China’s social credit system awards points to citizens who conform

Posted on 05/22/201905/03/2019 by ashton

“Once discredited, limited everywhere” is the message China’s government announced in a report, released in early March, to the 23 million citizens it had banned from purchasing plane or train tickets the previous year. These citizens, the government declared, had proven themselves to be “untrustworthy”, perhaps by spreading false information, forgetting to pay a bill on time, or even failing to walk a dog on a leash. As a result, their freedom of movement has been revoked.

This is the reality of social credit, a Chinese reputational measuring system that, according to governmental documents, “allows the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step”. Using a network of cameras equipped with facial recognition software, the government is able to identify and log the so-called harmful behaviour of every individual or business on Chinese soil. While the government claims the system purely seeks to restore trust in a corrupt society, the true capabilities of social credit are far more extensive and restrictive.

Surveillance culture
The modern-day social credit programme has its roots in the controlling, surveillance-based model that was envisioned by former Chinese Communist Party (CCP) leader Mao Zedong. From the establishment of the People’s Republic of China (PRC) in 1949 to Mao’s death in 1976, the chairman implemented a programme of mass surveillance that actively encouraged Chinese citizens to keep an eye on one another and report any actions that did not comply with dominant social ideologies. “It used to be like Neighbourhood Watch,” said Professor Steve Tsang, Director of SOAS, University of London’s China Institute. “It’s usually elderly people or others who are not in full-time employment keeping an eye out on everybody else and reporting whatever was happening in the neighbourhood to the local authorities.”

The modern-day social credit programme has its roots in the controlling, surveillance-based model that was envisioned by Chinese Communist Party leader Mao Zedong

Technological advances in the 20th century meant the CCP could supplement its word-of-mouth network with a web of cameras that watched civilians as they went about their daily lives. “[Surveillance] has become much more effective, smarter and well targeted with the addition of digital technology,” Tsang told The New Economy. As of 2018, there were more than 200 million cameras – one for every seven citizens – installed across the country. Many of these have now been fitted with facial recognition software, which can be combined with existing government data such as voice recordings, fingerprint data and blood samples to build a comprehensive profile of each Chinese citizen.

This physical surveillance is supplemented with online censorship and monitoring, with the government placing strict limits on what kind of news can be disseminated to the public and barring access to western social media sites. WeChat, which has more than one billion users across China, enjoys almost total market dominance, predominantly as a result of its relationship with the CCP. The messaging app has been subsidised by the CCP since its creation in 2011, and in April last year, a government watchdog revealed that it could access individuals’ WeChat messages, regardless of whether they had been deleted by the original user.

Class divides
In some ways, the social credit system is simply an extension of the ongoing mass surveillance programme in China – it serves to expand, digitalise and legitimise what already exists, with the added benefit that citizens will find being spied on more palatable if they’re rewarded for ‘good’ behaviour. The concept was first proposed in 2007 in an economic context, in a similar way to how financial credit ratings function in countries like the UK.

“Many Chinese do not have bank accounts and thus lack the types of credit histories common in western countries,” Timothy Heath, a senior international defence research analyst at RAND, told The New Economy. “The social credit system can help provide a means for financial entities to assess risk when offering financial services to customers.” In the initial proposal, a person would receive a positive score if they paid bills, loans and taxes on time.

The full social credit programme was announced as an opt-in scheme in 2014, and the government is aiming for it to be fully operational and compulsory for all 1.4 billion Chinese citizens by next year. Currently, around three dozen local government pilots are in operation, as well as a host of corporate schemes such as Sesame Credit, which is operated by Ant Financial. While these appear to be operating independently of municipal programmes, it is widely understood that the government is able to access private data, although it denies this. “Xi Jinping famously told the whole world, in society, in business, in schools, in everything, north, east, south, west and the centre, the party sees everything,” Tsang said. “The idea that any of the privately run social credit schemes can be run without the leadership of the party is just unrealistic, to put it very mildly.”

200m

Surveillance cameras in China

Sesame Credit’s scheme appears popular with Chinese citizens; according to a survey by the Institute for Chinese Studies at Freie Universität Berlin, 58 percent of the 2,200 respondents voluntarily participate in it. Those with a high score receive benefits such as free bike rental, or not having to pay a deposit when they reserve a hotel room. Having a good score is worn as a badge of honour, with many boasting about having been awarded points on social media. Sesame Credit has even teamed up with dating app Baihe so users can compare social credit scores as well as looks when swiping through profiles.

There’s a risk, however, that the system will lead to discrimination. “This system [can] exacerbate class inequalities, because many of the behaviours that lower social credit scores are more likely to be found among poorer classes,” explained Heath. Not paying bills on time, for example, could be put down to laziness, but it’s more likely to be a result of being on a low income and having to prioritise financial commitments. Yet, with social credit scores driven down by late payments, what is primarily an economic issue for most could spill over onto the social scale and result in a host of other problems, including cyber-bullying, isolation and loneliness.

A social plaster
The primary stated aim of the social credit programme is to improve relationships between citizens, businesses and the government, which are fractious in modern-day China. “There is a breakdown of trust in Chinese society generally – people don’t trust each other much, and they don’t trust the government much either,” explained Tsang. These issues stem from the Cultural Revolution, a sociopolitical movement executed by Mao between 1966 and 1976, which was designed to purge the so-called capitalist and traditional elements from society and re-impose Maoism as the driving ideological force. In traditional Chinese culture, questioning elders, teachers and cultural dogma were forbidden – society adhered to a strict hierarchical structure, in direct contrast with Mao’s communist ideology.

During the Cultural Revolution, young people “were literally required to report on counter-revolutionary behaviours or thoughts of their parents”, said Tsang. “Children were taught: ‘Your first and foremost loyalty is to Chairman Mao – you can’t trust your family, you can’t trust your friends, you can’t trust your teachers, you can’t even trust the party when it comes down to it’.” This long period of political conditioning created an atmosphere of tension and distrust that is an underlying, pervasive force in the modern era.

Trust between businesses and consumers is also extremely low as fraud and deception are rife in China, with private companies notorious for not paying workers an adequate wage or providing safe working conditions. This dates back to the 1980s, when Mao’s successor, Deng Xiaoping, implemented a number of reforms to turn China into a market economy. While these changes allowed for huge GDP growth, they also created regulatory problems. “You’ve got the issue of a society that has been transforming itself over the past 40 years from being dirt-poor and anti-business to being pro-business,” explained Tsang. “That will generate bad corporate behaviour anyway, plus you’ve got a basic breakdown in morality across the entire society. [It’s unsurprising that] the Chinese corporate world is pretty problematic.”

China’s economic transformation created space for opportunistic fraudsters and get-rich-quick entrepreneurs to exploit citizens in the knowledge that it was unlikely they’d be caught. For example, in the first three quarters of 2017, the government busted 870 pyramid schemes, whereby investors were told they would only receive dividends or a return on investment when they brought in friends or family members. Similar fraudulent schemes take place across the entire Chinese business ecosystem, from wealth management and insurance to dating apps and even medicine: in 2017, 100 leukaemia patients at Hebei Yanda Lu Daopei Hospital were swindled out of CNY 10m ($1.5m). They had given money to a charity investment programme that promised to match patient donations, thereby providing funding for essential medical treatment. It later transpired that the programme’s chief had run off with all the donations, although the hospital denied cooperating with the scheme and said it would continue to treat patients who had been scammed.

Trust between businesses and consumers is extremely low as fraud and deception are rife in China

Given the prevalence of fraud and the general breakdown in trust, it’s little wonder that Chinese citizens are suspicious of businesses. In this sense, it’s hoped that the social credit scheme will function as a kind of regulatory tool – under the current system, companies are given ratings in the same way people are, with points deducted for tax evasion, selling counterfeit goods or committing fraud. “The Chinese social credit system was originally designed in part to combat the pervasive problems of fraud and business malpractice,” said Heath. “Government regulators have simply been overwhelmed by the magnitude of the task, and thus tools that use data from the social credit system [have] been viewed by authorities as a critical means of helping improve the reliability and quality of the Chinese market.” While it may help to hold businesses accountable for corrupt behaviour, the system comes with a huge range of nefarious side effects, not least the severe infringement on the privacy of ordinary citizens. There are far better ways to regulate the corporate environment.

Solving trust issues between citizens themselves is much more difficult. Part of the problem lies in the fact that any discussion of the Cultural Revolution is heavily suppressed by the government – perhaps out of shame, or perhaps to preserve the cultural memory of Mao. By not allowing people to examine the cause of this breakdown in trust, there’s little hope of it being resolved; the social credit system simply papers over the cracks in that regard. Of course, there’s also the issue that by allowing citizens to examine history with a critical eye, it could lead to doubts about the current political system and even revolution. Through social credit, the government is maintaining a level of docility that allows it to survey its citizens. It’s a highly effective tool for control.

Dogmatic system
The crux of the problem when it comes to social credit is the way it ascribes moral value to certain behaviours, introducing an all-encompassing, quasi-religious aspect to the political system. It’s the nail in the coffin for a dictatorial government, solidifying its hold on the population. “It changes people’s behaviour,” explained Tsang. It forces them to adhere to a system of morality imposed by the political ruling party, fearing punishment if they do not conform. For example, points can be given for ‘good’ behaviour such as doing charity work or helping a family member, or deducted for jaywalking, spending too long playing video games or wasting money on ‘trivial’ purchases.

China’s social credit system in numbers

2007

Social credit system first proposed

2014

Opt-in social credit scheme launched

2020

Compulsory social credit scheme to be launched

What’s more, individuals are now beginning to be demonised for committing acts that are defined as ‘bad’ by the government. In several cities, large electronic billboards have been erected near road crossings, which flash up with images of those that have been blacklisted or have had their social credit scores lowered for jaywalking. The government has also been known to remotely personalise the dial tones of debtors, so incoming callers will hear a message that roughly translates as “the person you are calling is a dishonest debtor”.

While the system has been likened to an episode of dystopian drama Black Mirror, it’s a terrifying, inescapable reality for today’s Chinese citizens. Tsang described it as “Orwellian madness on steroids”. The level of control the social credit system gives the government is likely to increase further in coming years, as facial recognition software becomes more advanced. “There is nowhere to hide. If you’re on the run for any reason, as a political dissident, for example, you’ve got nowhere to [go],” Tsang said. The more social credit is expanded, the more control the government has, and the more China moves away from resembling any kind of democratic society. “When we get to that point, then there really isn’t much privacy or individual freedom or rights left,” Tsang told The New Economy.

