DISRUPTION Magazine - Autumn 2016

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OCTOBER

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Making sense of a changing world

2016

The future of food Could urban farming be one way to feed our ever-expanding cities?

Economics/

Will the technology we all love eventually make us poorer?

Innovation/

Aberdeen Asset Management’s Julie Chakraverty on life as an innovator

Talent/

How the Chief Digital Officer became the face of disruptive corporate change

Technology/

Is blockchain the way to claim back our online identities?

Less artificial, more intelligence.

You can automate tasks, but you can’t automate people.

Automation is just the start. Rainbird can help you innovate new solutions and empower your workers.

Is your business ready for AI? Learn how others have been successful with Cognitive Reasoning: www.rainbird.ai/idisrupted/ #CognitiveReasoning

/welcome

The world is changing...

Emerging technologies and innovative business models are transforming life, business and the global economy at a speed none of us have ever seen before. As a result, the way we’ve been used to doing things isn’t just being modified, it’s being replaced. That’s disruption.

As technologies such as 3D printing, advanced robotics, artificial intelligence, autonomous vehicles, blockchain, the Internet of Things and virtual reality go about dramatically reshaping the modern world, businesses that were established in less fluid times are having to make increasingly complex and critical decisions against the ticking clock of change.

What they do right now could affect their profitability for years. Or even their survival.

But look beyond the alarmist headlines and the proliferation of buzzwords surrounding these technologies and many business leaders still lack a source of expert opinion and analysis of

this ongoing digital transformation. That’s the role of D/SRUPTION magazine.

Bringing together the best and brightest entrepreneurs, thinkers, practitioners and innovators, D/SRUPTION cuts through the hype to address the full potential of these emerging technologies. We aim to stimulate discussion and debate around the key questions facing the business world through expert opinion, interviews, analysis and indepth articles.

The world is changing and organisations need to innovate in order to thrive in this dramatically reshaped world. Join D/SRUPTION as we all work out how to make that happen.

We are also on the lookout for talented contributors. If you are interested in sharing your insights or opinions, please get in touch editor@disruptionhub.com /John Straw Founder, D/SRUPTION

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/september_2016

Innovation

28 Disrupted loyalties

Regulars

Blockchain and personal data

06 Signing-in The five stages of disruption

Industry News from around the globe

This concept may be one of the most transformative ideas since the internet, with cryptocurrencies such as Bitcoin being merely its best-known application.

16 The future of food Urban farming innovators

Tech investor Julie Chakraverty

12 The big idea Will technology make us poorer?

04

The top 10 blockchain startups

What is blockchain?

08 In brief

10 A day in the life

32 Beyond banking

22 Risk and opportunity Insurance and the digital world

The blockchain is a public transaction ledger built in a decentralised network structure that’s based on cryptographic principles.

Any trading of assets does not need to go through a centralised intermediary.

Assets can be ideas, health data, financial assets, automobiles, and government documents. Any asset may be encoded into the blockchain and transacted, validated, or preserved in a more efficient manner than at present.

Technology

September 2016 38 Internet of Things What IoT means for consultants

Strategy

D/SRUPTION magazine Editor/Cam Winstanley Editor-in-chief/John Straw Publisher/Rob Prevett Head of marketing/Tania Duarte Design/Dylan Channon disruptionhub.com Content manager/Laura Cox Head of digital/Jayson Winters Copy editor/Kev Cooke

42 3D printing Innovative construction in Dubai

53 Talent The rise of the Chief Digital Officer

54 Investing in disruption

Contributing editors/ Calum Chace, Julie Chakraverty, Timothy Chou, Ian Gass, Clare Johnston, Stephen Lowery, Will McMaster, Gwilym Roberts, Collin Thompson

The opportunities of change iDisrupted Ltd 86-90 Paul Street London EC2A 4NE www.disruptionhub.com @disruptionhub

44 Virtual reality Does VR have a place in the office?

48 Artificial intelligence What if machines take all the jobs?

50 Robotics The value of a robot sidekick in business

56 IP strategy The problem with patents

58 Signing out The increasing value of data

Contact our editorial team on: editorial@disruptionhub.com Contact our sales team on: media@disruptionhub.com No part of this publication may be reproduced, stored in a retrieval system or transmitted by any means without the Publisher’s permission.

The editorial does not necessarily reflect the views of the Publisher. The Publisher accepts no responsibility for errors within the publication.

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/signing_in

The five stages of disruption With Google Trends showing an upturn in search terms such as “technology disruption”, John Straw founder of D/SRUPTION gives his take on the process, stage by stage

May 2013

May 2014

May 2015

Google Trends: “technology disruption” searches

Internet infrastructure

The Kodak moment Most people already know how Kodak was way too slow to recognise the camera market’s rapid switch to digital. The fatal blow to Kodak was the rapid wholesale destruction of its consumables business - film. Losing ground on camera sales certainly hastened the end but it was the collapse of film and processing that did it in.

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From the late ‘90s onwards, huge amounts of money went into building internet infrastructure. But by the late noughties, the market started to ask where the revenues (let alone the profits) were. The answer was such a resounding “don’t know” that the bubble burst and the market valuation was massively reduced. In other words, disruption got disrupted.

Technology meets disruptive business models Let’s take a look at Uber – a fabulous piece of user technology that marries drivers with passengers. In itself, that’s not particularly innovative… until you bring in the ‘zero marginal cost’ benefit.

This allows Uber to use drivers in a ‘delivery for everything’ model with no noticeable incremental costs to itself. It costs the same to deliver anything, from customers and fast food, to parcels and even flu jabs.

On its own, perhaps this is enough to give Fedex and UPS a Kodak moment, but it’s gone deeper than that. Uber recently bought out an API that allows other businesses to use Uber services.

So currently in America, Opentable, an app for booking restaurant tables, includes Uber as part of the service so that booking a table automatically includes an Uber ride there and back. It’s horizontal integration with no marginal cost, and technology + zero marginal cost = scaleable disruption.

The adoption curve

Internet of Things and Artificial Intelligence Imagine a business world where everything is connected. Everything.

That’s raw materials to transport, to manufacturing, distribution, retail and the consumer, then beyond that to consumer engagement.

The Internet of Things will enable all of that, providing an end-to-end view of the whole process in real time. At the very least, that’ll make savings at every step of the way. The world wastes $1 trillion of food every year but by real time analytics of production, transport and consumption, that could be reduced down to a few tens of millions. All made possible by the advanced understanding of real-time data through AI analytics.

Tesla cars can now use a software upgrade to provide ‘ludicrous mode’ – 0-60mph in 2.9 seconds. That’s an electric car giving the same performance as a Ferrari 488. The Tesla upgrade takes 20 minutes to install and costs $10,000.

To upgrade to a Ferrari 488 will take a customer two years on a waiting list and will cost north of $300,000.

Adoption curves are becoming steeper.

Take virtual reality, which ten years ago had virtually no users. Then along comes Oculus Rift, which excites users enough to briefly think about spending $300 but not enough for many to actually do so.

Google, spotting the opportunity, brings out Google Cardboard – a $5 box with a view to getting early adopters (and evangelists - I’m one of them) to market.

Just add a smartphone to the box and you have a VR headset that content makers are happy to design for. Thus the adoption curve steepens because, of course, Google has a more upmarket (and profitable) product down the line.

These same five principles can be seen happening across numerous business sectors. Value and profit become entrenched in the data sets held by the industry leaders, moving revenue away from where it’s traditionally been made. Such a profound shift can and does create social change as AI has and will continue to create unemployment in previously ‘safe’ sectors.

The disruption of disruption isn’t over yet…

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The D/SRUPTION website offers daily updates covering disruption, innovation and digital transformation. Visit disruptionhub.com for opinion, insight, trend reports and more DISRUPTED CARS

DISRUPTED AI

IBM

Driverless Uber cars prowl Pittsburgh

Volvo

The bus that talks back While Google, Tesla and even Ford’s advances in driverless car technology have been grabbing the limelight recently, Uber has been quietly working on a road revolution. In a recent interview with Bloomberg Businessweek, Uber’s CEO Travis Kalanick announced “We are going commercial” as he sketched out a plan to put a fleet of specially modified Volvo XC90 SUVs on the streets of Pittsburgh this autumn.

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Initially, customers using the Uber app will be randomly assigned one of the self-driving cars and pay nothing for their trip. While a human engineer will sit at the wheel, if the trials are successful, Volvo and Uber plan to spend $300m to develop a fully autonomous fleet that will use GPS, cameras and radar to eliminate drivers entirely.

Produced by Local Motors, creators of the world’s first 3D printed car, Olli is a 12-person electric bus that’s already on the road in DC and will be in MiamiDade County and Las Vegas by the end of 2016. It’s the first vehicle to use IBM Watson’s cloud-based cognitive computing to learn not just traffic patterns but also passenger behaviour.

Watson allows Olli to understand questions from passengers and answer verbally, hopefully allowing for an entirely intuitive journey experience.

/news DISRUPTED VR

Intel jumps into virtual reality

Intel Coporation

At the Intel Developer Forum in San Francisco this August, Intel CEO Brian Krzanich unveiled Intel’s leap into virtual reality. Project Alloy is a standalone headset that require no computer or external sensors to place the user inside a virtual space. Its RealSense cameras have depth-sensing capabilities, allowing the headset itself to track the user’s hands while other systems require additional sensors.

Project Alloy will be offered as an open platform in 2017.

From the Hub www.disruptionhub.com

Become a disruptionhub.com member and receive direct access to trend reports, technology guides and more.

DISRUPTED AR

Pokémon Go takes AR mainstream After years of developers trying everything they could think of to speed up the adoption of augmented reality, it turns out that all the world really wanted was to use their phones to chase and trap little creatures. Pokémon Go has proved to be a hit in across the globe, generating an estimated $1.5m a day on iTunes alone and gaining 100m users in six days when it took Candy Crush 15 months. What remains to be seen is whether the public’s interest in AR remains when all the hunting’s over.

Disruption and innovation in retail How technology is powering the high streets’ fight back against online retailers and why the IoT will transform the way we all shop.

A guide to chatbots See the power of AI as it transforms the way businesses communicate with their users.

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/A day in the life

Julie

Chakraverty

The non-executive director and chair of Innovation at Aberdeen Asset Management on her new mentoring app, innovation competitions and the wonders of chocolate bars he alarm always goes off at 7am but I’m one of those people who needs to hit snooze a couple of times before I can open my eyes.

Unless I have early meetings, I get to walk to school with Ella, my daughter. This is my favourite way to start the day, hearing what’s on her mind and comparing what we’ve got on for the coming day. Then I dash into either the City or the West End. Being a non-executive director means a real variety of challenges and topics to focus on.

At the moment we are quite busy with innovation, so I might be checking new employee ideas for our ‘Ignite’ competitions, helping with interviews for senior appointments, or talking through our innovation strategy with our CTO.

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that would typically accompany Audit, Risk, and Main Board preparation. After City meetings are finished, I check Twitter to catch up on news stories as I head back to the offices of my startup, rungway. I started this 18 months ago to create a tool for people to help each other with workplace advice and need to see how development is going.

