a bank for millennials. on executives’ minds and some are making bold moves to skills of tech entrepreneurs (see the story) ked there is tremendous opportunity for us to grow our Boundaries between industries have been blurring for fight back. Examples include Sberbank in Russia, which is But it is still early days. Most companies have still not presence in payments and financial services in order to some time. But few would have guessed just a short time investing heavily in an ambitious integrated ecosystem of figured out how to turn themselves into platforms or figure improve financial inclusion in Southeast Asia,” says Hooi ago that a ride-sharing firm or a gaming company could platform ventures across multiple adjacent verticals (see out how to work with existing ones. Ling, co-founder of Grab, which operates in 339 cities, become a bank. The providers of super apps can come the separate story), Reliance Industries in India (see the At the Platform Economy Summit in September, an annual has a $14 billion valuation and boasts that it has added from anywhere as long as they do a good job identifying separate story), China Merchant Bank (see the separate conference in Frankfurt on business model transformation $5.8 billion to Southeast Asia’s economy. Since Grab’s pain points, provide great customer service, add on story) and retailer Magalu in Brazil, which is turning into an for incumbents, successive panels of leaders from Europe’s founding in Malaysia in 2012 it has helped over 1.7 million adjacent offers within the same app, and do it seamlessly open platform business and growing its valuation like cra- chemicals, industrial manufacturing, financial services and micro-entrepreneurs open their first bank accounts, she across geographies and industries. “Today if you smartly zy, notes Simon Torrance, a member of the Forum’s Digital automotive sectors, bemoaned the lack of true commit- says, noting that “our financial services business is now the combine established and emerging technologies with a Platforms & Ecosystems Executive Working Group. ment to and breakthrough impact from digital investments only platform to have access to e-money licenses across all data-driven and customer-centric approach organizations Some established companies are considering breaking and the fundamental human challenges they faced in six major markets.” have a major opportunity for exponential growth,” says away from platforms controlled by tech giants. Ikea just turning around their supertankers, says Torrance, the or- Super apps like Grab, along with WeChat, Alipay, Go-Jek, Cristian Citu, the World Economic Forum’s Digital Trans- announced that it will no longer work with Amazon and is ganizer of the conference and a senior advisor on business Paytm, Kakao, Line in Japan, or Rappi in South America, formation Lead. rumored to be building its own platform. model transformation. Many said they felt like they were are examples of the platform business model on steroids More than 80 organizations are participating in the Fo- Others are partnering with challenger platforms. running fast just to stay still, but not making any major and are especially applicable for mobile-first markets. rum’s Digital Platforms and Ecosystems executive working Berkshire Hathaway and JP Morgan have formed a joint progress. “They increasingly recognize that they lack key Facebook, Amazon, Google, Microsoft, Apple incorpo- group, part of the Forum’s Digital Economy and New Value venture in healthcare with Amazon while ICBC - the wor- capabilities that the ‘new, digital incumbents’, who have rated the platform business model years ago and, along Creation platform, to learn about super apps and emerging ld’s largest bank in terms of assets – has partnered with taken over their crowns as the world’s most powerful with Tencent and Alibaba are the most valuable companies business models in geographies as diverse as South Ameri- China’s Alibaba and its spin-off Ant Financial. organizations with the most effective business models, in the world, having taken over this position from the ca, Africa and Southeast Asia. In Europe, companies ranging from Klockner, a distributor have developed, says Torrance. “Their leaders have found

4COVER STORY COVER STORY 5 Fighting Back How Corporates Are Combating Super Apps BY JENNIFER L.SCHENKER Grab, a South East Asian ride-sharing app active in eight banks, oil companies and industrial conglomerates.Grab was one of the starof steel and metal products, to energy com- countries, has rapidly added financial services such as digi-Grab is just one example of how challenges to established attractions at the Forum’s Digital pany Vattenfall are trying to build marketplaces tal payments, rewards, lending and insurance, on-demandcompanies are increasingly coming from unexpected Platforms executive workshopof their own. Henkel, a 144-year-old German services like food delivery, grocery delivery andplaces. Along with Grab and Ant Financial, an Alibaba in Singapore last July and Grab conglomerate, has launched HenkelX, an package delivery as well as hotel bookings, on-demand spin-off, applicants for full banking licenses in Singapore CEO Anthony Tan and co-foun-open innovation platform that seeks to help Eu- video, a ticketing platform and health services to the list of include a platform play led by gaming hardware com-der Ling are both invited to the ropean companies be competitive in the platform its offerings. Now it is preparing its next move: obtainingpany Razr, which has teamed up with a local supermarket Forum’s annual meeting in Davos economy. Europe is also home to Fightback, a new a full banking license in Singapore in partnership with operator, an insurance business, an Internet company and this year.movement that aims to enable business leaders to leverage telecom operator Singtel.a regional wholesale marketplace for cars with the aim of Thriving in the digital economy is topplatform business models, digital ventures and the special “With over 70 % of the region unbanked or underban-creating a bank for millennials.on executives’ minds and some are making bold moves to skills of tech entrepreneurs (see the story) ked there is tremendous opportunity for us to grow our Boundaries between industries have been blurring for fight back. Examples include Sberbank in Russia, which is But it is still early days. Most companies have still not presence in payments and financial services in order to some time. But few would have guessed just a short time investing heavily in an ambitious integrated ecosystem of figured out how to turn themselves into platforms or figure improve financial inclusion in Southeast Asia,” says Hooi ago that a ride-sharing firm or a gaming company could platform ventures across multiple adjacent verticals (see out how to work with existing ones. Ling, co-founder of Grab, which operates in 339 cities,become a bank. The providers of super apps can come the separate story), Reliance Industries in India (see the At the Platform Economy Summit in September, an annual has a $14 billion valuation and boasts that it has added from anywhere as long as they do a good job identifying separate story), China Merchant Bank (see the separate conference in Frankfurt on business model transformation $5.8 billion to Southeast Asia’s economy. Since Grab’s pain points, provide great customer service, add on story) and retailer Magalu in Brazil, which is turning into an for incumbents, successive panels of leaders from Europe’s founding in Malaysia in 2012 it has helped over 1.7 million adjacent offers within the same app, and do it seamlessly open platform business and growing its valuation like cra-chemicals, industrial manufacturing, financial services and micro-entrepreneurs open their first bank accounts, she across geographies and industries. “Today if you smartly zy, notes Simon Torrance, a member of the Forum’s Digital automotive sectors, bemoaned the lack of true commit- says, noting that “our financial services business is now the combine established and emerging technologies with a Platforms & Ecosystems Executive Working Group.ment to and breakthrough impact from digital investments only platform to have access to e-money licenses across all data-driven and customer-centric approach organizations Some established companies are considering breaking and the fundamental human challenges they faced in six major markets.”have a major opportunity for exponential growth,” says away from platforms controlled by tech giants. Ikea just turning around their supertankers, says Torrance, the or- Super apps like Grab, along with WeChat, Alipay, Go-Jek, Cristian Citu, the World Economic Forum’s Digital Trans-announced that it will no longer work with Amazon and is ganizer of the conference and a senior advisor on business Paytm, Kakao, Line in Japan, or Rappi in South America, formation Lead.rumored to be building its own platform.model transformation. Many said they felt like they were are examples of the platform business model on steroids More than 80 organizations are participating in the Fo-Others are partnering with challenger platforms.running fast just to stay still, but not making any major and are especially applicable for mobile-first markets. rum’s Digital Platforms and Ecosystems executive working Berkshire Hathaway and JP Morgan have formed a joint progress. “They increasingly recognize that they lack key Facebook, Amazon, Google, Microsoft, Apple incorpo-group, part of the Forum’s Digital Economy and New Value venture in healthcare with Amazon while ICBC - the wor-capabilities that the ‘new, digital incumbents’, who have rated the platform business model years ago and, alongCreation platform, to learn about super apps and emerging ld’s largest bank in terms of assets – has partnered with taken over their crowns as the world’s most powerful with Tencent and Alibaba are the most valuable companies business models in geographies as diverse as South Ameri-China’s Alibaba and its spin-off Ant Financial.organizations with the most effective business models, in the world, having taken over this position from theca, Africa and Southeast Asia.In Europe, companies ranging from Klockner, a distributor have developed, says Torrance. “Their leaders have found

COVER STORY 7 Sberbank’s Platform Play Grab, a South East Asian super app, started out as offer a single sign-off for everything from banking a ride-hailing app before branching out into finan- services to food delivery or a doctor’s appoint- cial services. Sberbank, Russia’s largest financial ment. “We have roughly 30 services that glue institution, is doing the reverse. these systems together and that is what makes the In November, Sberbank completed a joint venture ecosystem more sticky,” he says. “The objective is partnership with Mail.Ru with co-investment of to make people want to stay and use our services.” up to $1 billion in the food delivery and ride-hailing Today Sberbank’s digital ecosystem services businesses Delivery Club and CitiMobil. The two contribute only about 1% to 2% of Sberbank’s ove- companies also announced a separate partnership rall revenues but “it is rapidly growing and it is on to “boost the development of the digital economy the way to becoming a significant contributor to and AI-powered products in Russia.” our bottom line,” he says. it difficult to apply the habits of high performance to their loans, asset management and insurance that is well regu- Sberbank also extended its reach into the dri- position in a fast digitizing world: clarity of vision, ambi- lated for consumer protection, without being constrained verless vehicle market through a joint venture with J.L.S. tion, energy, productivity, influence, necessity, courage. by the need to establish a large physical branch network. Cognitive Technologies, an established player in They are trapped by out of date organizational structures, “Today our focus is on the Singapore license application, the software industry that develops driver assistan- IT, product development methods, metrics, and find it but we always remain open to opportunities in other ce systems based on artificial intelligence. harder and harder to attract the best talent.” markets as they become available,” says a company And, the bank is branching out into technology Too often, he says, incumbents are resorting to keeping spokeswoman. The risk for traditional banks and insurance services. In 2019 it launched Sber Cloud, a cloud solutions marketplace that targets corporate shareholders happy with share buy-backs and dividends, companies is that, unless they start to make bolder moves clients ranging from SMEs to large enterprises. rather than investing in business model innovation and right now, they become unprofitable legacy utilities with In a presentation to investors the state-owned growth. “The good news is that incumbents have assets slowly eroding impact on the role and function of money, bank claims its ever-expanding tech-lead digital that are extremely valuable, if only they can be leveraged says Torrance. ecosystem can now meet most of people’s non-fi- in new ways: customer bases, supplier relationships, nancial needs, including e-commerce, education, trusted brands, cashflow,” he says. “My experience is Research by the London Business School and University of entertainment and medical services. And like the that there are plenty of opportunities for incumbents to Oxford supports that thesis. “Our study of the rise of super so-called super apps, it is using these offerings as generate new growth and value, especially in complex app platforms has revealed that its success hinges on a a way of onboarding customers and cross-selling industries where their domain knowledge and relationships new source of firm value that is increasingly valuable in the products. Although Sberbank has a higher return on equity are so deeply embedded... But they must be willing to age of the Fourth Industrial Revolution: payments data,” than most banks worldwide (23% compared to an fightback against old ways of thinking and acting.” says Nina Teng, a Doctoral Researcher. “It’s important average 8%), relying on pure banking services as a for incumbents to consider who will own and control this business model is no longer an option as margins payments data when deciding whether to create their own are shrinking in the sector worldwide, says David Opportunities platform or to partner with an existing one; in addition to Rafalovsky, Sberbank’s Chief Technology Officer. being mindful of the great responsibility that comes with “In contemplating our future we decided that an In many major industries such as consumer electronics, data ownership with respect to safeguarding consumer ecosystem business model that leverages the transport, advertising, entertainment and retail ‘challenger’ data privacy and protection.” strength of our brand and tech know-how would All these developments create even stronger imperatives allow us to offer new and unique products to our tech companies such as Apple, Uber, Google, Netflix and 120 million + customers.” Alibaba have become the dominant incumbent, but not for traditional banks and financial institutions to create The difference between a holding company and in finance... yet. Tech companies, entrepreneurs and VCs bolder platform strategies, says Torrance. an ecosystem is that in an ecosystem you “have a are eyeing up this $22 trillion global market right now, and “If you look at Return on Equity (RoE) scenarios for business glue and a technology glue and the indivi- fintech innovation is rife. incumbent banks, it’s not looking rosy,” says Torrance. “If dual components work seamlessly together,” says According to a recent study by Google, Temasek and Bain digitization continues to bite, and more new entrants like Rafalovsky. One example of that is to & Company, almost 40% of Singaporeans are underserved challenger banks, fintechs, hyperscale platforms and super by their banks, notes Grab. “Similar to our work in trans- apps nibble away at the most profitable parts of their bu- port, we have taken it as our mission to make financial and siness, then you could see a slide into very unsustainable banking services just as accessible to them as transport - commercial positions. Even if interest rates rise, the global all from the palm of their hand,” says a spokesperson. economy warms up and the banks get super efficient - and Grab says it believes the value proposition of digital banks that’s a lot to ask - we’re looking at tiny RoE growth.” is clear: Southeast Asia is significantly underbanked, but The only way forward to new growth and value is for banks mobile penetration is high. Digital banks offer an opportu- to think beyond traditional banking with a three-part plat- nity to build a mobile-only platform offering deposits, form and ecosystem strategy, he says. The first step is to

COVER STORY 7 Sberbank’s Platform Play Grab, a South East Asian super app, started out as offer a single sign-off for everything from banking a ride-hailing app before branching out into finan-services to food delivery or a doctor’s appoint- cial services. Sberbank, Russia’s largest financial ment. “We have roughly 30 services that glue institution, is doing the reverse.these systems together and that is what makes the In November, Sberbank completed a joint venture ecosystem more sticky,” he says. “The objective is partnership with Mail.Ru with co-investment ofto make people want to stay and use our services.” up to $1 billion in the food delivery and ride-hailing Today Sberbank’s digital ecosystem services businesses Delivery Club and CitiMobil. The two contribute only about 1% to 2% of Sberbank’s ove- companies also announced a separate partnership rall revenues but “it is rapidly growing and it is on to “boost the development of the digital economy the way to becoming a significant contributor to and AI-powered products in Russia.”our bottom line,” he says.it difficult to apply the habits of high performance to their loans, asset management and insurance that is well regu- Sberbank also extended its reach into the dri-position in a fast digitizing world: clarity of vision, ambi-lated for consumer protection, without being constrained verless vehicle market through a joint venture withJ.L.S.tion, energy, productivity, influence, necessity, courage. by the need to establish a large physical branch network. Cognitive Technologies, an established player inThey are trapped by out of date organizational structures, “Today our focus is on the Singapore license application, the software industry that develops driver assistan-IT, product development methods, metrics, and find it but we always remain open to opportunities in other ce systems based on artificial intelligence.harder and harder to attract the best talent.”markets as they become available,” says a company And, the bank is branching out into technologyToo often, he says, incumbents are resorting to keeping spokeswoman. The risk for traditional banks and insurance services. In 2019 it launched Sber Cloud, a cloud solutions marketplace that targets corporateshareholders happy with share buy-backs and dividends, companies is that, unless they start to make bolder moves clients ranging from SMEs to large enterprises.rather than investing in business model innovation and right now, they become unprofitable legacy utilities with In a presentation to investors the state-ownedgrowth. “The good news is that incumbents have assets slowly eroding impact on the role and function of money, bank claims its ever-expanding tech-lead digital that are extremely valuable, if only they can be leveraged says Torrance. ecosystem can now meet most of people’s non-fi-in new ways: customer bases, supplier relationships, nancial needs, including e-commerce, education,trusted brands, cashflow,” he says. “My experience is Research by the London Business School and University of entertainment and medical services. And like the that there are plenty of opportunities for incumbents to Oxford supports that thesis. “Our study of the rise of super so-called super apps, it is using these offerings as generate new growth and value, especially in complex app platforms has revealed that its success hinges on a a way of onboarding customers and cross-selling industries where their domain knowledge and relationships new source of firm value that is increasingly valuable in the products. Although Sberbank has a higher return on equity are so deeply embedded... But they must be willing to age of the Fourth Industrial Revolution: payments data,” than most banks worldwide (23% compared to an fightback against old ways of thinking and acting.”says Nina Teng, a Doctoral Researcher. “It’s important average 8%), relying on pure banking services as a for incumbents to consider who will own and control this business model is no longer an option as margins payments data when deciding whether to create their own are shrinking in the sector worldwide, says David Opportunities platform or to partner with an existing one; in addition to Rafalovsky, Sberbank’s Chief Technology Officer. being mindful of the great responsibility that comes with “In contemplating our future we decided that an In many major industries such as consumer electronics, data ownership with respect to safeguarding consumer ecosystem business model that leverages the transport, advertising, entertainment and retail ‘challenger’ data privacy and protection.” strength of our brand and tech know-how would All these developments create even stronger imperatives allow us to offer new and unique products to our tech companies such as Apple, Uber, Google, Netflix and 120 million + customers.”Alibaba have become the dominant incumbent, but not for traditional banks and financial institutions to create The difference between a holding company and in finance... yet. Tech companies, entrepreneurs and VCs bolder platform strategies, says Torrance. an ecosystem is that in an ecosystem you “have a are eyeing up this $22 trillion global market right now, and “If you look at Return on Equity (RoE) scenarios for business glue and a technology glue and the indivi-fintech innovation is rife. incumbent banks, it’s not looking rosy,” says Torrance. “If dual components work seamlessly together,” says According to a recent study by Google, Temasek and Bain digitization continues to bite, and more new entrants like Rafalovsky. One example of that is to& Company, almost 40% of Singaporeans are underserved challenger banks, fintechs, hyperscale platforms and super by their banks, notes Grab. “Similar to our work in trans- apps nibble away at the most profitable parts of their bu- port, we have taken it as our mission to make financial and siness, then you could see a slide into very unsustainable banking services just as accessible to them as transport - commercial positions. Even if interest rates rise, the global all from the palm of their hand,” says a spokesperson. economy warms up and the banks get super efficient - and Grab says it believes the value proposition of digital banks that’s a lot to ask - we’re looking at tiny RoE growth.” is clear: Southeast Asia is significantly underbanked, but The only way forward to new growth and value is for banks mobile penetration is high. Digital banks offer an opportu- to think beyond traditional banking with a three-part plat- nity to build a mobile-only platform offering deposits, form and ecosystem strategy, he says. The first step is to