For businesses, the system could be particularly dangerous as, under current plans, the government makes no distinction between domestic firms and international companies that operate within the Chinese jurisdiction. “The Chinese Government has used its social credit system to pressure foreign companies into adopting political positions favourable to the CCP – such as when the government warned that failure by western airlines to use maps that include Taiwan as part of China would receive lower ratings,” said Heath.

Global implications
There’s also the issue of how social credit will affect relations between China and western nations. “We’re currently looking at an authoritarian China that has the capacity to shape the economic and technological agenda,” said Tsang. Being the world’s second-largest economy gives China a seat at the table alongside top global democratic powers, which is problematic if it does not subscribe to those same democratic values.

Nations that have close ties with China and companies that operate in the country’s jurisdiction now face a choice between protecting profit margins, privacy consequences be damned, or compromising economically in the fight for something greater: a commitment to freedom. For those living in China, escaping the consequences of social credit will be much more difficult, particularly given the level of governmental censorship and coercion that occurs. The onus, therefore, is on the international community to put pressure on China to prevent it from increasing its hold over its citizens. However, interference from other nations could have a detrimental impact on global diplomatic and economic relations, and may end up putting Chinese citizens at risk.

We have seen first-hand the political, economic and ethical implications of oppressive regimes over the course of the 20th century. We have seen what happens when freedom is fundamentally compromised. We understand that George Orwell’s novels are works of fiction – let us work to ensure they do not become a reality.

The challenges facing blockchain adoption in global trade

Posted on 05/21/201905/21/2019 by ashton

Blockchain has been a hot trend for years now, with experts marking it as a tech trend that would change the world. Almost every industry has been deemed ripe for blockchain disruption, from banking to video streaming. One sector with particularly high hopes for blockchain’s capabilities is global trade, owing to evidence that blockchain could improve the transparency and efficiency of supply chains.

A number of major players are exploring the technology’s potential. For example, Volkswagen is piloting a supply chain solution to aid the responsible sourcing of lead for its batteries, while Starbucks wants to use blockchain to track its coffee beans from farm to cup. At first glance, it would seem like the age of blockchain is finally upon us.

Despite extensive research into blockchain and a multitude of pilot studies, there remain almost no use cases for its success at scale

Many prototypes have been built, and worldwide spending on the technology is forecast to reach nearly $2.9bn this year, but widespread adoption still feels far away. In fact, Gartner predicts that 90 percent of blockchain-based supply chain initiatives will suffer ‘blockchain fatigue’ by 2023. The main reason for this, according to Gartner, is that despite extensive research into blockchain and a multitude of pilot studies, there remain almost no use cases for its success at scale. As such, organisations may have to be a lot more patient if they hope to unlock the technology’s potential.

Real-world applications
Modern supply chains, owing to their global reach, are vulnerable to fraud and misconduct. An incredible $600bn is lost to maritime fraud alone every year. Although blockchain technology doesn’t completely eliminate fraud, it does minimise the risk by permanently recording information about the product, such as its source, authenticity and sales price, on a decentralised public ledger. This makes it much harder for suppliers to fraudulently mislabel their products.

Tomaž Levak, Co-Founder and CEO of OriginTrail, believes blockchain will create greater transparency and trust between businesses. “What makes [blockchain] so revolutionary is that there is no central authority that can retroactively change data, ensuring that trust is built into the network itself,” he said.

Certain supply chains are especially in need of this level of transparency. Real-time tracking of meat and fish, for example, would provide retailers and consumers with important information regarding a product’s place of origin, how it was shipped, and its quality. Although only a pilot study, blockchain company Provenance has used its technology to trace yellowfin and skipjack tuna in Indonesia, ensuring they have been caught responsibly.

Kevin Clauson, Associate Professor at Lipscomb University’s College of Pharmacy and Health Sciences, believes the pharmaceutical supply chain is another area where the case for blockchain application is particularly strong.

Clauson told The New Economy: “Internationally, I am most optimistic about blockchain for supply chain management of medical devices since requirements around those devices are already harmonised to an extent – especially for North America and the EU. Another interesting use case of blockchain [is with the] supply chain for cannabis products in countries like Canada where there is clarity with its legal status.”

Blockchain could also help streamline supply chains by reducing administrative processes and costs. Shipping creates a huge amount of documentation, from invoices and quality control documents to customs declarations and certificates of origin. On the blockchain, these records would be stored digitally, in one place.

Technological immaturity
Blockchain is still in the infant stages of development, with relatively few engineers versed in the technology. This makes its implementation complex and expensive. “Technical issues relate to scalability and performance of underlying blockchain platforms, and ease of integration with existing systems and databases,” explained Pete Harris, Co-Founder of Chain Business Insights.

For Harris this is still not the greatest barrier to blockchain implementation: “My belief is that the technology challenges will probably be solved for most applications before the business ones.” One such business problem is the market’s fragmented nature. According to Clauson, a key value of blockchain is ‘coopetition’, which he says allows natural competitors to cooperate. This is part of the problem as much as it is a benefit of the technology. Blockchain’s applications implicate all stakeholders in the supply chain, but the blockchain ecosystem is mostly made up of disparate players working in self-interest.

“Many people are surprised that the greatest challenges with blockchain are not technical in nature, or even [to do] with scaling,” said Clauson. “Rather, it is around change management, alignment of incentives and, perhaps ironically, reaching [a] consensus among organisations seeking to work together in a ‘coopetition’ model.”

To address this fragmentation, the World Economic Forum has brought together 100 organisations as part of its blockchain supply chain initiative. This collective includes logistics companies, ports and blockchain companies, and aims to create a blueprint for future blockchain deployment.

Unclear business case
Some blockchain experts attribute the slow adoption of the technology to a fundamental lack of understanding about how blockchain could improve the supply chain. However, this knowledge gap alone doesn’t explain why the companies that have poured resources into understanding blockchain are still struggling to identify a business case.

Since the main pain points that blockchain can tackle include inefficiency, fraud and a lack of transparency, organisations need evidence that such issues are genuinely hampering their business and losing them money. For many businesses, blockchain feels like an over-complicated solution to a problem relatively low on the priority list.

“Blockchain is a new technology that is still quite hard to understand and implement, especially in terms of determining whether it is suitable for a particular application of business,” said Harris. “It has to be proven that blockchain can make a significant improvement in order to undertake the cost and effort to implement it.”

That said, Harris remains optimistic that a business case does exist. “My gut feel says in about five years time we’ll see some significant usage of blockchain in supply chains,” he told The New Economy. “IBM is already making good progress with its Food Trust service and the TradeLens venture that it has with Maersk… Businesses that are new but [have] great potential – just as the legal cannabis industry – might be an early adopter since it does not have much in the way of legacy systems, but absolutely requires supply chain traceability to meet regulatory requirements.”

Blockchain may restore trust in global trade, but it has yet to win the trust of businesses. The technology has huge potential to transform supply chains, making them more streamlined and transparent. However, until a major player can demonstrate a key competitive advantage of using blockchain, its widespread adoption may be further away than we think.

PhenoMx is bringing MRI to the masses

Posted on 05/20/201905/03/2019 by ashton

According to the World Health Organisation, as much as two thirds of the world’s population does not have access to basic radiologic services, such as X-ray-based examinations. Even when it is available, the quality of such procedures can be questionable. As a result, the applications of radiology have remained primarily in diagnosis, leaving its tremendous potential as a preventative tool largely untapped.

Digital healthcare solutions can revolutionise patient-to-provider encounters by enabling automated processing and analysis techniques such as AI, which transform data into meaningful results. For imaging data, AI-based processing and analysis yields simplified workflows, definitive diagnoses and predictive disease biomarkers.

Autonomous precision imaging
The digital nature of the data from most imaging modalities – if not all in the near future – means automated analysis can be used to obtain valuable information beyond raw images. Today, AI-based solutions – particularly deep learning techniques – have allowed the entire field of medical image analysis to evolve.

Magnetic resonance imaging (MRI) is an excellent non-invasive, non-ionising method for assessing a patient’s health status. For MRI to serve as an accessible screening tool, automation needs to be implemented throughout the imaging pipeline. This can be achieved by putting three elements in place: first, by decoupling data acquisition protocols from hardware implementation, MRI solutions can be made more flexible as they can be executed on different hardware platforms.

AI-based solutions, particularly deep learning techniques, have allowed the entire field of medical image analysis to evolve

Second, multiparametric solutions can be used. For example, magnetic resonance fingerprinting is an accelerated acquisition and reconstruction method that simultaneously generates multiple parametric maps. Third, automated processing methods that are embedded in the imaging pipeline can recognise the scan taking place and trigger the appropriate post-processing or analysis methods. This speeds up clinical decision-making.

Often, precision medicine is associated with genotyping – identifying DNA sequences. While genotyping can create a baseline view of an individual’s physical make-up, imaging observes – or phenotypes – the physical manifestations of a disease.

An accessible MRI solution with deep data analytic capabilities would allow health professionals to peer into an individual’s body to evaluate their health, understand behavioural characteristics and predict disease risks. PhenoMx has created a digital physical examination using MRI to measure the body’s major vital organs and tissues so personalised wellness solutions can be developed. This means MRI can be used as a comprehensive screening tool, paving the way for affordable and actionable annual health exams.

With a mere 20 to 30 minute scan, a detailed fingerprint of the body’s structure, composition, and function in health and disease can be determined. Tracking, monitoring and evaluating tissue distribution with respect to an individual’s baseline or a demographic population can provide insight into metabolic anomalies, which can serve as a biomarker for diseases such as obesity, diabetes and cachexia, to name a few.

Holistic healthcare
The rapidly changing digital healthcare landscape should be driven by one goal: to connect the greatest number of patients with medical providers by using an intuitive platform that optimises the efficiency of healthcare services and the quality of the patient’s experience. Fuelled by global advances in digital healthcare technology, the creation of a standardised, cloud-based personal health record is a logical next step in patient care.