Then it’s back home to deal with emails and follow up with the organisations who are trialling the app. All have ideas and questions that need to be responded to, and I’ll typically have some phone calls booked too. But first thing, I change into my beloved tracksuit. It’s always comfort over fashion when working from home!

I am often thinking about which innovation speakers to line up for committee meetings. Our very first speaker was John Straw, who got our attention on how to think about threats and opportunities in an entirely different way.

I realised that none of my ‘big ideas’ ever came to me sitting at my desk or in meetings. I always get them on holiday, so definitely need to be relaxed in order to look at a problem differently.

After Ella’s bedtime routine, a late dinner with my husband and a quick bit of TV together, it’s back to the PC to check the latest on rungway. All my colleagues are used to my late night emails as it’s the best time to properly focus. I keep myself awake with chunks of Dairy Milk Oreo (the best treat ever created) and listening to the Daily Politics show over BBC iPlayer. Then I’m usually into bed by 11.30 at the latest. I turn on the electric blanket regardless of the weather and will be fast asleep within a minute.

A board meeting day involves solid meetings back-to-back, having already read the 500+ pages

Download rungway from the Apple Store, Google Play or rungway.com

“None of my big ideas ever came to me sitting at my desk”

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/the_big_idea

psychology

economics

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technology

Will the technology we all love make us poorer?

Technology doesn’t happen in isolation – it can alter society in unintentional ways. John Straw explores the ‘technonomy’ to show how technological causes and disruptive economic effects can affect us all

conomic theory defines wage as a function of the marginal physical productivity of labour. But in a purely market-led economy, wages – and particularly minimum wages – are driven by demand. And if the market decides that an hourly rate should be less than an agreed-upon $15 an hour minimum, that’s what will be paid.

This is the ‘technonomy’ – the economy as determined by technology. For an example of it, look no further than Uber’s taxi-busting app. Each Uber driver must pay their own fuel and commissions to Uber itself, not to mention the cost of the car they’re driving. Drivers don’t get paid for dead time between fares but since consumers don’t want to wait for their

ride to arrive, there must be plenty of capacity in the system, so idling is built into the business model. For drivers to be guaranteed minimum wage, they’d have to charge customers a fee that’s not only $15 an hour greater than their overheads but also one that covers their slack time.

And that’s not how it works.

Uber calculates costs by algorithm, as do services such as PeoplePerHour.com, which allows freelancers to sell their services. These algorithms determine supply and demand at a previously unimaginable degree of accuracy, calculating wage fluctuations based on the scarcity of available labour virtually in real time. They are the embodiment of economic forces working exactly how the text books always said they should.

But when the algorithm is boss, there is no room for judgments on fairness or humanity. When rewards are set entirely according to market forces, workers have to either accept a constantly fluctuating income or they must find a different way of scratching a living. In this light, the brave new world of the sharing economy starts to look less appealing. So is technology helping or hindering the workforce’s quest for a living wage? Are apps giving us all fresh career choices, or killing income?

Will technology erode income?

Imagine a world where innovation suddenly changed everything. Nuclear fusion gives a non-polluting power source for universal water desalination.

Bio engineering allows food to be

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/the_big_idea manufactured cheaper than the cost of farming it. A new land transport system lets us travel at the speed of flight.

Wouldn’t that be great?

Facebook, Amazon – are enjoying an extended period of profit and expansion.

If this were to continue for all big businesses at the same rate, we’d quickly reach a point where the minority that Surprisingly, the answer isn’t cut-andeither builds or owns technology, or that dried. For unless this world sees owns the land we live and work a demand for goods and on, would hold nearly all the services rise in tandem wealth. Far from heralding with the greater as golden age, such productivity these rampant profit would innovations allow, then force the majority to instead of entering an settle for a minimum psychology age of plenty, it might wage job as the better actually face a neveralternative to being ending depression. It’s all surplus to requirement. those farms, refineries and car plants closed overnight, you see. What Man versus machine will become of all the workers made A report from Carl Benedikt Frey and redundant by change?

Michael Osborne from Oxford University titled The future of employment: How Perhaps this was an underlying cause susceptible are jobs to computerisation?, of America’s Great Depression in the looked at this very topic. They noted that 1930s. Could it be that the US had noteconomics since computers and robots can work figured out a way to benefit from all the tirelessly and dextrously, even in hot, great innovations of the late 19th and cramped spaces, then manufacturing jobs early 20th century? If so, then it took are most likely to be the ones taken from the Keynesian stimulus and upheaval of human workers. The report also noted World War 2 to turn potential into real that jobs requiring a high level of social wealth creation. intelligence are harder for computers to do, making roles that involve developing What about the great innovations of ideas, originality, negotiation, social the late 20th and early 21st century? perceptiveness or caring for others The internet promised total equality yet virtually future proof. But here’s the technology it wasn’t long before a small minority problem – skilled construction jobs tend gathered most of its wealth. Hundreds of to be well paid while creative writing, thousands of authors have published on social care or jobs requiring empathy Kindle, for example, but only Amazon has are so poorly paid, many carers are often got truly rich off their efforts. volunteers. The robots, it seems, are set to scoop up all the well paid jobs.

In my book iDisrupted, I note that innovation is accelerating at an As an individual, you accelerating rate. The dream of entering may fret that an an age of plenty is no longer a pipe economy of such dream but will this create plenty or inequality misery? Currently, GAFA – Google, Apple, is unfair to

all but the elite. You may even worry that it will lead to endless instability.

But an economist would note that such an economy isn’t even optimal. They’d say that since it’s better for everyone – especially GAFA – for the economy to grow, that a majority living on the breadline would be a brake to that.

Because of course, if most people have no spending power, they’d cease to be consumers, which would end the elite’s reign of expansion. Paradoxically, a consequence of rising inequality may, in the long run, be to make the super-rich worse off.

So if rising inequality, the erosion of median level incomes, mass unemployment and maybe even recession are the potential downsides of technological revolution, is our consumer addiction ultimately going to make us all worse off? Not necessarily. One solution may come from the markets themselves.

A recent McKinsey report suggested that the internet is now dropping barriers to entry so low that big corporates are facing real competition from startups.

“While global revenue could increase by some 40 per cent, reaching $185 trillion by 2025,” it said, “profit growth is coming under pressure. This could cause the real growth rate for the corporate profit pool to fall from around five per cent to one per cent, practically the same share as in 1980, before the boom began.”

psychology

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The internet has helped make this competition possible, with the newer, more agile companies embracing the sort of new technologies that established companies have yet to even understand.

economics

Keynesian stimulus vs Quantitative easing Two-part solution to America’s Great psychology Depression of the 1930s Monetary policy - interest rates reduced Fiscal policy - government infrastructure investment Recession ended by: creating jobs and encouraging people to spend

A central bank stimulus when all other measures have failed First used by Bank of Japan in 2001 in a bid to end ongoing recession Widespread use after the crash of 2008 Recession ended by: encouraging lending, thus stimulating spending

With profits to GDP set to fall, then byeconomics That said, there is still a very real danger definition, wages to GDP must rise. In that the pace of technological change this way, wealth is redistributed from will be so profound that no amount of corporate giants to startups. This is education will solve the underlying a possible self-balancing problem. Technology may become mechanism. The very so sophisticated that there richest would be better may be a limited need off if the economy for workers employed was bigger, even in wealth creation if they owned a activities. smaller share of it. While we, the As bleak as all workforce, retain this sounds, there technology our income. is still hope. The last decade has seen Improvements in global interest rates across the education may also help. developed world collapse and A growing number of companies the evolution of a new form of monetary complain about the lack of digital skills policy called quantitative easing, which within the labour market, so schools injects money into the banking system could solve this by putting greater in order to promote greater borrowing emphasis on coding. New products and and, it’s hoped, more consumer spending. services such as the Khan Academy are These developments are symptoms of set to improve global access to high underlying changes, partly charged by quality education. At a time when the technology. Record low interest rates very best education is unaffordable to are a consequence of what the former most, technology may push the other way FED chair, Ben Bernanke, calls a global by totally flattening the playing field. savings glut. At least in part, this was

created by the surge in corporate profits to GDP. Yet the debate has evolved even beyond this state. More and more economists are talking about a new form of quantitative easing, one that involves central banks funding government spending, which could be in the form of massive fiscal stimulus or tax credits.

In an age of potential plenty, but one that sees mass unemployment and excessive inequality, the creation of money to fund the kind of jobs that people need, but cannot afford, may provide a partial solution. And, thanks to technology creating massive unfulfilled production potential, the danger of inflation is low.

We may not ever live in a period of free power and clean drinking water for all but we do live in a world where innovation is changing everything. And even though we can’t accurately predict the implications of this change, that should never stop us from trying.

John Straw is the founder of D/SRUPTION and co-author of iDisrupted

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/food

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The future of food The countryside provides, the city consumes. That’s how it’s always been… until now. As pioneers test the market for urban farms, what part might food grown within the city play in ensuring food security throughout the 21st century?

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/food “We decided that although anyone can sit around talking about the problems, we should get involved and just do it” Steven Dring – Growing Underground

or most of its 50 years, the Pasona building has been instantly forgettable, a nine-storey cube of glass and concrete at a busy Tokyo intersection. But then a 2010 revamp

by New York firm Kono Designs turned it into something far more high profile - a city farm that fills offices with crops and drapes vegetation down exterior walls.

Pasona O2 is the largest urban farm-totable scheme in Japan, using a fifth of its 20,000m2 office space to grow over 200 species of fruits, vegetables and herbs. Protected from pests and grown in optimum conditions under LED lighting, three rice crops manage to thrive every year inside the building.

Pasona Group is a recruitment company, so while staff are encouraged to take an interest in the crops that surround them, dedicated growers do much of the grunt work. At lunch time though, anyone can pick whatever they want and ask the cafe to include fresh, zero food mile crops into their meal.

The building is one of the most visible examples of ‘vertical faming’ – a concept first proposed in 1999 by Columbia University professor Dr Dickson Despommier and his post graduate 18

students. Indeed, the cover of his book, The Vertical Farm, shows leafy high-rise buildings very similar to it. In the book, Despommier argues that mass producing food crops under controlled conditions within skyscrapers could be a way of solving numerous problems associated with modern farming and spiralling global populations. Crops produced within a city for the city would eliminate the cost and pollution of food miles, while countries with limited arable land could grow more crops by going up rather than out. In all instances, harvests would be guaranteed by eliminating the threat of drought or pestilence, creating a greater security of food supply.

In many respects, Pasona O2 seems to be the Despommier dream made real.

With only 12 per cent of Japan suitable for cultivation, the country imports much of its food from, on average, over 9,000 miles away – the highest food mile rate in the world. If anywhere was ready to embrace vertical farms, it should be Japan. Yet the concept has stubbornly remained just that – a concept. Sceptics have argued that building skyscraper farms will generate more pollution than even the most intensive forms of farming, while retro fitting existing buildings would create an equally massive carbon footprint through artificial climate

control. On the other side, supporters have argued that advances in renewable technologies such as solar power, wind turbines, LED lighting and water capture, in conjunction with vertical farms’ proximity to consumers, make them a viable form of renewable technology.

What’s needed are more cases of working farms. Pasona O2 is marvellous bit it’s just a proof-of-concept showcase. It has no need to turn a profit or make a strong business case for its own existence.