8 COVER STORY Reliance Industries Strikes Back Energy and the majority of the nation’s retail sector by linking petrochemicals producers, traders, small merchants, consumer conglomerate brands and consumers. Reliance Indus- tries, India’s most In an interview with The Innovator, John Cham- valuable com- bers, the former CEO and Chairman of Cisco pany by market Systems, who is now working closely with Indian revenue, has Prime Minister Narendra Modi on the country’s created a plat- digitalization, says Reliance Industries is well-posi- form for all of its tioned to succeed with its new digital platform digital businesses «Ambani has built out the most advanced architec- in order to better ture in the world for digitization, says Chambers. combat interlo- “He clearly got it. [He saw that] voice will be free, embed their financial services within other platforms – es- top management in place to enable them to adapt quickly pers for control of the Indian market. then data will be free and then video will be free. sentially a new approach to distribution. Then, banks need to disruptive innovations—whether it means to collaborate “This new Company will be a truly transformatio- He kept ahead of those trends and all the competi- to create much more vibrant marketplaces for banking and or compete with, or even undermine, new entrants.” nal and disruptive digital services platform,” tors not willing to take the huge risk that he took. Mukesh Ambani, Reliance Industries’ Chairman He spent billions and billions of dollars of equip- non-banking services, to help retain customers by adding and Managing Director, said in a press statement ment and now he is the leader in this market with more value. The third step to create new platform-based announcing the unit’s launch. “It will bring together the best network in the world, much more complex ventures in ‘white space’ areas beyond banking. “This Success Factors India’s number one connectivity platform, leading and capable than the U.S. networks are.» is about accessing new customers in new ways,” says digital app ecosystem and world’s best tech capa- Torrance. “If you can connect the dots between all three Established companies in theory have the resources, the bilities.” Reliance Industries is credited with having Chambers predicts that Ambani will test the new parts, then you can leverage much more data, play a might and access to the customers but what keeps them transformed the digital eco-system in India, cata- technology transitions and leverage those. «He will stronger role in the digital economy, and create a path to back is their culture and lack of customer orientation, pulting the country from 155th rank in broadband do it in an ecosystem environment where he brings RoE growth and shareholder value.” says Michael Jacobides, the Sir Donald Gordon Chair of penetration to the first rank in mobile data together the small companies, to compete against Sberbank is one of a relatively few banks that have de- Entrepreneurship & Innovation at London Business School, consumption within a span of less than three years the big companies, and enable them in ways that by building out a high-speed fiber optic network others can not,» says Chambers. He takes risks, cided to invest wholeheartedly in a dynamic platform and where he is Professor of Strategy. “They are more focused and slashing prices on data plans. It is the second again and again and again. He’s done the same ecosystem approach (see the story) “It’s a good example on functioning product lines which makes them less largest singlecountry operator globally and says it thing in the petrochemical market. So, if you look of integrating bold platform thinking into an overall well suited to seize opportunities that are based on real is trending towards half a billion customers, with at Reliance, they’ve reinvented themselves on so growth strategy,” says Torrance. “Sberbank is already one customer needs. There is nothing in terms of business cal- net additions of 8 million to 10 million per month. many fronts, and out of all the companies in Asia, of the best RoE performers in the world, but they are not culus that keeps them back. It is their inability to see the Ambani said the new spin-out, Jio Platforms, I’d put them at the very top in terms of reinventing complacent. They have anticipated the threats of disinter- opportunities and even more so their inability to mount an will roll-in the Jio Infocomm infrastructure and themselves.» Chambers says he thinks Ambani is mediation and are now executing at pace a platform-ins- effective response and to put into place the right organiza- focus on digital services in healthcare, education, brave for going up against the biggest technology pired business model renewal.” tional structure to make sure that it happens.” agriculture, commerce, government-to-citizen challengers while taking on the traditional players. services, gaming and manufacturing sector among «I think he is a great example,» says Chambers. others... The more successful ecosystems are orchestrated by an «It starts with a leader, a clear vision, using techno- Stepping Up The Pace established market share leader, says Jacobides. These Part of the plan is to win market share in India’s logy, getting the transitions right, understanding leaders are best positioned to attract partners with the burgeoning e-commerce sector. To that end, the trends that will occur, and that changes the But all too often incumbents from banking, transport and right skills and funding. The idea of starting a digital Reliance Industries has started testing its online game. That’s how you gain market share. There is retail sectors have been too slow to act. Some have even ecosystem might seem strange to some large incumbent shopping portal, JioMart, to challenge e-com- no incremental thinking here. This is all out-of-the allowed new entrants to take the driver seat, with their players, who are used to going it alone but it’s better for merce giant Amazon and Walmart’s Flipkart Online box, exponential thinking. This is all disruptive.» support. “Incumbents were well aware of disruptive them to try and shape the new digital landscape, he says, Services. Reliance Retail serves more than 3.5 innovations introduced by startups early on when these especially if they have advantages that rivals just can’t million customers each week through its nearly J.L.S. upstarts were just emerging in the industry and had a low match, most notably a strong user base. Research Jaco- 10,000 physical stores in more than 6,500 Indian cities and towns. JioMart, plans to offer more than market valuation,” says Teng, referring to her research at bides conducted with consultancy BCG shows that 83% of 50,000 grocery products and free home delivery. the London Business School and University of Oxford. “By digital ecosystems involve partners from more than three Ambani said his goal is to “completely transform” the time the incumbents decided to invest in these inno- industries and 53% from more than five. The research India’s mom-and-pop stores which account for vative startups several years later, they had to pay a steep showed that the more partners an ecosystem has, and the premium for partnering with startups that had become more industries they come from, the better that ecosystem unicorns. will fare. While the average ecosystem has 27 partners, The lesson here is that incumbents should be prepared to the most successful digital ecosystems have about 40, have the right organizational structure and support from according to their research. The most successful also cut

8COVER STORY Reliance Industries Strikes Back Energy and the majority of the nation’s retail sector by linking petrochemicals producers, traders, small merchants, consumer conglomerate brands and consumers. Reliance Indus- tries, India’s most In an interview with The Innovator, John Cham- valuable com- bers, the former CEO and Chairman of Cisco pany by market Systems, who is now working closely with Indian revenue, has Prime Minister Narendra Modi on the country’s created a plat- digitalization, says Reliance Industries is well-posi- form for all of its tioned to succeed with its new digital platform digital businesses «Ambani has built out the most advanced architec- in order to better ture in the world for digitization, says Chambers. combat interlo- “He clearly got it. [He saw that] voice will be free, embed their financial services within other platforms – es-top management in place to enable them to adapt quickly pers for control of the Indian market.then data will be free and then video will be free. sentially a new approach to distribution. Then, banks needto disruptive innovations—whether it means to collaborate “This new Company will be a truly transformatio-He kept ahead of those trends and all the competi- to create much more vibrant marketplaces for banking and or compete with, or even undermine, new entrants.” nal and disruptive digital services platform,”tors not willing to take the huge risk that he took. Mukesh Ambani, Reliance Industries’ Chairman He spent billions and billions of dollars of equip- non-banking services, to help retain customers by addingand Managing Director, said in a press statementment and now he is the leader in this market with more value. The third step to create new platform-basedannouncing the unit’s launch. “It will bring togetherthe best network in the world, much more complex ventures in ‘white space’ areas beyond banking. “ThisSuccess FactorsIndia’s number one connectivity platform, leadingand capable than the U.S. networks are.» is about accessing new customers in new ways,” saysdigital app ecosystem and world’s best tech capa- Torrance. “If you can connect the dots between all threeEstablished companies in theory have the resources, the bilities.” Reliance Industries is credited with havingChambers predicts that Ambani will test the new parts, then you can leverage much more data, play amight and access to the customers but what keeps them transformed the digital eco-system in India, cata-technology transitions and leverage those. «He will stronger role in the digital economy, and create a path toback is their culture and lack of customer orientation,pulting the country from 155th rank in broadbanddo it in an ecosystem environment where he brings RoE growth and shareholder value.”says Michael Jacobides, the Sir Donald Gordon Chair of penetration to the first rank in mobile datatogether the small companies, to compete against Sberbank is one of a relatively few banks that have de-Entrepreneurship & Innovation at London Business School, consumption within a span of less than three yearsthe big companies, and enable them in ways that by building out a high-speed fiber optic network others can not,» says Chambers. He takes risks, cided to invest wholeheartedly in a dynamic platform andwhere he is Professor of Strategy. “They are more focused and slashing prices on data plans. It is the secondagain and again and again. He’s done the same ecosystem approach (see the story) “It’s a good exampleon functioning product lines which makes them lesslargest singlecountry operator globally and says itthing in the petrochemical market. So, if you look of integrating bold platform thinking into an overallwell suited to seize opportunities that are based on real is trending towards half a billion customers, withat Reliance, they’ve reinvented themselves on so growth strategy,” says Torrance. “Sberbank is already onecustomer needs. There is nothing in terms of business cal-net additions of 8 million to 10 million per month.many fronts, and out of all the companies in Asia, of the best RoE performers in the world, but they are not culus that keeps them back. It is their inability to see the Ambani said the new spin-out, Jio Platforms,I’d put them at the very top in terms of reinventing complacent. They have anticipated the threats of disinter-opportunities and even more so their inability to mount an will roll-in the Jio Infocomm infrastructure andthemselves.» Chambers says he thinks Ambani is mediation and are now executing at pace a platform-ins-effective response and to put into place the right organiza-focus on digital services in healthcare, education,brave for going up against the biggest technology pired business model renewal.”tional structure to make sure that it happens.”agriculture, commerce, government-to-citizenchallengers while taking on the traditional players. services, gaming and manufacturing sector among «I think he is a great example,» says Chambers. others... The more successful ecosystems are orchestrated by an «It starts with a leader, a clear vision, using techno- Stepping Up The Paceestablished market share leader, says Jacobides. These Part of the plan is to win market share in India’slogy, getting the transitions right, understanding leaders are best positioned to attract partners with theburgeoning e-commerce sector. To that end,the trends that will occur, and that changes the But all too often incumbents from banking, transport andright skills and funding. The idea of starting a digitalReliance Industries has started testing its onlinegame. That’s how you gain market share. There is retail sectors have been too slow to act. Some have evenecosystem might seem strange to some large incumbent shopping portal, JioMart, to challenge e-com-no incremental thinking here. This is all out-of-the allowed new entrants to take the driver seat, with theirplayers, who are used to going it alone but it’s better formerce giant Amazon and Walmart’s Flipkart Onlinebox, exponential thinking. This is all disruptive.» support. “Incumbents were well aware of disruptive them to try and shape the new digital landscape, he says, Services. Reliance Retail serves more than 3.5 innovations introduced by startups early on when these especially if they have advantages that rivals just can’tmillion customers each week through its nearly J.L.S. upstarts were just emerging in the industry and had a low match, most notably a strong user base. Research Jaco-10,000 physical stores in more than 6,500 Indian cities and towns. JioMart, plans to offer more than market valuation,” says Teng, referring to her research at bides conducted with consultancy BCG shows that 83% of50,000 grocery products and free home delivery. the London Business School and University of Oxford. “By digital ecosystems involve partners from more than three Ambani said his goal is to “completely transform” the time the incumbents decided to invest in these inno-industries and 53% from more than five. The research India’s mom-and-pop stores which account for vative startups several years later, they had to pay a steep showed that the more partners an ecosystem has, and the premium for partnering with startups that had become more industries they come from, the better that ecosystem unicorns.will fare. While the average ecosystem has 27 partners, The lesson here is that incumbents should be prepared to the most successful digital ecosystems have about 40, have the right organizational structure and support fromaccording to their research. The most successful also cut

COVER STORY 11 How China Merchant Bank across a great number of industries and have advanced in Incumbents need to decide what is in it for them and be a lot of different countries. Their analysis shows that 90% clear about whether it makes sense to partner with super of ecosystems involve participants from more than five apps like Grab or start their own platform. “Ask yourself Is Leveraging The Platform countries, and 77% of ecosystems span developed and what value do you think you can add? Where do we play? emerging markets. The orchestrator of a winning ecosys- What is the role we want to undertake? Who do we tem must successfully manage dozens of partners, across want to combine with? Is it likely that our organization is Economy multiple industries and countries, and different types of decentralized enough to take the right decision?” advises relationships, says Jacobides. Jacobides. “Delegation of authority is an important issue. What is the organizational structure that will allow – not as Grab is doing just that. It has partnered with Toyota, Hyun- a PR exercise – real value to be added? The challenge is to Financial services expert Chris Skinner scoured via its mobile banking service, which the bank says dai, Booking Holdings, Microsoft, Mastercard and national develop a strategy, understand what the key questions are the world to find the most innovative banks while helps it to accumulate a lot of customer behavior champions and industry leaders such as Singtel, Thailand’s and build in the right way for the organization.” researching his new book, Doing Digital, which is data, according to Skinner’s book. In the book Central Group and Malaysia’s Maybank, and the Philip- scheduled to be published in February. He settled CMB says it set up more than 3,000 customer pines’ SM Group. Some, like Toyota, opted to invest. The J.L.S. on five. China Merchants Bank (CMB) was among categories and over 220 personalized recommen- Japanese automaker bought a $1 billion stake in Grab in them. dation models by integrating customer account June 2018. Grab says each partnership has its own unique transactions and customer information. Every day benefits. “The interest of our partners demonstrates the CMB started as a technology-led bank in the it provides customers with more than 200 million great opportunity they see in Southeast Asia, as well as 1980s, was one of the first to offer Internet banking personalized advertisements via mobile banking, Grab’s ability to capture it,” says a company spokesperson. in China and describes itself today as a “fintech with a response rate of 1.04 %, equivalent to crea- bank”. It has more recently created a tech-led ting two million sales opportunities for the bank. The super app’s ability to forge such partnerships allows it digital ecosystem that customers can use to do While most banks are still lagging behind when it to scale at speed and bring a broader set of services and everything from getting typhoon alerts to making comes to adopting new business models an even better user experience to its platform, strengthe- a dentist appointment, a move that is benefiting its “China Merchants Bank has been smarter and a ning its network effect. financial services products and its bottom line. lot more focused, concentrating on offering the In “Doing Digital” Skinner recounts how CMB got best banking service through digital technology where it is today. The bank has 1,830 branches and and data mining and creating a digital ecosystem over 136 million retail customers. As far back as that serve the needs of its customer base,” says 1993, it realized that it had too few physical outlets Professor Ben Shenglin, Dean of Zhejiang Univer- to compete with large state-owned banks. So, sity International Business School and Academy of it decided to develop e-banking to expand its Internet Finance, China. business. CMB, in the early stage of development, selected technology as its differentiated competi- J.L.S. 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