95%

of conditions can be treated by VPC doctors

12%

The saving on claims costs for employers

Key elements of such a platform include: compiling genomic information that describes an individual’s make-up and inherent disease risks; obtaining observable physical and behavioural characteristics via medical imaging to better understand the impact of lifestyle and environment on the body; and viewing the patient from a holistic instead of reductionist perspective to deliver on-demand, patient-centric information.

The emergence of personal health record services has given rise to the ‘concierge medicine’ model, where patients pay an annual retainer fee in exchange for enhanced care. Providers are principally committed to reducing patient loads, ensuring availability and increasing patient contact time. MRI-based phenotyping provided by PhenoMx can play an integral role within this framework.

Workplace wellness
Quantitative personalised solutions are also transforming employer-sponsored healthcare through primary care and workplace wellness programmes. A case study conducted at a Wisconsin printing company showed that worksite health clinics that focus on comprehensive primary care and wellness have lower costs and better outcomes for employees. This approach transforms the role of employers from mere purchasers of health insurance to fully invested stakeholders in employee health and productivity.

Accessible MRI can serve as a screening tool for wellness programmes, as most of the technical requirements for a meaningful screening procedure are already established. Example screenings could include a whole-body magnetic resonance (MR) composition evaluation. Systematic screening for common malignancies could lead to the discovery of hidden diseases or enhanced therapeutic options for early disease management. For example, when combined with dedicated cerebral and cardiac MR, a comprehensive screening protocol for atherosclerosis may significantly reduce stroke and heart attack incidences.

By incorporating such services in employee wellness and health programmes, the employer establishes a virtual primary care (VPC) model. VPC doctors will be able to diagnose and manage approximately 95 percent of the conditions a traditional primary care physician can manage. Employers could save up to 12 percent on claims costs, as well as being able to attract and retain talent, improving productivity.

Population health
With time, personalised medical solutions and wellness screenings can be extended beyond the workplace to positively impact entire populations. In a report by healthcare company Premier, patients with asthma, chronic obstructive pulmonary disease, hypertension, heart failure, diabetes or behavioural health issues were assessed. Researchers found that nearly 60 percent of all annual visits, comprising 24 million emergency department visits at 750 hospitals, included one of these conditions. Of these visits, more than 4.3 million were avoidable. Personalised medical solutions, such as those provided by PhenoMx, aim to reduce the burden of these unnecessary emergency department visits.

Diabetes represents one of the major causes of morbidity and mortality worldwide. By 2025, the global prevalence of pre-diabetes will include nearly 419 million patients. Diabetic complications can impact neurological, renal and cardiovascular systems, and not only significantly reduce the patient’s quality of life, but can also be life-threatening. Additionally, pre-diabetes is an independent risk factor for vascular, cardiac and metabolic changes. Measuring pre-diabetic patients with MRI uncovers ample evidence for increased subclinical disease burden.

As a systemic physiological state, pre-diabetes impacts multiple organ systems. Morbidity becomes increasingly evident under MRI with disease progression. Whole-body MRI represents an imaging modality with the capacity to detect early functional and structural complications in pre-diabetic patients, with greater precision for risk stratification.

A digital imaging examination can facilitate improvements in the healthcare ecosystem through its use in concierge medicine, employee and executive healthcare plans, and public wellness screenings. Successful large-scale adoption of this solution would provide an opportunity to test multiple hypotheses on biomarkers of health and disease, as well as facilitating affordable and accessible preventive and interceptive healthcare. This would lead to critical medical discoveries that could inform global policy decisions and have a significant impact on how healthcare is received.

Biofuel offers a solution to the world’s renewable energy crisis

Posted on 05/17/201905/03/2019 by ashton

Solar cells and wind farms are commonly referenced in the fight against climate change, but there is another, often overlooked, form of energy production that is already playing a sizable role. Bioenergy, which includes both biomass and biofuel, has been adopted by governments around the world as a viable method for generating carbon-neutral power, at least until the reliability and cost of other renewables improves.

A green delusion
Of late, bioenergy has come under attack, both for pulling investment away from other green technologies and for not being low-carbon. In October last year, more than 100 organisations from across the world signed a joint declaration arguing against the expansion of bioenergy projects, referred to as the ‘Biomass Delusion’.

Bioenergy has come under attack for pulling investment away from other green technologies

Recent developments in the field of bioenergy, however, have provided renewed hope that it can play a role in a green future. Last year, the US Department of Energy committed $80m of investment to bioenergy research and development, with the aim of producing more affordable and sustainable non-food dedicated energy crops.

Evidently, the jury is still out as to whether bioenergy is a useful tool in the fight against climate change. There have been open letters pledging their support, while others have been heavy with criticism. In order to bring everyone onside, bioenergy proponents will have to convincingly argue that burning biomass, or converting it into ethanol, is not a net contributor to carbon emissions and that crops for energy can be grown on a mass scale without negatively impacting food security.

Cream of the crop
Global population levels are set to hit 9.8 billion by 2050 and 11.2 billion by 2100, according to a 2017 United Nations report. Obviously, this growth will facilitate the need for heightened levels of energy production – but it will also mean many more hungry mouths to feed. If citizens are forced to choose between food and fuel, few will plump for the latter.

Consequently, there are concerns that any increase in the use of bioenergy will come at the expense of agricultural land that could be used for food crops. According to Global Food Security, a UK cross-government programme on food security research, the planet will need to produce more food in the next 35 years than it has produced in the entirety of human history. The likelihood of achieving such a goal will be made more difficult by changing dietary habits, increasing urbanisation and rising sea levels.

9.8bn

Predicted global population by 2050

11.2bn

Predicted global population by 2100

$80m

Invested by the US Department of Energy in bioenergy R&D last year

9%

of global energy supply comes form bioenergy

Dr Naomi Vaughan, Senior Lecturer in Climate Change at the University of East Anglia, told The New Economy that the growing demand for bioenergy crops could potentially exacerbate food security issues if “it was poorly regulated”. However, recent developments suggest that bioenergy and food crops can be grown in parallel rather than in competition.

Scientists at the University of Illinois are looking at ways of creating bioenergy-suitable crops that can be grown on the type of marginal land that is unsuitable for agricultural cultivation. In particular, they are investigating whether hybrid strains of elephant grass can be bred that will produce enough biomass to make them a viable fuel source even in low-temperature environments.

The resilience of elephant grass has long been recognised, but the plant has only recently been considered a potential bioenergy crop. Elephant grass, or miscanthus giganteus, is a naturally occurring hybrid produced by crossing two other Asian grasses, miscanthus sacchariflorus and miscanthus sinensis. In Eastern Siberia, a strain of miscanthus sacchariflorus was recently discovered growing in temperatures as low as minus three degrees Celsius. By studying these grass crops further, there is hope that even hardier hybrids can be created that can provide fuel in climates where food production is not an option.

“Miscanthus giganteus is exciting for a number of different reasons, the most obvious being that it is very productive in temperate regions compared to other highly productive crops – the obvious comparison here would be corn,” explained Charles Pignon, a postdoctoral research associate at the University of Illinois at Urbana-Champaign. “It is able to be very productive, while also being very resource-efficient. It doesn’t need too much fertilisation, it can grow well on marginal soil and even though it originates from Eastern Asia, the hybrid we use is sterile, which reduces its risk as an invasive species. These are the reasons for miscanthus’ broad appeal.”

Grasses are not the only viable bioenergy crop that scientists are looking at. Last year, a Texas A&M AgriLife Research study found that high biomass sorghum can be grown in water-stressed conditions and still produce significant yields – as much as 10 tons per acre. Other researchers are looking at growing the tamanu plant, another bioenergy crop, on peatland that is unsuitable for any other purpose. These developments show how bioenergy can make better use of the planet’s resources rather than being just another drain on them.

Seeds of doubt
A criticism often levelled at proponents of bioenergy is that it is not actually carbon neutral. When trees are cut down and burned to create energy, it is certainly true that bioenergy is a net contributor to atmospheric CO2 levels because carbon is released immediately, which will then take years to be sequestered by new plant growth. However, Pignon argues that it would be wrong to paint the bioenergy field with too broad a brush.

“There are lots of different crops and systems that can provide feedstock for bioenergy,” Pignon said. “With woody feedstock, it does take a while for carbon to be sequestered, but that isn’t the case with a perennial feedstock or a plant like miscanthus. Because the plant is harvested every year, the harvested biomass only contains the carbon that was sequestered over the past year, not over the past several years. In addition, we only harvest the above-ground part of the plant. So with a system like miscanthus, you have a real opportunity to achieve negative CO2 emissions.”

Distinguishing between the different forms of bioenergy is important if businesses and governments are to approve projects that truly grant environmental benefits. It is essential that the issues raised by bioenergy opponents are considered, but they shouldn’t dominate the dialogue. If bioenergy projects avoid using productive forests for combustion, they can ensure that forest carbon stocks at least remain stable. Effective forest management can ensure that bioenergy does not have a detrimental impact on the atmosphere or woodland ecology.

According to Vaughan: “The key challenge for sustainable biomass energy is strong governance and regulation to minimise negative impacts such as deforestation, biodiversity loss, food security issues or negative impacts on local communities.”

If this challenge can be overcome, bioenergy – whether it comes from burning trees or converting organic matter from perennial plants into ethanol – can play a part in a green future. What’s more, there are other benefits of bioenergy crops that aren’t always considered. The roots left in the soil by perennial grasses, for instance, help improve soil dynamics in a way that food crops do not.

Moreover, if scientists can grow bioenergy plants on land that was previously considered useless, then the economic benefits for communities in these areas could be huge, opening up new agricultural revenue streams. Farmers in locations susceptible to drought may find that bioenergy crops provide more reliable harvests than those dedicated to food.

Currently, bioenergy accounts for approximately nine percent of the world’s energy supply, but much of this still concerns the burning of biomass in less-developed countries. If bioenergy is to play a greater role in the energy make-up of the future, it needs to greatly increase its scale and sophistication. Scientists and agribusinesses will play their part, but so too must politicians, who should put the right regulatory frameworks in place to ensure that bioenergy has a positive effect on communities both locally and globally.

FIA Business School is encouraging entrepreneurship in Brazil

Posted on 05/15/201905/03/2019 by ashton

Entrepreneurs are often characterised as being forward thinkers, always alert to new ideas and opportunities. In order for such a mindset to develop, qualities of independence and creativity must be nurtured.