To find an actual business, you don’t have to travel round the world, just to East London. You won’t even have to look up. Because one of the world’s few commercial urban farms has embraced Despommier’s concept by going down.

Over thirty metres below Clapham High Street, a World War 2 era bomb shelter houses Growing Underground, a company that produces pesticide-free herbs and salad leaves all year round. Mostly sold wholesale at New Covent Garden Market for the hotel and catering trade, few of the pea shoots, wasabi mustard, coriander or other leaves ever escape the M25, almost eliminating food miles.

Bombproof salads The company started when co-founder Richard Ballard showed Despommier’s book to his business partner, Steven

Dring. “We were both looking at this field,” explains Dring, “whether it was the democratisation of energy, water scarcity or food security. And we decided that although anyone can sit around talking about the problems, we should get involved and just do it. We figured if the sums stacked up on paper then we’d go for it and if they didn’t, we’d have proved that the academics had got it all wrong in terms of viability. Because it’s one thing to build a greenhouse and something else to build a commercial urban farm.”

What followed was two years of research into every aspect of a project neither had any experience in. How much startup money would they need? What about running costs? And at the end of the day, would they be able to make money by selling at a competitive market price?

“We looked at office blocks and they were bloody expensive, even back during the

recession, so we knew they were always going to go up in price,” says Dring.

“Rich said he knew there were a bunch of tunnels under London but this was 2012 and we couldn’t get access to many of them due to security surrounding the Olympics. Then Transport London showed us a couple in the Clapham area and we said to them ‘Look, we’re a startup. We haven’t got any money and we ain’t going to sign a lease with you until we know it’s a viable business.’”

From these shaky beginnings, a one metre square section proved they could grow crops without natural light, so they scaled up to 100m2 to attract £1.3 million of investment, although that “still only only allowed us to build proof-of-concept of a commercial farm. We got the surveys and the air quality checks done and so on.

We’re not hermetically sealed from the tunnel but it is a food safe environment.

Then it required a further round of

funding to take over another section of tunnel and start building the scale.”

Growing Underground has always stuck to its founding ecological principals.

Where it originally used a hemp substrate for the roots to grow into, for example, they switched to a product made from carpet offcuts once they discovered that this recyled matting has a lower carbon footprint. But while this makes for a good PR story, it doesn’t stack up at the New Covent Garden wholesale market.

“We’re in a price competitive market and you can’t really extract any value from the lovely story about the tunnel, our sustainable values or even that it’s grown just down the road in Clapham,” notes Dring. “Ultimately, if it’s not the right price, we won’t sell.”

Because they do sell, and because they have maybe two more years of expansion in their current tunnels before

A six-legged solution Why don’t we eat insects? It seems a crazy question yet according to the United Nations, two billion humans already do.

The UN calculates that 30 per cent of the world’s ice-free land mass is used to raise livestock in an industry that generates nearly 15 per cent of all greenhouse gas emissions.

It’s an incredibly inefficient process, with one kilo of beef requiring ten kilos of feed – which itself must be grown – and vast amounts of water. With an ever-increasing global population, and developing nations switching from traditional vegetarian diets to more western ones, the figures don’t stack up.

Which brings us back to insects. The UN notes that around 2,100 types are already being eaten. It takes just two kilos of feed to produce a kilo of crickets and many insects can be dried and ground into shelf-stable protein powders to build up reserves against disaster. With twice the protein of beef, cricket flour can be an powerfully effective famine relief tool.

But food security and the environment will never convince the general public to eat bugs. What they want is taste and, amazingly, insects apparently provide plenty. Big Cricket Farms, based in a rust belt warehouse in Youngstown, Ohio, produce crickets for the gourmet market

and estimate they can only serve 10 per cent of the current demand. The company’s founder, Kevin Bachhuber, describes crickets as “a marriage of cashews and sweetcorn.”

TinyFarms, a Silicon Valley startup that raised $75m of investment, has found that around three quarters of children will sample insects at trade shows, compared to around a third of adults. With a growing acceptance and insect flour starting to become available in both Europe and the US, it seems that the business case for edible insects is growing.

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/food ‘downstream’ wastage of a systematic farm-to-fork problem.

The supermarkets’ “cult of perfection” means that harvestable, nutritious produce that has ripened either too early or too soon, or blemished by wind or rain, is not considered sellable. A fraction of this is sold to processed food manufacturers or as animal feed but most is simply ploughed under, producing the greenhouse gas

Hydroponics and LED lighting produce optimum growing conditions

they must find another site – these are the reasons to take note of Growing Underground. “We always wanted to prove that the green sector is an area to invest in by showing we were a good return on investment,” says Dring. “Our differentiator is that we go up against our competitors every day solely on price and quality and service.

“I want this to stand on its own in terms of viability and profitability while at the same time sticking to our principles of growing hyper locally. I can give London coriander and mint all year round from under Clapham High Street while competitors are flying it in from Peru and Israel. Should we ever want to sell in Bristol, Manchester or Edinburgh, we’ll start up in those cities because the whole point of this is not moving produce around the country. By growing and consuming it locally, we can actively engage socially with our consumers.”

First World problems The issues surrounding food security and industrial agriculture are so vast that people can and have written entire books about them. While we can only touch on some aspects here, Dring’s previous 20

comment about hyper local salad versus continent-spanning imported leaves does put us on the road towards our conclusion. For food is, in many ways, the very definition of a First World problem.

In our lifetimes, the western world has never faced famine, food inflation or lingering scares about tainted meat.

Quite the opposite in fact – industrial farming currently make so much clean and nutritious food that’s sold so cheaply, many of the farmers who produce it are struggling to stay in business, let alone turn a profit. And since consumers have got used to all kinds of food being available all year round, regardless of the season, an entrenched, seemingly wilful, policy of wastage has been established at every step from farm to plate.

The bloody veggie burger Pat Brown, Stanford geneticist and founder of Impossible Foods, took a scientific approach to produce his Impossible Burger, examining at a molecular level what gives beef its appealing flavour and aroma. He hit on a substance called ‘heme’ that’s extracted from yeast and gives a rich, red ‘blood’ ooze to his uncooked vegetarian ‘mince’.

With no cholesterol, hormones or antibiotics and more protein than beef, the Impossible Burger appears to pass both the health and taste tests. It shouldn’t be a surprise to learn that Bill Gates is among the many investors in this pioneering company. impossiblefoods.com

We’ve become used to headlines screaming in panic that the average UK household throws away between a fifth and a quarter of all food it buys but the emerging picture is that the reality is far, far worse than that. A recent report in The Guardian concluded that while a third of American produce – 60m tonnes worth $160bn – is indeed discarded annually by retailers and consumers, this is just the

methane. A UN Food and Agriculture Organisation report stated that in 2007, the carbon footprint of global emissions from the production and destruction of uneaten food amounted to 3bn tonnes of carbon dioxide – more than what most individual countries generate.

Combined, the ‘upstream’ and ‘downstream’ wastage brings US food wastage up to around 50 per cent, although there’s little to suggest that European countries are any better. In other words, the capacity to feed many more people is already here, if only the food chain were better managed.

Says Steven Dring, “If you feel the need to take a stance on hyper local food and food miles, you’ve got to understand that you can’t pick and choose. Are you really passionate about it? Do you really hold that opinion? Then stop eating meat right now and you’ll instantly start affecting the planet. But since people aren’t prepared to do that, and carnivorous diets are actually increasing, that’s not happening. So we all need to affect whatever small area we can. For Growing Underground, that means getting salads grown hyper locally into markets.”

Where Pasona O2 stands as a proofof-concept to vertical farming, Going Underground is breaking new ground in proving that sustainable values are not a limit to commercial success. The London skyline is unlikely to ever be dotted by towering multi-level fields – property prices make that an unrealistic dream – but that’s not to say that other cities with differing priorities will never adopt them. For now, urban farming remains an industry with great potential that stands to be one tool in the never ending problem of feeding the world.

“If you feel the need to take a stance on hyper local food and food miles, you’ve got to understand that you can’t pick and choose” FURTHER READING

Edible insects:

Future prospects for food and feed security Commissioned by the Food and Agriculture Organisation of the United Nations in 2013 and running to nearly 200 pages, this report looks at the wide range of edible insects and the potential benefits of its consumption on a global scale. It concludes that while industrial production and stockpiling of insect protein as flour could be a force for good, that we still all have a long way to go, both in educating populations and assessing the environmental impacts of commercial harvesting. However, with its low dependency on water and land, insect farming does offer the opportunity of food security to even the poorest in society, while industrial scale farming for animal feed could free up the considerable amount of grain currently used to rear meat for human consumption.

Download the report from www.fao.org/docrep/018/i3253e/i3253e.pdf

The Vertical Farm:

Feeding the world in the 21st century If the human population increases by 50 per cent over the next 40 years, where will the crops that feed them be grown when currently over 80 per cent of arable land is already in use? This was the problem that haunted Dickson Despommier in the 1990s. His proposed solution is described in The Vertical Farm, his 1999 book that argues cities should produce more of their own food in space saving tower block hydroponic farms. It’s only now, nearly 20 years later, that his theories are being put into practice.

The Vertical Farm is published by Picador

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/insurance

Risk and opportunity How does a centuries-old industry react to technological changes that have only recently emerged?

By redefining the customer experience, the insurance sector is starting to meet fresh challenges head on

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et’s just get this over with straight away – no one loves insurance. Businesses and individuals pay for it because they need it and, in some cases, have no choice. Car insurance is a legal requirement, for example. Even when it does provide the safety net that saves your business, replaces your stolen car or rebuilds your flooded house, it means something really, really bad has happened in your life.

Bradley Gamage, a director at digital marketing agency SapientNitro, deals with insurance industry clients on a daily basis. He’s in no doubt that a sector currently undergoing profound digital transformation also has an equally large image problem to deal with.

“Insurance customers only ever have one of three experiences,” he says. “One – you don’t use it but a year later, you have to buy it again. Two – you have to

claim and the experience is so shockingly bad, you’d never use that company again regardless of the price they offer. Or three – you claim, they cough up quickly and you feel good about that. But then a month before you renew, every insurance company you’ve ever spoken to bombards you with quotes and however favourably you think towards your current insurer, you’ll probably make your decision based on price alone. Nothing on that journey is attractive in any shape or form.

Unfortunately, that’s insurance.”

Not that the online retail giant has done anything bad to insurers. It’s just that Amazon has done its thing so well, the company has become the benchmark standard for all digital services.

The Amazon effect So the business that does everything right still might lose the renewal. How can that happen? Why is insurance regarded as a necessary evil rather than a social good? And what role can technology play in altering widespread perceptions?

That’s an understatement. Steven Mendel co-founded boughtbymany.com four years ago with the stated aim of making it easier for its customers to make informed choices for themselves. “It’s generous to say that getting insurance can be a pain in the bum,” he says. “Why people tolerate that it can take a day to find the lowest premium to reinsure your home or car is not exactly clear. But it’s simply unacceptable that this is still the norm.”

Blame is perhaps a strong word to use but if the insurance sector wants to point a finger of blame, it would be at Amazon.

Will Abbott is marketing director at insurance provider Hiscox: “In a world where you can go straight to your Amazon app, find a product with a voice search, pay for it with your thumb print and get it delivered the next day, financial service processes can feel very different.”

