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In the last five years, business models that have been around for generations have suddenly found themselves disrupted in new and surprising ways. Most board members and senior executives come to work with a certain set of assumptions about the world, the economy, the environment and their work force. Those assumptions are often built on decades of experience. But what if those assumptions are wrong or simply outdated?
Human Oversight Will Become More Important Than Ever
As c-suite executives and directors, a big part of your role is oversight of what’s happening in your organization and foresight to see what could be coming. The realty is several aspects of these new technologies like Artificial Intelligence (AI), self-driving cars, drones, and the connection of all of our devices through the internet of things (IOT) will require more oversight throughout your organization. The culture set from the very top to value oversight will be more important than ever as every company transforms into a technology company. The time to start thinking about what will be needed in the future is now.
In my digital disruption workshops, I often lead a discussion among executives and board members about Facebook’s role in the disruptive societal shifts we are all experiencing, capped with what role companies have played in boosting Facebook through advertising dollars. After reading McNamee’s new book and pouring through the latest revelations from the UK investigations, it becomes even more clear that directors and senior executives should be cautiously thinking about the future of Facebook and the role other technology companies (like Google, Twitter, Amazon and Apple) play in shaping the expectations of customers and your work force, as well as what laws and regulations may come as legislators awaken to the reality of how these companies have actually made their fortunes.
What was more striking to me at CES this year was the realization that none of what we saw really surprised any of us in our group. We have all come to a point of acceptance that technology and connectivity weaves in and out of our life at points we used to believe to be private or disconnected. The bigger questions will be how company cultures adapt to this new reality we accept as consumers and how privacy, laws and regulation may shape the business models of these technology companies in the future.
As you look to the year ahead, concerns about market stability and sales growth are likely top on your list. To be prepared for uncertainty and a changing marketplace, c-suite executives and boards can look to three driving forces that will impact every organization: cybersecurity, digital disruption and societal shifts. How is your company preparing to address these issues with a cross functional approach in the c-suite and how will your board oversee the management of the risks? How are you gathering the industry intelligence and data you need to ensure you don’t miss an important trend?
As the world is waking up to the data gold mine big tech has used to become the richest companies in the world, a backlash is forming as government leaders and individuals realize their privacy was sold off in the process and may never be recovered. Smart retailers are already using this to their advantage.
Enron collapsed in October of 2001 after the complex structure of subsidiaries and questionable accounting practices built by the energy giant fell apart, sending ripples across government, Wall Street and individual faith in Corporate America. In 2008, the financial markets collapsed. Most missed all the signals that something was coming. Are we at the same tipping point in digital?
How the gig economy, generational shifts and technology will change the way we work.
Often dubbed the fourth industrial revolution, we are living in a time of profound transformation impacting how we live, work, play and plan for our future. Digital disruption is not discriminatory – it impacts every industry and every profession. For c-suite executives and directors, it is crucial to understand how these shifts not only impact the products and services you sell and how you sell them, but how you manage the workforce and resources of the future. There are a number of trends impacting the future of work.
Social media has changed our culture and will continue to shape how people think. We have reached a tipping point of business leaders taking to Twitter to express their personal views. It’s no longer about just becoming aware of it and drafting a policy, it’s about governance and responsibility and more thoughtful oversight than just a few lines in an employee handbook.
All too often, “cybersecurity” is pushed to a chief information security officer or chief information officer to manage the threat as though that “assignment” has checked the box and everyone else need not worry. After the Equifax breach, the General Counsel, along with other senior executives, was pushed out for failure to manage the impact effectively (including a long list of misguided steps). If you are a general counsel, chief legal officer, corporate secretary or serve on a board, the reality of cybersecurity is that when a breach occurs, it will fall on your desk and you will be held accountable for the action the company takes.
The ball is never simply passed off to someone else when it comes to cybersecurity. This is a holistic effort that requires not just project management but checks and balances among the senior executive team and oversight by the board of directors. Learn more about why and how to tackle cybersecurity in your organization.
Blockchain has the potential to be transformative like IBM’s SQL database was in the 1960s or the adoption of the world-wide-web by businesses and consumers was in the late 1990s. But, it is still just potential. It will take a lot of companies, organizations, governments and thought leaders acting in cooperation to make the kind of transformations anticipated. But all that has happened before and we can learn from mistakes made in the past.
While many have touted what a fantastic job Zuckerberg did in answering questions from lawmakers, there were some glaring holes in his testimony. I think he did a good job representing his company, but the underlying missing substance has paved the way for future laws in privacy protection that could have implications for boards and c-suite executives across industries. Zuckerberg, clearly rehearsed and briefed by lawyers, repeatedly told both the house and senate committees that users have control over their data and that Facebook doesn’t sell data. But, to quote his beloved Star Wars, that’s only true “from a certain point of view.”