For decades, high-risk investments such as start-ups weren’t encouraged in Brazil’s business culture, which was conservative in nature due to the country’s history of economic instability. This meant qualities such as independence and creativity were slow to evolve. However, with the government encouraging growth, a culture of entrepreneurship has emerged: Brazilians are seeking greater autonomy and moving away from jobs where they have a boss to answer to.

Brazilians are seeking greater autonomy and moving away from jobs where they have a boss to answer to

Still, Brazilian businesspeople must navigate bureaucratic hurdles, from lengthy tax forms to slow processing times. As such, not only must business owners in the country deal with the difficulties faced by entrepreneurs around the world (raising capital, attracting customers and so on) – they also have to navigate issues such as the high cost of recruiting in Brazil.

Recently, employment methods have changed: for example, contractors can be hired as legal entities instead of individuals, meaning the employer doesn’t have to process their social security contribution. As laws applying to small businesses become more welcoming of start-ups, Brazil is set to see an increase in entrepreneurship.

Visiting the Valley
Entrepreneurship has always existed in Brazil, but as a result of the country’s economic growth in recent decades, its entrepreneurial profile is now changing. Turning to more established business centres can provide inspiration. In Silicon Valley, the world’s leading innovation hub, competitors can be found working together, guided by a collaborative vision that Brazil’s business environment could benefit from.

FIA Business School, which offers an international MBA programme, recognises the learning opportunities offered by Silicon Valley and has, as a result, added a trip to the Californian hub to its MBA programme. Over the course of the trip, students can gain an insight into how this nest of creativity functions. The trip has become a must-have experience on the MBA programme, attracting young executives looking to build a company with international success.

In addition to visiting state-of-the-art technology companies such as Netflix, Google, HP, Facebook, SAP, Salesforce and Amazon, students on the trip are afforded time with the start-up accelerator Plug and Play Tech Centre. They also attend lectures given by prominent entrepreneurs and investors, as well as classes at the esteemed Berkeley and Stanford Universities. It would be much easier to bring teachers and executives to Brazil to teach our students, but at FIA, we don’t choose the easy or comfortable option – we choose what is best for our students.

Making connections
In Brazil, networking is often approached as just occasional efforts at building connections; the mindset of networking as a long-term investment is still not fully established in the country. In Silicon Valley, however, forming contacts is considered an essential way for entrepreneurs to develop their businesses. FIA Business School’s trip to Silicon Valley provides an environment in which students can develop their networking skills.

The course is tailored to the needs of each student, taking the stage of their career and their goals into account. As such, they can choose from a number of pathways, whether they want to start a business or assume a higher position in the company they work for. Having completed the course, many of our students have left their long-term jobs in order to launch their own companies.

The MBA at FIA Business School is dynamic. It enables students to outline their career plans, fill gaps in their skills and training, and travel abroad to experience the world’s most important innovation hub. There is no formula or script to entrepreneurship; the idea is simply to be more innovative every day. FIA aims to nurture the disruptive students who will change the world.

Deep-sea mining could provide access to a wealth of valuable minerals

Posted on 05/13/201905/03/2019 by ashton

According to NASA and other industry experts, we know more about the Moon than the darkest recesses here on Earth. While 12 individuals have set foot on the lunar surface, only three have visited the deepest part of the ocean. Satellites have mapped the Moon with a pixel scale of around 100m, but the seabed has only been catalogued to a far grainier resolution of 5km.

To take nothing away from man’s astronomical achievements, reaching the bottom of the sea still represents a significant technical challenge. Even if the deepest parts are avoided – including the Mariana Trench and its record depth of 10,994m – travelling to the seabed often means a shadowy descent lasting more than an hour and enduring pressure thousands of times stronger than that found at the Earth’s surface.

As the prospect of deep-sea mining comes closer into view, businesses will begin scrutinising the industry financials in more detail than ever before

Aside from intellectual curiosity, there is one particular factor that is tempting businesses to make this arduous journey: deep-sea mining. At the bottom of the ocean resides a wealth of rare minerals that could be the key to powering the global economy of the future. It could also provide a lucrative revenue stream for any organisations that can reach them as quickly, cheaply and sustainably as possible.

Testing the water
The idea that the ocean floor might host a rich variety of valuable minerals was first considered in 1873, when the HMS Challenger recovered a number of manganese nodules from the bottom of the Pacific, Indian and Atlantic Oceans. At the time, the process of dredging the seabed for these minerals was rudimentary and offered little economic value. However, it did spark a curiosity that persists today.

In 1965, John L Mero – recognised by many as the father of ocean mining – conducted more detailed research into the economic potential lying at the bottom of the ocean, and determined that the mining of manganese nodules would become a viable business proposition within just 20 years. His declaration may have been overly optimistic, but it was based on solid economic principles: though later than Mero predicted, today deep-sea mining is gaining traction in the business world.

The Clarion-Clipperton Zone in numbers

4.5m

Square kilometres

15m

Tons of rare earth oxides

16 Number of exploration licences issued by the ISA

“Mining in the deep sea is an extremely technical and difficult thing to do,” Dr Kirsten Thompson, a marine biologist at the University of Exeter, told The New Economy. “The conditions at depths such as 4,000m are extreme, with high pressure, low temperatures and darkness. While commercial mining companies have considered and piloted mining in the past, it is only now that the technology has been developed that might make deep-seabed mining a reality.”

This technology is being deployed by a number of different companies, but perhaps the best known is Canada-based firm Nautilus Minerals. In 2011, Nautilus became the first company to gain deep-sea mining rights, after being granted a 20-year licence for its Solwara 1 project by the government of Papua New Guinea. The fact that Nautilus has only conducted exploration work in the time since the licence was granted is a testament to the technical difficulties surrounding deep-sea mining.

“There are some real technical challenges, and many of our staff and contractors are excited to be involved,” explained John Parianos, Manager of Exploration and Polymetallic Nodules at Nautilus Minerals. “The sea can be a turbulent place to work and most tasks need to be done by remote control in remote locations. Engineering work needs to meet exacting standards and procedures need to be well-thought-through. A lot of what we are developing is of interest to other miners seeking to mine deep underground, for example.”

The company’s exploratory programmes are certainly proving enlightening. Nodule samples have been recovered from the seabed in the Clarion-Clipperton Zone (CCZ) of the Pacific Ocean and metallurgical test results have yielded information sure to prove vital when drilling does commence. Businesses have waited decades to find a way of turning the idea of deep-sea mining into reality; in light of the potential riches lying on the ocean floor, a delay of a few more years is unlikely to put them off.

Deep pockets
Nevertheless, as the prospect of deep-sea mining comes closer into view, businesses will begin scrutinising the industry financials in more detail than ever before. The economic viability of any project may depend on the unpredictable movements of commodity market prices.

There are three groups of minerals found on the seabed: seafloor massive sulphides, cobalt-rich crusts and polymetallic nodules. Collectively, these can contain rich deposits of copper, manganese, zinc, cobalt, platinum and a host of other valuable metals. Although the price of these minerals remains volatile to an extent, they have stayed relatively stable for some time. Depressed metal prices have slowed the progression of the deep-sea mining industry in the past, but the likelihood of history repeating itself appears slim.

The minerals found underwater may actually be essential if humanity is to successfully transition from a fossil-fuel-based economy to a green one

Many of the minerals found thousands of metres below the water’s surface are absolutely essential to the modern digital economy and are set to remain so for the foreseeable future. In particular, some of the rare earth metals that have been harvested from polymetallic nodules, including erbium, europium and yttrium, play important roles in cutting-edge technologies. While the annual worldwide mine production of rare earth metals currently stands at around 100,000 tons, the CCZ alone is estimated to contain 15 million tons of rare earth oxides.

Global demand for many of the minerals found on the seafloor is already high, and is only travelling in one direction. China currently accounts for more than half of the world’s metal consumption and its economic trajectory means its desire for raw materials is set to rise further. This trend will surely be matched in other developing countries. Economically, deep-sea mining’s time finally appears to have arrived.

Even so, companies that decide to enter this new market must accept a certain degree of risk. The technical sophistication required to reach the ocean’s depths requires a great deal of investment, something that is immediately evident when looking at the three seafloor production tools that Nautilus has commissioned. What’s more, entering into such an experimental field usually means delays, and budget overshoots are to be expected.

As of September 2018, Nautilus has committed to contracts worth $16.7m for the design and build of a seafloor production system, but it’s highly likely that this figure will grow. Nautilus itself recognises that the level of funding it will require is difficult to quantify at this stage.

“Nautilus’ ability to generate revenues and achieve a return on shareholders’ investment must be considered in light of the early stage nature of the Solwara 1 deposit and seafloor resource production in general,” the firm stated in a cautionary note issued last year. “The company is subject to many of the risks common to early-stage enterprises, including personnel limitations, financial risks, metals prices, permitting and other regulatory approvals, the need to raise capital, resource shortages, lack of revenues, equipment failures and potential disputes with, or delays or other failures caused by, third-party contractors or joint venture partners.”

For Nautilus and the small number of other businesses that have decided to make tentative ventures beneath the ocean’s waves, the rewards on offer may make such a high degree of risk palatable. The deep-sea mining industry could be worth as much as $1trn to the US economy each year – the value of all the gold deposits alone on the seafloor is estimated to be around $150trn. It’s not hard to see why investors are getting excited.

A mine of information
However, not everyone is enthused about the potential benefits that could emerge from this fledgeling industry. Environmental concerns abound regarding the possible damage that deep-sea mining projects could have on what are largely unexplored ecosystems. All but one of the 17 exploration licences for polymetallic nodules granted by the International Seabed Authority (ISA) relate to the CCZ, an area spanning 4.5 million square kilometres in the Pacific Ocean that has demonstrated particularly high levels of biodiversity. One recent survey found that 70 percent of the 154 bristle worm species found in the CCZ were previously unknown to science.

“In my opinion, the opposing goals of deep-sea mining and marine conservation cannot be balanced at the moment,” Thompson said. “Many international experts are calling for at least a 10-year moratorium that will halt development of the industry because there is no way of reconciling marine conservation and deep-sea mining.”

Many are understandably urging caution simply because so little is known about the deepest parts of oceans; any knowledge lost could be lost forever. It is also difficult to know how long the seabed will take to recover from human interference. Belgian firm Global Sea Mineral Resources conducted a small-scale trial in April 2019 in an effort to determine how long it will take for species to repopulate areas cleared for deep-sea mining, but previous studies do not fill environmentalists with much optimism. In 2015, 26 years after a seafloor disturbance experiment was carried out in the Peru Basin of the Pacific Ocean, marine fauna levels remained depressed.

