Author: Ben Debski

Externships teach students the skills business needs

Posted on by Ben Debski

The industries of the future will require people creative and innovative enough to work with technology, not be replaced by it. And workers will need resilience and grit, because failure, more often than not, is part of the innovation process.

Unfortunately, secondary schools today are not providing a platform for imparting the skills necessary for their graduates to compete in the workplaces of the future. With some notable exceptions, mainstream schools in most countries remain insulated from the demands of industry, which all too often means they are cut off from rapid evolution in the economy at large. In order for students to be better prepared, schools and companies will have to learn to cooperate more closely than ever before in the formation of the workforce.

Externships offer students a better way to acquire skills

Several American companies are already working to close the gap. General Electric and IBM have both opened schools where students can benefit from a focus on math, engineering and science. Udacity, the online education start-up founded by Stanford professor Sebastian Thrun, delivers certified courses in partnership with companies, giving students an edge over applicants who have undertaken only classroom study. According to The Economist, more than 70 companies, including Microsoft, Verizon and Lockheed Martin – all struggling to find innovative and tech-savvy skilled employees – are working on similar models with schools.

The value of externships
Schools thinking of collaborating with industry naturally think of internships. But for secondary-school students in particular, this approach can be problematic. Opportunities for placing young interns are rare, because they lack the skills and knowledge companies want. And companies are reluctant to have teenagers in their offices for many other reasons (for example, in Singapore, no one under 18 years old may sign a non-disclosure agreement).

Those secondary-school students who do manage to get an internship often find the experience unrewarding; instead of learning anything of value, they are often relegated to making photocopies and performing other menial tasks. Meanwhile, university admissions committees know that internships are not productive experiences, and therefore do not give interns precedence over other applicants.

Externships offer students a better way to acquire skills, because students are given an opportunity to help a company solve a real-world problem from the classroom. Examples include tackling innovation challenges related to delivering services in different markets, developing technology apps to optimise operations and cut costs, and producing prototypes for new products.

In many ways, externships are a close cousin of the apprenticeship programmes that are common in secondary schools in Europe. What makes them different are the students’ requirements: less technical knowledge and greater emphasis on foundational skills like entrepreneurship, leadership, communication, and the basics of technology.

One solution is to create programmes that allow secondary-school students to tackle innovation challenges for companies without leaving their classrooms. Rather than working on-site at the company, students learn the skills to solve the tasks with their teachers and present their ideas to companies at formal meetings. Companies can oversee students for as little as six hours per externship.

Play and rigour
Externships can last from one to four months, and they follow a three-stage learning path. At the first stage, students try to solve the challenges faced by small or medium-size companies (SMEs). Then they grapple with difficulties troubling Fortune 500 companies. Finally, they work on identifying problems themselves, forming teams, and competing in international venues.

Learning to communicate the process by which students arrive at their solutions is central to any externship. Students must be able to make proposals to company leaders and learn to accept failure and criticism productively.

Externships lie precisely at the intersection of play and rigour, which is where innovation thrives. For SMEs, externships provide much-needed creative manpower. For larger companies, they are avenues for corporate citizenship and innovation.

When properly integrated into a student’s education, externships can provide the competitive edge on college application essays and at campus or alumni interviews, which admissions committees increasingly use to distinguish 21st century leaders from the competing hordes of top-scoring test-takers. Externships offer transparency and accountability for educators and imbue a spirit of fearlessness in students.

Our education system can no longer afford to wall itself off from the world of industry. Its goal should be to cultivate the kind of students that the organisational theorist John Seely Brown calls “entrepreneurial learners”. By helping companies solve their real-world problems, students can prepare themselves to meet the challenges of the future.

Ayesha Khanna is co-founder and CEO of the Keys Academy

© Project Syndicate 2016

ChemChina buys 12 percent of energy trader Mercuria

Posted on by Ben Debski

The China National Chemical Corporation (ChemChina) has just finalised its strategic investment in Mercuria Energy Trading. The move will see ChemChina become a major minority shareholder, with a 12 percent stake in the Swiss energy trader.

The deal is mutually beneficial for both companies, with ChemChina able to diversify its investment portfolio even further. This will help it to expand its reach within the energy sector, while helping Mercuria to bolster its already strong position in China.

ChemChina has been buying shares in numerous companies across Europe

“An investment by ChemChina in our company reaffirms Mercuria’s business model as well as growth potential”, said Marco Dunand, Chief Executive Officer of Mercuria Energy Group. ”ChemChina has important expertise and global reach. Combined with Mercuria’s experience, this will fuel and diversify our natural growth.”

ChemChina has been buying shares in numerous companies across Europe in order to help it manufacture and trade everything from pesticides and vitamins to rubber and plastics.

“Through the investment in Mercuria Energy Trading, which has grown rapidly over the last decade, ChemChina will expand further into the energy sector”, said Ren Jianxin, Chairman of ChemChina. “Mercuria has growth opportunities ahead in China and around the world. We highly respect and trust its outstanding management team. We look forward to working with its management and employees.”

The wearable technology market is still undervalued

Posted on by Ben Debski

Growth in the wearables market has been nothing short of astounding: according to IDC, the number of shipments rose 173.3 percent last year. PwC said “there is indeed a wearable future ahead” as the adoption rate of wearables falls in step with that of tablets, investment climbs into the billions of dollars, and the industry’s combined revenue into the tens of billions.