The European Union’s new privacy law, General Data Protection Regulation (aka “GDPR”) will take effect on May 25, 2018. In the final countdown, lawyers and consultants scramble to work with their clients to map when, where, how and why data is collected, stored and used. But the real question for people like me who are interested in digital trends is: “how will this change digital behavior?”
Blockchain has become such a hot buzz word that companies adding the word “blockchain” to their company name are seeing a surge in their stock price. In December, Bloomberg News reported that the Long Island Ice Tea Corp shares rose 289 percent after it rebranded itself Long Blockchain Corp (https://bloom.bg/2BsDCLg). In January, it was announced that Kodak, emerging from the shadows of its 2012 bankruptcy, loaned its name to a new digital currency called KodakCoin which will help photographers manage their digital rights. Kodak’s stock rose more than 200 percent following the announcement. This article provides insights into research from Jen's new book, Blockchain in the Boardroom, and a layman's term explanation how blockchain could replace legacy systems.
As you return from the holiday break and look towards your first quarterly board meeting, consider a few of the stories from 2017 that signal change for the year ahead and the implications in the boardroom. The bottom line: big changes are coming, and you need to be prepared.
As the story and forensics behind the Equifax breach continues to unfold, directors can dissect what went wrong, who knew and what could have been done about it. What questions should you be asking at your next board meeting? This article provides an overview of the root cause of the breach and questions board members should consider asking senior executives.
How an Amazon Trademark Filing tanked Blue Apron’s Stock for a While
And why it might not matter anyway
Amazon filed a trademark for We do the prep. You be the chef., which was widely reported in business news on July 17th. Blue Apron’s stock went tumbling. Then, the stock tumbled again by about 29%, by the end of July, almost 50% from its IPO price.
The sharing economy coinciding with Millennials turning 30 could change the way people work in the future.
Today, many U.S. businesses are in crisis to respond to an emerging threat: Non Practicing Entities. While innovation stalwarts like IBM, Microsoft, Google and Apple remain ahead of the innovation curve, far too many other companies have become short sighted in their ability to identify, value and protect their own innovations. How do we know? A new industry emerged in response to a market opportunity – affectionately referred to as Patent Trolls. Companies like Acacia, Intellectual Ventures, RPX, and even Universities have not only emerged in response to a market opportunity, but they are thriving on buying up patents, innovating and patenting and all for one reason: to extract a license fee from businesses large and small. Most were formed by the existing digital leaders only to find these innovation hubs turned into a real threat to their customers. This new market represented $29 billion in license and settlement fees paid in 2011 by US Companies. Troll related activity in high technology represents 75% of all IP litigation. And, why are so many companies falling prey to these “trolls”? The number one answer is because they don’t have the right bargaining chips. The big digital players settle, swap or ward off the trolls with their portfolio, while the rest of American companies are left with no bargaining chips. If companies are or could be infringing on patents owned by a troll and they don’t have any of their own patents to back up their position, then they are forced into an exorbitantly expensive patent law suit or to settle behind closed doors. The patent trolls know which companies are weak and exposed. They know which companies are, unbeknownst to them, using digital technologies or assets or devices through a vendor or directly that infringes on one of their patents. Trolls know that most companies are moving too fast to consider patenting their digital activity and thus an easy target. Trolls know that innovation and patents pay off in high profit margins. Armed with data, they know exactly the right price point to extract a license fee from a company.
In the current Digital Age, organizations must step up and take a proactive stance in developing and protecting intellectual property or risk global marketplace competitors stealing and protecting them under their names, or worse, licensing to a troll (also known in this context as privateers). This also means taking measures to drive more innovation like revolutionizing digital content to drive brick-and-mortar traffic, fostering internal collaboration through platforms and processes no matter the geographic location, and utilizing alternate methods of driving content to target audiences.
While IP lawsuits over technology are prevalent among Apple, Samsung, HTC, Google, Microsoft, Orcale, RIM, LG, Nokia, Cisco and other digital and technology leaders (also the largest patent filers), other industries have been left largely without a digital or technology patent portfolio to protect themselves when attacked by a troll. From consumer products to retail and even entertainment industries, they consider themselves “not an IP company” and so they don’t invest in protecting their digital innovations. Consumer products companies focus on packaging, diapers, toothpaste compounds and other patents, but not in digital. All the while, their marketing is shifting from a traditional media age to a digital age, requiring innovation in new digital arenas. Likewise, retailers might have patented certain configurations, packaging or other inventions, but not its digital technology. Contributing to the problem, they often use outside vendors without ensuring that they are not using patentable technologies in rendering their services and are ultimately sued as an end user (sometimes without sufficient indemnification). Companies are innovating, for sure, that’s how new products and services emerge to meet new market demands. But the trolls have identified a simple market opportunity. Evaluate what companies are doing in a digital age, apply for patents to protect that technology by tracking data of what companies are doing in their digital platforms, and then extract a license fee from them for using that same technology. And, trolls even go a step further, they are investing in real research, development and innovation directly and protect every aspect of it. Unfortunately for consumers, their sole purpose is to extract license fees from companies large and smalls, rather than to innovate and build products and services that help society.