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/insurance “Pricing and buying insurance has a magnitude of complexity greater than products on Amazon” Will Abbott, Hiscox

It’s clear that the industry must change and it is changing. But by design, it’s built for stability, not innovation. It can and does weather storms, quite literally in the case of shipping insurance. Any system robust enough to absorb shocks such as 9/11 or the Christmas tsunami is, by definition, an almost immovable force.

It’s no surprise, then, that insurers are looking to innovate within their existing frameworks rather than tearing it down and starting again.

Behaving like a startup Retail businesses have led the way in digital transformation for many reasons but principally because putting products online was always an easy sell. On a basic level, ecommerce mimics paper catalogues, with rivals able to showcase products and prices that the customer can readily compare like-for-like.

It was no accident that the biggest breakthrough for insurers online was the independent price comparison website.

However, insurance companies are now working hard to take their products back into digital domains of their own creation. Will Abbott from Hiscox again: “While change is being driven by the need to make processes easier for the customer, pricing and buying insurance 24

has a magnitude of complexity greater than products on Amazon. The input and data needed to assess risk and set a premium requires more time and more questioning. So recognised shortcuts such as ‘We also recommend’ just don’t apply in the same way.”

Other lessons from online retailers are more directly applicable. Creating the single view of a customer has long been a driving force for retailers such as John Lewis, who aspire to recognise individual shoppers regardless of whether they shop online or in store. Yet to any large insurer that has grown over decades, often through acquisition, the combination of legacy systems, disparate data sources and out sourced departments make the single view a tricky proposition.

“When a customer who already has car insurance phones up to ask about pet cover, they shouldn’t be treated as a new customer,” notes SapientNitro’s Bradley Gamage. “They expect to go to a single place to see all the products they hold, or speak to someone who knows that. They expect a personalised experience with benefits. But because they are identified by one policy number for car insurance and another for their home, that’s not happening. And that’s just not smart.”

Big companies such as Aviva, Prudential, Legal & General and Hiscox are like ocean-going supertankers – they require a lot of time and effort to change course.

But by adopting incubator programmes, embracing startups or giving parts of their business a degree of autonomy, these companies are, in effect, starting to create fleets of smaller departmental ships. Hiscox, for example, has created a business club in York, where startups from across Yorkshire are free to use office space and share ideas. Aviva has done something similar, while Axa and Alliance have set up venture capital investment subsidiaries to invest in startups. But, notes Hiscox’s Will Abbott, “People talk about startups failing fast and embracing failure, which can be difficult if failing has a significant detrimental effect on a customer. So we still tread carefully.”

Bradley Gamage confirms that even the companies who want to move like startups must still behave like insurers.

“They know they have to provide a richer, consistent, more complete crosschannel experience. But since they have to get everything right – data, transparency, security, regulatory – that’s what slows them down. Because as in any financial service, the media is quick to jump on them whenever they get it wrong.”

Insurance innovators

Can startups get ahead?

While existing companies have power, scale and formidable reputation but are held back by legacy systems and culture, the opposite its true of new entrants into the market.

Entry into financial services has always been deliberately difficult. It used to take a minimum of 18 months and £25m to get a banking licence. However, recently revised regulations now mean a business can get a licence within six months and be backed by £5m capital - enough to sensibly wind down 12 months of business. The result has been many more online and niche insurers arriving.

In a decade, Simply Business has become the largest insurer of small UK businesses by concentrating on one market. In Australia, trov.com seeks to engage the young with its phone app while Boughtbymany engages in online media.

All appear to be flourishing.

Yet the problems faced by startups are essentially the same as those faced by the incumbents. Says Will Abbott: “The companies who put customers first and use technology to improve their products and services will do well. The ones that get complacent won’t.”

trov.com

boughtbymany.com

Originally a digital inventory of a user’s high-value purchases, Australia’s trov has become an app-based insurance service where insurance and claims are processed with just a smartphone swipe. The phone-based system and emphasis on covering individual items are intended to appeal to younger users who typically ignore insurance.

This online broker negotiates discounted premiums for groups with specific needs. It currently supports 289 such groups, from the residents of Yeovil in Somerset and mobile hairdressers to bearded collie owners.

By matching “willing buyers and willing sellers” it claims an average 18.6 per cent reduction on premiums for its nearly 200,000 customers.

simplybusiness.co.uk

lemonade.com

Started in 2005 as an online price comparison website, Simply Business is now the UK’s largest broker of small businesses, shop and landlord insurance. It brokers public liability, professional indemnity and employers’ liability insurance for over 300,000 small businesses. It is also currently ranked number one in the Sunday Times ‘Best 100 companies to work for’ list.

Founded in 2015, New York based Lemonade is an online carrier that plans to operate as a peer to peer insurer. Its founders say traditional insurers are “in the business of denying claims.” By arranging groups of similar policyholders into claims pools, Lemonade’s model is that each pool self funds claims, with everyone getting a refund from any remaining pot money at the end of each policy.

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/insurance “My expectation is that we soon will see businesses such as justmymacbook or justmykeys popping up” Steven Mendel, boughtbymany.com

1 things that lie ahead The problems faced by the insurance industry are glaringly apparent - it’s hard to love, people find it complicated and companies have been slow to implement a joined-up strategy.

But what about the solution?

Here are five changes that are likely to transform insurance within the next five years…

Improving the user journey When most crosschannel transactions are quick and easy, insurance continues to be frequently slow and frustrating.

Educating customers as to the reasons for this is part of the solution but improving interfaces is a priority for all insurers.

Better use of data Insurance is a data-driven industry, with actuaries and underwriters combining real world information with their experience to determine the likelihood of outcomes in order to set premiums. This is set to become far more fine-grained.

Whatever it takes to make the process less painful can and will be tried. Aviva currently has a My Drive app whose in-car telemetrics monitor how you drive. On the surface, this seems to be a mechanic that rewards safe driving with a lower premium, although this ‘gamification’ of insurance is as much about engaging customers as reducing speeding.

Says Bradley Gamage: “House insurance cares less about you than your post code. So if you’re on the fringe of a leafy, safe area but share a post code with a different area, tough - you’ll get charged a higher premium.” The industry tends to treat individuals as stereotypes within a segmented audience, even though data about personal preferences abounds. But by seeing what Facebook users are talking about, for example, insurers can target marketing messages more accurately.

If smartwatch fitness data starts to affect health insurance premiums in the same way, its primary aim would surely be to get its users to promote insurance through social media channels.

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2

A more analytical use of third party data can also be used to better determine risk.

Increasingly hyper local weather data can determine whether your house, not area, is more or less prone to flooding. Or, by cross-referencing flight information with travel insurance policies, an insurer can pay out on flight delay cover moments after a customer’s plane misses its takeoff window.

3 Micro transactions and one-stop shops Thinking smaller and thinking bigger are two ends of the spectrum that show potential for growth. At one extreme, there’s the ever-increasing cost of individual items that customers leave the house with. Smartphone are hundreds of pounds, while even a mid-level road cycle can costs several thousand. Single item insurance service trov.com is probably just the first, thinks Steven Mendel.

“My expectation is that we soon will see businesses such as justmymacbook or justmykeys popping up,” he says.

At the other extreme, a single provider for everything is an equally appealing proposition to customers who fear the annual drudgery of renewal. Only by treating each customer as an individual who holds numerous policies rather than a set of policies that happen to be taken out by the same individual can the industry work towards seamlessly offering a single stop for home, car, life, health, pet, dental and travel insurance.

4 Blockchain The power of blockchain and the distributed ledger is that it creates secure yet transferable records that are tamper free. Most widely associated with cryptocurrencies, blockchain also allows an individual to hold their own data.

This has a profound implication for the insurance industry: if all the information about every insurance product is made freely available online and if every customer has proof of all their details and histories on blockchain, there’s very little call for a middleman.

The resellers of insurance are the big named companies who spend most of their money on marketing but have very little of the risk associated with the policy. The underwriters are the companies creating the policies: they shoulder the risk but spend little on marketing since they sell to the big companies. So what if the customers start going straight to the underwriters?

5 Redefining what an insurer is Even today, many new car buyers take out finance and insurance in the showroom.

While these tend to be white label third party services badged to match the car brand, other retailers are also looking to get in on this action.

John Lewis has such brand affinity that few customers would think twice about not only buying a new sofa but also insuring it through them. Radio Times, with its huge, aging subscriber base, is looking at not only moving into travel insurance but also package holidays as perfectly synchronous offshoots to the magazine business.

In conclusion Insurance will always be a tough sell – you buy a product that you don’t want, can’t see and hope you’ll never have to use. Yet by making it easier, by incorporating it into social media conversations and by adapting it to suit the needs of younger generations, this vast business sector is changing our perceptions of it. It may never be a hot topic but in time, we may all start to change the conversation towards the protection this safety net offers to us all and away from the onerous burden of premiums or the difficulties of renewal.

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/blockchain

Disrupted loyalties Taking identity management back from big business Blockchain consultancy firm Distributed Vision’s co-founder Ian Gass on how we should be reclaiming our online identities

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lthough perhaps hard to imagine, there are currently technologies on the horizon that have a significant chance of disrupting the domination of GAFA – Google, Apple, Facebook and Amazon. All the GAFA companies require network effects for their business models, which in turn require loyalty. The problem for users is that, over time, should your loyalties become divided for any reason (for example, you become uncomfortable with the level of personal information a single network has), the only option you have is to leave that network, therefore leaving all that personal data behind.

Loyalty is therefore intertwined with identity but technology will soon create a fundamental change to that structure of identity management.

Current computing networks rely on organisational supplied servers storing and protecting our data, effectively a ‘walled-garden’ that users expect organisations to defend.

Yet new decentralised peer-to-peer technologies now permit the encryption and authentication of individual data elements. This means not only no need for servers but also no need for the companies that protect them.

It’s all about identity We live in a paradoxical world when it comes to digital identity. Rigorous laws exist to preserve the confidentiality and privacy of our personal data, yet we regularly sign away and waive those rights contractually through ‘terms of service’ that few of us read. By doing this, we then permit a staggering amount of our data to be sold and shared.

Anecdotally, our collective attitude towards identity management seems

“The missing link is very nearly here and it’s called DENCS – Decentralised Encrypted Networked Computers” to vary enormously, from paranoid to apathetic to ignorant. These attitudes tend to change depending on both demographics and nationalities. It is interesting that Generation Y, whose adult lives are likely to be heavily digitised, seem to be far more aware of personal data infringements but also less concerned, provided they know they can control ‘write’ access.

are not fully understood by most people, which is why it is no accident that legislation is changing to ensure businesses now pay attention instead.

This is a worrying state of affairs, since history shows us that very bad things can happen when we relegate privacy to a ‘nice to have’ status. There is a long list of historical evidence, for example the Rwandan genocide of 1994 or the administrative efficiency in the Netherlands prior to the Second World War, which directly contributed to a high percentage of the Dutch-Jewish population (75 per cent) being identified, found and murdered during the years of German occupation.

