Updates from McKinsey

A transformation in store
Brick-and-mortar retail stores need to up their game. Technology could give them significant boost.
By Praveen Adhi, Tiffany Burns, Andrew Davis, Shruti Lal, and Bill Mutell – Now should be a great time in US retail. Consumer confidence has finally returned to pre-recession levels. Americans have seen their per capita, constant-dollar disposable income rise more than 20 percent between the beginning of 2014 and early 2019.

Yet despite the buoyant economic environment, many brick-and-mortar stores are struggling. In the last three years, more than 45 US retail chains have gone bankrupt.

Yet rumors of the physical store’s death are exaggerated. Even by 2023, e-commerce is forecast to account for only 21 percent of total retail sales and just 5 percent of grocery sales. And with Amazon and other major internet players developing their own brick-and-mortar networks, it is becoming increasingly clear that the future of retail belongs to companies that can offer a true omnichannel experience.

Retailers are already wrestling with omnichannel’s demands on their supply chains and back-office operations. Now they need to think about how they use emerging technologies and rich, granular data on customers to transform the in-store experience. The rewards for those that get this right will be significant: 83 percent of customers say they want their shopping experience to be personalized in some way, and our research suggests that effective personalization can increase store revenues by 20 to 30 percent.

Several new technologies have reached a tipping point and are set to spill over onto the retail floor. Machine learning and big-data analytics techniques are ready to crunch the vast quantities of customer data that retailers already accumulate. Robots and automation systems are moving out of factories and into warehouses and distribution centers. The Internet of Things allows products to be tracked across continents, or on shelves with millimeter precision. Now is a great time for retailers to embrace that challenge of bringing technology and data together in the offline world. more>

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Updates from Chicago Booth

How racial bias infected a major health-care algorithm
By Jeff Cockrell – As data science has developed in recent decades, algorithms have come to play a role in assisting decision-making in a wide variety of contexts, making predictions that in some cases have enormous human consequences. Algorithms may help decide who is admitted to an elite school, approved for a mortgage, or allowed to await trial from home rather than behind bars.

But there are well-publicized concerns that algorithms may perpetuate or systematize biases. And research by University of California at Berkeley’s Ziad Obermeyer, Brian Powers of Boston’s Brigham and Women’s Hospital, Christine Vogeli of Partners HealthCare, and Chicago Booth’s Sendhil Mullainathan finds that one algorithm, used to make an important health-care determination for millions of patients in the United States, produces racially biased results.

The algorithm in question is used to help identify candidates for enrollment in “high-risk care management” programs, which provide additional resources and attention to patients with complex health needs. Such programs, which can improve patient outcomes and reduce costs, are employed by many large US health systems, and therefore the decision of whom to enroll affects tens of millions of people. The algorithm assigns each patient a risk score that is used to guide enrollment decisions: a patient with a risk score in the 97th percentile and above is automatically identified for enrollment, while one with a score from the 55th to 96th percentiles is flagged for possible enrollment depending on input from the patient’s doctor.

Obermeyer, Powers, Vogeli, and Mullainathan find that black patients are on average far less healthy than white patients assigned the same score. For instance, for patients with risk scores in the 97th percentile of the researchers’ sample, black patients had on average 26 percent more chronic illnesses than white patients did. The result of this bias: black patients were significantly less likely to be identified for program enrollment than they would have been otherwise. Due to algorithmic bias, 17.7 percent of patients automatically identified for enrollment were black; without it, the researchers calculate, 46.5 percent would have been black.

The bias stems from what the algorithm is being asked to predict. more>

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The planet is burning

By Stephen J Pyne – From the Arctic to the Amazon, from California to Gran Canaria, from Borneo to India to Angola to Australia – the fires seem everywhere. Their smoke obscures subcontinents by day; their lights dapple continents at night, like a Milky Way of flame-stars. Rather than catalogue what is burning, one might more aptly ask: what isn’t? Where flames are not visible, the lights of cities and of gas flares are: combustion via the transubstantiation of coal and oil into electricity. To many observers, they appear as the pilot flames of an advancing apocalypse. Even Greenland is burning.

But the fires we see are only part of our disturbed pyrogeography. Of perhaps equal magnitude is a parallel world of lost, missing and sublimated fires. The landscapes that should have fire and don’t. The marinating of the atmosphere by greenhouse gases. The sites where traditional flame has been replaced by combustion in machines. The Earth’s biota is disintegrating as much by tame fire’s absence as by feral fire’s outbreaks. The scene is not just about the bad burns that trash countrysides and crash into towns; it’s equally about the good fires that have vanished because they are suppressed or no longer lit. Looming over it all is a planetary warming from fossil-fuel combustion that acts as a performance enhancer on all aspects of fire on Earth.

