Author: ashton

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

Posted on 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 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

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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 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 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

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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 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 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

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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.

Huawei denies claims it is owned by the Chinese Government

Posted on by ashton

Chinese telecoms firm Huawei has denied reports of government ownership, stating that it is controlled by its employees through virtual shares.

The company was responding to a report published by American academics Christopher Balding of Fulbright University Vietnam and Donald C Clarke of George Washington University Law School on April 17. The duo said in their abstract: “The myth of Huawei’s employee ownership seems to persist outside of China… This article… aims to refute this myth once and for all.”

The US has warned its allies not to contract Huawei to build any part of their 5G technology

The paper highlighted that Huawei is fully controlled by a holding company, of which Huawei founder Ren Zhengfei owns just one percent. The remaining 99 percent is owned by a trade union committee, the company claims.

No information on the members of this committee is available. However, all official trade unions in China are supervised by the All-China Federation of Trade Unions, a Chinese Communist Party (CCP) body.

Clarke and Balding’s paper concluded: “Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.”

Speaking at a press conference on April 25, Chief Secretary of Huawei’s Board of Directors Jiang Xisheng refuted these claims. He told reports that around half of the company’s 180,000 employees own “virtual shares” that pay dividends and provide them with voting rights.

Jiang added that trade union ownership was simply a legal convenience as Chinese law applies strict restrictions to the number of shareholders allowed to own a stake in a company.

He said Huawei pays an annual fee to the Shenzhen municipal trade union, which conducts an inspection of the holding company’s trade union committee and renews its licence. Outside of this, he claimed that neither union plays a role in the day-to-day operations of Huawei, save for organising extracurricular activities for employees and soliciting donations for health and charity initiatives.

“We don’t have any other relationships with [the Shenzhen municipal trade union]. We don’t need to report our business operations. They won’t come to ask for anything either,” said Jiang.

The question of governmental involvement in Huawei’s corporate structure has been raised by a range of media outlets in recent months after tensions arose between the US and Huawei over the firm’s involvement in 5G network installation.

The US has warned its allies not to contract Huawei to build any part of their 5G technology, citing concerns that the Chinese Government could use them for espionage.

Jiang denied these allegations, saying: “Most of what the US Government says, as we all know, is not true.” He added: “There is no government capital in Huawei.”

Jiang’s comments, while indicative of Huawei’s push to persuade the media that it is not secretive about its operations, are unconvincing in the face of mounting evidence to the contrary.

Balding and Clarke’s paper presents a wealth of evidence that Huawei is owned only in name by employees, while the Chinese Government has an extremely well-documented history of both official and unofficial, disclosed and undisclosed, methods of exerting control over the country’s businesses.

Given the CCP’s strict control on foreign media access, it will likely prove extremely challenging for either the US or China to definitively prove or disprove espionage and business control claims.

Congress demands answers from Google about user location database

Posted on by ashton

US congressional leaders have written to Google CEO Sundar Pinchai to request information about a database known as Sensorvault, where the tech giant allegedly stores exact location data from hundreds of millions of personal devices.

The letter, sent on April 23 to Pinchai on behalf of the bipartisan House Energy and Commerce Committee, raised a number of questions regarding the use and sharing of this data.

Sensorvault’s existence was revealed by The New York Times earlier in April. The US newspaper reported that law enforcement officials had sought access to data held by Google for use in criminal investigations, notably in identifying whether suspects had been near crime scenes.

Much of the data held in Sensorvault is collected through Google’s location history service

These ‘geofence’ warrants allow the police to search the database for new leads, but there is a risk of misidentification, as innocent bystanders could be erroneously implicated in investigations.

Much of the data held in Sensorvault is collected through Google’s location history service, which was launched on both Apple and Android devices in 2009. It allows the tech giant to collect location data from anyone signed in to a Google app on their phone, even if it is running in the background.

A representative for Google said in a statement, as reported by Reuters, that location history is “off by default”, adding: “If a user chooses to turn it on, we can provide helpful information, like real-time data to help them beat traffic on their way home from work. They can delete their location history data, or turn off the product entirely, at any time.”