COVER STORY 11 How China Merchant Bank across a great number of industries and have advanced in Incumbents need to decide what is in it for them and be a lot of different countries. Their analysis shows that 90% clear about whether it makes sense to partner with super of ecosystems involve participants from more than five apps like Grab or start their own platform. “Ask yourself Is Leveraging The Platform countries, and 77% of ecosystems span developed and what value do you think you can add? Where do we play? emerging markets. The orchestrator of a winning ecosys- What is the role we want to undertake? Who do we tem must successfully manage dozens of partners, across want to combine with? Is it likely that our organization is Economy multiple industries and countries, and different types of decentralized enough to take the right decision?” advises relationships, says Jacobides. Jacobides. “Delegation of authority is an important issue. What is the organizational structure that will allow – not as Grab is doing just that. It has partnered with Toyota, Hyun- a PR exercise – real value to be added? The challenge is to Financial services expert Chris Skinner scoured via its mobile banking service, which the bank says dai, Booking Holdings, Microsoft, Mastercard and national develop a strategy, understand what the key questions are the world to find the most innovative banks while helps it to accumulate a lot of customer behaviorchampions and industry leaders such as Singtel, Thailand’s and build in the right way for the organization.” researching his new book, Doing Digital, which is data, according to Skinner’s book. In the bookCentral Group and Malaysia’s Maybank, and the Philip- scheduled to be published in February. He settled CMB says it set up more than 3,000 customer pines’ SM Group. Some, like Toyota, opted to invest. TheJ.L.S. on five. China Merchants Bank (CMB) was among categories and over 220 personalized recommen-Japanese automaker bought a $1 billion stake in Grab in them.dation models by integrating customer accountJune 2018. Grab says each partnership has its own unique transactions and customer information. Every daybenefits. “The interest of our partners demonstrates the CMB started as a technology-led bank in theit provides customers with more than 200 million great opportunity they see in Southeast Asia, as well as 1980s, was one of the first to offer Internet bankingpersonalized advertisements via mobile banking, Grab’s ability to capture it,” says a company spokesperson. in China and describes itself today as a “fintechwith a response rate of 1.04 %, equivalent to crea- bank”. It has more recently created a tech-ledting two million sales opportunities for the bank.The super app’s ability to forge such partnerships allows it digital ecosystem that customers can use to do While most banks are still lagging behind when it to scale at speed and bring a broader set of services and everything from getting typhoon alerts to making comes to adopting new business modelsan even better user experience to its platform, strengthe- a dentist appointment, a move that is benefiting its “China Merchants Bank has been smarter and aning its network effect. financial services products and its bottom line.lot more focused, concentrating on offering the In “Doing Digital” Skinner recounts how CMB gotbest banking service through digital technology where it is today. The bank has 1,830 branches andand data mining and creating a digital ecosystem over 136 million retail customers. As far back asthat serve the needs of its customer base,” says 1993, it realized that it had too few physical outletsProfessor Ben Shenglin, Dean of Zhejiang Univer- to compete with large state-owned banks. So,sity International Business School and Academy of it decided to develop e-banking to expand itsInternet Finance, China. business. CMB, in the early stage of development, selected technology as its differentiated competi-J.L.S. 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

12 COVER STORY COVER STORY 13A BIOGRAPHY 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 Leader’s 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, Survival Guide platform strategy and digital ventures. He is a member of the World Economic Forum’s Digital Platforms & Ecosystems executive working Five key steps to renew your business model group and co-founder and Chair of the Platform Economy Summit, an annual global conference that explores new business models. and compete effectively in future Reset how you think about sources of growth and value. Execute with entrepreneurs, within an ambidextrous organization «If ever there was an industry ripe for disruption... it’s every industry» «Tech entrepreneurs are your biggest untapped resource» 1. The way you think determines how you act, which determines what you get in terms of performance. This is where 1. It’s time to start co-creating with proven tech entrepreneurs – the best people to work with to execute new business leaders need to start. models. 2. Re-educate yourself and your teams on the types of business models that perform best in a digital economy. Without 2. Build an ‘ambidextrous organization’: a separate ‘Fast-Track the Future’ business unit, reporting to the CEO, with new this, you won’t make the breakthroughs that will unleash your growth potential. people, skills, metrics and incentives. Attract entrepreneurs to lead your digital ventures and incentivize them with equity. 3. At the same time, optimize every aspect of the current business, including decision-making, with software and data 3. Create a governance model to bridge the gap between the core business and the Fast-Track the Future unit. Ensure the intelligence. latter drives demand for your core business and use it to transfer learning. Envision new ecosystems and your role within them. Widen your appeal and wow your customers «If you don’t have a platform strategy, you don’t have a strategy» «Leverage others to serve your customers better» 1. McKinsey has forecast that 30% of global economic activity will be mediated by platforms within new ecosystems in five 1. The most customer-centric businesses on earth leverage others to serve their customers. You needn’t own all the assets. years’ time. What ecosystems will you be operating in and which could you orchestrate? Think of all those third-party developers and merchants supplying Apple’s App Store and Alibaba’s platforms. 2. You’ll need a very different approach to market analysis to understand the new opportunities and threats. 2. Reconceive yourself as orchestrating an ecosystem of innovation, not just as a supplier of products and services. 3. What types of platform strategy do you need to be successful in this different world? There are ten different types. Work 3. Incentivize others to work with and through you. The most important third parties to leverage are entrepreneurs and through them to find which would suit you best. developers – your key resource to create new growth and value. 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.

12COVER STORY COVER STORY 13A BIOGRAPHY 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 Leader’s 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, Survival Guide platform strategy and digital ventures. He is a member of the World Economic Forum’s Digital Platforms & Ecosystems executive working Five key steps to renew your business model group and co-founder and Chair of the Platform Economy Summit, an annual global conference that explores new business models. and compete effectively in future Reset how you think about sources of growth and value.Execute with entrepreneurs, within an ambidextrous organization «If ever there was an industry ripe for disruption... it’s every industry»«Tech entrepreneurs are your biggest untapped resource» 1. The way you think determines how you act, which determines what you get in terms of performance. This is where 1. It’s time to start co-creating with proven tech entrepreneurs – the best people to work with to execute new business leaders need to start.models. 2. Re-educate yourself and your teams on the types of business models that perform best in a digital economy. Without 2. Build an ‘ambidextrous organization’: a separate ‘Fast-Track the Future’ business unit, reporting to the CEO, with new this, you won’t make the breakthroughs that will unleash your growth potential.people, skills, metrics and incentives. Attract entrepreneurs to lead your digital ventures and incentivize them with equity. 3. At the same time, optimize every aspect of the current business, including decision-making, with software and data 3. Create a governance model to bridge the gap between the core business and the Fast-Track the Future unit. Ensure the intelligence.latter drives demand for your core business and use it to transfer learning. Envision new ecosystems and your role within them.Widen your appeal and wow your customers «If you don’t have a platform strategy, you don’t have a strategy»«Leverage others to serve your customers better» 1. McKinsey has forecast that 30% of global economic activity will be mediated by platforms within new ecosystems in five 1. The most customer-centric businesses on earth leverage others to serve their customers. You needn’t own all the assets. years’ time. What ecosystems will you be operating in and which could you orchestrate?Think of all those third-party developers and merchants supplying Apple’s App Store and Alibaba’s platforms. 2. You’ll need a very different approach to market analysis to understand the new opportunities and threats.2. Reconceive yourself as orchestrating an ecosystem of innovation, not just as a supplier of products and services. 3. What types of platform strategy do you need to be successful in this different world? There are ten different types. Work 3. Incentivize others to work with and through you. The most important third parties to leverage are entrepreneurs and through them to find which would suit you best.developers – your key resource to create new growth and value. 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.

14 COVER STORY 15 Helping European BIOGRAPHY Felix Staeritz co-author of Fightback: How To Win In The Digital Economy With Platforms, Ventures and Entrepreneurs , a new book being launched Corporates Punch 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 Their Weight In The 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 Digital Era the world for a sustainable, digitally-enabled future. Q: In the Fightback book you and assets and Q:Europe seems Q: How can the Fightback movement make the investments that will be your co-author note that fewer than human to be further help? needed. broad experience in plat- 20% of the investments in digitization skills and behind than the forms and ventures. Examples include made by large companies in Europe expertise, and U.S. and China. FS: Fightback is a true call to action, Vattenfall, one of Europe’s largest and in the U.S. have had any positive the networks, How can Euro- to fight back against inertia and the producers of electricity and heat. impact on financial performance platforms and pean companies old way of doing business. Instead, we FoundersLane connected them with once the cost of capital is taken into technologies fight back? want to enable business leaders to use entrepreneurs who helped them set account. Why do you think this is the that the digital the digital economy to their advantage up a decentralized, large-scale solar case? revolution FS: We have by leveraging three powerful strategic analytics business to generate expo- is making seen substantial tools – platform business models, digi- nential growth. We are also helping FS: On the whole, their initiatives available. The parts of tal ventures and the special skills of Trumpf, a German high tech company, have been limited to incremental problem, of the European tech entrepreneurs. Fightback is also transform into an integrated provider modernization of the core business, course, for the economy lag about sharing the best practices of of hardware, software and services. rather than radical transformation. incumbent behind because global entrepreneurs, academics and I am a very purpose- oriented guy The main problems include a rate of businesses is of an inability or corporate and digital leaders to actual- and I believe hybrid models that pair adjustment that is too slow, the false that they just unwillingness to ly get going. The movement brings entrepreneurs with big companies are assumption that adopting a range of can’t throw the see that yester- everyone together in order to identify very necessary. This approach – and digital tools and interfaces will be cards up n the day’s success the biggest topics and challenges our movement – is for companies enough to put things right and the air, walk offers no and then closely cooperate to take that don’t want to just think about failure to match digital initiatives with away from guarantees for joint action: which solutions, platforms the future but to act upon it and seize the necessary cultural and business their traditional sources of revenue tomorrow. The stage is set for a digital and ventures can be used to effec- opportunities offered by Digitization. model changes. and profit and bet the farm on their recession, home-grown and self-inflic- tively fight back. ability to pull it off and create an ted, caused by the hubris that has Q: How do interested companies join Q: The book talks a lot about the equally profitable and durable digital led our nations to ignore the radical Q: What is the relationship between the Fightback movement? platform business model and its platform business from scratch. And impact of digital transformation. But FoundersLane and Fightback? power to leverage new technologies, it’s not that easy to make the kind if the digital revolution poses threats FS: Our movement is just as dynamic economic and social trends and the of change that Apple, Amazon and it also offers solutions. Europe has FS: FoundersLane and Fightback are as digitization, so this is the right time hidden value of the abundant and Microsoft did and build the platform some 2000 world-leading specialist connected by a shared purpose. The to join Fightback, gaining valuable detailed data they generate. Why model into your strategy. Our research companies, with the advanced skills Fightback movement pursues the insights in order to benefit from digital haven’t more traditional companies shows that while there’s plenty of and knowledge to potentially lead the overall mission, and the book explains change. As a first step, on Fightback. adopted this model? awareness, interest and experimen- way once they have grasped digital. the reason why we have started Foun- com, you can learn about the latest tation, only 2% of established com- We are seeing some signs – especially dersLane: It provides the foundation developments and join online. Al- FS: The big opportunity for the incu- panies have effectively incorporated in recent months – of a new European for the daily operations and business though we are starting with Europe, mbent leaders in almost every sector a platform strategy into their overall determination to take the actions and there. the movement is open to established is the possibility of creating a hybrid plans for the future. So, there is a long make the investments that will be Established companies and govern- companies based elsewhere. Our goal business that successfully exploits way to go. needed. ments have amazing but untapped is to scale the movement in 2020. both existing strengths, physical assets and our entrepreneurs have

14COVER STORY 15 Helping European BIOGRAPHY Felix Staeritz co-author of Fightback: How To Win In The Digital Economy With Platforms, Ventures and Entrepreneurs , a new book being launched Corporates Punch 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 Their Weight In The 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 Digital Era the world for a sustainable, digitally-enabled future. Q: In the Fightback book you and assets and Q:Europe seems Q: How can the Fightback movement make the investments that will be your co-author note that fewer than humanto be further help?needed. broad experience in plat- 20% of the investments in digitization skills andbehind than the forms and ventures. Examples include made by large companies in Europe expertise, andU.S. and China. FS: Fightback is a true call to action,Vattenfall, one of Europe’s largest and in the U.S. have had any positive the networks, How can Euro-to fight back against inertia and theproducers of electricity and heat. impact on financial performance platforms and pean companies old way of doing business. Instead, we FoundersLane connected them with once the cost of capital is taken into technologies fight back?want to enable business leaders to use entrepreneurs who helped them set account. Why do you think this is the that the digital the digital economy to their advantage up a decentralized, large-scale solar case?revolutionFS: We haveby leveraging three powerful strategic analytics business to generate expo- is making seen substantialtools – platform business models, digi-nential growth. We are also helping FS: On the whole, their initiatives available. The parts oftal ventures and the special skills ofTrumpf, a German high tech company, have been limited to incremental problem, of the Europeantech entrepreneurs. Fightback is also transform into an integrated provider modernization of the core business, course, for the economy lagabout sharing the best practices of of hardware, software and services. rather than radical transformation. incumbent behind becauseglobal entrepreneurs, academics and I am a very purpose- oriented guy The main problems include a rate of businesses is of an inability orcorporate and digital leaders to actual-and I believe hybrid models that pair adjustment that is too slow, the false that they just unwillingness toly get going. The movement brings entrepreneurs with big companies are assumption that adopting a range of can’t throw the see that yester-everyone together in order to identify very necessary. This approach – and digital tools and interfaces will be cards up n the day’s successthe biggest topics and challengesour movement – is for companies enough to put things right and the air, walkoffers noand then closely cooperate to take that don’t want to just think about failure to match digital initiatives with away fromguarantees forjoint action: which solutions, platforms the future but to act upon it and seize the necessary cultural and business their traditional sources of revenue tomorrow. The stage is set for a digital and ventures can be used to effec-opportunities offered by Digitization. model changes.and profit and bet the farm on their recession, home-grown and self-inflic-tively fight back. ability to pull it off and create an ted, caused by the hubris that hasQ: How do interested companies join Q: The book talks a lot about the equally profitable and durable digital led our nations to ignore the radical Q: What is the relationship between the Fightback movement? platform business model and its platform business from scratch. And impact of digital transformation. ButFoundersLane and Fightback? power to leverage new technologies, it’s not that easy to make the kind if the digital revolution poses threatsFS: Our movement is just as dynamic economic and social trends and the of change that Apple, Amazon and it also offers solutions. Europe hasFS: FoundersLane and Fightback are as digitization, so this is the right time hidden value of the abundant and Microsoft did and build the platform some 2000 world-leading specialist connected by a shared purpose. Theto join Fightback, gaining valuable detailed data they generate. Why model into your strategy. Our research companies, with the advanced skillsFightback movement pursues theinsights in order to benefit from digital haven’t more traditional companies shows that while there’s plenty of and knowledge to potentially lead the overall mission, and the book explainschange. As a first step, on Fightback. adopted this model?awareness, interest and experimen-way once they have grasped digital.the reason why we have started Foun-com, you can learn about the latest tation, only 2% of established com-We are seeing some signs – especially dersLane: It provides the foundationdevelopments and join online. Al- FS: The big opportunity for the incu-panies have effectively incorporated in recent months – of a new European for the daily operations and business though we are starting with Europe, mbent leaders in almost every sectora platform strategy into their overall determination to take the actions andthere.the movement is open to established is the possibility of creating a hybrid plans for the future. So, there is a long make the investments that will be Established companies and govern-companies based elsewhere. Our goal business that successfully exploitsway to go.needed.ments have amazing but untappedis to scale the movement in 2020. both existing strengths, physical assets and our entrepreneurs have