Still, for a balanced discussion to take place, the environmental hazards of deep-sea mining should be compared with the damage caused by land-based mining projects. Mining on land creates large quantities of air pollution, results in landscape destruction, contaminates nearby water sources and damages local biodiversity. These mines are also huge eyesores.

In contrast, the comparative richness of the mineral deposits found on the seafloor means deep-sea mining projects are much more contained than those on land. Initial research indicates that the mineral concentration found in the hydrothermal vents off the coast of Papua New Guinea is at least 10 times higher than in a typical land-based mine. The best-case scenario would mean the environmental damage caused by deep-sea mining projects is confined to a relatively small area.

However, once profits start rolling in, the push to expand deep-sea mining projects may become difficult to resist. At that point, businesses and investors will be queuing up to offer national governments huge financial incentives to grant further mining licences. More worrying still, the ecological impact of deep-sea mining is easy to hide. It is out of sight and perhaps out of mind too.

Contractual concerns
One thing saving the seabed from destruction (for now, at least) is the fact that businesses cannot start mining until they have been authorised to do so. While a number of licences have been granted, many remain exploratory for now and include environmental guidelines within their regulatory framework.

“There are two main paths that allow for the awarding of commercial deep-sea mining contracts,” Parianos told The New Economy. “Firstly, each nation state controls the granting of exploration and mining permits within their own territorial waters. And secondly, within international waters, there is a governing act set up by the United Nations called UNCLOS [the United Nations Convention on the Law of the Sea]. Most of the nation states have signed and ratified this act.”

Nevertheless, questions have been raised about how these mining contracts are awarded. Many of the small island states located in parts of the world with the greatest potential for deep-sea mining are facing sizable economic pressures – plenty also have relatively large exclusive economic zones (EEZs) compared to their populations. This means the exploration and harvesting of marine resources can go ahead largely unimpeded.

“Mining in deep waters within national jurisdictions, within the EEZ of the coastal state, is the responsibility of the coastal state,” Thompson said. “As some operations are co-funded by nations, there could be conflicts of interest in some cases. Better international governance of the oceans, encompassing mining in both high seas and national waters with a well-designed and enforced network of marine protected areas, would help to protect marine biodiversity across all of the ocean.”

Polymetallic nodule contracts issued by the ISA stipulate that contractors must fund training programmes for citizens from developing states, often connected to marine activities, engineering and other employment initiatives. While this could help local communities retain some of the economic benefits gleaned from deep-sea mining, in the grand scheme of things, it’s a small concession for contractors to pay.

In fact, there are concerns that the particulate plumes that will inevitably be created by the process of mining the ocean floor could interfere with marine life in the waters surrounding small island nations in the Pacific, Atlantic and Indian Oceans. This could damage the fishing industry, which is currently the only lifeline keeping many of these communities afloat. Rather than solving the economic problems facing small island nations, deep-sea mining may end up creating new ones.

Hell or high water
Deep-sea mining may not have begun yet, but it is right that people are raising their concerns now. So little is known about life at the bottom of the ocean, but the fact that the seafloor has remained largely undisturbed by mankind for millennia means deep-sea life forms are likely to be particularly vulnerable to disruptions.

“One of the biggest concerns surrounding deep-sea mining is the potential knowledge that may never be acquired,” explained Thompson. “Some authors suggest that only 0.0001 percent of the deep seafloor has been extensively sampled. There are huge uncertainties surrounding species diversity and processes relating to the deep sea.”

Ironically, the minerals found underwater may actually be essential if humanity is to successfully transition from a fossil-fuel-based economy to a green one. Many renewable technologies require large amounts of the same metals that deep-sea mining companies have set their sights on: a single wind turbine requires 500kg of nickel, while building an electric vehicle requires triple the amount of copper needed for the average internal-combustion-engine car.

Demand for these minerals is not going to go away. Businesses will get them from somewhere – it is just about choosing the method that causes minimal damage to the planet. Whether they come from a terrestrial mine or the ocean floor will depend largely on economics, but regulators must also stand firm when wads of cash are waved in front of them. The deep sea remains one of the few unspoiled places on Earth; that is surely just as valuable as any amount of copper, nickel or gold.

Types of deep-sea minerals

The rich collection of resources that are found on the ocean floor can generally be placed into three different categories. Each poses its own challenge when it comes to harvesting and is accompanied by distinct environmental risks

Seafloor massive sulphides

Seafloor massive sulphide deposits are predominantly found along tectonic plate boundaries or in areas with high levels of volcanic activity. Seawater seeps into seafloor cracks, dissolving minerals and carrying them back up to the surface, where they form hydrothermal chimneys and other deposits. Harvesting minerals in this form will involve a similar process to open-pit mining on land, with metallic ores crushed and pumped to the ocean surface as a slurry. Because these deposits extend below the seafloor, mining can take place over a relatively small area.

Cobalt-rich crusts

Cobalt-rich crusts form on the surface of hard rock substances at a rate of between one and five millimetres every million years. Around 57 percent of these crusts are believed to reside in the Pacific Ocean, but the mining process is expected to be highly labour-intensive due to the difficulty of removing the crust from the underlying rocks. Despite the length of time they take to form, crusts that are more than 25cm thick have been found. An area south-west of Japan, known as the Prime Crust Zone, is estimated to contain 7.5 billion tonnes of cobalt-rich crusts.

Polymetallic nodules

Polymetallic nodules are perhaps the best known of the seafloor mineral deposits. They are generally between five and 10cm in diameter and are formed by the slow accretion of manganese and iron hydroxides over the course of millions of years. These nodules are causing such excitement in the mining industry because they are simply lying on the seafloor waiting to be collected, often covered by little more than a few centimetres of sediment. Bringing them to the surface in the most economically viable way, however, will require large areas of the seafloor to be mined.

North Rhine-Westphalia pushes investment growth in Germany

Posted on 05/10/201904/29/2019 by ashton

Within North Rhine-Westphalia (NRW) beats the heart of the German economy. The state, which is conveniently situated in Europe’s core, offers investors a location from which they can grow their business.

With 17.9 million inhabitants, NRW is the most populous of Germany’s 16 federal states. It also generates more than 20 percent of the total German GDP. Around 160 million people live within 500km of the state capital Düsseldorf – almost one third of all EU consumers. From no other location in Europe can so many people with high purchasing power be reached within such short distances.

NRW’s economy is taking major steps towards digitalisation along the entire value-added chain

NRW is home to large international industrial corporations, as well as dozens of smaller companies that are leaders in their respective fields. One out of four German market leaders from all economic sectors comes from NRW. Of Germany’s 50 highest-grossing companies, 20 are headquartered in the state: these include Bayer, Bertelsmann, Deutsche Post, Deutsche Telekom, E.ON, Henkel and Thyssenkrupp.

Attracting investment
Not only does NRW produce some of Germany’s most successful businesses, but it also attracts foreign investors. In 2016, the state was responsible for the largest share of Germany’s foreign direct investment (FDI), making up 26.1 percent of total FDI for that year.

21.1%

of Germany’s GDP is generated in NRW

22.1%

of British firms operating in Germany are based in NRW

26.1%

of Germany’s FDI in 2016 went to NRW

Today, approximately 20,000 foreign companies are based on the Rhine and Ruhr rivers. Among them, 1,500 come from the UK, meaning 22.1 percent of all British firms operating in Germany have made a home for themselves in NRW. UK cosmetics manufacturer Lush opened its production facility in Düsseldorf in June 2016, a move that marked the company’s biggest investment on the European mainland. Meanwhile, telecommunications provider Vodafone manages more than just its German business from Düsseldorf: it also operates the company’s Vodafone Innovation Park, where new technologies and services are developed.

Start-up support
NRW’s excellent infrastructure is a key reason for its popularity with businesses. It boasts integrated transport with the Rhine, as well as with Europe’s largest inland port at Duisburg, six airports and the densest motorway and rail network in Germany. Further, with more than 110 technology centres and non-university research institutes present in the region, NRW offers an outstanding network for technology transfer. A further 772,000 students at 70 universities ensure that companies from all industries can find qualified employees, particularly in the digital economy.

The state has put everything in place to become a leading location for businesses looking to settle in Germany. Today, NRW is ahead of Berlin and all other German regions in terms of the number of digital start-up companies it accommodates. Additionally, NRW’s economy is taking major steps towards digitalisation along the entire value-added chain, offering excellent market and partnering opportunities for digital companies.

State-owned economic development agency NRW.INVEST supports international companies as they set up and grow in NRW. The company provides comprehensive information on property, recruitment, tax and legal requirements. Besides its head office in Düsseldorf and subsidiaries in Japan and the US, NRW.INVEST operates branch offices in China, India, Israel, South Korea, Poland, Russia, Turkey and the UK.

Virtual reality will change how the healthcare sector treats patients

Posted on 05/08/201905/07/2019 by ashton

There’s a revolution taking place in the healthcare sector – one that stems from an unlikely source. While virtual reality (VR) often makes headlines for transforming the way we digest content – bringing movies, gaming and even pornography to life – its medical applications are less obvious. But VR is making huge strides in this space, holding the potential to vastly improve the lives of millions of people around the world.

Perhaps most exciting is just how many applications VR could have in the healthcare sector, from helping those with autism to improving pain management and cognitive rehabilitation. Dementia is a particularly interesting area for VR, largely due to the marked lack of progress in finding a cure for a condition that, according to the World Health Organisation, some 50 million people around the globe suffer from.

“Dementia is already one of the greatest health challenges we face and is predicted to affect more than 130 million people worldwide by 2050,” Tim Parry, a director at Alzheimer’s Research UK, told The New Economy. “Research and available funding for Alzheimer’s and other [forms of] dementia has long lagged behind other serious health conditions – it’s taken us too long to wake up to the seriousness of the condition and its impact medically, socially and economically.”

Navigating dementia
VR is already beginning to tackle this lack of research. In 2016, Deutsche Telekom and game company Glitchers, together with scientists from the University of East Anglia, University College London and Alzheimer’s UK, released Sea Hero Quest, which sees players make their way through various checkpoints, scoring them for their navigational skills. As the loss of navigation and orientation skills is one of the first signs of Alzheimer’s, scientists hope to gain a better understanding of when these abilities begin to falter by using data retrieved from the game.