How Did this Happen?
The bottom line is that business and the U.S. economy have become so focused on short-term street value, from which executive bonuses trickle down, that the value of long-term research and development and building intellectual assets on a global level has been diminished. Meanwhile, we have evolved from an industrial age to an information age and are now emerging in a digital age where the rules are changing faster than most companies can keep up. While companies are innovating, many are not taking the next step to protect those innovations as assets. For many of these companies, digital strategy is still emerging and is largely fragmented across the company rather than centralized. So, when the company views itself as “not an IP company” then innovation is occurring, but is not captured and evaluated for protection purposes, rather just rolled out.
Innovation is about investing in new ideas, breaking down silos, allowing employees to take risks with budgets set aside for those risks, tearing apart old assumptions and thinking about the future. And then, it’s about owning those inventions to capture and maintain market dominance. Either you innovate and own it or someone else will. So, how do we know innovation capture is declining and not growing in the U.S.? Today, the metric by which most invention is measured is patents granted. Patents are largely the result of innovation that can be used as an asset for companies in the long term. In 2010, half of all patents issued in the U.S. were awarded to non U.S. companies and nearly 60 percent of the information technology patents originated outside of the U.S.
This failure of many U.S. organizations to protect their innovations has resulted in the explosion of the the patent troll business. Due to the increasing number of easy targets—companies lacking patents to defend themselves—patent trolls have amassed large portfolios of patents to use against them. And many companies have sold off patent portfolios to these NPEs to boost revenue and short term gains.
Kodak, case in point, sold its patent portfolio to many NPEs for hundreds of millions of dollars in a fight to survive. Kodak may not have pursued license fees against you if you used one of their patents on your web site, but the trolls will. Like it or not, patent trolls are simply responding to a market opportunity. So to all those CEOs out who don’t take the necessary steps to protect your innovation pipeline, look out. Trolls are on the rise. The average suit is $1.1 million dollars, often resulting in settlement rather than victory. American companies that are willing to take a proactive stance in protecting their digital innovations have a significant opportunity to end the NPE practice while driving product improvements and strengthening their competitive position.
Making an Innovation Change – It Starts at the Top
Leadership must set the tone. Leadership must understand the value of building an innovation pipeline, capturing those ideas, and then tracking them for protection and use as an intellectual asset. It’s all about data to drive results in a digital age. It must be a strategic short- and long-term investment. It’s important to pay attention to cultural change and provide incentives, both financial and recognition-based, to facilitate a collaborative, knowledge sharing environment that values intellectual assets as the end result.
Process is essential. Human beings are creative and innovative creatures. Establishing a methodology and process that facilitates collaboration and captures ideas into a process that can track it into a valuable asset is essential. Risk taking and failures must not just be allowed, but celebrated and budgeted for, when it comes to innovation.
Technology & Knowledge Sharing. Using the right technology based tools to capture ideas, share data and information across stakeholder groups is essential. All too often within large companies, multiple groups are performing the same tasks, repeating or reworking them using different data sets. These efforts must be centralized and disseminated through a centralized knowledge sharing program that can capture ideas, develop them and ultimately turn them into valuable “innovative” assets.
Companies must do more with less and produce even greater return on investment faster to compete and survive today. But they can’t sacrifice innovation and asset protection as a result. While Wall Street may value day-to-day performance and executives strive for bonuses as a result, the rest of us rely on companies to invest in our future. While Apple, Microsoft and IBM continue to lead in innovation and building new technologies for our future, many others have simply opted out as “not an IP company.” Those companies are the targets of trolls. Savvy companies will invest in innovation pipelines and utilize technology of today for efficiencies to maximize the impact and return on investment of tomorrow.
Note: The above research is based on the research acquired in developing and writing Brand Rewired and Domain Names Rewired, two books authored by Jennifer Wolfe.
John Podesta’s Email Hack Should be a Lesson for All
The hack of the DNC and Hillary Clinton’s Campaign Chairman, John Podesta, may fade away as the news media turns its attention to the transition of power and next big story, but an important issue for business executives and board members is not the politics of the hack, but how it happened. It could easily happen to anyone, causing damage and harm to you, your reputation, your company and your colleagues.