So dire is the picture that some observers argue that the past is irrelevant. We are headed into a no-narrative, no-analogue future. So immense and unimaginable are the coming upheavals that the arc of inherited knowledge that joins us to the past has broken. There is no precedent for what we are about to experience, no means by which to triangulate from accumulated human wisdom into a future unlike anything we have known before. more>

Updates from McKinsey

Why isn’t your transformation showing up in the bottom line?
The success rates of large change programs vary widely. Finance teams can make a big difference in the outcome of these initiatives by articulating and validating the link between transformation efforts and long-term value.
By Ryan Davies, Douglas Huey, and David Kennedy – “Transformation” is the buzzword of the day for companies in most industries, but for many it carries an asterisk: studies show wide variation in companies’ rates of success with organizational transformations—whether they are changing how they go to market, updating back-office processes, automating production systems, or otherwise making significant changes in how their businesses are structured and run.

In some cases, this variation exists because executives propose fundamental changes in how the business operates but don’t go through the hard process of setting commensurate performance targets. They often set targets too low, aiming for incremental change. When they do set their sights appropriately high, they often fail to adequately make clear to key stakeholders who owns the goals and responsibilities associated with various elements of the transformation. As a result, value can end up “leaking” even from good initiatives, which can sap companies’ efforts to meet bottom-line targets, drain momentum from good investments, and impede buy-in for change efforts generally.

CFOs and finance teams have a critical role to play in not only setting ambitious targets but also providing the discipline to mitigate value leakage and fully deliver transformational benefits to the bottom line. more>

Updates from ITU

WRC‑19: Enabling global radiocommunications for a better tomorrow
By Mario Maniewicz – ITU’s World Radiocommunication Conference 2019 (WRC‑19) is playing a key role in shaping the technical and regulatory framework for the provision of radiocommunication services in all countries, in space, air, at sea and on land. It will help accelerate progress towards meeting the Sustainable Development Goals (SDGs). It is providing a solid foundation to support a variety of emerging technologies that are set to revolutionize the digital economy, including the use of artificial intelligence, big data, the Internet of Things (IoT) and cloud services.

Every three to four years the conference revises the Radio Regulations (RR), the only international treaty governing the use of the radio-frequency spectrum and satellite orbit resources. The treaty’s provisions regulate the use of telecommunication services and, where necessary, also regulate new applications of radiocommunication technologies.

The aim of the regulation is to facilitate equitable access and rational use of the limited natural resources of the radio-frequency spectrum and the satellite orbits, and to enable the efficient and effective operation of all radiocommunication services. more>

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Updates from Adobe

Seeing Music with Amelie Satzger
By Brendan Seibel – For German photographer Amelie Satzger, music has always intertwined with the creative impulse.

As a youth, she performed in a band with a good friend. When that partnership split, her imagination found refuge behind the lens of a camera. “I was searching for another medium I could put my creativity into,” says Satzger. “I would ride around on my bike searching for cool locations to shoot. I was just imaging something in there that could maybe look good and then putting my camera on a tripod and trying it out. I didn’t really care if the picture came out well or not. I just tried everything.”

But even as her artistic focus changed, the music was there inspiring the visual narratives she created. While studying photography in Munich, she began translating lyrics that moved her into a series of richly colored, evocative self-portraits.

Then a thought struck her: Why not have the musicians themselves star in the scenes their songs inspired?

“I want to visualize lyrics from musicians into my own colorful world and I want the musician to be a part of the picture,” says Satzger. more>

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War once helped build nations, now it destroys them

By Mark Kukis – Organized violence – the term war boils down to – has long been a unifier of peoples. Archaeological evidence shows that nearly half those who lived during the last part of the Stone Age in Nubia, an area along the southern reaches of the Nile River, died violent deaths. Many other tribal societies through the ages have shared this mortality pattern, which suggests large-scale mobilization for killing rather than widespread random violence.

Cooperation, mutual dependence, trust – even in killing others – are building blocks of political order, the foundational elements of states.

The advent of agriculture was a prerequisite to long-term human settlements – cities – of any significant size. It gave rise to larger societies, capable of bigger and more elaborate wars. For the dynasties of ancient China, the empires of Mesopotamia and, centuries later, the kingdoms of Europe, waging war was one of their reasons for being.

Frederick William founded and built Prussia to wage war against its many hostile neighbors. Prussia’s clashes with regional rivals during the 17th and 18th centuries made the nation we know today as Germany.

Across this long history from the Stone Age to the modern era, the basic political formula remained the same. Disparate elements of a society learned to cooperate outside familial structures in order to arm themselves for plunder, defense – or both. They formed hierarchies, bureaucracies and institutions that endured and evolved. For emerging nations, the aftermath of the wars imparted important shared experiences too. Defeat could be even more unifying than victory.