Dementia is a particularly interesting area for VR, largely due to the marked lack of progress in finding a cure for the condition

Progress has been tremendous so far: having been downloaded around four million times, the mobile game has gathered data the equivalent of some 17,600 years of lab research, according to the company’s website. Using this information, scientists have been able to create a benchmark for spatial navigation across various factors, such as age and location. “Research holds real power for creating [the] more accurate diagnostics and effective treatments that those living with dementia and their families really need,” Parry told The New Economy.

With the introduction of VR to a new version of the game, released in 2017, scientists have been able to obtain greater volumes of even more accurate data. Through VR headsets, scientists have gained crucial insights into the head movements and direction of a subject’s gaze when they are navigating. Michael Hornberger, Professor of Applied Dementia Research at the University of East Anglia and one of the project’s collaborators, said: “With the tablet version, it’s quite difficult because people need to swipe to look around, while with a virtual reality headset, of course, it’s very quick to do this.”

50m

people suffer from dementia globally

152 dementia patients cared for in Hogeweyk, The Netherlands

Sea Hero Quest VR enables scientists to understand how healthy people navigate in comparison with those that are at high risk of dementia, as well as those already affected. “The idea behind it is that the processes in the brain in Alzheimer’s disease particularly affect these navigation areas, and what we know from brain scans or other studies is that these changes occur up to 10 to 15 years before actual memory symptoms occur,” Hornberger explained. “So the potential is for you to test spatial navigation in diagnosing people much, much earlier.” Earlier diagnosis could also provide the key to creating preventative treatments – a development that could change the lives of millions worldwide.

There are other ways that VR can help, too: Alzheimer’s patients, for example, can often become disorientated and lost, placing them in harm’s way. Though it has not yet been explored, VR could train individuals to use landmarks and improve their navigation skills, which – coupled with medication – could help keep them safe. Through applications like Sea Hero Quest VR, scientists can assess those most at risk of Alzheimer’s and create better safeguarding measures for them.

The power of the past
A study published in the Journal of the American Medical Directors Association in 2015 indicates that reminiscence therapy – a treatment that uses audiovisual aids to help patients remember their past – can improve cognitive functions. Scott Gorman, Co-Founder and CTO of London-based start-up Virtue Health, told The New Economy: “Research shows that reminiscence therapy can [also] improve communication abilities, elevate mood and help to recall memories in people with dementia.”

VR creates a safe space to practise real-world scenarios and learn transferable skills without pressure or risk

In recent years, this type of therapy has been used on a grand scale in the form of dementia villages. One notable example is Hogeweyk in the Netherlands, a village designed to care for 152 dementia patients and help them remember their past through the use of life-sized props.

Naturally, the cost and accessibility of reminiscence therapy on such a grand scale makes it inaccessible to many, but this is where head-mounted displays – like those used in VR gaming – can step in. One app in particular, LookBack by Virtue, is leveraging VR in this way. With help from carers and family members, patients can select settings and scenes best suited to their past: they can choose to sit in a tearoom set in the 1950s or ride a steam train. In other words, LookBack brings reminiscence therapy to patients from the comfort of their own homes.

“We believe in the potential for immersive technology to provide a more affordable and flexible option for conducting reminiscence therapy,” Gorman told The New Economy. “An app like LookBack is not a panacea, but it can help improve quality of life and potentially reduce the need for certain medications.”

While there is a preconceived notion that the elderly and technology don’t mix well, the reality is not as black and white. “We found this mercifully as definitely not the case – that really people embrace it once they understand how it works and how easy it is to use,” Hornberger said. “We found that for all the people and dementia patients it’s fantastic because it’s so much more intuitive than using a keyboard or anything like this.”

Training for reality
Autism is another area in which VR has huge potential. Dr Nigel Newbutt, Senior Researcher in Digital Education at the University of the West of England, Bristol, believes this is due to the two simply being a natural fit: “VR is a form of technology, and we know that forms of technology appeal to people with autism because they are predictable, they’re controllable, they remove the need for face-to-face communication, and often they’re a one-on-one interaction.”

For this reason, Newbutt has been looking into the various ways VR can help those with autism, such as by enhancing their social communication skills and breaking down other barriers they may face. He said: “What the research does show quite well is that there is a lot of ecological validity – which is feeling natural in virtual spaces – so that ability to take what they learned in a virtual space into the real world is closely aligned.”

Sea Hero Quest in numbers

4.3m

Number of times downloaded

17,600

Equivalent years of lab research collected

Removing the need to decode facial expressions and handle the nuances of communicating with a real person allows people with autism to face one challenge at a time, instead of being bombarded by a variety of stimuli. Settings can also be modified to suit the individual, allowing users to improve at their own pace. “[For] someone with autism, trying to interact with a real-world scenario can get very overwhelming,” Newbutt explained. “What we’ve found is that those anxiety and stress levels are reduced in actual fact [when] using VR.” Newbutt believes there’s less pressure, too: “They can practise things, try things out; they can make mistakes without real-world consequences.”

One area that Newbutt has received multiple requests to help with is dating. “[You’re] going into a space you’ve maybe not been to before and having to socially interact with lots of loud noises,” he explained. With a VR app, these stimuli can be controlled and increased slowly. This, Newbutt said, can “help somebody transition into a real-world scenario like that more comfortably”.

Newbutt has also worked with the UK’s Department for Work and Pensions, developing virtual versions of job centres to improve access to employment opportunities for autistic groups. Other companies are exploring the world of autism through VR, too. Washington-based Floreo, for example, has been making strides to help with joint attention, which is the ability to take cues regarding what objects should be given attention in a social interaction.

There are numerous ways in which VR could help people with autism: it creates a safe space to practise real-world scenarios and learn transferable skills without pressure or risk. Naturally, research and development for every type of situation and corresponding platform will take time, as well as a series of scientific studies and controlled trials. Fortunately, this process has already begun, and the next step towards widespread adoption will be greater affordability. This could see the technology adopted in schools, clinics, centres and homes around the world.

A virtual future
Simulating real-world scenarios in VR is not limited to enhancing social communication skills: there are countless other situations and groups that could benefit from training exercises in the safe and controlled environment afforded by VR.

Dr Wendy Powell, Associate Professor at the Department of Cognitive Science and Artificial Intelligence at Tilburg University, put forward one example: “Someone who has recently had a stroke may not be safe to practise crossing roads, but we can create a road-crossing simulation, complete with various levels of traffic and other pedestrians, in order to practise safely until they are ready to try in the real world.”

In her previous post, Powell led VR training and research at the University of Portsmouth’s School of Creative Technologies. Her team found success in increasing the pace at which a patient can walk by presenting their pace as slower in the virtual world than it is in reality. Studies show that a subject’s speed on a motorised self-paced treadmill accelerates naturally, without the anxiety that usually comes with encouraging patients to adopt a faster pace. This technique also found that the patient’s speed increased without aggravating pain.

Indeed, pain management is another area that could benefit from VR technology. Powell explained that VR works first as a means of distraction; by immersing one’s senses in a completely new environment, the focus is taken away from pain. “This is particularly helpful in the management of acute pain, or painful procedures,” she said. There’s also mounting evidence from brain imaging studies that VR has a direct effect on the brain’s pain centres. “Since pain often has a psychological as well as a physical component – for example, anticipating a pain tends to make it hurt more – using VR to reduce pain can break the pain-tension-pain cycle and may have [benefits] for chronic pain,” Powell added.

The team at Portsmouth also looked into using VR to manage phantom limb pain in amputees, as pain can be relieved if the brain believes the amputated limb is still present. In a study conducted by Aalborg University, residual limbs were given electrical impulses, which made the patient feel as if the limb they lost was still present. The patients then played VR games that involved carrying out the same task with, for example, both hands, such as holding an object and twisting it into different shapes. In the virtual world, the amputated limb is present again, reducing the sensory conflict that causes phantom pain.

VR can also make other types of therapy more fun and engaging, thereby helping patients to realise full recovery. Using VR for brain injuries and cognitive rehabilitation is another promising application. Relearning everyday tasks can be extremely repetitive, boring and frustrating but, according to Powell, “research shows that introducing cognitive training tasks into VR allows patients to engage with them in a variety of ways and with customised increasing levels of complexity, which can speed up recovery and regain better cognitive function”.

When considering these examples, what becomes clear is just how much potential VR holds for the healthcare industry. It can ease pain, help those whose memories have failed them, provide an invaluable training ground, and make therapy more engaging, and therefore more effective. We’re still just scratching the surface of what VR has to offer. With head-mounted displays becoming more affordable with each passing year, the technology won’t just be limited to the wealthy or certain institutions – it can be rolled out to the masses and change lives across the globe. VR is set to revolutionise healthcare as we know it, making the benefits of a virtual world a reality.

VR therapy games

DEEP

As DEEP’s players drift through the game’s peaceful underwater setting, the custom controller monitors the speed and depth of their breathing. The game then feeds the player a variety of visual cues to prompt them to slow their breathing and relax. DEEP can be used to alleviate stress, anxiety and mild depression.

Bravemind

Many PTSD sufferers naturally develop avoidance tendencies, meaning they are unable or unwilling to imagine their traumatic experience. This limits their ability to process the distressing emotions that are symptomatic of PTSD. Bravemind immerses the player in an environment representative of their experience, controlling the stimuli to decondition the patient.

Limelight

Glossophobia, or the fear of public speaking, is believed to affect up to 75 percent of the population. Limelight by Virtual Neuroscience Lab places its users on a stage in front of a virtual crowd, to whom they can practise a speech or presentation. The size and mood of the audience can be adjusted.

Cityscapes

Exposure therapy is a style of cognitive behavioural therapy that immerses the patient in the source of their anxiety. Cityscapes, an app designed by Samsung, helps users overcome their fear of heights by placing them hundreds of feet above the ground. With three outdoor settings – a lift, a skywalk and a skyscraper – and a heart rate monitor, users can gauge their progress and control their phobia.

Floreo

Designed specifically for children with autism, Floreo uses VR to teach social and communication skills in a fun and engaging way. The app currently features seven games – a further three are in development – that teach the player essential skills such as how to cross the road safely, interact with a police officer and develop their nonverbal communication skills.