Conflicting identity objectives Before I go into the technology, it is worth highlighting some of the high level issues that surround identity. In order to go about our complicated lives, we need both privacy and transparency, yet it is these conflicting objectives that cause complexity and confusion. We all both need and want the potential to be different persona, in different situations and at different times. It’s for this reason that the current fragmented management of online identity, which allows any individual to create any number of accounts and identities, is not necessarily a complete disaster. While this system is inefficient and insecure, at the very least, it has allowed for us to keep some degree of segregation between our personae.

Long periods of stability serve to weaken the importance that societies place on identity and privacy, which is particularly relevant right now. The current structure of the internet, combined with the rapid pace of change in technology and services, mean we all have to accept terms we’d probably rather not.

However, we’re at a tipping point.

The sheer number of online accounts and identities we all try to manage is impractical and runs the risk of weak password protection. To make matters worse, there is a long and infamous list of organisations that have failed to protect our personal data.

The risks and consequences of doing so are amplified by the fact that most of the ‘free’ online services and content we consume is funded through targeted advertising. The implications of this

Is data an asset or a liability?

In the internet age, the gathering of data has always been considered an asset. That is about to change. Take, for example, the new EU General Data Protection Rules

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/blockchain “The trusted provenance of these networks tends to also come with pseudonymity rather than anonymity” (EU GDPR), which impose a number of fairly punitive obligations on all companies as to how they (and their commercial relationships with whom they share data) handle the private data of EU citizens. The EU GPDR is a much-needed piece of legislation in a world that says one thing but does another with private data. It is inevitable that companies will be taken to court over breaches relating to the EU GPDR and when this happens, the idea of this data being a liability will begin to permeate through big business.

To combat these identity management failures, there has been a noticeable increase in identity-based businesses, in addition to well-publicised efforts by the likes of Google, Facebook and Apple to facilitate single sign-on services.

While I applaud the efforts of some of these companies, there is a fundamental long-term disconnect between these particular corporate business motivations and the interests of the users at their core. Even if current motivations are pure, no-one knows with certainty how these companies will behave in the future. Without significant compromise, it is unavoidable over the long-run for any network or service to have anything other than the protection of personal data at its core.

Let’s do it differently What is needed is identity management at the edges of connected networks rather than at the centre. To date, this has always been technically impossible but it

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is this that is about to change. Advances in peer-to-peer technology, cryptography, blockchain and decentralised contributedcomputing resources are about to offer us a new paradigm of digital identity and data management. These have the potential to impact the entire world around us, from the way governments are run and how we vote for them, to how we conduct business, how we fund and access curated content and how we manage our finances.

We’re at a very interesting time in computing history. Live working examples exist of decentralised peer-to-peer computing systems that enable the electronic transfer of assets, including the agreement and settlement of contracts through technologies such as Ethereum, Bitcoin and Tendermint.

There is a great deal of excitement surrounding the commercial application of these type of technologies but they currently tend to come at a cost.

Specifically, the trusted provenance of these networks tends to also come with pseudonymity rather than true anonymity.

Although you can interact with the networks under a name other than your own, your identity to the network will be the pseudonym you assume. While it is possible for a single user to create many pseudonyms, it is equally possible that over time, this user’s traffic or history could be used to identify them. Note that this is not inherently bad, indeed it can be desirable. It is just not desirable all the time in all circumstances.

It is for these reasons that I think blockchain technologies are an important and necessary ingredient of identity management but that they are not the complete solution.

The missing link is nearly here – Decentralised Encrypted Networked Computers (‘DENCs’). The combination of both DENCs and blockchains will create the right conditions needed for identity management. It will permit the appropriate balance between transparency and anonymity, transitory records and permanence. It will allow individuals to truly control their data by permitting the appropriate level of disclosure to whatever data they choose under agreed and transparent terms.

The end of GAFA? It is hard to overstate the impact this would have were it to happen. At the very least it would lead to a rethink of certain business models. In the same way that ad-blocking web browsers are creating panic among online businesses that rely on advertising as their primary source of revenue, an identity-based configuration as described above could have a notdissimilar impact on the GAFA companies.

Other established businesses would also be in the firing line. A good example is Microsoft, as its dominance of corporate IT systems is partly predicated on its directory services, which could very quickly become redundant.

User loyalty to GAFA companies and other household names may be about to shift.

How will that affect us all? Only time will make that apparent.

Ian Gass is co-founder of Distributed Vision, a blockchain consultancy www.distributed.vision

/blockchain

Beyond Banking Think blockchain is all about Bitcoin?

Think again. Collin Thompson highlights ten innovative startups who are taking blockchain in very different directions

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Enigma Coming in a close second on my list is a stealthy startup coming out of the MIT media lab called Enigma. Lead by Guy Ziskind and Oz Nathan and advised by Prof Alex Pentland, Enigma is a decentralised cloud platform that guarantees privacy.

Private data is stored, shared and analysed without ever being fully revealed to any party. It provides secure multi-party computation, empowered by the blockchain.

Provenance Provenance is a real-time data platform that allows brands to take steps toward greater transparency by tracing the origins and histories of products. With its technology, users can easily gather and verify stories, keep them connected to physical things and embed them anywhere online.

This is as futuristic and radical as the blockchain gets and if proved – it’s still in beta – could be one of the most important innovations to come out in the space as it solves two of the most difficult and pressing problems in technology today, privacy and security. This core function, layered on top of distributed cloud technology, is a dynamic combination that could transform how data is stored and retrieved. It could potentially provide industries as diverse as finance, health and civil services with the underlying trust and security to truly unlock the potential of next generation mobile applications. enigma.media.mit.edu

Jessi Baker and Dr Jutta Steiner bring some serious technological chops to this project, as both have a deep understanding of supply-chain engineering and cryptography, which lends well to a unique perspective on product ‘proof of existence’ and transparency utilising the blockchain.

Provenance is based in South East Asia and while this is area host to a few important financial services centres, an even larger opportunity for transformation lies within shipping, logistics, and commercial trade. The region is home to four of the world’s top five shipping ports: Shanghai, Shenzhen, Singapore and Hong Kong. Under this vast industry umbrella exists a rich variety of sub categories that would all be well served by the Provenance platform. Luxury goods is a great example, as it’s faced an ongoing battle to wipe out the scourge of counterfeit products which Provenance seems primed to mitigate. Outside of this area, one can only imagine what the technology could mean for the art world. www.provenance.org

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/blockchain Ethcore

Consenys Under the stoic leadership of Joseph Lubin, Consensys is an antifragile organisation that is steeped in the theoretical frameworks of Ronald Coase.

A hub and spoke model, it nurtures a loose federation of blockchain technologists all working in multiple verticals, yet leverages their collective understanding and skills. Some of the companies currently under the Consensys umbrella are good enough to stand alone here on this top ten list, especially Uport and Ujo music.

Look for Consensys to build upon their success with Block Apps and the Microsoft collaboration on Azure, as their federation and core team grows to bring some exciting innovations in the blockchain space. consensys.net

A small offshoot of the Ethereum Project lead by the project’s co-founder and core C developer, Dr Gavin Wood, EthCore has an all-star cast of hardcore developers and thought leaders, including Dr Jutta Steiner and Vitalik Buterin, who aspire to enable businesses and organisations to capitalise on blockchain technology and benefit from the new opportunities it presents. They develop cutting-edge software solutions for enterprises and industries to unlock the full value of decentralised technology.

At the vanguard of blockchain technology, the Ethcore team is primed to be working on and driving a lot of the change in the industry for multinational businesses and governments. ethcore.io

IPFS Warning: this company is only about 10,000ft high on the hardcore tech-nerd scale but is extremely important none the less. IPFS is short for Interplanetary File System and it does exactly what that name entails.

Think of it as rewiring and re-routing the entire internet so that trains run and stop on time and go precisely where they need to go, all while greatly reducing redundancy. Designed by the visionary technologist Juan Benet, IPFS is a peerto-peer distributed file system that seeks to connect all computing devices with the same system of files. In some ways, IPFS is similar to the web but IPFS could also be seen as a single BitTorrent swarm, exchanging objects within one Git repository. In other words, IPFS provides a high throughput content-addressed block storage model, with contentaddressed hyperlinks.

Look for more early stage startups and innovators to experiment with this open source technology to truly create some out-there next generation technologies. ipfs.io

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Backfeed Based in Tel Aviv, with a well defined and broadly skilled team of engineers and thought leaders, Backfeed develops resilient technology and new economic models that support free, large-scale, systematic collaboration. Based on a distributed governance model, Backfeed protocols make it possible for people to easily deploy and maintain decentralised applications and organisations that rely on the spontaneous and voluntary contribution of hundreds, thousands or even millions of people.

Backfeed is led by Dr Matan Field, a theoretical physicist turned entrepreneur who was also the founder of open-source and decentralised collaborative transportation system LaZouz and is dedicated to challenging the notion of work and organisations in the age of globalisation. Building on the emerging blockchain ecosystem, Backfeed develops grassroots-powered technology that enables scale-free human cooperation. The toolkits it provides offer resilient infrastructure and innovative economic models that promote the viability and sustainability of decentralised communities as well as legacy organisations through equitable distribution of co-created value.

As an analogy, if the blockchain can be regarded as the TCP/IP (communication layer of the internet), Backfeed is building a canonical protocol and platform (akin to the HTTP protocol and the web browser) to enable blockchain-based decentralised collaboration as easily as one would deploy a website today. backfeed.cc

Colony One of the most thoughtful and ambitious projects in the blockchain this year is lead by a former artist/designer named Jack Du Rose. Before Colony, Jack was the jeweller who created For the Love of God – the infamous Damien Hirst diamond skull.

Jack and Colony are taking on “the future of work” and are now dropping the future into our hands, and also our laptops. They have created a beautifully designed decentralised autonomous organisation that replicates a company, except instead of being managed by fallible individuals, Colony harnesses the wisdom of the crowd using AI to ensure that the right things get done by the right people, at the right time. People can now convene and collaborate on large scale projects, even startups, and have a way to manage and measure productivity in order to provide the means for people to get paid. Colony allows creators to stock value in their own cryptocurrency, called ‘nectar’.

Watch for startup accelerators, hackathons and open source projects around the world to take notice of what Jack and the Colony team have created, as it solves many of the organisational issues of talent and capital localisation, as well as compensation for open source projects. colony.io

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Slock.it

Plex

Slock.it stands at the intersection of two of technology’s hottest areas – IoT and blockchain. It explores how Ethereum light nodes embedded in connected cars, homes and businesses could revolutionise the emerging sharing economy infrastructure by enabling anyone to rent, sell or share their property without a middleman. It’s led by one of the co-founders of the Ethereum project, Stephan Tual, and the Jentzsch brothers Simon and Christoph. The Slock.it crew has been at the vanguard for a while now, creating some interesting products around physical locks, mobility and connected devices.

These guys are small and just starting out but I got a chance to talk to the founder, Terek Judi, and I really liked his focus and ambition. Plex is an automotive telematics platform that uses Ethereum, machine learning and artificial intelligence to give insurance companies real-time, remote diagnostics on a car and its driver.

slock.it

Ethereum Enough has already been said about Ethereum and the precocious and visionary leader Vitalik Buterin, so I really don’t have the capability to add much more other than the courage and verve of the project, and team, are inspiring and everyone should watch what they put out this year. I wish them the best in growing and scaling the project so that more innovation can spring from their insights.