One of the market’s major forces, Fitbit, was last year valued at $7.6bn, having surpassed rival GoPro less than a week into its initial public offering. As clear an indication as you’re ever likely to see that wearables are enjoying a surge in demand, investors are clamouring atop a wave of explosive growth and capitalising on the sector’s rich and as-yet-unrealised potential.

173.3%

Increase in wearables shipments, 2014-15

$7.6bn

Value of Fitbit

$20bn

Wearable technology market, 2015

$70bn

Wearable technology market, 2016 (predicted)

$3.3bn

Wearable medical devices market, 2015

$7.8bn

Wearable medical devices market, 2020 (predicted)

“The growth of the most common wearable technology devices such as smartwatches, fitness trackers, eyewear, and the like was enabled by the introduction of low energy Bluetooth in Bluetooth 4.0 and later”, said James Hayward, Technology Analyst at IDTechEx. “Products such as the smartwatch, fitness tracker, and the like had existed for many years, but never had the form factor, battery life or use case to reach mass markets. This has now changed.”

According to IDTechEx, the market for wearable technology will reach $70bn in 2016, up from an already-impressive $20bn in 2015. However, though market stalwarts such as Fitbit and Jawbone receive the lion’s share of the coverage, many have lost sight of the market’s potential, not just as a way of improving fitness, but also healthcare. By combining medical, fitness and wellness, it’s not unreasonable to suggest wearables could revolutionise the healthcare sector.

“While the smartphone remains Americans’ device of choice, the tech world is creating a future of wearable devices that promises to entertain consumers, save them money and help them live healthier lives”, said the PwC report Health Wearables: Early Days. “Technology companies’ interests in health and wellness have sparked the creation of a myriad of wearable devices, from fitness bands that monitor activity and sleep patterns to flexible patches that can detect body temperature, heart rate, hydration level and more.”

Not only could some of the market’s brightest minds improve the resiliency and efficiency of healthcare solutions, but advancements in wearable technology could also address some of the underlying issues plaguing the global healthcare technology market.

Big names, big opportunities
Fitbit’s revenues have risen tenfold in the past two years, and even President Obama was last year seen sporting a wristband of his own. Speaking to business magazine Inc, the company’s CEO and co-founder James Park said one reason for Fitbit’s success is that its mission has remained unchanged: “How do we use technology to help people get healthier and more active, specifically by giving them data and guidance and inspiration?”

Certainly, Fitbit is by no means the most advanced toolkit in the wearables market, though the health benefits tied to it serve to underline the sector’s place in realising broad-based and sustainable gains for the healthcare system. While the progress is limited in consumer products, the same cannot be said for devices made for medical practitioners.

According to Mordor Intelligence, the global market for wearable medical devices will exceed $7.8bn by 2020, up from $3.3bn in 2015, growing at a CAGR of 17.7 percent and driven by ongoing projects in the healthcare sector and rising chronic disease rates. Broadly speaking, the market is segmented into monitoring and feedback, disease management, rehabilitation, and health fitness, with the first occupying a 70 percent share of the market, split between North America, Europe, Asia-Pacific and the rest of the world. Though much of it is concentrated in the US and in the hands of major market participants (namely Fitbit, Omron, Philips Electronics, Draeger and others), the rate at which the market is growing means there is potential for greater things in the months and years to come.

Healthcare shake-up
Silicon Valley-based medical device and healthcare technology company VitalConnect, for example, uses its HealthPatch biosensors to log a range of biometric measurements. The patch, together with its companion app SweetBeatLife, allows users to monitor skin temperature, heart rate variability, body posture and a string of activities for them to pass on to a healthcare professional. “The value of multi-modal data is greater than the sum of its parts”, said the company, and the ability to monitor a patient remotely is a major leap forwards for the medical profession.

“Wearables bring many advantageous properties that can help in a huge range of disease verticals, and everyone from the smallest start-ups to global medical device giants are embracing wearables to solve problems across the industry”, said Hayward. “Whether it be improving the convenience and comfort of repeat testing and self-medication in diabetes, decreasing physician or physiotherapist visits post-surgery with active monitoring and coaching devices, or monitoring infant heartbeat and activity during pregnancy to provide peace of mind and insight to future parents, wearable technology solutions are finding their way into many aspects of modern healthcare. All of the largest players are involved, and this is a growing industry worth billions of dollars.”

HealthPatch is by no means the only device advancing the healthcare profession, whether it’s “smart textiles” (AiQ), wearable sensors (Metria), headsets (EEG) or insole sensors (Moticon). Unfortunately, these additions create a number of new problems.

“Wearables enable the collection of physiological data on an unprecedented scale. The challenge is making that data actionable in a safe, reliable and efficient way”, said Hayward. “At the moment, many are focused on improving the quality of the information provided, so that it goes beyond just data to something that is actionable and useful to the user.”

Aside from the difficulty of collating and interpreting data, there are additional challenges if users take the data into their own hands; information is often housed in silos outside the healthcare system, and users must be educated about exactly what it is they’re looking for and how they can put that data to good use. Communication between wearables companies, the healthcare system and the consumer is of the utmost importance; without that dialogue, the sector’s promise will likely come to nothing.

What Japan can teach South Korea

Posted on by Ben Debski

South Korea’s recent economic performance has been disappointing. After 40 years of astonishing 7.9 percent annual GDP growth, the average growth rate dropped to 4.1 percent in 2000-10, and has stood at a mere three percent since 2011. This has many wondering whether South Korea is headed for the kind of protracted deflation and stagnation that characterised Japan’s so-called “lost decades”, from which it is just beginning to emerge.