16 COVER STORY 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 During the World Economic Forum’s annual meeting in “Central banks are responding to the reality that digital lable to central banks to address the failures in existing Middleton. Davos central bankers from around the world will meet currencies, either privately or publicly-issued, will be payments systems for consumers, understand how digital The move may be fueled by a desire to improving the for breakfast with Forum Founder and Executive Chair- an unavoidable part of the global monetary system, the currencies may address these shortcomings, and take the overall effectiveness and resilience of a national payments man Klaus Schwab to discuss government-backed digital report says. It is in central banks’ best interest that they are initiative to deliver their own digital currencies, according system by reducing the prevalence of cash, says the currencies. neither left behind nor displaced.” to the OMFIF report. report. Alternatively, it could be associated with extending financial inclusion; reducing the size of the dark economy; The Forum has convened this global community from The Forum sees its role as helping central banks to decide One potential advantage of CBDCs is that they can in- countering financial crime; or for a specific purpose, such both emerging and developed economies to exchange how to best respond and remain relevant in a digital age. crease government seigniorage – the revenue generated as transforming the cross-border transmission of migrant best practice and learn about how CBDCs work. CBDCs, by monetary authorities through the process of money worker remittances. short for central bank digital currencies, are digitalized “There is a demand and a perception from institutions and creation – in the face of declining use of cash by redu- instruments issued by a central bank that can serve as an consumers to look into systems that will make things more cing distribution and management costs, according to Which central bank will be first out of the gate is an open electronic extension of a form of cash. efficient but really more fair,” says Sheila Warren, the Fo- the report. These savings would be especially helpful for question. Press reports that China is ready to issue its own rum’s head of blockchain and distributed ledger. “There is emerging markets, where low financial inclusion hinders CBDC have so far proven unfounded. Facebook’s announcement of Libra, a privately-issued a lot of concern about the traditional banking and financial growth. Since CBDCs can integrate national identity, stablecoin that could challenge the traditional global re- system. There is a perception that it is rigged in favor of they could reduce the cost of remittance by alleviating While in most instances, the development of CBDCs is serve currency system, has helped move CBDCs to the top certain kind of payers and the barriers to entry are very concerns about money laundering and terrorist financing. most likely going to be nationally driven, OMFIF predicts of central banks’ agendas. hard to overcome. These are real problems and there is a These improvements in the reach and stability of money, that increasing co-operation and collaboration between sense of a potential here that CBDCs could help level that along with potential digital features that enable negative monetary authorities is likely to become the norm. The challenge of privately-issued digital currencies is not playing field and I think that is compelling. If there is a way interest rates and smart contracts, could dramatically the only factor driving the discussion of CBDCs. Compe- to do that that is not seen as overly risky why wouldn’t you enhance monetary policy implementation. OMFIF also expects extensive private-public sector tition-driven innovations in cross-border transfers, mi- take a look?” partnerships to emerge, with the private sector providing cropayments and new payments instrument offerings are “There is a strong incentive for governments to get rid of or running technology, infrastructure and operations for profoundly affecting the way people pay, save and transfer cash and move to a fully digital payment system,” says central banks on an outsourced or collaborative basis. value. The application of these new technologies to Challenges And Opportunities Middleton. “It is a lot cheaper and it does make the exer- Its report predicts that there will be a growing number financial services and the desire of monetary authorities to cise of monetary policy easier.” of studies, use cases and pilot programs as both sectors address perceived weaknesses in payments infrastructures The OMFIF report says policy makers and regulators can’t “explore, design and test the art of the possible and desi- are rapidly combining to transform the prospects of central afford to sit on the fence. Libra and cryptocurrencies such It is likely a fiat retail digital currency will be introduced rable.” bank digital currencies from a theoretical abstraction to a as bitcoin give individuals the ability to store, spend and within the next five years, either as a complement to or as practical proposition, according to a 2019 report on retail move value en masse without relying on fiat currency. a substitute for notes and coins, according to the report. J.L.S. CBDCs by the Official Monetary and Financial Institutions “It is a direct challenge to the sovereignty of the state “It is improbable that the first such issuance will come Forum (OMFIF), an independent forum for central banking, and financial stability,” Philip Middleton, OMFIF’s Deputy from a G20 central bank; it is considerably more likely to economic policy and public investment. Chairman, said in an interview with The Innovator. be launched in a smaller and less complex economy in The Libra announcement highlights the opportunity avai- response to a specific policy objective and use case,” says

16COVER STORY 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 During the World Economic Forum’s annual meeting in “Central banks are responding to the reality that digital lable to central banks to address the failures in existingMiddleton. Davos central bankers from around the world will meet currencies, either privately or publicly-issued, will be payments systems for consumers, understand how digital The move may be fueled by a desire to improving the for breakfast with Forum Founder and Executive Chair-an unavoidable part of the global monetary system, the currencies may address these shortcomings, and take the overall effectiveness and resilience of a national payments man Klaus Schwab to discuss government-backed digital report says. It is in central banks’ best interest that they are initiative to deliver their own digital currencies, accordingsystem by reducing the prevalence of cash, says the currencies.neither left behind nor displaced.”to the OMFIF report. report. Alternatively, it could be associated with extending financial inclusion; reducing the size of the dark economy; The Forum has convened this global community from The Forum sees its role as helping central banks to decide One potential advantage of CBDCs is that they can in-countering financial crime; or for a specific purpose, such both emerging and developed economies to exchange how to best respond and remain relevant in a digital age.crease government seigniorage – the revenue generated as transforming the cross-border transmission of migrant best practice and learn about how CBDCs work. CBDCs, by monetary authorities through the process of money worker remittances. short for central bank digital currencies, are digitalized “There is a demand and a perception from institutions and creation – in the face of declining use of cash by redu- instruments issued by a central bank that can serve as an consumers to look into systems that will make things more cing distribution and management costs, according to Which central bank will be first out of the gate is an open electronic extension of a form of cash.efficient but really more fair,” says Sheila Warren, the Fo-the report. These savings would be especially helpful for question. Press reports that China is ready to issue its own rum’s head of blockchain and distributed ledger. “There is emerging markets, where low financial inclusion hinders CBDC have so far proven unfounded. Facebook’s announcement of Libra, a privately-issued a lot of concern about the traditional banking and financial growth. Since CBDCs can integrate national identity, stablecoin that could challenge the traditional global re-system. There is a perception that it is rigged in favor of they could reduce the cost of remittance by alleviating While in most instances, the development of CBDCs is serve currency system, has helped move CBDCs to the top certain kind of payers and the barriers to entry are very concerns about money laundering and terrorist financing. most likely going to be nationally driven, OMFIF predicts of central banks’ agendas. hard to overcome. These are real problems and there is a These improvements in the reach and stability of money, that increasing co-operation and collaboration between sense of a potential here that CBDCs could help level that along with potential digital features that enable negative monetary authorities is likely to become the norm. The challenge of privately-issued digital currencies is not playing field and I think that is compelling. If there is a way interest rates and smart contracts, could dramatically the only factor driving the discussion of CBDCs. Compe-to do that that is not seen as overly risky why wouldn’t you enhance monetary policy implementation.OMFIF also expects extensive private-public sector tition-driven innovations in cross-border transfers, mi-take a look?” partnerships to emerge, with the private sector providing cropayments and new payments instrument offerings are “There is a strong incentive for governments to get rid of or running technology, infrastructure and operations for profoundly affecting the way people pay, save and transfer cash and move to a fully digital payment system,” says central banks on an outsourced or collaborative basis. value. The application of these new technologies to Challenges And OpportunitiesMiddleton. “It is a lot cheaper and it does make the exer-Its report predicts that there will be a growing number financial services and the desire of monetary authorities to cise of monetary policy easier.”of studies, use cases and pilot programs as both sectors address perceived weaknesses in payments infrastructures The OMFIF report says policy makers and regulators can’t “explore, design and test the art of the possible and desi- are rapidly combining to transform the prospects of central afford to sit on the fence. Libra and cryptocurrencies such It is likely a fiat retail digital currency will be introduced rable.” bank digital currencies from a theoretical abstraction to a as bitcoin give individuals the ability to store, spend and within the next five years, either as a complement to or as practical proposition, according to a 2019 report on retail move value en masse without relying on fiat currency. a substitute for notes and coins, according to the report.J.L.S. CBDCs by the Official Monetary and Financial Institutions “It is a direct challenge to the sovereignty of the state “It is improbable that the first such issuance will come Forum (OMFIF), an independent forum for central banking, and financial stability,” Philip Middleton, OMFIF’s Deputy from a G20 central bank; it is considerably more likely to economic policy and public investment. Chairman, said in an interview with The Innovator. be launched in a smaller and less complex economy in The Libra announcement highlights the opportunity avai-response to a specific policy objective and use case,” says

18 COVER STORY COVER STORY 19A Reshaping Global Trade How Countries Can Combat The Growing Power Of Internet Giants Internet platforms that facilitate financial interactions, Digitalizing Trade And Logistics operates or is building logistic hubs in Malaysia, Rwanda, cation of regulations and customs processes, evolution of capture data and physically help move goods are playing Ethiopia and Belgium. consumer protection, lowering of tariffs, harmonization of an increasingly larger role in global trade, directly impac- E-commerce marketplaces have already enabled signifi- taxation, development of internet and logistics infrastruc- ting and even competing with countries. So much so that cant cross-border flows by aggregating huge selections According to a survey conducted by the World Trade Or- ture, facilitation of flow of goods, finance and data. Sangeet Paul Choudary, a member of the World Economic and making pricing and comparisons more transparent. ganization and the Organization for Economic Cooperation EWTP said it “will identify and share best practices, for ins- Forum’s Digital Platforms & Ecosystems group, calls plat- says a new McKinsey Institute report entitled Globalization and Development (OECD) on SMEs’ access to cross border tance around the development of efficient infrastructures form- led trade “one of the defining shifts of our time.” in Transition: The Future of Trade and Value Chains. trade, the major challenges they face include access to such as cross-border eTrade hubs and experiment zones, As platforms such as Alibaba and Ant Financial create an It cites Alibaba’s AliResearch projects that cross-border information about export opportunities, access to trade smart logistics, credit payment, and technical assistance electronic silk road and benefit from winner-takes-all B2C e-commerce sales will reach approximately $1 trillion finance and logistics costs. Cross border eTrade is proving for emerging markets, with a view to influencing policy scenarios, governments risk losing control over global by 2020. B2B e-commerce could be five or six times as to be a game changer for SMEs to participate in global making and promoting inclusive eTrade.” trade. “Platforms like Alibaba can drive the growth of small large. While many of those transactions may substitute for value chains. It creates direct access to international and medium-sized businesses and financial inclusion for a traditional offline trade flows, e-commerce could still spur customers and highly efficient digitalized flows of pro- A Shift In The Balance Of Power third-party country and have direct bearing on its develop- some $1.3 trillion to $2.1 trillion in incremental trade by ducts, data and money. Many institutions which previously ment,” says Choudary. “This gives these platforms 2030, boosting trade in manufactured goods by 6% to 10%. focused on global trade are working to facilitate eTrade. While digitalizing trade will improve efficiency and help incredible negotiating power. It also raises geopolitical Alibaba is positioning itself to grab a big percentage of But there is no forum to bring together these disparate SMEs it is also giving the Chinese Internet giant unprece- concerns, especially when the platforms are closely moni- that trade by operating as a vehicle for public-private coo- efforts around eTrade, nor to bring the perspectives of dented power over global trade. “In Africa or in countries tored by the home-country government.” peration that can incubate eTrade rules and foster a more the diverse sets of private and public constituencies, e.g. like the Philippines or Pakistan they don’t have infrastruc- Governments in India, Singapore and elsewhere are busy effective and efficient policy and business environment for SMEs, regulatory entities, vendors, consumer associations, ture to facilitate SMEs and plug into the global economy, devising plans to combat the growing power of such cross border B2B and B2C electronic trade. The Chinese industry associations, business intermediary organizations, Alibaba offers infrastructure -in-a-box to help them exploit platforms by either banding together to use public goods company’s Electronic World Trade Platform (eWTP), which and enable these parties to assess existing regulations and their potential,” says Choudary. While Alibaba is digitali- to create a common financial services infrastructure or by was conceived by Albaba founder Jack Ma and launched best practices, and incubate and advocate rules to foster zing trade and logistics at cost or even for free, Ant Finan- developing separate government-as-a-platform strategies, in 2016, aims to help small and medium sized enterprises eTrade. cial, which got its start powering Alibaba’s e-commerce says Choudary, a platform business model expert and the (SMEs) participate in global trade without investing in At a 2016 meeting of the G20 eWTP offered to step into platform and was later spun-out as a separate business, author of an upcoming Forum white paper on the topic. their own supply chains by easing “global purchase, global the breach and incubate rules for the development of is taking much bolder steps to dominate payment wallets sales, global payment and global logistics.” It already eTrade in terms of industry standards and rules, simplifi- in almost every major country in Asia, Latin America and

18COVER STORY COVER STORY 19A Reshaping Global Trade How Countries Can Combat The Growing Power Of Internet Giants Internet platforms that facilitate financial interactions,Digitalizing Trade And Logisticsoperates or is building logistic hubs in Malaysia, Rwanda, cation of regulations and customs processes, evolution of capture data and physically help move goods are playingEthiopia and Belgium. consumer protection, lowering of tariffs, harmonization of an increasingly larger role in global trade, directly impac-E-commerce marketplaces have already enabled signifi-taxation, development of internet and logistics infrastruc- ting and even competing with countries. So much so thatcant cross-border flows by aggregating huge selectionsAccording to a survey conducted by the World Trade Or-ture, facilitation of flow of goods, finance and data. Sangeet Paul Choudary, a member of the World Economic and making pricing and comparisons more transparent.ganization and the Organization for Economic CooperationEWTP said it “will identify and share best practices, for ins- Forum’s Digital Platforms & Ecosystems group, calls plat-says a new McKinsey Institute report entitled Globalizationand Development (OECD) on SMEs’ access to cross border tance around the development of efficient infrastructures form- led trade “one of the defining shifts of our time.”in Transition: The Future of Trade and Value Chains.trade, the major challenges they face include access to such as cross-border eTrade hubs and experiment zones, As platforms such as Alibaba and Ant Financial create an It cites Alibaba’s AliResearch projects that cross-borderinformation about export opportunities, access to trade smart logistics, credit payment, and technical assistance electronic silk road and benefit from winner-takes-all B2C e-commerce sales will reach approximately $1 trillionfinance and logistics costs. Cross border eTrade is proving for emerging markets, with a view to influencing policy scenarios, governments risk losing control over global by 2020. B2B e-commerce could be five or six times asto be a game changer for SMEs to participate in global making and promoting inclusive eTrade.” trade. “Platforms like Alibaba can drive the growth of small large. While many of those transactions may substitute forvalue chains. It creates direct access to international and medium-sized businesses and financial inclusion for a traditional offline trade flows, e-commerce could still spurcustomers and highly efficient digitalized flows of pro-A Shift In The Balance Of Power third-party country and have direct bearing on its develop-some $1.3 trillion to $2.1 trillion in incremental trade byducts, data and money. Many institutions which previously ment,” says Choudary. “This gives these platforms2030, boosting trade in manufactured goods by 6% to 10%.focused on global trade are working to facilitate eTrade.While digitalizing trade will improve efficiency and help incredible negotiating power. It also raises geopolitical Alibaba is positioning itself to grab a big percentage ofBut there is no forum to bring together these disparate SMEs it is also giving the Chinese Internet giant unprece- concerns, especially when the platforms are closely moni-that trade by operating as a vehicle for public-private coo-efforts around eTrade, nor to bring the perspectives ofdented power over global trade. “In Africa or in countries tored by the home-country government.”peration that can incubate eTrade rules and foster a morethe diverse sets of private and public constituencies, e.g. like the Philippines or Pakistan they don’t have infrastruc- Governments in India, Singapore and elsewhere are busy effective and efficient policy and business environment forSMEs, regulatory entities, vendors, consumer associations, ture to facilitate SMEs and plug into the global economy, devising plans to combat the growing power of suchcross border B2B and B2C electronic trade. The Chineseindustry associations, business intermediary organizations, Alibaba offers infrastructure -in-a-box to help them exploit platforms by either banding together to use public goodscompany’s Electronic World Trade Platform (eWTP), whichand enable these parties to assess existing regulations and their potential,” says Choudary. While Alibaba is digitali- to create a common financial services infrastructure or by was conceived by Albaba founder Jack Ma and launchedbest practices, and incubate and advocate rules to foster zing trade and logistics at cost or even for free, Ant Finan- developing separate government-as-a-platform strategies,in 2016, aims to help small and medium sized enterpriseseTrade.cial, which got its start powering Alibaba’s e-commerce says Choudary, a platform business model expert and the (SMEs) participate in global trade without investing inAt a 2016 meeting of the G20 eWTP offered to step into platform and was later spun-out as a separate business, author of an upcoming Forum white paper on the topic.their own supply chains by easing “global purchase, globalthe breach and incubate rules for the development of is taking much bolder steps to dominate payment wallets sales, global payment and global logistics.” It alreadyeTrade in terms of industry standards and rules, simplifi-in almost every major country in Asia, Latin America and