Insurance is a staid and well monied industry that deserves more attention from the blockchain community, especially with the dawning age of automated driving. plex.ai

www.ethereum.org

Conclusion So there’s my list. They’re all great teams working on some seriously interesting problems and opportunities that are helping transform industries and the world through the use of imagination and blockchain. Anyone who’s ever scaled a startup will know that it’s an unglamorous process that takes a significant amount of energy without any guarantee of success. I applaud all the founders and teams I’ve listed for their vision and courage.

Collin Thompson is the co-founder and managing director of Intrepid Ventures, a venture development firm that invests, builds and accelerates blockchain and IoT companies.

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/internet_of_things

IoT for the management consultant Internet of Things investor Timothy Chou explains the value of web-enabled machines to both manufacturers and users

38

s a management consultant, you’ll already be familiar with such buzzwords as the Internet of Things (IoT), Industrial Internet and Industry 4.0. But what staff resources do businesses need to implement an IoT solution? How do you deal with the client’s security fears? And, maybe more fundamentally, who in the organisation actually owns IoT? We’ll answer each of these in turn and hopefully leave you a lot more enlightened…

Let’s start with who the client is by dividing the world into enterprises that build ‘Things’ and businesses that use them. So AGCO builds combine harvesters but August Farms uses them. GE builds MRI scanners but the Children’s Hospital of Orange County uses them. Goldwind builds wind turbines but Sempra uses them to generate electricity. And so on.

To businesses that build Things, the benefit of the IoT is that a connected Thing will give a higher quality of service.

A combine harvester must be ready to work round-the-clock during harvest time, so one that can self analyse to predict failure during its lengthy down time is an obvious win. A company that rents construction equipment globally can spend $1bn on maintenance so again, using data to improve maintenance has massive implications on operating costs.

This is interesting to executives on the product or service side of the business.

But CEOs of leading manufacturers are also beginning to understand that the internet has the potential to change their business models in order to allow for additional sources of revenue and product differentiation. These newer, web-enabled models follow

a path pioneered by the enterprise software companies. If you realise that increasingly, the value of the machines is in the software, then this should come as no surprise to you.

As-a-service model The internet has enabled the ‘as-aservice’ model for IT infrastructure and software. The IoT enables machines-asa-service or equipment-as-a-service business models for all kinds of products, potentially allowing many types of company to shift from selling products to selling services based on these products.

This model can transform large capital

technology? There are at least four reasons: lower consumable costs, higher quality service, healthier products and safer services.

Most machines require consumables to operate. Planes need fuel, gene sequencers need chemical reagents and so on. Anyone who’s ever run an inkjet printer knows that the machine rarely costs more than the toner used over its lifetime and generally, consumables are so integral that they form a large portion of any operational cost structure. It follow that any reduction in consumables can be a significant benefit.

“CEOs of leading manufacturers are beginning to understand that the internet has the potential to change their business models” expenditures into a pay-by-usage operating expense. Emerging examples of this trend include selling tyres by the number of miles driven, compressors by the amount of usage and industrial coal mining machines supplied based on the volume of coal mined. Selling such services will often be more profitable than selling the products they are based on. In your industry, while you may not want to take the risk of being the first to move into offering product-as-a-service, you certainly won’t want to be the last.

Reducing consumables Let’s move on to the enterprises that use Things: hospitals, farms, airlines, manufacturers and utilities. Why should they care about web-enabled precision

Let’s take Nick August, owner of August Farms, as an example. Precision farming can lower the cost of consumables such as fuel, fertiliser and pesticides and Nick estimates that with precision agricultural machines, he can reduce fuel consumption from 60 to 5.9 litres per hectare for crop establishment. That’s a huge saving to him but of course, he also uses fertilisers and pesticides and a reduced consumption of those not only reduces his costs, it also creates a healthier product that’s having less of an environmental impact.

Application So what technologies and skills does a business need in order to implement an IoT solution? Such applications can

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/internet_of_things be very complex because they cross so many different domains. In my recently published book, Precision: Principles, Practices and Solutions for the Internet of Things, we simplify the domain into a five-layer framework: Things, Connect, Collect, Learn, Do… Things are becoming smarter. Driven by the widespread use of sensors in cell phones, costs have plummeted, allowing next-gen machines to include numerous sensors – a recent oil drilling platform in the Gulf of Mexico has over 40,000.

The continuing reduction in computing and data storage costs allows any Thing – a crop sprayer, blood analyser or solar grid – to be driven by increasingly more sophisticated software. As any Tesla owner can tell you, they tend to get new features more often than the rest of us.

Connecting Things require a diverse set of technologies based on the amount of data that needs to be transmitted, how far it needs to go and how much power you have. You also have many choices on how to manage the connection and how it is protected and secured.

Collecting this huge volume of IoT data will be a challenge. Currently, data might typically collected and stored using SQL, NoSQL and traditional time-series from companies such as IBM, SAP, Oracle and Teradata. Your data architect will be dealing with a different kind of data than a traditional transaction processing systems. Learning and analysis products will also be required to make sense of this flood of data. Each product will include query technology as well as both supervised and unsupervised machinelearning technologies. Because, until now, we have mostly focused on IoP (Internet of People) applications, most of

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the technology applied to learning from data streams has been applied to learning from data about people. Machinelearning innovation is being driven by large companies such as IBM and their well-known Watson technology as well as companies as small as Lecida, a stealth startup from Stanford.

In IoP there is a set of horizontal packaged application for ERP, CRM, Purchasing and HR. The same will be true of IoT. An example of an IoT management application comes from a company called Oomnitza. Traditional asset management assumes things are dumb, so a person needs to scan a bar code or type an identifier into an IoP app. Furthermore if the Thing needs to be serviced, a person issues the service order. But in the new world, Things are smart and can be programmed. So potentially, each Thing can now identify itself and issue its own service request.

Like the IoP world, there will be many more custom applications than packaged applications. Many companies are starting to provide middleware, from large companies such as GE with Predix down to young companies such as Atomiton with their unique Thing Query Language (TQL). As many in the software industry already know, the movement to delivering software as a service has revolutionised the enterprise software industry. It promises to be no different for enterprises that build machines and those who use them.

A matter of security No matter which part of the five layers you’re designing on or using, you’ll have to make sure you’re considering issues relating to security. Some of these will be unique to IoT. For example, data from

“As someone who’s worked in the area of cloud computing for years I’m often asked, “Is the cloud secure?” machines as different as agricultural equipment, compressors or gene sequencer will consist of two kinds of data: machine data and what I’m going to call nomic data.

What’s the difference? Well, a gene sequencer has machine data such as the power level of the laser or the amount of chemical reagents. But it also generates ge-nomic data, the actual gene sequence.

On the farm, seed spreaders and fertiliser sprayers generate machine data such as speed, oil pressure and location, alongside agro-nomic data such as the nitrogen level of the soil or the moisture level of the grain.

Should all of this data be available to the builders of machines? Car manufactures might not want to share the data from their construction robots as this might be used to forecast the company’s quarterly results. Semiconductor manufacturers might not want sensitive process data outside of their four walls for similar reasons while Chinese wind turbine companies might not want energy data going to foreign countries. This is going to be an ongoing debate since clearly the machine manufacturer can only build a more reliable, secure, performant product if this data is shared.

As someone who’s worked in the area of cloud computing for years I’m often asked, “Is the cloud secure?” I tell them that we need a more sophisticated

understanding what the word “secure” actually means. Security is a complex topic but as a management consultant, it’s useful to simplify the subject.

Any IoT application is secure only if it meets feature specifications in five key areas: hardening, identity and access management, auditing, testing and, finally, compliance.

The security of any IoT application depends on not only the integrity of the application itself but also all the supporting software and hardware. So at the basic level, you must make sure the latest security patches have been applied and there are no viruses or malware. A well-documented vulnerability in an IoT application is the story of the StuxNet virus. If everything from the application down to the network is not hardened, all bets are off. A specific example of a security feature for an IoT application might be that from the time a security patch is issued from ten suppliers, 433 tests are applied and the patch is placed into production within 32 minutes, plus or minus 15 seconds.

The implementation of any such security policy is dependent on knowing the identity of an individual. Once authenticated, access management is deciding what data or operations an individual can do. Just like the speakeasies during the Prohibition era, someone inside has to know who you before you can enter. Thing or machine

authentication might be able to skip ahead and move to schemes which require no passwords.

A key principle in building secure systems is auditing – the recording of all the changes that happen to an application and its underlying technology. Because any system built by people will have flaws, you want to be able to study the audit trail in order to identify the source.

Intrusion detection solutions use real time auditing to sound the alarm when a security fault occurs. Maybe one day like the characters in the movie Minority Report, we’ll be able to discover a security fault before it happens. Which brings us neatly to security testing…

There is a wide variety of security tests which can be run to determine whether the security of the application and underlying technology can be compromised. Since this class of operations management cloud services is available from a number of companies, it still remains to be seen what universal standards will emerge for IoT. We’re only at the beginning of this wave of technology, what I think of as the third generation of enterprise software. As a management consultant, you should consider becoming a student of this area. As I tell my Stanford students, our industry has so far only really affected the virtual world. We’ve made it easier to pay for things or plan a trip but as we start being able to use software to change the physical world, we’re going to need to build a more precision planet.

Timothy Chou is the former president of Oracle On Demand, a lecturer at Stanford University and chairman of Lecida, an industrial machine learning company.

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/3d_printing

Laura Cox reports on an experimental building in Dubai that lays the foundations of a major disruption to construction he first fully functional office created using 3D printing technology has opened in Dubai. The ‘Office of the Future’ sits at the foot of Emirates Towers and was officially inaugurated on 23 May by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and ruler of Dubai. He said, “Today 42

we announce the opening of the first 3D-printed office, after less than a month of launching Dubai 3D printing strategy.

The world is changing rapidly and we have to accelerate our pace of development, together. History does not recognise our plans but our achievements.”

The structure took just 17 days to print and, significantly, employed a team of

just 18 people. The 2,500 square feet office used a 3D printer that was 20 feet high, 120 feet long and 40 feet wide, supplied by a Chinese 3D printing and construction company called WinSun Global. Parts were printed in concrete before being assembled on site in just two days. A further three months were then required to fit out, decorate and furnish the office building.

According to the government of Dubai, the project cost around $140,000 to complete. Through the use of such a small, specialist team, labour costs were 50 per cent lower than a similar building built using conventional techniques. The Office of the Future is as much a statement of intent as a construction project, literally setting in stone the country’s commitment to using 3D printing techniques in a quarter of its building sites by 2030. From the standpoint of reduced labour costs alone, it’s easy to see why.

“We see this project as a case study that will provide valuable lessons,” said Sheikh Mohammed. “It will also benefit governments around the world as they seek to better understand and take advantage of this important technology.”

The project is regarded as a cornerstone for real estate and healthcare, as well as

a triumph in energy efficiency. The office uses LED lighting, responsive building systems and low energy air conditioning throughout. The space was designed to encourage inventive, reflective work and facilitate spontaneous meetings.