The similarities between South Korea today and Japan 20 years ago are undeniable. And, in fact, on economic matters, South Korea has, for better or worse, often followed Japan’s example. In this case, Japan’s example can save South Korea – if, that is, South Korea’s leaders take it as a lesson in what not to do.

What Japan got wrong
Japan’s woes are rooted in real-estate and equity bubbles, which were fuelled by monetary expansion aimed at stimulating domestic demand after the 1985 Plaza Accord drove up the yen’s value and hurt Japan’s exports. In the early 1990s, the bubbles burst, leaving the private sector with a huge debt overhang. Add to that sluggish productivity growth, weak demand, and rapid population ageing, and Japan’s situation was dire.

South Korea’s per capita income, just one-fifth of Japan’s in 1970, amounts to almost 95 percent of Japan’s today

At first, Japan’s authorities turned again to fiscal and monetary expansion. But fiscal policies often targeted unproductive projects, such as rural infrastructure construction, and weaknesses in the banking system dampened the effectiveness of monetary stimulus. As a result, the economy grew by just 1.1 percent, on average, in the 1990s, far below the 4.5 percent of the 1980s.

In the early 2000s, Prime Minister Junichiro Koizumi’s government took aggressive action to tackle underlying problems in the financial and corporate sectors. Despite these efforts – not to mention the boost provided by rapid GDP growth in China – Japan’s economy expanded by just 0.75 percent annually, on average, for the entire decade.

Things have been looking up since Prime Minister Shinzo Abe took office in 2012 and launched his three-pronged recovery strategy, dubbed ‘Abenomics’, which entailed bold monetary easing, fiscal expansion, and structural reforms. Stock prices have climbed more than 80 percent. The yen’s depreciation – from YEN78 to YEN123 against the US dollar – has boosted exports of industrial products and, in turn, corporate profitability. Consequently, employment and wages have also increased.

Now, Abe is preparing to augment these efforts with initiatives to address major drags on Japan’s economy. So-called ‘Abenomics 2.0’ entails efforts to raise the fertility rate (free preschool education, support for fertility treatments, and greater assistance for single-parent families) and to mitigate problems associated with population ageing (boosting social security and providing more employment opportunities for retirees).

But Japan’s economy is by no means out of the woods. On the contrary, GDP contracted by 0.1 percent in 2014, and is expected to have grown by just 0.6 percent in 2015. Moreover, despite continued purchases of YEN80trn per year in government bonds, the Bank of Japan has failed to achieve its two percent inflation target. And Japan’s public debt-to-GDP ratio, at 240 percent (and rising), remains the highest in the world.

And Abenomics 2.0 may not succeed, not least because young people, unconvinced that they can support larger families, are increasingly delaying marriage and children. Against this background, many believe that preventing the current population of 127 million from falling below 100 million – Abe’s official goal – will require Japan to accept more immigrants. That is no small matter in a country that places such a high value on homogeneity.

Simply put, while Japan has some reason for hope, its position is not enviable. And, if South Korea is not careful, it could end up in much the same place.

Reliving the 90s
Employing many of the same development strategies – including export-orientated policies and a conglomerate-dominated industrial system – South Korea has been catching up with Japan for four decades. Its per capita income (in terms of purchasing power parity), just one-fifth of Japan’s in 1970, amounts to almost 95 percent of Japan’s today. Over the same period, South Korea’s share of global exports jumped from 0.3 percent to three percent – very close to Japan’s 3.6 percent.

To be sure, significant differences between the two countries remain. South Korea still lags behind Japan in international influence and institutional quality. South Korea ranks 26th on the World Economic Forum’s Global Competitiveness Index, whereas Japan ranks sixth. Based on the gap in GDP per worker with that of the US, South Korea is more than 20 years behind Japan.

Nonetheless, the reality is that South Korea has been experiencing many of the same problems Japan did in the early 1990s, including high levels of household and corporate debt, labour- and financial-market inefficiencies, and low productivity in the service sector. Given a fertility rate of just 1.2 births per woman – among the lowest in the world – South Korea’s labour force is set to shrink by a quarter by 2050, with people aged 65 and over accounting for 35 percent of the total population, up from 13 percent today. This will put serious strain on public budgets.

If South Korea is to avoid Japan’s fate, it must take steps to reduce its household and corporate debt. It also should continue to implement structural reforms aimed at strengthening its labour and financial markets, improving institutional quality, and boosting productivity in services and small and medium-size enterprises.

Taking a cue from Abenomics 2.0, South Korea would do well to provide a better environment for child rearing, including flexible working environments, affordable and high-quality childcare and after-school programmes, and paid maternal and paternal leave. Financial support, such as low-interest loans for newlyweds, could also promote marriage and childbirth.

Japan’s lost decades highlight the importance of treating economic ills with the right medicine, before they become chronic and difficult to cure. If South Korea takes this lesson, and implements the right policies and reforms, being like Japan won’t have to mean sharing its economic fate.

Lee Jong-Wha is Director of the Asiatic Research Institute at Korea University

© Project Syndicate 2016

Forget the cloud, use humans instead

Posted on by Ben Debski

In recent years, we have seen the growth of what has been termed the ‘human cloud’: employers divvying up piecemeal bits of work for freelance workers to pick up from online freelance platforms such as Amazon’s Mechanical Turk. The tasks on offer tend to be those unsuitable to being carried out by computers, relying instead on human attention to detail – leading to the jobs becoming known as ‘Human Intelligence Tasks’ (HIT).