The last major nation-building war came in 1980, when Iraq under Saddam Hussein attacked Iran following the Iranian Revolution. When Hussein launched a ferocious assault reminiscent of fighting from the First World War, Iran was woefully unprepared. The Iranian revolutionaries drew on religious commitments to help galvanize legions of fighters. Iranian men young and old flung themselves against Iraqi tank attacks, again and again, until Iraq’s advance ground to a halt.

For Iran, it is difficult to overstate the legitimacy this achievement gave the new regime, and the cohesion the war imparted to Iran. Iranian society cohered around grief, fear and a renewed sense of Persian identity in response to Arab invaders, both Sunni and Shiite.

Since the Iran-Iraq War (1980-88), wars have tended to be mainly destructive forces for nations. more>

Cybersecurity and digital trade: What role for international trade rules?

By Joshua P. Meltzer – Trade and cybersecurity are increasingly intertwined. The global expansion of the internet and increased use of data flows by businesses and consumers—for communication, e-commerce, and as a source of information and innovation—are transforming international trade. The spread of artificial intelligence, the “internet of things,” (IoT) and cloud computing will accelerate the global connectivity of businesses, governments, and supply chains.

As this connectivity grows, however, so does our exposure to the risks and costs of cyberattacks. As the President’s National Security Telecommunications Advisory Council observed, the U.S. is “faced with a progressively worsening cybersecurity threat environment and an ever-increasing dependence on internet technologies fundamental to public safety, economic prosperity, and overall way of life. Our national security is now inexorably linked to cybersecurity.

Not only are traditional defense and other national security targets at risk of cyberattack, so too is the broader economy. This includes critical infrastructure—such as telecommunications, transport, and health care—which relies on software to network services. There is also cybertheft of intellectual property (IP) and manipulation of online information. More broadly, these risks undermine business and consumer trust in the internet as a basis for commerce and trade.

Many countries are adopting policy measures to respond to the threat. According to one estimate, at least 50 percent of countries have adopted cybersecurity policies and regulations. more>

Updates from Ciena

Is automation enough for digital transformation?
Many leading service providers are already concluding that automation is not enough to drive complete digital transformation. Complex decision making at super-human speeds requires intelligent automation, machine learning, and AI, all of which are fundamental for controlling and operating communications networks of the future.
By Shelley Bhalla – On March 26, 2019, many airlines tweeted that their main reservation systems were having “system issues” and were unable to issue boarding passes. This was a U.S.-wide outage that impacted hundreds of thousands of passengers and the scene below from one of the airports illustrates a frustrating customer experience most anyone can relate to.

Every industry inevitably experiences network issues and outages, but in today’s deeply connected social world, a disruption in service severely impacts a company’s brand value and reputation. Service providers understand this and are focusing on using automation to quickly identify root causes and fixes to such issues.

But is automation enough for meaningful digital transformation?

To reduce operating expenses and address the complexity resulting from incorporating newer technologies, service providers must embrace a fundamental shift in ideology to focus on solving problems proactively, before they happen. This won’t happen overnight; it’s more of a journey that starts with a keen focus on solving problems quickly using analytics and automation. As time progresses, the power of artificial intelligence (AI) can then help predict and avoid these issues before they impact services.

Many leading service providers are already concluding that automation is not enough to drive complete digital transformation. Complex decision making at super-human speeds requires intelligent automation, machine learning and AI, all of which are fundamental for controlling and operating communications networks of the future.

Let’s look at why. more>

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Updates from Chicago Booth

Startups, forget about the technology
New ventures should focus all their efforts on problem-solving
By Michael D. Alter – Soon after Brian Chesky graduated in 2007 with a degree in industrial design, he moved from Rhode Island to San Francisco. He was shocked by the cost of living, at one point owing $1,200 for his share of the rent for an apartment, but with only $1,000 in his bank account. Chesky saw an ad for an international design conference being held in the city, which mentioned that all the nearby hotels were completely booked up. He immediately saw an opportunity: designers needed a place to stay, and he needed rent money. So he set up a website and advertised that his roommates had space to accommodate three visitors, if they would sleep on inflatable air beds. What would later become Airbnb was born.

The following year, Chesky was reading an article about the Democratic National Convention, which was due to be held in Denver. How, the article wondered, would Denver, which had some 28,000 hotel rooms at the time, accommodate about 80,000 convention goers? The entrepreneur immediately recognized that this could be a big break for his fledgling startup. “Obama supporters [could] host other Obama supporters from all over the world,” Chesky recalled three years later. “All we did was become part of the story.”

As well as being a memorable origin story that explains their name (air mattresses were the air in Airbnb), this is an instructive lesson in entrepreneurship. Chesky and his cofounders identified a twofold problem—lack of affordable accommodations and sky-high rents—and thought creatively of how they might be able to solve it and make some money at the same time.

In the startup world, it isn’t necessarily the best product that ultimately wins out. Rather, it’s the best way to solve the problem. Once you do that, you can figure out how to scale it. more>

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