Breakdown Printing time 17 days 3D printed materials Glass fiber-reinforced gypsum, fiber-reinforced plastic, concrete Construction time 2 days

Creating the Office of the Future is part of a larger strategy called the Dubai Future Agenda, which represents the country’s commitment to developing initiatives with global partners. The office will be the temporary home of the Dubai Future Foundation, the government agency responsible for prototyping futuristic technologies. It’s hoped that the adoption of 3D printing on such a large scale will encourage the disruption of various sectors, as well as inspire other global powers to invest in additive manufacturing to increase cost efficiency. This single storey space has paved the way for the creation of multistorey structures that will combine the innovative design potential of 3D printed concrete pieces with ease-ofproduction and cost benefits.

Construction crew 18 workers Goal 25 per cent of building in Dubai 3D printed by 2030

Watch the construction of the Office of the Future here: http://bit.ly/1sNoM96

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/virtual_reality

Seeing business differently Usually regarded as a breakthrough in immersive gaming, virtual reality has the potential to change work environments too. Will McMaster from Visualise maps out his vision of a virtual office

en years from now, it’s likely that this year will be regarded as the year that virtual reality went mainstream, yet there is still a lot of tech to be developed and concepts explored before VR can be fully ingrained into our work and business lives. For the way things are right now, what can be done with VR is fairly limiting, especially in business applications.

Even so, we’ve seen examples that showcase VR’s potential across almost all sectors, from travel companies transporting their customers to holiday destinations to the automotive sector taking potential buyers on virtual track days. We’ve seen businesses investing billions into development and taking their VR products to market but we haven’t yet seen industries using those products as part of their day-to-day operations. So we still don’t know how VR will manifest itself in business. We’re 44

at a similar point to internet pioneers, who might have grasped the idea of social media but who could never have foreseen how Facebook and Twitter could transform the business world.

What’s exciting is that many companies are now working on making VR the norm.

Businesses are starting to apply VR to their operations, training, recruitment and development. We’ve seen marketing departments leading the way with innovative campaigns that attract and hold customer attention in completely new ways. But businesses still haven’t grasped that VR has the capability to transform the way they operate. Instead, we’re seeing companies developing projects that may go live or may just be proof-of-concept. These tend to be focused on driving recruitment or training, and since these are parts of any business that have tangible measurement metrics, it allows those in management positions to measure their effectiveness.

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Experiencing the moment We at Visualise have worked on a proofof-concept campaign with Deloitte to promote the company’s ethics and best practice. The majority of internal training at the moment directs staff to a company intranet page, where an online course presents them with scenarios and a situation-based multiple choice question. This format can be quite dull, but add VR and staff are transported to a real-life, 360 degree scenario.

They can hear what’s going on around them, experience the unfolding scenario and select responses in an interactive way. Their choices then play out and they can see the implications of their actions.

Suddenly, training becomes far more interesting and, because headsets are used, external distractions are blocked out. Perhaps this will eventually change the perception of staff training.

VR conferences might emerge soon as a time-saving initiative that will allow employees to interact and learn from guest speakers at their own desks. The education sector has already explored this – BIMA live-streamed its Digital

“There’s no reason to expect that VR won’t have the same transformative effect as the computer, mobile and social media...”

Day to schools to inspire a career in the sector. We expect this trend to expand into conference and webinar formats.

Recruitment is another sector where VR is already delivering benefits. As much as a company looks for potential in candidates during interviews, the process also lets the interviewees get a feel for what it’s like to work there. By investing in VR for recruitment purposes, companies can see past any exaggerated CV claims and put each candidate to the test from the very start of the process, without the costs of arranging face-to-face interviews.

Visualise has worked on a British Army recruitment drive by creating a campaign to attract the very best talent. As a result, applications went up 65 per cent in February and 41 per cent in March compared to the previous year. That really brings home what is possible from VR. I think that VR within the workplace could totally transform our ‘normal’ working days. Flexible working already offers many the freedom to choose hours that fit their lifestyles. It’s now a definite possibility that employers could create virtual office environments in which to attend meetings while at other times shutting out distractions. VR could be a great time and money saver for staff who currently have a lot of external meetings or who can avoid the commute by using virtual offices from the home whenever it is appropriate to do so.

Changing perceptions The most common deterrents to using VR applications in business are a failutre to understand its potential and the perception that it’s expensive. But considered in context, VR is surprisingly inexpensive. The first personal computer was the IBM 610, which went on sale for $55,000 in the 1950s, at a time when a new car cost under $2,000.

By comparison, a good VR system is a fraction of that. And of course, VR costs will come down as the quality goes up, in line with all computing technologies.

There’s no reason to expect that VR won’t have the same transformative effect that the computer, mobile and social media have had on the business world. Watch this space!

Could virtually attending meetings from your desk become the norm?

Will McMaster is head of VR at Visualise,a London-based VR studio founded in 2012. visualise.com

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/artificial_intelligence

Preparing for the economic singularity Is a world where machines do all the work a utopian or dystopian vision? Calum Chace wonders how close we’re getting to this tipping point 48

“To society at large, self-driving cars will be the canary in the mine – the single development that serves as a wake up call”

y forthcoming book, The Economic Singularity, argues that improvements in machine intelligence are going to make it impossible for many of us –maybe all of us – to earn a living. If this is even an outside possibility, we’d all be wise to spend some time working out how we intend to deal with it.

In 1900, 40 per cent of American workers were employed in agriculture. That has now fallen below three per cent and while the farm workers eventually found better jobs elsewhere in the economy, their horses didn’t. For the year 1900 was ‘peak horse’, with around 25m of them working on farms in America. Today, there are virtually none. The difference between the fate of human and horse farm workers is that once machines provided the muscle, humans had something else to offer: cognitive, emotional and social abilities. Since horses had nothing else to offer, their population collapsed.

The question now is whether we are approaching the ‘peak human’ era.

Artificial intelligence is improving at an exponential rate but machines are still far from becoming Artificial General

Intelligences (AGIs) –possessing the same flexible cognition of an adult.

Even the smartest machines possess only narrow intelligences: they may play a mean game of Go, but they can’t experience fear and they can’t yet write a good joke. Most significantly, even though they can beat a human opponent at Go, they aren’t even aware they are playing a game.

While that sounds terrible, it could actually be extremely good news. A world in which machines do all the boring work could be wonderful. They could be so efficient that goods and services could be plentiful and, in many cases, free.

Humans could get on with the important business of playing, relaxing, socialising, learning and exploring. Surely this is what we should be aiming for?

But machines don’t need to become AGIs to displace most of us from our jobs – they simply have to become better than us.

And because machines excel at many forms of pattern recognition, including natural language processing and image recognition, they’re already well on their way to overtaking us. And, of course, once a machine has your job, it will do it faster, better, longer and cheaper than you can, with its abilities improving exponentially all the time.

Of course there are challenges, and my book explores these in detail. With considerable reluctance, I conclude that we may need to adopt an entirely new economic system. We don’t know what this should look like, or how to get there, which is why I talk about an “economic singularity”, borrowing the term from physics to describe a point at which the normal rules cease to apply.

To society at large, self-driving cars will be the canary in the mine – the single development that serves as a wake up call. But the fate of drivers is likely to be swiftly shared by other sectors. Some think that mass unemployment fears are premature since society will develop new human roles as machines take over the old ones. Even if this is possible, these are only likely to be temporary respites as whatever these new jobs are, machines will be more capable of doing them too.

In the medium term, it does seem likely many will not be able to earn a living.

The book argues that we should be monitoring our economies for signs that technological unemployment is beginning, and undergoing careful scenario planning to help us to avoid the negative outcomes and ensure the good ones. As we face the prospect of widespread technological unemployment, this planning may turn out to be mission critical for our economies, and our civilisation.

Calum Chace is an author and speaker about artificial intelligence’s likely future impact on society.

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/robotics

Far from taking our jobs, could the role of interactive robots be to augment their user, being a digital Robin to their human Batman?

he idea of robots has fed our curiosity for more than half a century, with humans constantly intrigued by the potential of having another form to interact with on our own natural terms. In reality, robots offer us much more and, through recent technological innovations, robots are now helping us reach the next frontier in artificial intelligence research and engineering.

At SoftBank Robotics, we believe in a future where interactive, communicating robots will accompany humans in their jobs and family lives as well as with their hobbies. Currently, our robots are mainly available on the professional market but our goal is to make them available for everyone soon.

At the moment, we have three robots.

All have a humanoid form because

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we strongly believe that it makes the interaction more natural. Quite simply, their design facilitates social interaction.

Pepper, NAO and Romeo were created to resemble a human-like figure, with a head, arms and legs, but they are not meant to look exactly look like humans.

We can see with Pepper (shown on this page) that is a humanoid robot – both engaging and surprising. Pepper is the first emotional robot. He was not designed for an industrial function, rather to be a true companion for daily life. Some other robotics players today work on robots that look very much like humans, with features such as artificial ‘skin’ that’s similar to a wax figure. That is not where we are headed with our developments. We want to be completely transparent and want people to keep in mind that they are talking to machines, albeit it machines that they control.

(L to R) Nao, Romeo, Pepper

Today, SoftBank Robotics has nearly a hundred Certified Partners. Alongside them, we are creating B2B solutions for Pepper. This involves making a wide range of applications that can be incorporated into Pepper’s various capabilities – which include motion, conversation and sensors – to allow people to experience Pepper’s business capabilities. These include tasks such as welcoming, informing or entertaining clients within industries as diverse as retail, banking, hospitality and healthcare.

Mood and memories Are you sad or happy? By the tone of your voice, the expression on your face, your gestures and through the words you use, Pepper is able to detect your mood and adapt his behaviour accordingly. Pepper’s main objective is to communicate with you. He has a certain personality and expresses his own ‘emotions’ through the colour of his eyes, his gestures and words he uses.

There’s no need for a keyboard, mouse or screen – all our robots communicate

the same way you do, through voice and gestures. This is another example of how technology can use the simplest and most intuitive forms of communication.

Today, our robots are able to memorise names, faces and moods. Tomorrow, we aim for them to also remember an individual’s personal tastes and habits.

Their evolution will also be fuelled by an application library which either you or the robots will be able to access to find new behaviours, activities and content that will inform, entertain or surprise you.

Shared responsibilities SoftBank Robotics makes interactive robots for the well-being of humankind.

Our robots are not meant to replace humans and take their jobs. They are interactive companions, only able to do simple and repetitive tasks that leave employees free to focus on more valuable missions. Furthermore, they cannot undertake any physical tasks.

Robots may take some jobs but they are more likely to create many more, and of a different kind. If you look at countries such as the US, Germany and Japan, they currently have more robots yet less unemployment than anywhere else.

We hope someday our robots will be able to be lifelike companions but our goal is not to make them completely interchangeable with humans.

Ultimately, our robots will make interactions more meaningful and, as faithful sidekicks, they will make their humans even better!

Rodolphe Gelin is EVP chief scientific officer at SoftBank Robotics Europe www.ald.softbankrobotics.com

51

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/talent

The rise of the Chief Digital Officer In today’s world, where businesses need to become truly customer- and digitally-centric, the CDO is often the human face of digital transformation ith numerous disruptive newcomers snapping at their heels, many corporates, spanning sectors such as financial services, media and retail, have decided to invest in Chief Digital Officers (CDOs) to drive the wholesale transformation necessary for growth, or even survival. The number of CDOs currently stands at around 2,000 globally and hiring one typically signals a commitment to transformation. But what should the role encompass? And how do you go about finding the right person?