20 COVER STORY COVER STORY 21 Africa. “The strategy is to invest in payment wallets and “Widespread coopera- Government As a Platform ecommerce companies across the globe and invest on the condition that the investee companies move their tech tion on public goods and In a 2018 article he co-authored, Choudary proposed a to the Alibaba Cloud,” he says. Meanwhile, Ant Financial government-as-a-platform approach that Singapore could is approaching banks in emerging markets to help them use to establish itself as a hub for digital trade. The country as a platform model expand their business and target the unbanked population. standards development “It promises them something they could not do themsel- The approach, which Choudary says could be adopted ves – expand the potential customer base by targeting the can help countries work by other governments, involves first using technologies cash economy and help with the digital transformation of like blockchain to help SMEs to conduct digital business the bank by offering a whole suite of AI capabilities for together to create a more securely, and seek new business partners and distributors, credit scoring of the unbanked population,” he says. while managing a common audit trail. Once the success DIGITAL PUBLIC The end result is that a growing list of clients around the inclusive platform eco- of the SME trade platform is demonstrated, the country GOODS world are sharing the same back-end infrastructure for could open its platform technology, know-how and pro- everything from fraud mitigation to e-commerce and nomy, without becoming cesses to emerging economies that are seeking to boost banking, with payment wallets being built on top of the digital SME trade but don’t want to become over-reliant on Alibaba Cloud, allowing the Chinese Internet giant to overtly dependant on the commercial platforms such as Amazon and Alibaba. When amass better and better datasets, he says. “The big picture multiple countries start using the same platform, they start COUNTRY AS is the top payments wallets and banks are using the same infrastructure offered by subscribing to the same data standards, leading to greater A PLATEFORM credit scoring models and are increasingly dependent on cooperation and interoperability among them. one company at the backend. The end goal is to create a common standard for financial services and trade backed private firms.” AI CAPABILITIES STANDARDS In order to create the right control points and be a hub for (NATIONAL AI DEVELOPMENT AND by the world’s best credit scoring model,” says Choudary, STRATEGY) MULTILATERAL digital trade, countries that want to become digital hubs AGREEMENTS “And as these platforms get bigger we may see control must invest in creating unique intellectural property that points over trade shift from political countries to digital other countries using the SME trade platform find va- platforms.” luable. To gain competitive advantage, a country needs to create and control unique IP that adds value to users of the Creating Digital Public Goods SME trade platform. By creating regulatory sandboxes, countries like Singapore So how can governments regain control? India has deve- and Switzerland are already encouraging innovation in loped one approach. IndiaStack is a set of APIs that allows fintech and could use these as a value-add plug-ins to SME governments, businesses, startups and developers to trade platform. Examples include developing a data-driven utilise a unique open source digital Infrastructure which credit scoring system that could be used to extend trade is treated as a public good. financing to SMEs based on their trade activity data gathe- red on the platform. As more countries use the platform, The Open API team at the Indian Software Product Indus- other IP creators could find it more attractive to create IP try Roundtable (iSPIRT) has been a pro-bono partner in for this platform, owing to the higher demand. the development. As of 2019, the services that IndiaStack offers are proving identity, completing KYC, making digital This growing IP, in turn, is likely to lead to greater usage of payments, signing documents digitally and sharing of data. the platform, amplifying the network effect and positio- Morocco is now working on using the IndiaStack to intro- ning a country that moves to do this as the central and duce the common infrastructure necessary to enable an most powerful point for processing digital trade data from open source financial services ecosystem, says Choudary. participating countries, making it a hub for digital trade. Meanwhile, with the encouragement of UN Secretary-Ge- A country that turns itself into a platform for digital trade, neral Antonio Guterres; Norway, Sierra Leone, UNICEF could also leverage its neutral position to create a free and iSPIRT are collaborating closely with other stakehol- data port that positions it as a neutral country for proces- ders to in a group called the Digital Public Goods Alliance sing global trade data. to implement a UN recommendation that a platform be created for “sharing digital public goods, engaging talent A free data port would allow data from other countries to and pooling data sets, in a manner that respects privacy, be stored and processed in a country like Singapore, but in areas related to attaining the SDGs”, such as financial in accordance with their individual country-specific data inclusion. jurisdictions. The group’s guiding principle is that software, content and Singapore is in the early phases of developing a country- data must be possible to use independently of any particu- as-a-platform model. Choudary is meanwhile also working lar vendor to be considered as digital public goods. 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

20COVER STORY COVER STORY 21 Africa. “The strategy is to invest in payment wallets and “Widespread coopera-Government As a Platform ecommerce companies across the globe and invest on the condition that the investee companies move their techtion on public goods andIn a 2018 article he co-authored, Choudary proposed a to the Alibaba Cloud,” he says. Meanwhile, Ant Financialgovernment-as-a-platform approach that Singapore could is approaching banks in emerging markets to help them use to establish itself as a hub for digital trade.The country as a platform model expand their business and target the unbanked population. standards development “It promises them something they could not do themsel-The approach, which Choudary says could be adopted ves – expand the potential customer base by targeting the can help countries workby other governments, involves first using technologies cash economy and help with the digital transformation of like blockchain to help SMEs to conduct digital business the bank by offering a whole suite of AI capabilities for together to create a more securely, and seek new business partners and distributors, credit scoring of the unbanked population,” he says.while managing a common audit trail. Once the success DIGITAL PUBLIC The end result is that a growing list of clients around the inclusive platform eco-of the SME trade platform is demonstrated, the country GOODS world are sharing the same back-end infrastructure for could open its platform technology, know-how and pro- everything from fraud mitigation to e-commerce and nomy, without becoming cesses to emerging economies that are seeking to boost banking, with payment wallets being built on top of the digital SME trade but don’t want to become over-reliant on Alibaba Cloud, allowing the Chinese Internet giant to overtly dependant on the commercial platforms such as Amazon and Alibaba. When amass better and better datasets, he says. “The big picture multiple countries start using the same platform, they start COUNTRY AS is the top payments wallets and banks are using the same infrastructure offered by subscribing to the same data standards, leading to greater A PLATEFORM credit scoring models and are increasingly dependent on cooperation and interoperability among them. one company at the backend. The end goal is to create a common standard for financial services and trade backed private firms.” AI CAPABILITIES STANDARDS In order to create the right control points and be a hub for (NATIONAL AI DEVELOPMENT AND by the world’s best credit scoring model,” says Choudary, STRATEGY) MULTILATERAL digital trade, countries that want to become digital hubs AGREEMENTS “And as these platforms get bigger we may see control must invest in creating unique intellectural property that points over trade shift from political countries to digital other countries using the SME trade platform find va- platforms.” luable. To gain competitive advantage, a country needs to create and control unique IP that adds value to users of the Creating Digital Public GoodsSME trade platform. By creating regulatory sandboxes, countries like Singapore So how can governments regain control? India has deve-and Switzerland are already encouraging innovation in loped one approach. IndiaStack is a set of APIs that allows fintech and could use these as a value-add plug-ins to SME governments, businesses, startups and developers totrade platform. Examples include developing a data-driven utilise a unique open source digital Infrastructure whichcredit scoring system that could be used to extend trade is treated as a public good.financing to SMEs based on their trade activity data gathe- red on the platform. As more countries use the platform, The Open API team at the Indian Software Product Indus-other IP creators could find it more attractive to create IP try Roundtable (iSPIRT) has been a pro-bono partner infor this platform, owing to the higher demand. the development. As of 2019, the services that IndiaStack offers are proving identity, completing KYC, making digital This growing IP, in turn, is likely to lead to greater usage of payments, signing documents digitally and sharing of data. the platform, amplifying the network effect and positio- Morocco is now working on using the IndiaStack to intro-ning a country that moves to do this as the central and duce the common infrastructure necessary to enable anmost powerful point for processing digital trade data from open source financial services ecosystem, says Choudary. participating countries, making it a hub for digital trade. Meanwhile, with the encouragement of UN Secretary-Ge-A country that turns itself into a platform for digital trade, neral Antonio Guterres; Norway, Sierra Leone, UNICEFcould also leverage its neutral position to create a free and iSPIRT are collaborating closely with other stakehol-data port that positions it as a neutral country for proces- ders to in a group called the Digital Public Goods Alliancesing global trade data. to implement a UN recommendation that a platform be created for “sharing digital public goods, engaging talent A free data port would allow data from other countries to and pooling data sets, in a manner that respects privacy, be stored and processed in a country like Singapore, but in areas related to attaining the SDGs”, such as financial in accordance with their individual country-specific data inclusion. jurisdictions. The group’s guiding principle is that software, content and Singapore is in the early phases of developing a country- data must be possible to use independently of any particu-as-a-platform model. Choudary is meanwhile also working lar vendor to be considered as digital public goods.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

22 CYBER SECURITY CYBER SECURITY 23A 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 cyberattacks. Trafigura manages more “The difficult thing is you don’t have a Deconstrucing NotPetya replicate NotPetya by deconstructing corporate assets could be included. office at global commodities trading than $54 billion in assets and moves way to test. Working on assumptions it and then reconstructing it,” says Then we built in various other safe- firm Trafigura in the Mayfair district over $170 billion per annum of commo- is not a good way to be measuring It was one of Trafigura’s lead engineers Whitehouse. guards, such as the rate at which of London’s West End when he first dities around the world by ship, barge, your defenses.” that first suggested testing how well it could propagate so it would not started hearing reports about Not- truck, rail and pipeline. the company’s defenses would stand Swift’s team and NCC Group started overload the system. We did three full Petya, a computer worm attack. The There was only one way to be sure: up to the NotPetya worm under the work in November of 2017. “We environment tests before we even got worm rapidly spread around the world do the unthinkable. With the help of controlled circumstances. Swift liked decided to rewrite the worm so we near the production and were confi- in June, 2017, crippling multinational NCC Group, a global firm specializing the idea and approached NCC Group. knew exactly what every line of code dent that the controls could do what companies including global shipping in cybersecurity and risk mitigation, They struck an agreement: If the cy- did,” says Swift. “We discovered a co- they said they are going to do.” company Maersk, pharmaceutical Swift hatched a plan to replicate the bersecurity firm could help develop ding mistake in the way it moved and giant Merck, FedEx’s European subsi- Notpetya worm, strengthen it, and a replica of the worm Trafigura would stole tokens and the way it scanned. It diary TNT Express, French construc- then unleash it on the company’s test it and- if all went well – NCC wasn’t as efficient in moving as it mi- Getting Sign-Off tion company Saint-Gobain, food production environment, with the full could use the case as a reference to ght have been so we corrected those producer Mondelez, and manufacturer support of the CEO and the board. sell the service to other big corporate mistakes to make it even stronger.” Getting the company’s leadership to Reckitt Benckiser, among others, The audacious move was deemed clients. The team also installed kill switches sign-off was an important part of the causing an estimated $10 billion + in to be an acceptable risk because to ensure the worm didn’t proliferate process. Trafigura stores and delivers damages. Trafigura had standardized the way it Oliver Whitehouse, NCC Group’s outside of Trafigura’s network and ac- the commodities it trades, which “It was clear there was a major pro- exercises cyber hygiene, something Global Chief Technology Officer, cidently infect suppliers and partners. includes approximately six million blem; we got a very early understan- the World Economic Forum’s Centre remembers the first discussion about The process was supposed to take barrels of oil a day. In order to buy the ding that something was going on that For Cybersecurity has been encoura- replicating Notpetya with Swift, whom three months but took a year. assets that it later trades it has establi- was much more significant than the ging companies to do. he has known for 20 years. “We were shed access to credit from 155 banks. usual ransomware but no one had a coming off a busy summer in the U.K. “The complex bit was having the It has to manage credit risks, legal clear picture of what was happening,” Swift, a speaker at The World Econo- We had two major worms, the last of confidence that the controls would risks, IT risks and liquidity risks and says Swift, Trafigura’s Chief Informa- mic Forum’s Centre For Cybersecu- which was NotPetya. Mark [Swift] was work and that it would not go awry all of these risks are integrally linked. tion Security Officer. “There was a rity’s annual meeting in Geneva last getting questions from his chief execu- and be disruptive,” says Whitehouse. “We are a high volume, low margin bu- huge amount of confusion and quite November, agreed to an interview tive about whether it would have an “ We worked on the principle that if siness,” explains Christophe Salmon, a bit of angst. It was incredible that with The Innovator in the hopes that impact on Trafigura. Mark could just there was any doubt the first instruc- Trafigura’s Chief Financial Officer. so many companies were being hit at Trafigura’s experience will help other say ‘we think our controls would limit tion was to shut itself down, ensuring “Our business is based on arbitrage, the same time and extremely worrying While Swift believed the company was large enterprises better prepare their the impact’ but it was very much a that it would only spread to computer we fight for the last cent per barrel. because you can’t defend against what reasonably safe he could not quantify cyber defense. theory and he could offer no definitive networks directly under Trafigura’s Any basis point matters in terms of you don’t understand.” the risk. “The questions I kept asking assurance. When he outlined that he control. There were key systems in the protection of our margins. If the inte- myself is how does the worm get in, would like to run this test to quantify industrial operations technology in grity of our system was compromised Swift’s job it is to ensure the company how does it move and would our de- the risk I told him ‘we can do that.’ areas such as mining and fuel termi- it would have consequences in being can effectively play defense against fenses hold out?” he says. I had the confidence that we could nals that had to be excluded but all the able to conduct our business and in

22CYBER SECURITY CYBER SECURITY 23A 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 cyberattacks. Trafigura manages more “The difficult thing is you don’t have a Deconstrucing NotPetyareplicate NotPetya by deconstructingcorporate assets could be included. office at global commodities tradingthan $54 billion in assets and moves way to test. Working on assumptions it and then reconstructing it,” says Then we built in various other safe- firm Trafigura in the Mayfair district over $170 billion per annum of commo-is not a good way to be measuring It was one of Trafigura’s lead engineers Whitehouse.guards, such as the rate at which of London’s West End when he first dities around the world by ship, barge, your defenses.”that first suggested testing how wellit could propagate so it would not started hearing reports about Not-truck, rail and pipeline. the company’s defenses would standSwift’s team and NCC Group startedoverload the system. We did three full Petya, a computer worm attack. The There was only one way to be sure: up to the NotPetya worm under the work in November of 2017. “We environment tests before we even got worm rapidly spread around the world do the unthinkable. With the help of controlled circumstances. Swift likeddecided to rewrite the worm so wenear the production and were confi- in June, 2017, crippling multinational NCC Group, a global firm specializing the idea and approached NCC Group. knew exactly what every line of code dent that the controls could do what companies including global shipping in cybersecurity and risk mitigation, They struck an agreement: If the cy-did,” says Swift. “We discovered a co-they said they are going to do.” company Maersk, pharmaceutical Swift hatched a plan to replicate the bersecurity firm could help developding mistake in the way it moved and giant Merck, FedEx’s European subsi-Notpetya worm, strengthen it, and a replica of the worm Trafigura would stole tokens and the way it scanned. It diary TNT Express, French construc-then unleash it on the company’s test it and- if all went well – NCCwasn’t as efficient in moving as it mi-Getting Sign-Off tion company Saint-Gobain, food production environment, with the full could use the case as a reference toght have been so we corrected those producer Mondelez, and manufacturer support of the CEO and the board. sell the service to other big corporate mistakes to make it even stronger.” Getting the company’s leadership to Reckitt Benckiser, among others, The audacious move was deemed clients.The team also installed kill switchessign-off was an important part of the causing an estimated $10 billion + in to be an acceptable risk because to ensure the worm didn’t proliferate process. Trafigura stores and delivers damages.Trafigura had standardized the way it Oliver Whitehouse, NCC Group’soutside of Trafigura’s network and ac-the commodities it trades, which “It was clear there was a major pro-exercises cyber hygiene, something Global Chief Technology Officer, cidently infect suppliers and partners.includes approximately six million blem; we got a very early understan-the World Economic Forum’s Centre remembers the first discussion about The process was supposed to take barrels of oil a day. In order to buy the ding that something was going on thatFor Cybersecurity has been encoura-replicating Notpetya with Swift, whomthree months but took a year.assets that it later trades it has establi- was much more significant than the ging companies to do.he has known for 20 years. “We were shed access to credit from 155 banks. usual ransomware but no one had a coming off a busy summer in the U.K. “The complex bit was having the It has to manage credit risks, legal clear picture of what was happening,” Swift, a speaker at The World Econo-We had two major worms, the last of confidence that the controls would risks, IT risks and liquidity risks and says Swift, Trafigura’s Chief Informa-mic Forum’s Centre For Cybersecu-which was NotPetya. Mark [Swift] was work and that it would not go awryall of these risks are integrally linked. tion Security Officer. “There was arity’s annual meeting in Geneva last getting questions from his chief execu-and be disruptive,” says Whitehouse.“We are a high volume, low margin bu- huge amount of confusion and quiteNovember, agreed to an interviewtive about whether it would have an“ We worked on the principle that if siness,” explains Christophe Salmon, a bit of angst. It was incredible thatwith The Innovator in the hopes that impact on Trafigura. Mark could justthere was any doubt the first instruc-Trafigura’s Chief Financial Officer. so many companies were being hit at Trafigura’s experience will help other say ‘we think our controls would limittion was to shut itself down, ensuring“Our business is based on arbitrage, the same time and extremely worrying While Swift believed the company was large enterprises better prepare their the impact’ but it was very much athat it would only spread to computer we fight for the last cent per barrel. because you can’t defend against what reasonably safe he could not quantifycyber defense.theory and he could offer no definitive networks directly under Trafigura’s Any basis point matters in terms of you don’t understand.”the risk. “The questions I kept asking assurance. When he outlined that he control. There were key systems in the protection of our margins. If the inte- myself is how does the worm get in,would like to run this test to quantifyindustrial operations technology in grity of our system was compromised Swift’s job it is to ensure the companyhow does it move and would our de-the risk I told him ‘we can do that.’areas such as mining and fuel termi-it would have consequences in being can effectively play defense againstfenses hold out?” he says.I had the confidence that we couldnals that had to be excluded but all theable to conduct our business and in