The letter asked Google for further information about Sensorvault, specifically who has access, how accurate the data is, and whether it is the only store of personal location data the company has.

“The potential ramifications for consumer privacy are far-reaching and concerning when examining the purposes for the Sensorvault database and how precise location information could be shared with third parties,” the letter said.

Congressional lawmakers have asked that Pinchai answer their questions by May 7 and have organised a briefing for May 10.

The letter is the latest development in a congressional campaign for data privacy regulation, which is being spearheaded by senators such as Amy Klobuchar, a Democratic presidential candidate from Minnesota, and Marco Rubio from Florida.

It appears Congress is gathering information about Sensorvault to ascertain the scale of the problem and establish what legislative action is required.

Despite its developed technology sector, the US’ internet regulations are not comprehensive. With industry leaders such as Facebook and Google frequently at the centre of privacy scandals, it is clear that legislation is sorely needed.

Facebook pivots to privacy-based model

Posted on by ashton

Founder and CEO of Facebook Mark Zuckerberg has announced a new, privacy-focused vision for the social network that veers away from the open sharing model he originally pioneered.

“Facebook and Instagram have helped people connect with friends, communities and interests in the digital equivalent of a town square,” Zuckerberg said in a blog post shared to Facebook on March 6.

Some critics have seen the move as an ill-disguised strategy to salvage Facebook’s reputation, providing commercial benefits for the company but not for its users

“But people increasingly also want to connect privately in the digital equivalent of a living room,” he continued.

The billionaire founder of Facebook went on to set out his vision for a new, privacy-centric model that will be based on intimate interactions, encryption, safety and secure data storage.

Zuckerberg also pledged to reduce the permanence of user-added content, saying: “We won’t keep messages or stories around for longer than necessary to deliver the service or longer than people want them.”

Facebook has been hit by a series of privacy scandals in recent years, the most significant of which saw the personal data of about 50 million individuals harvested and passed on to political targeting consultancy Cambridge Analytica.

Zuckerberg addressed the lack of trust in Facebook’s security measures in his post, saying: “We don’t currently have a strong reputation for building privacy protective services.”

Some critics have seen the move as an ill-disguised strategy to salvage Facebook’s reputation, providing commercial benefits for the company but not for its users. Ashkan Soltani, a former chief technologist for the Federal Trade Commission, tweeted: “While positioned as a privacy-friendly play, its timing suggests a competition play to head off any potential regulatory efforts to limit data sharing across services.”

The BBC’s North America technology reporter Dave Lee also highlighted concerns that if content shared on Facebook is more private and increasingly temporary, it may be more difficult to hold the tech giant liable for any future misuse of data.

Zuckerberg also described an ongoing commitment “not to build data centres in countries that have a track record of violating human rights like privacy or freedom of expression”. He conceded that this pledge, together with the encrypted model, would limit Facebook from entering certain new markets, or may mean the social network is blocked in some countries. “That’s a tradeoff we’re willing to make,” he added.

These comments appear to refer to China, a market that Zuckerberg has long attempted to enter, but with little success due to the country’s stringent data storage laws. Internet service providers in China are obliged to keep all personal data produced by its citizens on computers within the country’s borders; to comply with these regulations, Facebook would be forced to build a data centre on Chinese soil.

An anonymous Facebook source told Buzzfeed News that the company “does not see a way forward in China”, a move which has been welcomed by critics. Facebook’s former Chief Security Officer, Alex Stamos, tweeted: “Zuck [sic] has clearly given up on entering China, as these changes makes [sic] that impossible. Good.”

Zuckerberg ended the post by setting out Facebook’s next steps, saying: “Working through these principles is only the first step in building out a privacy-focused social platform. Beyond that, significant thought needs to go into all of the services we build on top of that foundation.”

It’s unlikely that user experience on Facebook will change significantly in the short term as Zuckerberg is simply setting out the guiding principles for the new model. The details of how the social network plans to implement this new philosophy remain to be seen, and details will undoubtedly be heavily scrutinised as they emerge in the coming months.