“First came outsourcing of IT and business processes. Next came offshore outsourcing. Now comes the human cloud”, said MIT Sloan Management Review. Now we have outsourcing through platforms that offer a “virtual, on-demand workforce”. The rise of the human cloud is is allowing more and more people to work from home, employed by no one, doing small clerical-style tasks, which typically would have been carried out in an office environment by white-collar workers.

Amazon Mechanical Turk has half a million users carrying out contract work

Amazon Mechanical Turk has half a million users carrying out contract work, with half located in the US and just under half in India. These workers are known as Turkers. When they pick up a piece of work – posted, along with remuneration details and a description, on the platform – they must complete it in an allotted timeframe, and are then paid by the employer after completing the task. The pay received can vary from a few cents for certain tasks, up to a few dollars. According to Jeremy Wilson, writing in Kernel: “Studies suggest that Turkers can earn between $1.20 and $5.00 an hour for this independent contract work.”

Before a Turker can start carrying out tasks, they must complete a brief training course, for which they receive a small payment, relating to the sort of HIT they wish to do. Wilson described his experience attempting to carry out copying text from a business card. “But before I was unleashed on any real business cards”, he said, “I had to start in training mode. Generously I was to be paid $0.02 for copying down the details of a fake card. The training mode proved to be useful: I got the name wrong, the address wrong and mixed up the fax and phone numbers. It took over 10 minutes to get it right.” He then embarked upon a number of other HIT jobs, such as mimicking facial expressions into his webcam. This task, taking 20 minutes, earned him $1.50.

Price of freedom
Whether or not this rise of HIT work is a positive development or not is disputed. Denis Pennel, Managing Director of Ciett, the international lobbying organisation for private employment agencies, told the Financial Times: “What we see today [with platforms such as Amazon Mechanical Turk] is people taking ownership again of the means of production, because you just need a computer, your brain and a Wi-Fi connection to work. So actually, Marx should be very happy!” Others argue it is not so clear-cut.

Christian Fuchs, a professor at the University of Westminster and a Vice-Chair of the EU COST network, noted that, while this new way of organising work does provide some benefits (such as flexibility), wages tend to be very low due to the unregulated nature of digital labour. “The internet and online companies tend to be inherently global”, he said, “whereas political regulation is normally made by national and regional parliaments, so there is a contradiction between the global economy and national/regional politics.”

Guy Standing, author of the influential book The Precariat: The New Dangerous Class and Professor of Economics at SOAS, University of London, argued we are seeing the rise of a new class of workers who can be termed ‘the precariat’: workers who are “subject to pressures to accept a life of unstable and insecure labour, with the added difficulty that those in it have to do a lot of work that is not counted as work and that is not remunerated”. This description could very easily be applied to Turkers.

Relying on platforms such as Amazon Mechanical Turk and TaskRabbit, “may give some people more freedom on when and how much to do”, Standing told The New Economy, but at the same time “we must realise that, for the majority of those doing tasks, the payment per task is very low. And there is no security, no benefits and no assurance of any particular level of income. The freedom that the platform corporations stress is a mixed blessing. In many forms of tasking, the person has to work a lot of time in order to make a very modest income. Too often one hears stories of what I would call excessive self-exploitation”.

Neither employed nor self-employed
The growth of the cloud-based economy, however, shows no signs of abating. According to Standing: “Cloud labour is spreading to almost every level of labour, and in the process is increasing the division of labour as more services are broken into constituent elements. I think that, within the next five to 10 years, one in every three labour transactions will be done online.”

In the global economy of the 21st century, we are seeing the emergence of a category of people who are not part of the traditional labour force of worker and employer. As Fuchs told The New Economy: “21st century economies’ structures are very complex. There are regular employees and employers, but then there is a range of new activities, such as a large amount of freelancers, part-time workers, temporary workers, [and] zero-hour-contract workers.” How we accommodate the freedom of work offered by HIT platforms while ensuring that those working for them are not in a race to the bottom will be a defining political question of our century.

The end of Safe Harbour means uncertainty for businesses

Posted on by Ben Debski

Under current EU regulations, citizens’ personal data cannot be transferred or processed outside the 28 members states without countries applying strict privacy protections outlined by the EU.

Back in 2000, the EU and the US agreed to a deal that permitted American companies to self-certify they had put the appropriate security measures in place, streamlining data transfers between the two entities. But in 2013, NSA whistleblower Edward Snowden leaked information that suggested US security forces had abused this trust and managed to obtain access to EU citizens’ data stored by US firms – the first nail in the coffin of Safe Harbour.

Two years after those revelations, the European Court of Justice ruled the Safe Harbour agreement was invalid

Two years after those revelations, the European Court of Justice (ECJ) ruled the Safe Harbour agreement was invalid. The judgment has left many US companies fearful of facing a bureaucratic nightmare, with them forced to comply with individual member states’ data regulators until the renegotiation is completed.

Don’t worry
In the wake of the ECJ’s decision, the First Vice-President of the EU Commission, Frans Timmermans, gave some reassurance to US firms, stating in a press conference: “The court confirms the need of having robust data protection safeguards in place before transferring citizens’ data. I see this as a confirmation of the European Commission’s approach for the renegotiation of the Safe Harbour.