24 CYBER SECURITY 25 WHAT TRAFIGURA DOES the daily reporting to our financial partners,”, a factor that could impact Trafigura’s access to both credit and its liqui- “I paused for a moment dity. “This was why, in discussing with Mark, testing the strength and integrity of our system – and identifying any and wondered potential vulnerabilities – was so important,” says Salmon. ‘What on earth am I Unleashing The Worm doing?’ before giving On November 8th, 2018 the worm was unleashed. Swift, SOURCE STORE BLEND DELIVER together with Trafigura’s lead engineer, Whitehouse and an the green light. And NCC Group developer huddled around a group of compu- ter screens. “We looked at each other and said ‘should then we waited for the Negotiates off-take It stores petroleum It blends physical It moves commodities by we run it?’, remembers Swift. “I paused for a moment and agreements with oil products at owned and commodities to barge, truck, rail, pipeline wondered ‘What on earth am I doing?’ before giving the havoc to begin.” producers, refiners, third-party tankage. regional, market and and vessel in support of green light. And then we waited for the havoc to begin.” mining companies and It stores metals and owner specifications its core trading activities Thirty minutes went by. Nothing happened. Then the worm smaleters. It owns mines minerals at terminals in strategically located and for third parties. found its way in through an unpatched computer in and smelters and ivnests and third party-owned terminals and warehouses Switzerland and exploited that entry to gain privileges. At The value of the test data can’t be overstated, he says. in logistics that improve facilities. around the world. that point the team thought it would spread like wildfire. Trafigura used it to make adjustments to its network. market access for its But to their surprise it didn’t, due to a security configu- “This one configuration change by Trafigura significantly suppliers. ration Trafigura had made that they had not fully appre- disrupts the speed at which worms can propagate even if ciated. So the team launched different scenarios, purpo- they sely infecting different ‘patient zeros’ increasingly notching can access highly privileged systems,” says Whitehouse. To up the level of exposure. Eventually a misconfiguration in Swift’s great relief unleashing the worm in this controlled a software development network lit the fuse and the worm manner had no operational impact on the business. None started to spread aggressively throughout the develop- of the company’s computer users noticed a thing. 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 Key Takeaways things to standard.” good map and a good understanding of its speed and its ferociousness,” Whitehouse says. NCC Group is eager to run similar tests for other big One of the key takeaways from the test was that having corporates but so far there have been no other takers. Al- hard data and being able to really measure risk is key, though a number of big companies have expressed interest says Swift. Trafigura thought that being 99.9% compliant in doing so they have had trouble getting internal sign-off. in some areas was good enough. It was not. “So now we Whitehouse says that often organizations think they have a understand that and if anybody says we are being overly picture of what their computer networks look like. Howe- cautious we can demonstrate why we need to do what ver, 99% of the time this does not reflect reality. Knowing we do. We believe it is worthwhile to get better at testing who is connected is one of the first things a company has and measuring the effectiveness of security in our internal to do to ensure its cyber security. The map needs to be network, but is only worth doing if you also have an appe- accurate “at any point in any week,” he says. “When I ask tite to introduce major controls.” what is on their network, who is responsible for it, what each device does and what business operation it underpins Swift says he has no illusions. Controls or no controls the they look at me quizzically and say they don’t know. If you attacks will keep coming. The next worm, the next virus, don’t know then you don’t know what your risk is. You have is likely to be more virulent. And no matter how good its to understand the material risks before you can unleash cyber defense is, Trafigura – like any other company on the tests like Trafigura’s.” planet – will have to continue to be vigilant in the never- ending battle to keep its systems safe. Swift agrees. “One of the reasons why we were more capable of running this was we know where the edge of J.L.S. 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

24CYBER SECURITY 25 WHAT TRAFIGURA DOES the daily reporting to our financial partners,”, a factor that could impact Trafigura’s access to both credit and its liqui-“I paused for a moment dity. “This was why, in discussing with Mark, testing the strength and integrity of our system – and identifying any and wondered potential vulnerabilities – was so important,” says Salmon.‘What on earth am I Unleashing The Wormdoing?’ before giving On November 8th, 2018 the worm was unleashed. Swift, SOURCESTORE BLEND DELIVER together with Trafigura’s lead engineer, Whitehouse and an the green light. And NCC Group developer huddled around a group of compu- ter screens. “We looked at each other and said ‘shouldthen we waited for the Negotiates off-take It stores petroleum It blends physical It moves commodities by we run it?’, remembers Swift. “I paused for a moment and agreements with oil products at owned and commodities to barge, truck, rail, pipeline wondered ‘What on earth am I doing?’ before giving thehavoc to begin.”producers, refiners, third-party tankage. regional, market and and vessel in support of green light. And then we waited for the havoc to begin.”mining companies and It stores metals and owner specifications its core trading activities Thirty minutes went by. Nothing happened. Then the worm smaleters. It owns mines minerals at terminals in strategically located and for third parties. found its way in through an unpatched computer in and smelters and ivnests and third party-owned terminals and warehouses Switzerland and exploited that entry to gain privileges. At The value of the test data can’t be overstated, he says. in logistics that improve facilities.around the world. that point the team thought it would spread like wildfire. Trafigura used it to make adjustments to its network. market access for its But to their surprise it didn’t, due to a security configu-“This one configuration change by Trafigura significantly suppliers. ration Trafigura had made that they had not fully appre-disrupts the speed at which worms can propagate even if ciated. So the team launched different scenarios, purpo-they sely infecting different ‘patient zeros’ increasingly notching can access highly privileged systems,” says Whitehouse. To up the level of exposure. Eventually a misconfiguration in Swift’s great relief unleashing the worm in this controlled a software development network lit the fuse and the worm manner had no operational impact on the business. None started to spread aggressively throughout the develop-of the company’s computer users noticed a thing. 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 Key Takeaways things to standard.” good map and a good understanding of its speed and its ferociousness,” Whitehouse says.NCC Group is eager to run similar tests for other bigOne of the key takeaways from the test was that having corporates but so far there have been no other takers. Al- hard data and being able to really measure risk is key, though a number of big companies have expressed interest says Swift. Trafigura thought that being 99.9% compliant in doing so they have had trouble getting internal sign-off. in some areas was good enough. It was not. “So now we Whitehouse says that often organizations think they have a understand that and if anybody says we are being overly picture of what their computer networks look like. Howe- cautious we can demonstrate why we need to do what ver, 99% of the time this does not reflect reality. Knowing we do. We believe it is worthwhile to get better at testing who is connected is one of the first things a company has and measuring the effectiveness of security in our internal to do to ensure its cyber security. The map needs to be network, but is only worth doing if you also have an appe- accurate “at any point in any week,” he says. “When I ask tite to introduce major controls.” what is on their network, who is responsible for it, what each device does and what business operation it underpins Swift says he has no illusions. Controls or no controls the they look at me quizzically and say they don’t know. If you attacks will keep coming. The next worm, the next virus, don’t know then you don’t know what your risk is. You have is likely to be more virulent. And no matter how good its to understand the material risks before you can unleash cyber defense is, Trafigura – like any other company on the tests like Trafigura’s.” planet – will have to continue to be vigilant in the never- ending battle to keep its systems safe. Swift agrees. “One of the reasons why we were more capable of running this was we know where the edge of J.L.S. 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

26 CYBER SECURITY 27 actors – iincluding homeowners who are able to produce resilience by establishing common expectations regarding and sell electricity directly – are entering the ecosystem. cybersecurity roles and responsibilities between the diffe- rent actors of the industry’s value chain. “Our security is dependent on the weakest link,” says Ka- “It is crucial for all stakeholders in the value chain to riger. “This is not about our data. This is about protecting embrace a collaborative and risk informed cybersecurity our assets and continuity of an essential service to society.. approach to adapt and ensure a secure ecosystem,” says The highly interdependent and increasingly complex na- de Moura. ture of our industry makes it necessary to address cyberse- curity beyond the boundaries of our own companies.” “We cannot do it alone as it takes an ecosystem to address Fragmented company practices and government regula- cyber risks,” says Christophe Blassiau, CISO and head of tions make it difficult to have a global and harmonized digital security at Schneider Electric and a member of the approach. Forum electricity cyber resilience community. “The indus- try needs to collaborate.” The same is true in other industries, which is why the Fo- rum envisages to use this pilot with the electricity sector to The Forum’s ability “to bridge all of these parties and the templatize the approach and scale across other industries, regulators and political and geographical differences is De Moura says. fairly unique,” says Floris Van Den Dool, Managing Direc- tor, Information Security Services, Europe, Africa and Latin At the annual meeting in Davos in 2019 the Forum electri- America at Accenture, a founding partner of the Centre for city working group on cyber security presented a guide for Cybersecurity and anchor partner of the Cyber Resilience board members of electricity companies. in Electricity program. “The trick is figuring out how to get everyone mobilized.” During the past year the Forum’s Cyber Resilience commu- nity has been focusing on influencing organizational J.L.S 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 En Garde The World Economic Forum is helping providers of The World Economic Forum’s critical infrastructure defend against cyber attacks Top 10 Messages On Cyber Security In Davos It’s every company’s nightmare: the IT system is infected nologies such as biometrics, artificial intelligence, machine by trojan malware or ransomware, causing millions of dol- learning, and the Internet of Things, says de Moura. lars in lost business or reputational damage. The power system is one the most complex and critical The problem is magnified for electricity companies or air- infrastructure since any major impact to the electricity During Davos 2020 The Forum plans to convey the peration across the public and the private sectors lines because risks could have cascading effects, potential- grid could generate massive blackouts and have disastrous message that it is the responsibility of all public is vital. Among the dimensions to be prioritized are ly resulting in major economic losses, industrial disruption financial and societal consequences. For example, a winter and corporate leaders to take ownership of the information-sharing, business cooperation with and, in some cases, human casualties. blackout in mainland France for just six hours would result challenge to ensure global cybersecurity and law enforcement agencies, and skills and capacity The Forum’s Centre for Cybersecurity is helping providers in losses of over €1.5 billion, according to a simulation digital trust. development, particularly in emerging economies. of critical infrastructure by convening communities of cited in a Forum report. Board and C-Suite members need to gain a better And, the Forum plans to tell leaders that innovation different industries such as electricity and aviation to de- understanding of the cyber risks to which their in cybersecurity and rapidly evolving technologies, fine the most salient challenges and systemic risks, strate- Complicating matters is that the electricity sector has organization is exposed and of the degree of the such as AI, identity management and quantum gic approaches that could mitigate them, and increase the some unique challenges, says Rosa Kariger, Global Chief organization’s cyber readiness. Leaders may need computing, call for greater investment to stay level of cyber resilience across the various ecosystems, Information Security Officer (CISO) at electricity firm to rethink organizational structures and gover- ahead of cybercriminals who are adopting those says Georges de Moura, Head of Industry Solutions at Iberdrola and the co-chair of the Forum’s electricity sector nance to enable a better cybersecurity posture. technologies even faster and to their advantage. the World Economic Forum’s Centre for Cybersecurity. cyber resilience community. Both public and private organizations need to Collaboration is more important than ever because new improve their cyber crisis management, develop technologies in the Fourth Industrial Revolution offer both Among them is the complexity of the ecosystem, which holistic response and recovery plans, including a opportunities and greater risks. Physical and digital things includes highly interdependent infrastructures operated crisis communication strategy, to limit economic, are becoming increasingly connected, from critical in- by retailers, distributors and generators. As the sector reputational and legal consequences. Global coo- frastructure assets to people and data, by harnessing tech- becomes more decentralized an increasing number of new

26 CYBER SECURITY 27 actors – iincluding homeowners who are able to produce resilience by establishing common expectations regarding and sell electricity directly – are entering the ecosystem. cybersecurity roles and responsibilities between the diffe- rent actors of the industry’s value chain. “Our security is dependent on the weakest link,” says Ka- “It is crucial for all stakeholders in the value chain to riger. “This is not about our data. This is about protecting embrace a collaborative and risk informed cybersecurity our assets and continuity of an essential service to society.. approach to adapt and ensure a secure ecosystem,” says The highly interdependent and increasingly complex na- de Moura. ture of our industry makes it necessary to address cyberse- curity beyond the boundaries of our own companies.” “We cannot do it alone as it takes an ecosystem to address Fragmented company practices and government regula- cyber risks,” says Christophe Blassiau, CISO and head of tions make it difficult to have a global and harmonized digital security at Schneider Electric and a member of the approach. Forum electricity cyber resilience community. “The indus- try needs to collaborate.” The same is true in other industries, which is why the Fo- rum envisages to use this pilot with the electricity sector to The Forum’s ability “to bridge all of these parties and the templatize the approach and scale across other industries, regulators and political and geographical differences is De Moura says. fairly unique,” says Floris Van Den Dool, Managing Direc- tor, Information Security Services, Europe, Africa and Latin At the annual meeting in Davos in 2019 the Forum electri- America at Accenture, a founding partner of the Centre for city working group on cyber security presented a guide for Cybersecurity and anchor partner of the Cyber Resilience board members of electricity companies. in Electricity program. “The trick is figuring out how to get everyone mobilized.” During the past year the Forum’s Cyber Resilience commu- nity has been focusing on influencing organizational J.L.S 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 En Garde The World Economic Forum is helping providers of The World Economic Forum’s critical infrastructure defend against cyber attacksTop 10 Messages On Cyber Security In Davos It’s every company’s nightmare: the IT system is infected nologies such as biometrics, artificial intelligence, machine by trojan malware or ransomware, causing millions of dol-learning, and the Internet of Things, says de Moura. lars in lost business or reputational damage. The power system is one the most complex and critical The problem is magnified for electricity companies or air-infrastructure since any major impact to the electricity During Davos 2020 The Forum plans to convey the peration across the public and the private sectors lines because risks could have cascading effects, potential-grid could generate massive blackouts and have disastrous message that it is the responsibility of all public is vital. Among the dimensions to be prioritized are ly resulting in major economic losses, industrial disruption financial and societal consequences. For example, a winter and corporate leaders to take ownership of the information-sharing, business cooperation with and, in some cases, human casualties.blackout in mainland France for just six hours would result challenge to ensure global cybersecurity and law enforcement agencies, and skills and capacity The Forum’s Centre for Cybersecurity is helping providers in losses of over €1.5 billion, according to a simulation digital trust.development, particularly in emerging economies. of critical infrastructure by convening communities of cited in a Forum report. Board and C-Suite members need to gain a better And, the Forum plans to tell leaders that innovation different industries such as electricity and aviation to de-understanding of the cyber risks to which their in cybersecurity and rapidly evolving technologies, fine the most salient challenges and systemic risks, strate-Complicating matters is that the electricity sector has organization is exposed and of the degree of the such as AI, identity management and quantum gic approaches that could mitigate them, and increase the some unique challenges, says Rosa Kariger, Global Chief organization’s cyber readiness. Leaders may need computing, call for greater investment to stay level of cyber resilience across the various ecosystems, Information Security Officer (CISO) at electricity firm to rethink organizational structures and gover-ahead of cybercriminals who are adopting those says Georges de Moura, Head of Industry Solutions at Iberdrola and the co-chair of the Forum’s electricity sector nance to enable a better cybersecurity posture. technologies even faster and to their advantage. the World Economic Forum’s Centre for Cybersecurity. cyber resilience community. Both public and private organizations need to Collaboration is more important than ever because new improve their cyber crisis management, develop technologies in the Fourth Industrial Revolution offer both Among them is the complexity of the ecosystem, which holistic response and recovery plans, including a opportunities and greater risks. Physical and digital things includes highly interdependent infrastructures operated crisis communication strategy, to limit economic, are becoming increasingly connected, from critical in-by retailers, distributors and generators. As the sector reputational and legal consequences. Global coo- frastructure assets to people and data, by harnessing tech-becomes more decentralized an increasing number of new