SAP is teaching businesses to bridge the experience gap

Posted on 05/07/201905/07/2019 by ashton

Think about the last time you stayed in a hotel – what was the experience like? Was it memorable, or a horror show best forgotten? Perhaps a hotel was forgone in favour of an alternative type of accommodation; if so, what made the experience memorable?

Many variables can affect a guest’s experience, from the ease of booking the stay to whether the reality of the location and lodging met expectations. Then there’s the in-room experience: cleanliness, the amenities provided, the entertainment system and the feeling of being a valued guest.

According to SAP’s Capital Markets Day 2019 report, 80 percent of CEOs believe their company offers a superior experience, but only eight percent of customers agree. That’s a staggering gap. A 2018 report by New Voice Media, meanwhile, stated that 67 percent of customers in the US are ‘serial switchers’, flipping from one brand to the next because of what they perceive to be a poor customer experience – an astounding increase of 37 percent in just two years. In the experience economy, not having a deep, accurate picture of the entire experience – customer, employee, product and brand – can be fatal to a business.

New Voice Media’s report in numbers

30%

of US customers were serial switchers in 2016

67%

of US customers were serial switchers in 2018

Feelings shape perceptions
Research shows that customer experience is not rational – it is based on emotions and perceptions that are cumulative, not episodic. Prospective and existing customers compare each new experience to previous ones, whether with a direct competitor or an unrelated business in a different industry. Customers set the standard for the experience they want based on an assembled mental portrait of expectations.

Joe Pine, a customer experience consultant and co-author of The Experience Economy, has argued that businesses must orchestrate memorable events for their customers, and that memory itself becomes the product. Every interaction has the ability to form a negative or positive emotional impression; customers remember how it feels to deal with any company.

“How well companies perform in the experience economy depends on how well companies know their customers and how connected that is to their business,” said Mala Anand, President of Intelligent Enterprise Solutions and Industries at SAP. “Not how well they think they know their customers, but how well they actually know their customers across every possible touchpoint. There is an immense difference between an assumption and real insight that allows you to anticipate and to act.”

Customers base their buying decisions not only on features and price, but on the entire buying experience, which includes what a brand stands for and how those values are reflected in practice – from diversity and inclusion to sustainability and the environment. Understanding a customer’s perceptions about a brand also includes understanding their personal values. Purpose-driven purchasing is having a big impact on companies. In fact, according to the 2018 Edelman Earned Brand: Brands Take a Stand report, almost two thirds of consumers across the globe base their purchase decisions on what they perceive a brand’s beliefs to be. They are choosing, switching, avoiding or boycotting brands based on the brand’s perceived stance on societal issues.

Edelman’s Brands Take a Stand report in numbers

13%

increase in belief-driven buyers from 2017 to 2018

64%

of consumers are belief-driven buyers

65%

of belief-driven buyers wouldn’t buy from a brand because it had stayed silent on an issue

67%

of belief-driven buyers bought from a brand because of its stance on a controversial issue

“Buyers believe that companies have a responsibility in society to help solve challenges as they relate to things like the economy, societal challenges and the environment,” said Alicia Tillman, SAP’s Global Chief Marketing Officer. “Buying with purpose will emerge as the sustainable differentiator that separates one company from another.”

Transforming experiences
To thrive in a purpose-driven world where understanding values and experience is key, business leaders need to evolve further and faster on their digital transformation journeys. It is imperative to gain a comprehensive view of the business through a digital lens, embed intelligence into business processes and proactively take steps to close the experience gap.

To successfully bring all these elements together, organisations require a comprehensive strategy that takes them beyond digital transformation. SAP’s strategy is to bring the ‘intelligent enterprise’ model to life in the context of every industry and line of business. In an intelligent enterprise, data becomes insight, feeding process automation and innovation. The strategy-to-execution digital transformation journey starts by defining and prioritising business outcomes. It then uses intelligent technology to connect cross-functional business processes and data across an organisation to achieve business goals.

Research shows that customer experience is not rational – it is based on emotions and perceptions that are cumulative, not episodic

“Digital transformation is just the beginning,” said Anand. “First and foremost, businesses need to think about their desired business outcomes before thinking about the technology. Delivering exceptional customer experiences is the key to survival for any organisation and is often the starting point for many organisations as they embark on their journey to become an intelligent enterprise. Experience management, as part of the intelligent enterprise strategy, streamlines the customer experience from beginning to end, seamlessly delivering valuable data insights and predictions throughout the entire process.”

Building trust
While each consumer has different criteria and priorities, great customer experiences should be consistent, responsive, memorable, transparent and based on trust. According to SAP’s January report, Mind the Gap: The Trust/Experience Paradox, customer relationships increasingly need to be built on trust, but public trust is at an all-time low. The gap between what people want and what they expect has been dubbed the ‘trust deficit’. This historically low level of trust offers customer-focused organisations a rare opportunity to differentiate themselves from competitors. If customers have a consistently positive experience with a company, greater trust and loyalty can be built.

Technology is not just changing how companies record and measure experiences; it is also transforming the nature of the experience itself. According to the SAP report The Future Customer Experience: Five Essential Trends, technology-driven trends shaping the experience economy include personal meaning, AI intermediaries, customers as contributors, ‘markets to mobs’ and aligning values. As such, it’s important for companies to understand what each trend means for businesses and their customers.

First, customers are increasingly choosing to focus their limited time on experiences that have personal meaning to them. This is obviously different for each customer, but experiences generally have more meaning if they involve some element of entertainment, human connection, learning or aspiration. If a company simply offers a basic product or service and doesn’t provide a meaningful total experience around it, customers could choose to spend their time and
money on other things that do.

Customers are becoming increasingly comfortable with AI intermediaries taking over many of their buying decisions. As such, though unwittingly, they are likely to use ‘set it and forget it’ AI algorithms to take over routine buying decisions, such as keeping the house stocked with cleaning supplies or paying bills. This means they can spend their time on more meaningful experiences.

While taking a background role in the sales process runs the risk of reducing customer loyalty, companies can fight back by becoming their industry’s most trusted AI intermediary. Netflix and Amazon, for example, have become dominant by using AI intermediaries to simplify their customers’ lives. According to the SAP’s Five Essential Trends report, 35 percent of Amazon purchases and 75 percent of Netflix selections are driven by machine learning recommendations. Organisations can become leading AI intermediaries in their industries by enabling AI in their products. They can also enhance human-to-human touchpoints by providing AI-based customer data to employees to encourage more meaningful customer interactions.

Customers as contributors
A third trend is that customers are becoming contributors to businesses, not simply recipients of goods and services. A 2018 Harvard Business Review article stressed that companies “looking to exploit the branding potential unlocked by core digital technologies need to make the shift in their engagement with customers – from purchase to usage”. Companies must engage with buyers in an ongoing relationship, whether actively (such as in a user community) or passively (as in the case of fitness platforms where customers allow apps to access their digital activity data to generate new offerings).

Great customer experiences should be consistent, responsive, memorable, transparent and based on trust

When Yamaha designed the Montage keyboard, it engaged actively with its customers to design a product they would love. Yamaha used the Qualtrics experience management system to ask musicians whether they preferred knobs or sliding faders on their keyboards. Within hours, the company had more than 400 responses from qualified customers to help them make the right design decision, saving days of discussions and design time. As a result, Yamaha was able to create a product with the exact features that most of its customers preferred (it turns out it’s all about faders).

Other companies – from heavy equipment suppliers to SMEs – are creating platforms that track customer data and invite participation. As more features are added and these platforms become smarter and more able to add value to the experience, participation becomes easier and data becomes more insightful. This creates an iterative, and potentially exponential, value cycle. In return for giving businesses their ideas and expertise, customers receive optimised products and services. Additionally, the process of contribution adds more meaning to the consumer experience, benefitting the customers who engage with companies in this way.

Markets to mobs
If customers are not satisfied with their overall experience, a target market can quickly turn into an upset, outspoken ‘mob’ on social media. ‘Digital tribes’, as they are also known, can spontaneously form and quickly escalate support or scorn for a company. The ease and speed with which these groups form, communicate and act can cause serious corporate damage.

To keep target markets from turning into digital mobs, companies should make social sharing natural and create social objects, such as tweets, photos and status updates, that matter to relevant digital customer groups. It’s also important to shift away from directing or dictating customer responses, towards cultivating ideas and content from these digital tribes. Keeping customers engaged and demonstrating active listening goes a long way to keeping positive sentiments on track and boosting loyalty.

To retain customers, companies must go above and beyond the product or service and form meaningful, sustained connections

The final trend – values – highlights something discussed earlier: customers increasingly choose brands and products that align with their own values. Technology platforms have encouraged growing awareness about global issues, while digital technology and social media are creating greater transparency concerning corporate operations. Businesses need to learn what their customers are passionate about and ensure their corporate values align. SAP’s Mind the Gap study found that nearly 90 percent of consumers would purchase a product based on the company’s values – for example, if it advocated for an issue they cared about. Nearly 80 percent would boycott a brand if it supported an issue contrary to the consumer’s beliefs.

“Generally speaking, purpose and the potential for brands to enact positive change isn’t anything new – traditional CSR efforts and corporate citizenship have been around for nearly a century,” said Tillman. “The shift that we’re seeing as marketers is really about authenticity and accountability. Consumers have demonstrated they’re loyal to the brands that connect their brand identity to shared values and aren’t afraid to punish those who they view as inauthentic or capitalising on a trending conversation.”

X’s and O’s
One of the biggest challenges in today’s experience economy is connecting the customer, who is external to the company, with everyone within it. When a customer places an order, they expect impeccable products or services to be delivered as promised, on time and on budget. To deliver on this expectation, both internal business processes and the entire supply chain need to be responsive and to keep the promise. To retain customers, companies must go above and beyond the product or service and form meaningful, sustained connections. This goes far deeper than the buying process or customer service – it involves digital transformation with an intelligent enterprise strategy that includes experience management.

“Experience management is the process of monitoring every interaction people experience with a company in order to discover opportunities for improvement,” said Timo Elliott, Vice President and Global Innovation Evangelist at SAP. “Customers now expect extraordinary experiences in order to remain loyal – this is now the new normal. In order to provide a fully personalised experience, organisations require seamless coordination between the front-office systems, such as business-to-business e-commerce, and the back-office systems, such as logistics, finance, billing and workforce resources.”