“We have already been working with the American authorities to make data transfers safer for European citizens. In the light of the ruling, we will continue this work towards a renewed and safe framework for the transfer of personal data across the Atlantic.”

The ruling, which more than 5,000 US companies rely on in order to carry out data transfers using self-certification, has been rendered illegal by the ECJ. Luckily, EU regulators are eager to rectify the situation and have granted regulators and organisations a period of grace until the end of January. Time enough, hopefully, to find a solution.

So far, both sides have reached a consensus on the basic principles of Safe Harbour 2.0, but, as Justice Commissioner Vera Jourova told lawmakers, negotiators from the EU and the US “are still discussing how to ensure that these commitments are binding enough to fully meet the requirements of the court”.

Companies respond
This positive news is reflected in many US tech companies’ sentiments on the ruling. They have, for the most part, expressed little concern about their ability to continue functioning as normal. In a blog post, Microsoft said users of its cloud services could “continue to transfer data by relying on additional steps and legal safeguards we have put in place”. The company was also optimistic the ECJ’s decision would not significantly impact its consumer services, such as Hotmail.

Facebook made it known that it too was unlikely to be drastically affected by the court’s ruling, but was hoping the reforms did not infringe data transfers. “It is imperative that EU and US governments ensure that they continue to provide reliable methods for lawful data transfers and resolve any issues relating to national security”, the social-networking company said in a statement.

Not everyone in the US tech community is upbeat about the decision, however; the chairman of Alphabet, Eric Schmidt, told an audience at the Virtuous Circle conference that it could lead to “per-country internets”, which, if allowed to happen, would see the world “lose one of the greatest achievements of humanity”.

In the end, whatever the EU and US agree upon in the coming months, the hope will be that they manage to strike the right balance between privacy and security, without removing elements that permit the fast, cost-effective transfer of data that is essential for both businesses and consumers alike.

Why your business needs an app

Posted on by Ben Debski

In a recent CA Technologies survey, the overwhelming majority of enterprises said they believed the transition to software-driven business would separate the winners from the losers in the coming years. On top of that, 51 percent had increased their investment in new forms of software, while 49 percent were bringing software development back in-house and 48 percent incorporating analytics into customer-facing strategies. On the consumer side, 51 percent used applications to make online purchases, 47 percent to bank, and more than half said they’d be willing to pay taxes, manage their healthcare or vote via an app. If nothing else, these findings show we are partway through the transition to software-defined business.

To take a practical example, the rise of Airbnb means traditional hotels have entered into direct competition with internet users, while Uber has fuelled unrest among taxi drivers, for whom the traditional method of transporting and charging passengers is inadequate. Suffice to say, disruptive applications such as these mean existing businesses must make changes if they are to survive, and if this means investing in software – as it so often does – then so be it.

In just seven years, the app industry has emerged as a $120bn marketplace

“Technology advances now allow virtualisation of the entire technology stack – compute, network, storage, and security layers”, according to Deloitte’s Tech Trends 2015 report. “The potential? Beyond cost savings and improved productivity, software-defined everything can create a foundation for building agility into the way companies deliver IT services.”

Dealing with disruption
This turn in behaviour has brought a host of new opportunities and challenges, not least in mobile, where software has given rise to the application economy. This market, which didn’t even exist 10 years ago, is expected to be worth $143bn in 2016, according to Developer Economics. “The growth of the app economy has transformed how businesses function today”, said Morgan Reed, Executive Director of the App Association. “In just seven years, the app industry has emerged as a $120bn marketplace. This tremendous growth shows no signs of abating.”

Looking at another CA Technologies survey, half of 1,425 senior business executives said their industry was either very or highly disrupted by the application economy, and many had already felt its impact on day-to-day operations.

“Applications have become the most diverse and broadly adopted software in existence and a crucial interface between brands and consumers”, said Milko Van Duijl, SVP Sales and UKI General Manager at CA Technologies. “Analysts predict that 268 billion mobile apps will be downloaded by 2017. To thrive in this new commercial reality, every business, regardless of the industry it operates in, is under pressure to think and act more like a software business.”

Today, almost every business is a software business, and the implications for companies and consumers mean executives must rethink their operating strategies in sometimes-fundamental ways if they are to survive – let alone thrive.

“For many industries, failure to be aware will mean failure full stop”, said Windsor Holden, Head of Forecasting and Consultancy at Juniper Research. “Consumer-facing businesses will need to provide apps because consumers increasingly expect it, and they expect apps that will make their lives easier and more convenient. From an internal perspective, apps are improving productivity and reducing costs.”

It all began with an Apple
As apps become the preferred method of browsing, any company that chooses not to engage is missing a huge opportunity. The app economy’s influence is most pronounced in – though not exclusive to – mobile, and those who think a digital presence just means having a website will be left behind.

“Apple effectively created [the app economy] with the App Store and provided the major catalyst for growth with the iPhone and the iPad”, said Holden. “You could argue with some justification that innovation in software was constrained by the mobile network operators: when the App Store arrived back in 2008, it removed the operators from the equation and allowed developers unprecedented direct access to consumers. The innovation started in games, then spread to other consumer apps, and then – as CEOs started using iPhones – to the enterprise sector. At that point, the genie was out of the bottle. Bring in the growth of Wi-Fi and 4G broadband and suddenly enterprises have the opportunity to deploy apps in an environment of ubiquitous connectivity.”