28 CYBER SECURITY CYBER SECURITY 29A The Death of Passwords New Forms Of Secure Authentication Are Key But What Happens If Our Biometrics Get Hacked? Passwordless authentication is the thentication is truly secure and factors exfiltrate data, says the white paper. It concludes that Hardware Keys next big breakthrough in secure digital in privacy, sustainability, user expe- "There is a need from a risk management perspective transitioning to communication. rience, scalability and inclusiveness. passwordless authentication could allow companies to cut Extra security with hardware keys is another approach to gather a com- the budgets associated with their breach risk exposure by to passwordless authentication. Security keys come in a That news will make consumers and “We need to put the word out there 4/5, translating into lower cyber insurance premiums. variety of form factors ranging from a small USB, NFC or employees who have trouble remem- that there is a need to gather a com- munity of CEOs Bluetooth device to something built into a user’s mobile bering multiple passwords happy. munity of CEOs and leaders around Another plus is that passwordless authentication makes it phone that can securely authenticate when they need to Companies are also likely to welcome the topic of implementing a more and leaders easier to comply with international regulations, which sign into a new device. These approaches require that the the change because the average glo- secure means of authentication and to is key to expanding digital businesses across device be physically and locally present when authentica- bal cost of a data breach in 2019 was do so sooner rather than later,” says around the topic geographies. tion happens. $3.92 million – a 1.5% increase from Adrien Ogee, lead for technology and the year before. According to the 2019 innovation at the World Economic of implementing “Many companies are already moving down this path,” QR Codes Data Breach Investigations Report, Forum’s Centre for Cyber-security. says Kelly Bissell, Accenture’s Senior Managing Director 80% of hacking-related breaches a more secure and Global Lead of Security. “This will give confidence to Complex, animated QR codes can also be used to authen- involved compromised and weak other companies, including banks and retailors, to imple- ticate without passwords. Users logging in scan a QR code credentials, and 29% of all breaches, Why now? means of au- ment passwordless authentication. I see a wave coming to with a smart device to bind the session to their user iden- regardless of attack type, involved the stronger security. We are at the early stages but I believe it tity. A confirmation message is then displayed in an use of stolen passwords. To stay competitive corporates across thentication and will pick up very quickly.” app on the device verifying the authentication and a bio- industries are increasingly building, metric scan is triggered on the device, confirming that the But the technologies that are replacing buying or joining digital platforms (see to do so sooner users are who they say they are. At that point, an authenti- passwords have vulnerabilities of their the cover story of our Davos issue). Technology Options cated session is passed to any relying party and the user is own. What happens, for example, if Authentication systems are the first rather than logged in. our biometrics get hacked? That is the contact customers have with digital A range of technology alternatives to passwords are title of a panel discussion at the annual platforms and ease of use is a compe- later." already available. Zero-Knowledge Proofs meeting of the World Economic Forum titive differentiator, notes the white in Davos this year that will include exe- paper. Passwordless authentication Biometrics Zero-knowledge proofs (ZKP), provides yet another cutives from Walmart and Facebook can potentially significantly improve alternative. A ZKP authentication process can transform a and be moderated by The Innovator’s user experience and give platform Recent technological advances in smartphone cameras password into a complex and unique abstract string, like a Editor-in-Chief Jennifer l. Schenker. businesses ubiquitous authentication and machine-learning models mean facial recognition Rubik’s cube with a completely random pattern. at a fraction of the cost, allowing for and document scanning can now be used to verify people The abstraction is transferred to a server and The Forum is releasing a white paper cross-platform interoperability and remotely and at scale. By using biometrics, such as face stored, allowing authentication of users in such a way during the conference that outlines multinational expansion and increase scans, as an authenticator, users no longer need to asso- that a password never leaves the user’s device some crucial issues that need to be security by seriously hindering the ciate a password with their account. or browser. resolved to ensure passwordless au- ability of criminals to access and

28CYBER SECURITY CYBER SECURITY 29A The Death of Passwords New Forms Of Secure Authentication Are Key But What Happens If Our Biometrics Get Hacked? Passwordless authentication is the thentication is truly secure and factors exfiltrate data, says the white paper. It concludes that Hardware Keys next big breakthrough in secure digital in privacy, sustainability, user expe-"There is a need from a risk management perspective transitioning to communication. rience, scalability and inclusiveness.passwordless authentication could allow companies to cut Extra security with hardware keys is another approach to gather a com-the budgets associated with their breach risk exposure by to passwordless authentication. Security keys come in a That news will make consumers and “We need to put the word out there 4/5, translating into lower cyber insurance premiums.variety of form factors ranging from a small USB, NFC or employees who have trouble remem-that there is a need to gather a com-munity of CEOs Bluetooth device to something built into a user’s mobile bering multiple passwords happy. munity of CEOs and leaders around Another plus is that passwordless authentication makes it phone that can securely authenticate when they need to Companies are also likely to welcome the topic of implementing a more and leaders easier to comply with international regulations, whichsign into a new device. These approaches require that the the change because the average glo-secure means of authentication and to is key to expanding digital businesses acrossdevice be physically and locally present when authentica- bal cost of a data breach in 2019 was do so sooner rather than later,” says around the topic geographies.tion happens. $3.92 million – a 1.5% increase from Adrien Ogee, lead for technology and the year before. According to the 2019 innovation at the World Economic of implementing “Many companies are already moving down this path,” QR Codes Data Breach Investigations Report, Forum’s Centre for Cyber-security.says Kelly Bissell, Accenture’s Senior Managing Director 80% of hacking-related breaches a more secure and Global Lead of Security. “This will give confidence to Complex, animated QR codes can also be used to authen- involved compromised and weak other companies, including banks and retailors, to imple-ticate without passwords. Users logging in scan a QR code credentials, and 29% of all breaches, Why now? means of au-ment passwordless authentication. I see a wave coming to with a smart device to bind the session to their user iden- regardless of attack type, involved the stronger security. We are at the early stages but I believe it tity. A confirmation message is then displayed in an use of stolen passwords. To stay competitive corporates across thentication and will pick up very quickly.” app on the device verifying the authentication and a bio- industries are increasingly building, metric scan is triggered on the device, confirming that the But the technologies that are replacing buying or joining digital platforms (see to do so sooner users are who they say they are. At that point, an authenti- passwords have vulnerabilities of their the cover story of our Davos issue). Technology Optionscated session is passed to any relying party and the user is own. What happens, for example, if Authentication systems are the first rather thanlogged in. our biometrics get hacked? That is the contact customers have with digital A range of technology alternatives to passwords are title of a panel discussion at the annual platforms and ease of use is a compe-later."already available. Zero-Knowledge Proofs meeting of the World Economic Forum titive differentiator, notes the white in Davos this year that will include exe-paper. Passwordless authentication BiometricsZero-knowledge proofs (ZKP), provides yet another cutives from Walmart and Facebook can potentially significantly improve alternative. A ZKP authentication process can transform a and be moderated by The Innovator’s user experience and give platform Recent technological advances in smartphone cameras password into a complex and unique abstract string, like a Editor-in-Chief Jennifer l. Schenker.businesses ubiquitous authentication and machine-learning models mean facial recognition Rubik’s cube with a completely random pattern. at a fraction of the cost, allowing for and document scanning can now be used to verify people The abstraction is transferred to a server and The Forum is releasing a white paper cross-platform interoperability and remotely and at scale. By using biometrics, such as face stored, allowing authentication of users in such a way during the conference that outlines multinational expansion and increase scans, as an authenticator, users no longer need to asso-that a password never leaves the user’s device some crucial issues that need to be security by seriously hindering the ciate a password with their account. or browser. resolved to ensure passwordless au-ability of criminals to access and

30 CYBER SECURITY 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.

30CYBER SECURITY 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.

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32 COMPUTING COMPUTING 33 Quantum Computing’s the unusual behavior of atomic and sub-atomic particles to perform far Potential more complex calculations at a mas- sively increased speed compared to The technology’s impact on business will be discussed at the World today’s computers. Economic Forum’s annual meeting in Davos 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- In October Google and NASA an- sues, such as simultaneously charting “When we talk about material nounced that they have achieved the best route for vehicles in cities like ‘quantum supremacy’, i.e. the ability Beijing and Lisbon, a puzzle that would design, drug design, portfolio of quantum computers to perform be too tough for normal computers. certain tasks that a classical compu- If industry pundits are right the best is optimization in finance and risk ter simply cannot do in a reasonable yet to come. Productivity gains by end timeframe. They claimed that their users of quantum computing, in the analysis for insurance com- quantum computer solved a problem form of both cost savings and revenue in 200 seconds that would take the opportunities, are expected to surpass panies, these are areas where world’s fastest supercomputer 10,000 $450 billion annually, within the next years. couple of decades, according to aMay While critics say the problem that 2019 study by Boston Consulting there are strong indications was solved was without any practical Group. A precipitous breakthrough in merits or implications, the Google the technology could happen at any that quantum computers will experiment demonstrated the huge time, warns the study, so companies potential of quantum computing, should start experimenting now. revolutionize the market.” a form of computing that taps into A view of the quantum computing technology being developed by Austria’s AQT. RIGETTI COMPUTING QUINTESSENCELABS IQM PSIQ AQT (Alpine Quantum Technologies) UNITED STATES AUSTRALIA FINLAND UNITED STATES AUSTRIA WHAT IT DOES WHAT IT DOES WHAT IT DOES WHAT IT DOES WHAT IT DOES STARTUPS Builds quantum computers and Named a 2018 World Economic Developing a unique IP that aims Building a general purpose sili- Produces ion-trap quantum pro- the superconducting quantum Forum Technology Pioneer, it to make quantum processors of con photonic quantum computer. cessors, and offers access to its TO processors that power them. is developing cybersecurity much better quality by reducing PsiQ believes it can harness pho- quantum computers via a cloud WATCH Its quantum computers are avai- solutions for the era of quantum the number of physical qubits tonics to build a commercially service. AQT supports both lable to users through Amazon computing. needed to build powerful quan- viable quantum computer much Cirq and Qiskit, the two most Braket, an Amazon Web Services tum computers. sooner than competitors using prominent quantum computing solution that allows researchers more common approaches. programming languages. and developers to begin expe- rimenting with computers from quantum hardware providers in a single place. rigetti.com quintessencelabs.com meetiqm.com psiquantum.com aqt.eu

32COMPUTING COMPUTING 33 Quantum Computing’s the unusual behavior of atomic and sub-atomic particles to perform far Potential more complex calculations at a mas- sively increased speed compared to The technology’s impact on business will be discussed at the World today’s computers. Economic Forum’s annual meeting in Davos 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- In October Google and NASA an- sues, such as simultaneously charting “When we talk about material nounced that they have achieved the best route for vehicles in cities like ‘quantum supremacy’, i.e. the ability Beijing and Lisbon, a puzzle that would design, drug design, portfolio of quantum computers to perform be too tough for normal computers. certain tasks that a classical compu- If industry pundits are right the best is optimization in finance and risk ter simply cannot do in a reasonable yet to come. Productivity gains by end timeframe. They claimed that their users of quantum computing, in the analysis for insurance com-quantum computer solved a problem form of both cost savings and revenue in 200 seconds that would take the opportunities, are expected to surpass panies, these are areas where world’s fastest supercomputer 10,000 $450 billion annually, within the next years. couple of decades, according to aMay While critics say the problem that 2019 study by Boston Consulting there are strong indications was solved was without any practical Group. A precipitous breakthrough in merits or implications, the Google the technology could happen at any that quantum computers will experiment demonstrated the huge time, warns the study, so companies potential of quantum computing, should start experimenting now. revolutionize the market.”a form of computing that taps into A view of the quantum computing technology being developed by Austria’s AQT. RIGETTI COMPUTINGQUINTESSENCELABSIQM PSIQ AQT (Alpine Quantum Technologies) UNITED STATESAUSTRALIAFINLAND UNITED STATES AUSTRIA WHAT IT DOESWHAT IT DOESWHAT IT DOES WHAT IT DOES WHAT IT DOES STARTUPSBuilds quantum computers and Named a 2018 World Economic Developing a unique IP that aims Building a general purpose sili-Produces ion-trap quantum pro- the superconducting quantum Forum Technology Pioneer, it to make quantum processors of con photonic quantum computer. cessors, and offers access to its TOprocessors that power them.is developing cybersecurity much better quality by reducing PsiQ believes it can harness pho-quantum computers via a cloud WATCH Its quantum computers are avai-solutions for the era of quantum the number of physical qubits tonics to build a commercially service. AQT supports both lable to users through Amazon computing.needed to build powerful quan-viable quantum computer much Cirq and Qiskit, the two most Braket, an Amazon Web Services tum computers. sooner than competitors using prominent quantum computing solution that allows researchers more common approaches. programming languages. and developers to begin expe- rimenting with computers from quantum hardware providers in a single place. rigetti.comquintessencelabs.commeetiqm.com psiquantum.com aqt.eu

34 COMPUTING 35 “Since quantum computing is a step- Venturelli, who manages Science Ope- quantum computers will revolutionize change technology with substantial rations for Universities Space Research the market.” barriers to adoption early movers will Association activities at the Quantum seize a large share of the total value, Artificial Intelligence Laboratory How Companies Should Prepare as laggards struggle with integration, located at NASA’s Ames Research talent, and IP,” the report says. Center. “As of now the world has still There won’t be a shift. Quantum com- to invent an algorithm that would be puting resources will be seamlessly in- Such projections are provoking worth using in current challenges in tegrated on the cloud and made avai- anxiety. No company wants to fall finance, logistics, data science,” he lable transparently when needed, says behind when a technology shift trans- says. “However, there is a grounded Venturelli. If the business is related to forms industry. Yet, there are enough optimism that when we will have ac- chemistry or material science it might unknowns about quantum computing cess to more and more sophisticated make sense to hire specialists, setup and enough fundamental scientific quantum computers empirical partnerships with quantum compu- riddles to solve that no one can say research in the next five years will en- ting manufacturers and top research for certain when it might be ready to able scientists to invent non-rigorous groups to steer the entire community make an impact. methods that will have qualitatively towards the correct questions and different features with respect to the problems that might have a chance to So how will quantum computing best known algorithms and possibly a be addressed by quantum computing change business? Which sectors will compelling speedup.” in the short term. If the business is be impacted first? What should every a perspective enduser further out in executive know about the technology Technology Bottlenecks the future the best way for executives and what should they be doing to to prepare is to make sure that their prepare? Participants in a panel on The main bottleneck to quantum technical team leaders are not fooled the potential of quantum computing computing today is hardware, says by the hype and understand the state at the World Ecnomic Forum’s annual Ekatrina Almasque, a partner at ven- of art as it progresses, he says. Ven- meeting in Davos, January 21-24, mo- ture capital firm OpenOcean, which turelli recommends focusing more on derated by The Innvoator’s Editor-in- participated in a $13 million invest- hardware and theory than on software. Chief Jennifer L. Schenker, will try ment into Finnish quantum computing “If the core business strongly relies on and answer those questions. company IQM last July. While computational performance then it mi- pioneers in quantum computing such ght be worth it to have an internal task The first impact of quantum compu- as IBM and D-Wave Systems provide force experimenting with the concepts ting capabilities is likely to be felt in software companies with cloud access or funding academia or specialized the businesses that are dependent on to their data centers for early testing startups on spot projects in order to simulation of quantum mechanical of narrow use cases, the cost of gain some timing advantage against processes, such as materials, chemi- using these machines in a commercial competitors in detecting opportuni- cals and scientific research, says environment remains prohibitive, she ties,” he says. “But it is important panelist Scott Aaronson, a theoretical Says. “What we need is some hard- to recognize that this is still science computer scientist and David J. Bruton ware that works and that costs less so research and we are likely years away Jr. Centennial Professor of Computer that we have enough qubits to solve from having production value.” Science at the University of Texas at real problems like drug discovery.” Austin. Even if hardware is available, a sui- AQT’s Monz also recommends compa- table software based on algorithms nies create internal teams that receive That alone will likely have a monumen- that offer a speed-up compared to training on the potential of quantum tal impact on society. “Think of it as classical algorithms needs to be computing in their sector, figure out the ability to turn on a new telescope developed for specific applications. who is developing a full application for into nature,” he says. But businesses “Neither can impact existing industry challenges in that field and then do a need to manage their expectations without the other,” says Thomas proof of concept trial. “This will essen- says panelist Chad Rigetti, CEO of Monz, Co-founder and CEO of Aus- tially give you internal know-how on Rigetti Computing, a California-based trian quantum computing company quantum computing, in combination company that designs and fabricates AQT. That said, “quantum computing with a proof-of-concept realization quantum chips, integrates them with a promises to have an extreme impact that both explains the underlying diffe- controlling architecture, and develops on any business that’s limited by rences to classical computing but also software for programmers to use to classical computing capabilities where shows the real state-of-the-art,” he build algorithms. “The potential of we have quantum algorithms and says. “Follow and extend on this initial quantum computing is significant but hardware that offer an advantage,” he proof-of-concept once a year and you there are major challenges to un- says. “This means the resolution on a can be sure not to miss out.” locking its value,” he says. video will not change due to quantum computers, this is already fairly effi- J.L.S. That’s a point of view shared by most cient. But when we talk about material in the industry. Quantum computing’s design, drug design, portfolio optimi- D-Wave System’s 2000Q system. Enterprises can get started learning how to code their early quantum applications using the impact on machine learning and zation in finance and risk analysis for Canadian quantum computing pioneer’s quantum cloud service and begin to incorporate the technology into their workflows. optimization in the short term is more insurance companies these are areas speculative, but possible, says Davide where there are strong indications that