So, let’s take a moment to dissect exactly what happened. Podesta received a phishing email from no-reply@accounts.googlemail.com that appeared to be from Google requesting him to change his password. Notice in this email the bit.ly link – this is the key.
He forwarded it to his IT team to confirm that he should reset his password. His IT team then informed him that he should reset the password and provided a clean link to use to reset the password and recommended a two-factor authentication (meaning you get a code on your phone or multiple sources to reset your password – thus more secure). Unfortunately, Podesta somehow went back to the phishing email and clicked on the link, thereby allowing the hackers to have access to his gmail account. Unknowingly, he let the bad guys in. It’s like leaving your door open and going on vacation and then being surprised you got robbed.
Most security breaches are a result of someone mistakenly allowing the hackers access. So what does this mean, what is the lesson to learn?
There’s really two issues here:
So, let’s start with the first issue. Hacks can never be fully prevented. I interview and talk with cyber security professionals regularly and the common belief is that as soon as you develop tools to stop the bad guys, they create new tools. It will never be a fully solvable problem, but there are ways to mitigate the attacks. For senior executives and board members a first key step is to ensure that your CIO is fully supported, given resources and funding to implement plans, technology and tools to identify, stop and mitigate bad and malicious activity directed at your company. I write at length about this in Chapter Two of my new book, Digital in the Boardroom. There should be an annual independent cyber threat audit and the board should have a clear and objective picture of the threats facing the. This “independent audit” has been place in accounting for years, why should the threat not be treated with the same level of importance?
Additionally, senior executives and board members need to exercise extreme caution when clicking on a link to ensure it is from a trusted source. Phishing sites are designed to confuse even savvy and sophisticated executives. So when it comes to clicking on a link, particularly one to reset a password, be extra cautious. I write regularly about the new top level domains. This is one way companies could minimize the “typosite” that looks confusing. American Express is often duped by a company using an americanexpress.gov, which is not them. See the image below – this is a phishing email. They could put a dent in this by using their top level domain, Dot AmEx for all communication with their customers.
Now, let’s address the other issue. With the release of thousands of embarrassing emails to President Obama, Hillary Clinton and her staff alongside the not too distant memory of embarrassing emails released about Sony executives and celebrities, will email conversations hush to a quiet?
While it’s not likely email will die, or go away entirely, senior executives will likely stop using email as a means of conversation and dialogue. I anticipate we will see a return to actual phone calls and face-to-face meetings for important discussions and relationship building.
As cyber security experts know all too well, there is only so much that can be done to prevent a cyber attack. There are certainly best practices and mitigation plans and technology that can help to minimize this exposure, but if someone wants into your system badly enough, they will likely find a way to do it (or the right person to prey upon).
This realization will change the way many continue to use electronic communication. While in ligation lawyers often go to painstaking efforts to protect privileged communication from discovery or presentation in a lawsuit, the reality is if someone just wants to embarrass you, nothing will stop them from releasing it to the court of public opinion, who quite frankly doesn’t care if you think it was subject to some sort of legal privilege. It will be out there and the damage to your reputation, your company, and career will be done, forever.
So many of us have become accustomed to the idea that an email or text is a one-to-one communication, unlike social media which is one to many. We believe that these conversations are private. But if you’ve ever accidently replied to all or sent an email to the wrong person when autofill pulls up the wrong email, you’ve felt the horror of someone seeing something they shouldn’t have seen. Now imagine that same communication out to the entire world. Savvy executives will simply stop using email for actual conversations, dialogue, opinions or anything other than benign schedule setting or simple messages that you wouldn’t care if the whole world knew you sent.
We may see a return to the custom of picking up the phone and speaking to someone or scheduling a face-to-face lunch where the real conversation can occur without the risk of that conversation being read by millions possibly months or years later. And, is that such a bad thing? It takes a little more work to make a phone call, but don’t you get so much more out of it? And, face to face meetings might require a little more effort and sometimes travel, but doesn’t it make for a richer and more meaningful discussion and relationship? These are things we have sacrificed for speed and convenience.
Interestingly, the millennial generation may not feel the impact like those of us in Gen X, Gen Y or Baby Boomers. Millennials never built the habit of using email for conversations, however their use of social media could eventually suffer the same fate as they begin to realize the negative impact their one-to-many conversations have as their lives and careers progress. What is acceptable at 22 is not so much at 32 or 42, but with social media, it’s all just out there to be found and used against you when someone needs to find a reason. Think of how these emails have been used against senior executives and politicians in just the last few years. Social media history will ultimately be the same, only rather than because of a hack, these are messages users have intentionally and willingly posted to the masses. There’s a lot to unpack here between emails and use of social media. C-Suite Execs and Board members should heed the warning and carefully consider how email is used and best practices to protect yourself and your company.