$143bn

Predicted value of the app economy, 2016

268bn

Apps will have been downloaded by 2017

77%

of leading apps are from start-ups or small companies

The app economy is on course to make up a 33 percent share of the mobile market this year, up from 18 percent in 2012, and the segment’s growth dwarfs that of any other in the mobile value chain. The iOS App Store last year generated $10bn in revenue, and the gathering adoption of smartphones, coupled with the enthusiasm with which developers are chasing the opportunity, means the market will no doubt continue to grow.

“Retail, news, entertainment, banking, education, government, communications – everything is driven by a connected, mobile, application-based world where your customers are far more likely to experience your brand and interact with your enterprise through a software application than a live person”, said the CA Technologies report How to Survive and Thrive in the Application Economy.

The ubiquity of software is advantageous not just for major names but smaller enterprises as well; it allows SMEs to compete where previously they could not. “In terms of enterprise app users, certainly the gains in productivity and reduced costs mean that smaller businesses can now be viable on an ongoing basis in environments where previously they would not have been able to compete”, said Holden.

Far cheaper than bricks-and-mortar stores, apps, if employed to good effect, can reach customers while on the move and build more of a back-and-forth between company and consumer. Looking at the App Association’s findings for 2014, the majority of the world’s leading 650 apps are either from start-ups or small companies (77 percent). “Success is accruing to new entrants and nimble companies that are quick to respond to opportunities in the rapidly evolving mobile marketplace”, said the report.

“The application has accelerated to the point that it is now central to business success”, said Van Duijl. “Customers are now far more likely to experience a brand and interact with a business through a software application than a live person.” The ability to deliver superior user experiences and engage with customers, therefore, takes precedent for many. “The rapid onset of the application-centric business will become not just a major organisational factor but a major economic one and those organisations that take note of the trend and allow business operations to be rewritten by software, will be the ones to enjoy the widespread benefits of application economy.”

Essentially, the changed marketplace means there are now far fewer barriers to entry, and the foundations for success in today’s market consist of little more than an internet connection and rudimentary coding skills. “Development skills are not just a bonus – they’ve become vital to commercial success because, in the application economy, quickly delivering customer-winning applications to market can translate into real competitive advantage”, said Van Duijl. Using these new tools and resources, expect the app economy to balloon in the coming years, driven not by major names in tech, but smaller, more nimble players.

Dennis Crowley steps down as CEO of Foursquare

Posted on by Ben Debski

Jeff Glueck, the current COO of location and discovery service app Foursquare, will be taking over as CEO from co-founder Dennis Crowley. Crowley will now serve as Foursquare’s executive chairman, while Chief Revenue Officer Steven Rosenblatt will step up as company president.

“It feels amazing”, said Crowley, according to Business Insider. “We’re taking the two strongest business leaders we have and putting them in the spots they’re supposed to be in.”

The company was valued at $250m – a steep decline from previous valuations

Along with the reshuffle, it was announced the New York-based firm has received $45m in its latest round of funding. During the funding round, the company was valued at $250m – a steep decline from previous valuations. The cash injection and reorganisation thus comes at a critical point as Foursquare transitions from a check-in platform for consumers into a serious cash generator. The company also plans to hire around 30 new employees, including in engineering and sales roles.

Although the company attracted much interest when it was established in 2009 and soon grew to boast 30m users, monetisation became a struggle as advertising revenue disappointed and deficient product-focus confused consumers.

However, with the appointment of Rosenblatt in 2012 and a new sales team dedicated to advertising, revenue began to grow, and by the following year the company was valued at $650m and received $35m in funding.

Another pivotal change for the start-up came in 2014 when the app was split into two products: Swarm, which enables users to check-in to locations and earn ‘badges’ as part of a game, and Foursquare, a platform for local tips and recommendations. The latter app can now also sell accurate location data to businesses, commercialising its most important asset.

Given the serious push made by the company to capitalise on its product, along with its latest reorganisation, it would seem Foursquare is back on track to rebuild the brand interest it lost in previous years.

US unveils $4bn autonomous vehicle initiative

Posted on by Ben Debski

The US Department of Transportation has proposed a 10-year, $3.9bn initiative to speed up the adoption of autonomous vehicles across the US by implementing a uniform set of rules for all 50 states. Doing so, according to Secretary of Transportation Anthony Foxx, will reduce human error and address some of the country’s infrastructure problems.

Speaking at the North American International Auto Show in Detroit, Foxx said the country’s transportation infrastructure would be unable to accommodate a future in which 75 percent of the population lived in one of 11 US “megacities” by the year 2045. “If the government doesn’t change its ways, drivers in the future won’t be moving on our highways, they will be crawling”, he said.

The proposal to implement a uniform set of laws was welcomed by carmakers

The proposal to implement a uniform set of laws was welcomed by carmakers, many of them familiar with the difficulties of juggling multiple sets of rules and regulations. Backed by Google, Tesla, Ford, GM and Volvo, Foxx and his team will spend the next six months finalising the laws.

Regulatory hurdles have been cited by many in the business as one of the issues standing in the way of increased adoption, and Volvo felt strongly enough about it that it issued a statement on the topic last year. In the statement, Håkan Samuelsson, President and Chief Executive of Volvo Cars, said: “The absence of one set of rules means carmakers cannot conduct credible tests to develop cars that meet all the different guidelines of all 50 US states.”