Experience management is not a new concept, but with technology innovation, it can be taken to the next level. Thomas Saueressig, President of SAP Product Engineering, said: “We at SAP look at experience management as an integrated and seamless end-to-end business process enabled by intelligent technologies across all our systems. From the very first touchpoint on the website to a white paper download, accessing a trial, moving to a productive system, entering into a contract, then on to services, adoption, support and customer success – it’s an end-to-end relationship with each customer. In an intelligent enterprise, we can connect all these business processes to deliver a richer customer experience at every stage.”

Intelligent enterprises can seamlessly manage the customer experience through a balance of operational (O) systems and experience (X) systems. Business operational data (O-data) reveals what happens in the customer experience, while experience data (X-data) gives insight into why something happens. X-data is gathered by capturing human sentiment at key moments in the customer journey, which provides an immediate understanding of the quality of the customer’s experience.

To use the hotel example from earlier, O-data includes aspects like ensuring the back-end booking system is operational, updating reservation status in real time, streamlining the check-in process, keeping customer information secure, and ensuring that all of the operational systems and business processes run smoothly.

Experience factors, meanwhile, include all of the other elements that can affect a customer’s experience, such as meals, cleanliness, friendliness of staff and the quality of the room. When O-data and X-data are combined, it’s possible to uncover in-depth, customer-driven insights that were previously hidden, allowing businesses to effectively plan and create exceptional experiences on an ongoing basis.

Creating deep connections
“We know that our experiences need to be intelligent, but they also need to be empathetic, so we can connect with customers on a deeper level, which will increase customer loyalty,” said Tillman. “We’re on a mission to create intelligent customer experiences that don’t just respond to customer needs, but predict them.”

Connecting with the customer in a deep and meaningful way was a key innovation driver for Bumble Bee Foods, the largest branded shelf-stable seafood company in North America. The company wanted to proactively address consumer concerns around food safety and sustainable sourcing. Through the use of blockchain technology, the company now tracks the fish it sells from the moment it’s caught to its placement on store shelves.

Critically, customers can easily access the complete origin and history of the product on a smartphone via a QR code for complete transparency in food sourcing and safety. To meet customer expectations and live up to Bumble Bee’s long history of sustainable tuna production, the company implemented an innovation sea change across its operations and throughout the supply chain. The results were wide-ranging, positively impacting ecosystems and the lives of stakeholders.

The ability to apply intelligent technologies, such as blockchain and machine learning, across applications and processes is critical to another important aspect of customer experience management: speed. These technologies enable the transformation of massive volumes of X-data and O-data into a clear picture of what the customer experience looks like, while also allowing businesses to respond quickly to events in real time, as well as take proactive action.

Through the use of intelligent technologies, connected business processes, experience management and a unified data platform, companies can innovate and bring together all areas of the organisation to deliver on the overall brand promise.

“Having an intelligent enterprise strategy is a massive opportunity to create new value in every industry, across every line of business,” said Anand. “It’s not just about improving the bottom line; you can create new and disruptive experiences and products that truly delight the customer and give them huge value.’’

Trends shaping the experience economy

Personal meaning

As well as meeting the usual customer requirements – quality products delivered efficiently – businesses must also offer emotionally fulfilling services that leave each customer experience imbued with meaning. Such experiences fit into four broad categories: entertainment, connection, learning and aspiration.

AI intermediaries

With the complexities of modern life resulting in widespread cognitive overload, AI engines can sift through the glut of data and offer suggestions to help consumers reach a buying decision. As AI becomes more accurate, consumers will increasingly offload the decisions they deem unimportant onto AI intermediaries.

Customers as contributors

Consumers have become embedded in business operations, acting as participants as well as purchasers. By creating open platforms where consumers can engage with a product, companies consolidate brand loyalty; customers enjoy the feeling of belonging that comes with contributing to something they care about.

Markets to mobs

Technology has made it easy for target markets to transform from a collection of individual customers to digital tribes that can grow into mutinous mobs. Through social media, these groups can form, communicate and act with ease, making it essential that businesses understand their values and keep them onside.

Aligning values

Increasingly, customers are making purchase decisions based on whether a business’ values align with their own. As technology platforms and social media bring greater transparency to companies’ operations, consumers are evaluating the aesthetic, personal and moral values of the businesses they spend money with.

Putin signs law to create ‘sovereign internet’

Posted on 05/02/2019 by ashton

Russian President Vladimir Putin has signed a bill that will create a ‘sovereign internet’ in a bid to solidify the government’s control of online activities.

The law will force internet service providers to filter all traffic through dedicated portals that will be policed by Roskomnadzor, the Kremlin’s online censorship arm.

It is not yet clear how the disconnection system will work, although the Kremlin will allegedly force service providers to test it later this year

It also sets in motion plans for the creation of a Russia-only domain name system that is separate from the rest of the global internet.

The government has claimed this will provide a back-up option in case Russia’s internet becomes disconnected from the world wide web, but critics have raised concerns that the function could be exploited to block access to outside media and further clamp down on freedom of speech in the country.

A document providing details of the new law was published on May 1 on the government’s website. It is expected to come into force on November 1.

It is not yet clear how the disconnection system will work, although the Kremlin will allegedly force service providers to test it later this year.

According to The Moscow Times, Russia reportedly carried out clandestine trials in 2014 to evaluate whether it was possible to disconnect its internet from the world wide web. The tests allegedly found that Russia’s internet could be isolated, but only for a period of around 30 minutes at a time. It is not clear whether the technology has been updated to allow the internet to be cut off for longer periods.

Russia’s internet users already face significant restrictions on their online access, with many sites blocked and the use of virtual private networks banned. Freedom House, an internet freedom advocacy platform, classified Russia’s online environment as “not free” in its 2018 report, citing government efforts to block the messaging app Telegram and legislative censorship proposals as evidence.

The new controls, if successfully implemented, will further consolidate the Kremlin’s hold over Russia’s online ecosystem, making it even more challenging for Russian citizens to express themselves freely or gain access to impartial information. They will also make operations significantly more challenging both for Russian businesses, as their potential customer base will be severely restricted, and international firms that sell to the Russian market.

Hackers steal data from IT infrastructure firm Citycomp

Posted on 05/01/201905/01/2019 by ashton

A group of cybercriminals has stolen data on a number of prominent global firms including Airbus, Toshiba and Volkswagen by breaking into an IT services provider.

Citycomp, a German firm that builds IT infrastructure, was targeted by a hacker group on April 30, according to Motherboard, the publication that first learned of the attack. The hacker group set up a website to distribute the stolen material, which may include sensitive financial data.

The hacker group set up a website to distribute the stolen material, which may include sensitive financial data

Michael Bartsch, Citycomp’s crisis manager for this case, told The New Economy: “A still-unknown perpetrator has stolen customer data of Citycomp and threatened the company with publication, should it not comply with the blackmail attempt.”

On the website set up by the hackers, they claimed to be in possession of “312,570 files in 51,025 folders, over 516GB [of financial data] and private information on all clients”. The companies affected include Ericsson, Leica Camera, Toshiba, UniCredit, BT, Hugo Boss, NH Hotel Group, Oracle, Airbus, Porsche and Volkswagen, according to the hackers.

The files were made publicly available for download on the data site. Bartsch said: “Since Citycomp does not comply with blackmail, the publication of customer data could not be prevented.” He added that Citycomp’s customers had been informed of the publication.

The site set up by the hackers also featured a contact email address, which, according to Motherboard, has previously been associated with other ransomware campaigns.

Bartsch confirmed that Citycomp had since “implemented further technical and organisational measures” to “increase security in order that such an attack will not occur again in the future”.

The hackers’ tactic of attempting to extort a ransom payment from Citycomp in exchange for the data is becoming increasingly common in this sort of attack. Where previously cybercriminals may have attempted to sell data on the dark web, many are now choosing the ransomware path in the hope this will deliver a bigger payoff.

Co-working giant WeWork files for IPO

Posted on 04/30/2019 by ashton

The We Company, formerly known as WeWork, has confidentially filed for an initial public offering, it announced on April 29.

In its statement, the office space giant said it had filed the paperwork with the US Securities and Exchange Commission in December 2018, kick-starting the process of becoming a publicly traded company.

By filing confidentially, the We Company is able to avoid providing key information about its finances

Founded in 2010, the We Company is London and New York’s largest private office occupier, and today operates in 114 cities globally. Its flexible co-working model makes it popular with entrepreneurs and small businesses, as it allows them to avoid long, expensive leases on trophy headquarter buildings.

We Company tenants also benefit from a wealth of perks such as regular conferences and panel discussion events, access to ping pong tables and free beer on tap.

Although it was valued at $47bn by private investors in a January funding round and reported $1.8bn in revenue last year, the firm is yet to turn a profit; its losses doubled to $1.9bn in 2018. For this reason, some ratings agencies have given the company a ‘junk’ or risky credit score.

By filing confidentially, the We Company is able to avoid providing key information about its finances. The firm also declined to voluntarily offer any information about how much it will seek to raise, the valuation it will be targeting or the timing of its IPO.

The We Company is the latest in a line of ‘decacorns’ – companies valued at over $10m – to file for an IPO in the past few months. Ride-hailing giant Lyft, which went public at the end of March, targeted a $23bn valuation, while its powerful rival Uber is seeking an $80-90bn valuation when it begins publicly trading in the next few weeks.

Like the We Company, neither Lyft nor Uber have turned a profit in the lead-up to IPO, a fact all are hoping will not deter investors. The We Company, in particular, has argued that it is in a strong financial position, with $6.6bn in cash and committee capital as of last year.

In a bid to make itself more attractive as a public company, the We Company has made several attempts in recent years to diversify its business model. Some have been more successful than others; the company launched a community housing project, WeLive, in 2016, which it said would account for 21 percent of its revenue by 2018. However, the project stalled in the face of high build costs, and today has just two sites, compared with 651 WeWork office sites.

Investors will have a clearer picture of the viability of investing in the We Company when it eventually releases financial information, which it will be forced to do before its listing.

In the meantime, the success of company’s diversification efforts will be under close scrutiny, as investors will be keen to avoid pouring funds into a firm that appears to have reached the ceiling of its potential growth.