We’re often tasked by ‘traditional’ businesses to find a change agent who can embed both digital- and customercentricity into the entire company’s DNA. Long gone are the days where digital is the sole concern of the CIO or CMO. Instead, organisations now require a leader who can break down silos, build teams and evangelise digital and the customer across the entire business.

CDOs can come from marketing,strategy, product, technology or general management. As the path of the DCO becomes increasingly well-trodden, we’re seeing more digital executives from pureplays considering transformational roles within corporates. As well as bringing 53

valuable expertise of how a digital-first business works, they can also inject an ‘intrapreneurial’ spirit into traditionally slow-moving corporate environments.

The CDO will typically build a broad team spanning UX, design, product, engineering, digital marketing and data.

These skills are often acquired externally but training can also be used to unearth existing talent within the organisation.

CDOs, and the digital transformation they oversee, are not just confined to large listed corporates. Private equity firms are seeing digital as a key growth driver for their more traditional, multichannel portfolio businesses and so are also hiring CDOs to lead this change.

Tips for hiring CDOs n Be sector agnostic. Hire those with the experience to drive cultural change n Europe has great digital talent and key hubs have emerged in London, Stockholm and Berlin n Be open to people from both the corporate world as well as those with pure-play experience and ideally find a hybrid from both worlds n Ensure that the CEO meets candidates to demonstrate the importance of the role

Since the measure of a CDO’s success is to make their own role obsolete, as each business becomes truly multichannel or digital-first, the era of the CDO may prove to be a transitional one. However, today’s successful CDOs could well be set to be tomorrow’s CEOs. It is also important to note that meangingful change has to come from the top, with a CEO who is committed to supporting the CDO’s vision.

Clare Johnston is founder and co-CEO at The Up Group www.theupgroup.com

/finance

Stephen Lowery, managing director of capital markets at Silicon Valley Bank UK, on what it takes to benefit from times of extreme change

t Silicon Valley Bank we have been supporting our tech clients for over 30 years, working alongside entrepreneurs and investors by providing the banking, debt and financing solutions that help them make an impact.

In all that time, we have been at the heart of the tech ecosystem, helping to finance the building blocks of the industry – PCs, internet, sensors, displays, communications and mobility through to social networks, big data, cloud computing and AI – all the key developments that have led to massive change. With each development, there has been a new wave of innovation for each company to ride. But each wave is travelling further, faster and deeper than the one before it.

Today, technology has been absorbed into everyday life, in every industry, in

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every corner of the world. In the year we opened our doors, the total amount of venture capital invested in the US was less than $3bn. This year, a point was reached when the world’s five largest companies by stock market value were venture-backed tech companies. Their combined value? Over $2,200bn. With so much ahead of us, what are we looking for in the leaders of tomorrow?

Technology-led solutions that simplify major problems We’re living at a time where technology, business models and innovation are converging. The companies that combine them all to make things simple, or provide enriching experiences, are the ones that are disrupting markets.

It’s what has worked for the tech giants.

Google – searching easily. Facebook – keeping up with friends easily. Amazon – buying things easily. Uber – travelling

easily. As the world tries to do more and more, as we all try to squeeze every last drop out of life, we’re all seeking out businesses, tools and brands that make our lives better and easier.

Financial services and healthcare are two huge industries where significant advances are being made, with new services, more automation and advanced used of data analytics. Functional areas within industries are also being targeted for transformation. Staffing is the largest expense for many employers and we’re seeing fast-growing companies that are addressing HR challenges, making it easier to hire people, provide benefits solutions and improve performance.

At the same time, there are significant new technologies and tools being developed around robotics, data analysis and machine learning/AI. These are the new technologies that we believe will form the core of future innovations in socially-vital sectors such as transportation, retailing and education.

attributes online, so there’s no need to go into greater detail here.

Teams with vision that can execute their plans It’s been said a million times but the team, and the successful development of the team, are critical success factors for building a sustainable business.

Raising capital is a competitive process too. We look for companies that have the traction they need to raise the money they need to further their ambitions. Has the business developed sufficiently to attract the investment on terms that the team wants?

When the tipping point to scale has been reached, we look for teams that are investing for success and building strong positions through a combination of organic growth and acquisitions.

“What has become clear from the patterns of the last 30 years is that while industries are disrupted, certain characteristics remain constant” We look for people who can attract, retain and develop talent and form it into strong teams that can perform well. We look for teams that iterate quickly and can make decisions with the potential to scale rapidly with great execution. Equally importantly, we look for teams that can build the confidence of investors so they can raise the capital they need to deliver their plan.

Traction and momentum in a fast growth environment In a competitive and busy market, building momentum in the right direction is key. We look for companies that address a substantial market with a clear productmarket fit, combining unit economics with great customer satisfaction. There is much excellent material that covers these

In conclusion What has become clear from the patterns of the last 30 years is that while industries are disrupted, certain characteristics remain constant. Leveraging major technology trends. Making things much cheaper, better and faster. Assembling great teams. Gaining momentum. Raising capital. These are the constants.

There’s no silver bullet – it’s just a perfect combination of the factors we’ve listed above that match each opportunity. If you can put these together, there’s a better chance than ever of moving quickly from disruptor to incumbent.

Stephen Lowery is managing director of capital markets at Silicon Valley Bank UK www.svb.com/uk/

CASE STUDY

Smart lighting One business that caught our eye this year is Gooee, which connects lighting manufacturers to the Internet of Things (IoT).

Keeping it simple By developing the world’s first operating platform to connect lighting to the IoT, Gooee has solved the problems of integration and interoperability, making it simple for businesses and end users to access the benefits of feature-rich, connected solutions.

A team with vision CEO Andrew Johnson previously founded Aurora Lighting and the management team is made up of experts in LED lighting, software engineering and embedded hardware design. They are complemented by a strong advisory board from the tech community.

Intellectual property At the heart of Gooee is a sensor that detects motion and ambient light while tracking LED performance.

The platform also leverages big data from lighting networks, opening up opportunities for energy saving and product tracking businesses to interface efficiently.

Scalability Commercially, Gooee has partnered with 30 lighting manufacturers to deliver the solution around the world and is engaged with a further 40 companies. This gives us confidence about the potential of this business.

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/ip_strategy

Patent pending Does IP lag behind innovation?

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gainst a backdrop of every major tech player stockpiling intellectual property, it’s worth asking how the PR got so bad for patents and where improvements might be found.

There has always been a need to balance the role of IP between beneficially stimulating innovation and the risk of the system being abused. As a result, the current bad press comes in two forms.

Patent holders argue that the system is so slow and costly, a product can be on sale and copied before a patent is ever granted. Conversely, potential copiers argue that patents are handed out far too easily and are too easy to assert.

To appease both sides would require patents to only ever be granted to genuine inventions rather than variations on a theme. This would prevent crazy decisions and even crazier damage awards from US courts, where patent cases are heard before a jury. But who should decide what is ‘true innovation’?

Another possible solution sould be to address the time it takes to secure a patent. Surprisingly, the most vociferous complaints about the three to six year process come not from the patentees but their competitors. This is because while a patent is pending, there is ample opportunity to attack competing products by varying the scope of the patent. This was demonstrated by the notorious ‘submarine patents’ in the US, where pending applications were kept unpublished and rewritten to track, and eventually sue, competitors’ developments. On the other hand, sometimes a patentee will have a product

that’s going to market quickly and is likely to be copied aggressively, so rather than drawing out the process, they will want a speedy resolution to the patent process.

So what system would provide a sensible degree of protection for the patentee while also letting third parties know where they stand on the matter of producing similar products without the threat of being sued for patent infringement? Any solution will have to meet some key requirements:

This last proposal isn’t currently reflected in legislation anywhere in the world but its benefits to patentees can be seen immediately – that with a well-defined product development timescale, time to product launch can be predicted, allowing a timescale for granting a patent to be set in stone. Probably the opportunity to define the timescale should only be afforded to the patentee as clever third parties could play havoc otherwise, but this is a debate yet to be had. However, matching the delivery

“There has always been a need to balance the role of IP between beneficially stimulating innovation and the risk of the system being abused” n The time that any patent remains pending needs to be reduced n Patentees need enough time to get their product to market in order to pay for their patent protection n Patentees should have the option to fast-track patents when timeto-market is crucial. This is already possible in the UK and Europe but is both trickier and costlier in the US n Third parties should also be able to request acceleration of slow-moving patent applications in order to clarify their own position. The European Patent Office is looking at this option n Subject to patents only being granted to legally defined ‘true innovations’, interested parties should be able to specify a rigid timeframe for gaining a patent

from national Patent Offices to the requirements of businesses seems to be central to ensuring that the process continues to support innovation culture.

There are strong practical issues surrounding this level of flexibility but what a triumph it would be if we aligned the granting system with the innovations that necessitate its existence. Patent Offices everywhere are getting better at listening, so this might be something they’d be interested to hear more about.

Until then, however, whichever side of the system you sit on, you’d better get used to seeing that ‘patent pending’ sign.

Gwilym Roberts is a partner at Kilburn & Strode LLP www.kilburnstrode.com

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/signing_out

Profit is shifting from product to data hile talking to the CEO of a large medical device company recently, I noted that IBM is now gathering large scale data sets from various health sources. It would never have happened in the Steve Jobs era but in 2015, Apple announced a data partnership with IBM, which gave the latter access to the health metadata collected by the Apple Watch.

That’s everything from data on a user’s heart rate to sleep monitoring.

However, it took until February of this year for IBM’s first big data experiment to kick off, with an app to collect data on sleepers that’s then shared with other researchers in an open source format.

For the first time, a precise study using significant amounts of data is being analysed by an AI device – IBM Watson.

I was explaining to this CEO that very soon, his hospital customers would be requiring his company to connect all kinds of medical devices to a large AI analytics cloud so that data can be amalgamated and sorted. This in turn would lead to better quality treatments

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“This is just a taste of things to come. Not in the next decade, or the next five years, but in 2016” and pre-emptive identification of device issues. The implications for better healthcare and more comprehensive research are obvious but it didn’t take the CEO long to also realise the full cost implications of these changes.

For a start, any company cloud hosting this data will have to be paid to do so.

The CEO’s company will also be paying the cloud vendor to find out how well his devices are performing, both in isolation as well as against their competitors. This additional cost for data management might not only suck the profit margin out of the business, it could also reduce it to the role of ‘dumb pipe’ manufacturer.

If, via the Internet of Things, we connect cognitive analytics up to everything from the humble banana to a chainsaw to a cow (yes – a US startup really has produced Fitbit for Cows), then value will move from product supplier to data analyser. When this happens, it will probably be the most significant shift in our understanding of where profit lies in the history of business.

The good news is that by extracting comparison data from each product types then consumers looking to buy a new item will be able to see objective product performance and reliability on a like-for-like basis. This will allow the best products, rather than the best marketed one, to rise to the top, resulting in a whole new experience in making purchasing decisions.

This is just a taste of things to come. Not in the next decade, or the next five years, but in 2016.

John Straw is an advisor to McKinsey & Co and IBM. The views expressed are his own. @john_straw

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