This week’s statement signals to those in the same position as Volvo that their concerns have been noted. “We are bullish on automated vehicles”, said Foxx. “We are on the cusp of a new era in automotive technology with enormous potential to save lives, reduce greenhouse gas emissions, and transform mobility for the American people.”

Deep brain stimulation could treat Parkinson’s and OCD

Posted on by Ben Debski

There are some conditions for which medication simply cannot relieve the debilitating symptoms. But when all other avenues have been exhausted, patients suffering from extreme cases of Parkinson’s disease and obsessive compulsive disorder (OCD) now have a glimmer of hope: deep brain stimulation (DBS). This highly intrusive and risky procedure involves drilling into the brain to connect electrodes, which send signals that can drastically alleviate symptoms.

The treatment involves a two-step surgical procedure. In the first operation, two small holes are drilled through the top of the skull in order to channel electrodes that travel seven centimetres into the brain’s grey matter. The second surgery involves the implantation of a battery device into the chest or the abdomen, which is connected to a wire that runs up into the skull and onto the electrodes. When switched on, the device emits electrical currents that stimulate the information-carrying areas of the brain and can override rhythmic oscillations that have gone awry.

Parkinson’s disease
DBS was first used by Alim-Louis Benabid, a French professor of neurosurgery, who made the fortunate discovery in 1987. For decades, lesion therapy had been used as a last resort for Parkinson’s and severe tremors. This procedure involved making small lesions to the affected area of the brain that could result in symptom alleviation. During one such procedure, Benabid inserted an electrical probe into the area he intended to operate on – a common precaution that ensured the correct spot had been identified. As expected, when stimulating the area with slow pulses, the shaking worsened, but, to his surprise, Benabid found that, when speeding the pulses up, the patient’s hand stopped shaking for the first time in years. Instead of making a laceration as planned, he instead attached the world’s first DBS lead.

DBS as a therapy has had the most meaningful effect on Parkinson’s disease patients worldwide

DBS has since become an FDA-approved treatment for uncontrollable tremors, Parkinson’s and, more recently, OCD. “DBS in Parkinson’s disease is applied to a tiny region of the brain, usually the [subthalamic nucleus or globus pallidus interna], and despite the small amount of current that is used, DBS precipitates an important change in a larger neural network”, said Dr Michael S Okun, Neurologist at UF Health, National Medical Director at the National Parkinson Foundation and author of 10 Breakthrough Therapies for Parkinson’s Disease. “This network-wide change can, in some patients, lead to dramatic changes in a Parkinson’s disease patient’s symptoms. Next to dopamine replacement therapy, DBS as a therapy has had the most meaningful effect on Parkinson’s disease patients worldwide. It has led to control of tremors, suppression of dyskinesias, and reductions in their ‘off’ medication time.”

Future potential
Despite the phenomenal success witnessed in some patients, the chances of a miraculous reaction to DBS are still only 50 percent. Moreover, while trials are now being carried out on major depression, with more to follow on conditions such as schizophrenia and anxiety disorders, there is still a great deal of research to be done in order to painstakingly map the complex connections in the brain that vary from disorder to disorder, and even from patient to patient.

Until now, it has been almost impossible to record these constellations, as the data was only accessible when the brain was exposed during surgery. But that is about to change. “The next generation of DBS devices will be smaller, smarter and sleeker, and the therapy will be directed at a much broader range of neuropsychiatric diseases”, Dr Okun told The New Economy. Thus the new, more complex DBS will enable a real-time, ongoing, long-term look into the neurological pathways that occur in an array of mental afflictions. Furthermore, doctors will be able to tailor stimulation configurations to the individual and even make adjustments if new patterns emerge.

It is a very exciting time in the field, which is receiving a great deal of state support from both sides of the Atlantic. President Obama’s five-year White House Brain Initiative is investing $30m into research for advanced neurotechnologies in order to revolutionise our understanding of the human brain, while the EU’s €1bn Human Brain Project has over 100 institutions participating in a similar initiative. There is a real push from leading scientists, hospitals, academic institutions and governments to finally identify the neuro-transmitting patterns that cause various neuropsychiatric disorders. With this knowledge, together with innovative developments in DBS, effective and lasting treatment could drastically improve millions of lives.

DeepMind founders book an appointment with the virtual doctor

Posted on by Ben Debski

In the run-up to the launch of its AI doctor, which will offer patients instant advice about medical concerns, British tech start-up Babylon Health has raised £25m in its latest funding round. Having sold their own AI company, DeepMind, to Google for around £400m, co-founders Demis Hassabis and Mustafa Suleyman are among those lining up to invest in the digital doctor technology.

The smartphone app, which was launched in February 2015, has ignited a great deal of interest from a range of over 50 investors, including insurance providers BUPA and Aviva. Others include MasterCard, Sky, Citigroup and the co-founders of Innocent Drinks. With Hassabis and Suleyman on board, Babylon will benefit from two of the most prominent figures in the AI industry.

The app allows users to obtain referrals to specialists in Babylon’s own catalogue

At present, Babylon is used by around 250,000 people in the UK, who pay £4.99 each month to access a group of human doctors via video chat seven days a week.

Created by Dr Ali Parsa, the app asks questions and then provides advice to patients on the best course of action. It allows users to obtain referrals to specialists in Babylon’s own catalogue or among BUPA’s consultant doctors. The app can also book blood tests, scans and X-rays on the patient’s behalf, or even send a diagnostic kit where possible. Other helpful features include reminders to take medication, and the use of physiological and biological data, as well as an individual’s medical history, to flag up any potential issues.