34COMPUTING 35 “Since quantum computing is a step-Venturelli, who manages Science Ope-quantum computers will revolutionize change technology with substantialrations for Universities Space Research the market.” barriers to adoption early movers will Association activities at the Quantum seize a large share of the total value, Artificial Intelligence Laboratory How Companies Should Prepare as laggards struggle with integration, located at NASA’s Ames Research talent, and IP,” the report says.Center. “As of now the world has still There won’t be a shift. Quantum com- to invent an algorithm that would be puting resources will be seamlessly in- Such projections are provokingworth using in current challenges in tegrated on the cloud and made avai- anxiety. No company wants to fallfinance, logistics, data science,” he lable transparently when needed, says behind when a technology shift trans-says. “However, there is a grounded Venturelli. If the business is related to forms industry. Yet, there are enoughoptimism that when we will have ac-chemistry or material science it might unknowns about quantum computingcess to more and more sophisticatedmake sense to hire specialists, setup and enough fundamental scientificquantum computers empiricalpartnerships with quantum compu- riddles to solve that no one can sayresearch in the next five years will en-ting manufacturers and top research for certain when it might be ready toable scientists to invent non-rigorousgroups to steer the entire community make an impact.methods that will have qualitatively towards the correct questions and different features with respect to theproblems that might have a chance to So how will quantum computingbest known algorithms and possibly a be addressed by quantum computing change business? Which sectors willcompelling speedup.”in the short term. If the business is be impacted first? What should every a perspective enduser further out in executive know about the technologyTechnology Bottlenecksthe future the best way for executives and what should they be doing to to prepare is to make sure that their prepare? Participants in a panel on The main bottleneck to quantum technical team leaders are not fooled the potential of quantum computing computing today is hardware, says by the hype and understand the state at the World Ecnomic Forum’s annual Ekatrina Almasque, a partner at ven-of art as it progresses, he says. Ven- meeting in Davos, January 21-24, mo-ture capital firm OpenOcean, which turelli recommends focusing more on derated by The Innvoator’s Editor-in-participated in a $13 million invest-hardware and theory than on software. Chief Jennifer L. Schenker, will tryment into Finnish quantum computing “If the core business strongly relies on and answer those questions.company IQM last July. Whilecomputational performance then it mi- pioneers in quantum computing such ght be worth it to have an internal task The first impact of quantum compu-as IBM and D-Wave Systems provide force experimenting with the concepts ting capabilities is likely to be felt insoftware companies with cloud access or funding academia or specialized the businesses that are dependent on to their data centers for early testingstartups on spot projects in order to simulation of quantum mechanical of narrow use cases, the cost ofgain some timing advantage against processes, such as materials, chemi-using these machines in a commercial competitors in detecting opportuni- cals and scientific research, saysenvironment remains prohibitive, she ties,” he says. “But it is important panelist Scott Aaronson, a theoretical Says. “What we need is some hard-to recognize that this is still science computer scientist and David J. Brutonware that works and that costs less soresearch and we are likely years away Jr. Centennial Professor of Computer that we have enough qubits to solvefrom having production value.” Science at the University of Texas at real problems like drug discovery.” Austin.Even if hardware is available, a sui-AQT’s Monz also recommends compa- table software based on algorithmsnies create internal teams that receive That alone will likely have a monumen-that offer a speed-up compared to training on the potential of quantum tal impact on society. “Think of it asclassical algorithms needs to be computing in their sector, figure out the ability to turn on a new telescopedeveloped for specific applications. who is developing a full application for into nature,” he says. But businesses “Neither can impact existing industry challenges in that field and then do a need to manage their expectations without the other,” says Thomasproof of concept trial. “This will essen- says panelist Chad Rigetti, CEO of Monz, Co-founder and CEO of Aus-tially give you internal know-how on Rigetti Computing, a California-based trian quantum computing companyquantum computing, in combination company that designs and fabricates AQT. That said, “quantum computing with a proof-of-concept realization quantum chips, integrates them with a promises to have an extreme impactthat both explains the underlying diffe- controlling architecture, and develops on any business that’s limited byrences to classical computing but also software for programmers to use to classical computing capabilities whereshows the real state-of-the-art,” he build algorithms. “The potential of we have quantum algorithms and says. “Follow and extend on this initial quantum computing is significant but hardware that offer an advantage,” he proof-of-concept once a year and you there are major challenges to un-says. “This means the resolution on a can be sure not to miss out.” locking its value,” he says.video will not change due to quantum computers, this is already fairly effi-J.L.S. That’s a point of view shared by most cient. But when we talk about material in the industry. Quantum computing’s design, drug design, portfolio optimi-D-Wave System’s 2000Q system. Enterprises can get started learning how to code their early quantum applications using the impact on machine learning and zation in finance and risk analysis forCanadian quantum computing pioneer’s quantum cloud service and begin to incorporate the technology into their workflows. optimization in the short term is more insurance companies these are areas speculative, but possible, says Davide where there are strong indications that

36 HEALTH 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 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. Over the last two decades the biotech Careful evaluations of key research in- «It is time to try industry has conducted over 156 sights driven by data, most notably the clinical trials and spent hundreds of recent announcement of the revival of new approaches billions of dollars on the discovery and a drug developed by U.S. drug com- to stop this How AI Could Help amplify or muffle these signals,” says Berkowitz. “This testing of these drugs, and yet, not pany Biogen called Aducanumab, offer methodology can remove noise, improve confidence, and one clinically impactful drug has been some hope. “This possible break- slow-moving The new federation will harvest insights from AIs that run uncover new areas of exploration without ever sharing brought to market in that time. through raises many questions,” says locally on each dataset, explains Berkowitz. After local sensitive and proprietary raw data. “ Berkowitz, “One of the most pressing epidemic.» analysis, generated knowledge- not data- are aggregated There is no cure and no treatment to is whether there are more meaningful from each AI into a combined set of findings that could By iterating a few times, the AI that has aggregated slow down a disease, which in the U.S. insights hidden in the failed drug trial both uncover previously weak signals and inform further knowledge can dig into these signals and gain greater alone is expected to impact 16 million data.” among them are privacy concerns and areas of inquiry and treatment. clarity. “In this system, the consistency of data becomes people by 2050, generating $1.2 tril- competition issues. less of an issue. We aggregate the generated knowledge, lion in medical and hospice care costs. One of the most valuable assets “What we are talking about is privacy-preserving federated not the data. Noise can be filtered out, and we can turn created by these trials is the data col- Berkowitz will be in Davos during the learning,” he says. “Now we can say to drug companies the data from two decades of research into knowledge “The economic impact of this disease lected. While there has been progress, annual meeting of the World Econo- ‘you do not need to share your data.’ An AI can sit on your that, when aggregated, will lead to clinically meaningful is mind-boggling,” says Barak Berko- the vast majority of this data has yet mic Forum January 21-24 to recruit local server and analyze the data and simply share the insights,” Berkowitz says. witz, co-founder of this project. He is to be shared or, more importantly, potential partners in a new federation insights that come from that analysis.” also the Director of Operations and aggregated, Berkowitz says. Data ag- that seeks to overcome these hurdles The federation will work on encrypted data eliminating Strategy at the MIT Media Lab where gregation could turn one hundred fifty by removing data sharing from the Sharing research insights is a principle that has been used critical privacy concerns; the AI will focus on local data he came in contact with the power relatively small data sets into a truly equation. The federation is seeking for the critical advancement of science for decades, at servers, so raw data never leaves its owner’s site; aggre- of federated learning systems. It is massive data asset of more than one firms that have conducted clinical scientific conferences and congresses, leading to new gate insights to amplify weak signals and identify new estimated that in the U.S. more than 16 hundred and fifty thousand subjects. trials focused on Alzheimer’s and understandings of disease and new areas of inquiry. “It is correlations and correct for small-sampling bias. million Americans provide unpaid care “There is a robust scientific basis those that specialize in helping artifi- not just listening to reports, but the discussions that they for people with Alzheimer’s or other for believing this aggregated data cial intelligence (AI) filter out “noise”, stimulate, that make congresses so valuable,” says Ber- Members of the federation gain value in three critical dementias. That is almost 10% of the could provide meaningful insights i.e. extraneous information. MIT’s kowitz. In the same way, new technologies enable AIs to ways, says Berkowitz. The federation will share insights working age population. “Alzheimer’s into these trials, reasons for failures, Connected Science Group will serve share their insights with other AIs in a secure mode. “No AI related solely to a specific trial on a proprietary basis with is a growing global catastrophe tied missed efficacy, and possibly clinically as a data trustee to the federation, sees raw data, so it can not be shared. Instead, the AIs col- the data creator. It will share generated insights around to aging in a world that is aging and meaningful treatments,” he says. also which means it will be responsible for lect correlations and other data signals they may ascertain, the data creator. It will share generated insights around the scale of the catastrophe is right up significant forces slowing or stopping making sure the AI is not doing things and these signals then create knowledge. The knowledge obvious key questions with all federation members. And there with climate change,” he says. such in-depth data sharing. Chief or passing data it should not. is then aggregated from multiple AIs and is combined to all Federation members can interrogate the aggregated

36HEALTH 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 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. Over the last two decades the biotech Careful evaluations of key research in-«It is time to try industry has conducted over 156 sights driven by data, most notably the clinical trials and spent hundreds of recent announcement of the revival ofnew approaches billions of dollars on the discovery and a drug developed by U.S. drug com-to stop this How AI Could Helpamplify or muffle these signals,” says Berkowitz. “This testing of these drugs, and yet, not pany Biogen called Aducanumab, offer methodology can remove noise, improve confidence, and one clinically impactful drug has been some hope. “This possible break-slow-movingThe new federation will harvest insights from AIs that run uncover new areas of exploration without ever sharing brought to market in that time.through raises many questions,” sayslocally on each dataset, explains Berkowitz. After local sensitive and proprietary raw data. “ Berkowitz, “One of the most pressingepidemic.»analysis, generated knowledge- not data- are aggregated There is no cure and no treatment to is whether there are more meaningful from each AI into a combined set of findings that could By iterating a few times, the AI that has aggregated slow down a disease, which in the U.S. insights hidden in the failed drug trial both uncover previously weak signals and inform further knowledge can dig into these signals and gain greater alone is expected to impact 16 million data.”among them are privacy concerns and areas of inquiry and treatment. clarity. “In this system, the consistency of data becomes people by 2050, generating $1.2 tril-competition issues. less of an issue. We aggregate the generated knowledge, lion in medical and hospice care costs.One of the most valuable assets “What we are talking about is privacy-preserving federated not the data. Noise can be filtered out, and we can turn created by these trials is the data col-Berkowitz will be in Davos during the learning,” he says. “Now we can say to drug companies the data from two decades of research into knowledge “The economic impact of this diseaselected. While there has been progress, annual meeting of the World Econo-‘you do not need to share your data.’ An AI can sit on your that, when aggregated, will lead to clinically meaningful is mind-boggling,” says Barak Berko-the vast majority of this data has yet mic Forum January 21-24 to recruit local server and analyze the data and simply share the insights,” Berkowitz says. witz, co-founder of this project. He isto be shared or, more importantly, potential partners in a new federation insights that come from that analysis.” also the Director of Operations and aggregated, Berkowitz says. Data ag-that seeks to overcome these hurdles The federation will work on encrypted data eliminating Strategy at the MIT Media Lab where gregation could turn one hundred fifty by removing data sharing from the Sharing research insights is a principle that has been used critical privacy concerns; the AI will focus on local data he came in contact with the powerrelatively small data sets into a truly equation. The federation is seeking for the critical advancement of science for decades, at servers, so raw data never leaves its owner’s site; aggre- of federated learning systems. It is massive data asset of more than one firms that have conducted clinicalscientific conferences and congresses, leading to new gate insights to amplify weak signals and identify new estimated that in the U.S. more than 16 hundred and fifty thousand subjects.trials focused on Alzheimer’s and understandings of disease and new areas of inquiry. “It is correlations and correct for small-sampling bias. million Americans provide unpaid care “There is a robust scientific basis those that specialize in helping artifi-not just listening to reports, but the discussions that they for people with Alzheimer’s or other for believing this aggregated data cial intelligence (AI) filter out “noise”,stimulate, that make congresses so valuable,” says Ber-Members of the federation gain value in three critical dementias. That is almost 10% of the could provide meaningful insights i.e. extraneous information. MIT’s kowitz. In the same way, new technologies enable AIs to ways, says Berkowitz. The federation will share insights working age population. “Alzheimer’sinto these trials, reasons for failures, Connected Science Group will serve share their insights with other AIs in a secure mode. “No AI related solely to a specific trial on a proprietary basis with is a growing global catastrophe tiedmissed efficacy, and possibly clinically as a data trustee to the federation, sees raw data, so it can not be shared. Instead, the AIs col-the data creator. It will share generated insights around to aging in a world that is aging and meaningful treatments,” he says. also which means it will be responsible for lect correlations and other data signals they may ascertain, the data creator. It will share generated insights around the scale of the catastrophe is right up significant forces slowing or stopping making sure the AI is not doing things and these signals then create knowledge. The knowledge obvious key questions with all federation members. And there with climate change,” he says.such in-depth data sharing. Chiefor passing data it should not. is then aggregated from multiple AIs and is combined to all Federation members can interrogate the aggregated

38 39 To receive in-depth analysis of digital transformation trends every week subscribe to our newsletter: www.innovator.news knowledge with proprietary questions whose answers are the massive swings in valuation is that the data shows they shared exclusively with the integrator. might have a drug that works a little bit on Alzheimer’s, which has nearly immeasurable economic value,” says All these services will be provided free of charge to Alzhei- Berkowitz. “The other thing they proved is that there is mer’s federation members and will serve as a key proof of interesting data in the drug trial base.” concept for this. There is a huge data store that is locked up that has very Berkowitz says he thinks it will be a compelling proposition meaningful insights on what could be effective treatments, to biotech companies working on Alzheimer’s drugs. Take says Berkowitz. “We are aiming to recruit significant the case of Biogen. Initial trials of its drug Aducanumab neurological disease biotech companies to share insights failed when it was judged to be futile” and the trials were to accelerate treatments for this horrible and stubborn- stopped, causing Biogen’s stock to drop and costing it over ly untreatable disease. With an insight federation, the $20 billion in market cap. Then new data surfaced, which opportunities far outweigh the risks. It is time to try new when added into the drug trial data, indicated that the approaches to stop this slow-moving epidemic.” drug could actually work. The company had a discussion with the U.S. Food & Drug Administration (FDA) and is J.L.S 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

38 39 To receive in-depth analysis of digital transformation trends every week subscribe to our newsletter: www.innovator.news knowledge with proprietary questions whose answers are the massive swings in valuation is that the data shows they shared exclusively with the integrator.might have a drug that works a little bit on Alzheimer’s, which has nearly immeasurable economic value,” says All these services will be provided free of charge to Alzhei-Berkowitz. “The other thing they proved is that there is mer’s federation members and will serve as a key proof ofinteresting data in the drug trial base.” concept for this. There is a huge data store that is locked up that has very Berkowitz says he thinks it will be a compelling propositionmeaningful insights on what could be effective treatments, to biotech companies working on Alzheimer’s drugs. Take says Berkowitz. “We are aiming to recruit significant the case of Biogen. Initial trials of its drug Aducanumab neurological disease biotech companies to share insights failed when it was judged to be futile” and the trials were to accelerate treatments for this horrible and stubborn- stopped, causing Biogen’s stock to drop and costing it over ly untreatable disease. With an insight federation, the $20 billion in market cap. Then new data surfaced, which opportunities far outweigh the risks. It is time to try new when added into the drug trial data, indicated that theapproaches to stop this slow-moving epidemic.” drug could actually work. The company had a discussion with the U.S. Food & Drug Administration (FDA) and isJ.L.S 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