Babylon recently struck a partnership with the UK’s National Health Service to pilot the service in the city of Birmingham, with the hope of extending it nationwide.

Rather than replace doctors, Parsa hopes to reduce the bottleneck system that currently affects the health industry and bodies such as the National Health Service. This will allow people to receive treatment sooner than they can at present.

It is expected the AI version of Babylon will be launched sometime in the next two months.

The main roadblock to an Indian common market? Democracy

Posted on by Ben Debski

Of the many economic reforms crying out for immediate implementation in India, the most obvious is the long-pending Goods and Services Tax (GST). So why have India’s politicians failed to enact it?

The need for a GST is virtually indisputable. As the billionaire Steve Forbes recently wrote in his eponymous magazine: “Outsiders are amazed that much of India resembles pre-revolutionary France, with many internal barriers standing in the way of economic efficiency and growth.” He then pointed out that a GST is critical to enabling India, like the United States, to reap the benefits of its continent-size domestic market, as it would replace the “stifling hodgepodge of local taxes” that amount to “internal tariffs on the movement of goods”.

It is estimated that the Goods and Services Tax’s passage would add one to two percent to India’s GDP instantly

Indeed, India has a bewildering array of subnational taxes. For example, taxes on commerce among India’s states require checkpoints at their borders, with long queues of trucks awaiting clearance. As a result, shipping freight across the country is a logistical nightmare. Sales taxes vary, and are augmented by “octroi” taxes on cross-border shipments of goods destined for local consumption. Whereas the European Union is 28 sovereign countries with one common market, the Indian Union is one sovereign country with 29 separate markets.

Making matters worse, India’s multiple taxes and tax authorities create more opportunities for corruption and tax-avoidance. A national GST would eliminate these problems. For businesses, particularly those that have to transport goods across the country, the GST would be a boon. It is estimated that the GST’s passage would add one to two percent to India’s GDP instantly.

Petty politics
So what is holding up the GST’s implementation? In short, politics.

The GST was first introduced seven years ago by the Congress-led government in power at the time. But it was delayed because of the fierce opposition of Narendra Modi, then-Chief Minister of the western state of Gujarat.

When Modi became Prime Minister two years ago, he and his Bharatiya Janata Party (BJP) suddenly recognised the virtues of a GST, embracing the bill with great fanfare, but also with important amendments. Pandering to BJP governments in Gujarat and Maharashtra, which claimed that, as “producer” states, they would lose out from a GST, Modi revised the bill to grant states the right to levy an additional one percent tax on outgoing goods. And yet the bill already provides for states to be compensated for five years for any loss of revenue from the application of GST.

The change – a breath-taking act of petty politics – controverts the very spirit and intent of the GST. If states were levying individual taxes on top of the GST, the national market would again be divided and distorted, with checkpoints returning on state frontiers to assess the value of the goods on their way out. In short, India would be back to square one.

It gets worse. In another act of political appeasement, the BJP government has introduced a number of exemptions. By omitting alcohol, tobacco, petroleum products and electricity – which together account for more than a quarter of all tax receipts – the government is significantly diluting the GST’s potential impact on the national economy.

Moreover, the BJP government has increased so many other taxes (which it simply should have eliminated) that the National Institute of Public Finance and Policy estimates that the GST would have to amount to as much as 27 percent to prevent revenue loss. Far from reviving the economy, such a rate would cripple it. Overall, the current government’s gutted version of the GST would, by some estimates, have no measurable effect on GDP at all.

Congressional resistance
The Congress party, now in opposition, refuses to support the adoption of the GST bill until the more effective version is restored. It wants to abolish the extra one percent tax levied by the states and bring all kinds of goods within the GST’s ambit. In order to reduce incentives for avoidance and thus augment revenues, Congress also wants to cap the GST at 18 percent. And, to ensure fairness, it seeks the restoration of the GST Disputes Settlement Authority provided for in the original bill, so that the GST council administering the tax would not rule on its own decisions. There are a few more minor objections, but these are the core issues holding up the adoption of the GST.

These kinds of problems do not arise in top-down autocracies

Instead of addressing these legitimate problems, Modi is accusing Congress of unconstructive opposition by thwarting reforms that it had once advocated. But Congress will not back down, insisting that it will not allow the bill to pass through the upper house of parliament, where the BJP does not have a majority, until the government accepts the key amendments. The resulting stalemate means that Modi’s plan to roll out the new tax at the start of the next fiscal year, on April 1, 2016, is probably dead in the water.

Some will see in this contretemps proof of the age-old argument that India’s democracy is an obstacle to development. After all, it was democracy – specifically, the pressure to maintain adequate support – that led the Modi government to hollow out the GST concept. And it is democracy – that is, the need to secure adequate support for the bill in parliament – that is enabling Congress to block any further progress until Modi relents. These kinds of problems do not arise in top-down autocracies like China and Singapore.

Nonetheless, India is right to organise itself this way. Its system of governance rests on the belief that an integrated process of bargaining, disagreement, reflection and compromise – not top-down unchallenged decision-making – is the most effective route to wise, fair and successful policymaking.

The GST bill that eventually emerges from this standoff will be better for having gone through these detailed, if time-consuming, debates. When it is finally adopted, the chances that it will transform the Indian economy for the better are high.

Shashi Tharoor is a former UN Under-Secretary General

© Project Syndicate 2016