Changing sectors at the Edge

The coming volume of data will have a range of impacts. It will challenge current tech models and architectures – by 2025, nearly 30 percent of data generated will be real-time[i] and more than 50 percent of data is forecast to be managed autonomously[ii]. It will also force industries to collide, whether through new data models, third party data arbitrage or even more direct partnerships and collaborations.


The edge could also reshape what it is that industries do. Take insurance, for example; at present the industry adheres to its higher purpose of ‘protection,’ by compensating after loss and allowing people to take on risk that is otherwise too large. Edge powered IoT devices will likely shift the nature of the insurance industry from ‘compensation,’ to ‘prevention,’ and in doing so draw new players into the space. If insurers do not use their natural comparative advantage of rigour and distribution to help distinguish such a strategy, the space is likely to be explored by utilities and even big tech companies with footholds in the smart home environment.

It is not the only industry likely to undergo profound change in purpose or practice thanks to the edge. As-a-service models, exemplified by Rolls Royce selling outcomes as opposed to engines to a range of aviation customers, is likely to spread into whole new sectors once data regarding the use of a whole range of objects becomes made available in real time. Retailers, for example, could move beyond just providing augmented reality mirrors, to providing a personalised selection for customers to peruse based on real-time, contextual information. Fast, better, real time data could also enable financial services to in-built into products and services or offered in an on-demand basis, while logistics could decentralize into P2P type services.

Healthcare, like insurance could also move into a more preventative realm, with real-time recommendations and feedback likely shifting elements of the industry into a life-coach role. How this could interplay with others – from insurers to sportswear manufacturers – will likely spread the opportunities and challenges of such changes way beyond the confines of traditional industry barriers.

This will render traditional planning obsolete – today’s strengths can rapidly morph into irrelevance once the rules of the game are changed. The edge, combined with 5G, will force every organisation to reaffirm and perhaps redress the question of just what business they are in and what it is they do to achieve their higher purpose. Mental models, the nature of competition, talent requirements and the competencies needed to play in future spaces will all change


[i] Source: ZDNet, 2018

[ii] Source: Oracle, 2019

Cybersecurity at the Edge

The future of computing lies at the edge of networks, such as with IoT linked devices and infrastructure. While today only about 20 percent of enterprise data is being produced and processed outside of centralised datacentres, by 2025, that is expected to rise to 75 percent and could reach 90 percent[i].


These forecasts, if realised, would imply even handheld devices will have AI capabilities built into them without outsourcing the heavy lifting to large servers, something that would otherwise be next to impossible.’ All data could therefore be processed in near real-time, at the edge of networks such as the IoT. Information technology strategies, consumer behaviour and the architecture within which to operate would all shift as a result, some in unpredictable ways as the edge economy potentially approaches $4.1Tn by 2030[ii]. As it grows in prominence, so will cybersecurity issues associated with it.

I.T ecosystems will increasingly need to exist ‘out there’ – at the edge- rather than within the organisational walls. With most IoT using organisations having limited visibility to their network, let alone their exposure to IoT cyber risk, new standards will likely be needed. Security and privacy controls will need to be built at the edge and intrinsically part of every device and network. Where possible security will have to be inbuilt into the edge device itself, which brings up some potentially interesting collaboration models and partnership possibilities.

Edge computing will also bring about significant changes to organisational IT architecture[iii]. Given both the networked nature of the edge, the likely creation of ecosystems around edge data, and the increasingly intertwined nature of IT systems, approaching edge cybersecurity at the ecosystem level is increasingly necessary to protect potentially weaker links in the cybersecurity chain, such as third parties.

71 percent of CEOs already state that they see information security as a strategic function and a source of competitive advantage[iv]. However, data breaches could potentially reach $5Tn yearly by 2024[v], complicated by edge technology ‘…as dependency on complex internet-enabled business models outpaces the ability to introduce adequate safeguards that protect critical assets[vi].’ If infosec strategy is to thrive in an edge era, new security and data architectures that span multiple organisations and even industries will need to emerge. Until then it is likely that organisations will have to impose ‘…zero trust concepts where they can’t trust the network, have to authenticate use, and have to understand what data is actually resident there[vii],’ and plan for the fact that the edge is dynamic. As with other technologies, organisational change would seem a must if edge yields are to accumulate effectively.










Outside regulation, or self-regulation?

From being seen as an onerous burden, the nature, breadth and impact of regulation is set to become a key strategic facet for many organisations. Those with strategic foresight will look to pre-empt and in conjunction with others, help shape the direction of regulation to come.


On October 3rd, 2019 it was reported that ‘…European courts can now force Facebook to scrub illegal content worldwide.’ Reuters reported that Facebook and other platforms can also be made to comply with requests to take down content globally, even in countries where it is not illegal[i]. How the governments of the United States and other powers react to a foreign law that could easily be seen as subverting freedom of speech in their own countries will likely add to what is already, technologically speaking, a patchwork of privacy laws, lack of transparency and general incoherence that neither protect competition nor customers[ii]. Either way, Europe’s gambit could have lasting geopolitical clout, MIT Sloan believes that ‘…he first country to figure out the best way to regulate the broader tech industry could become the focal point for the next chapter of the world’s digital revolution[iii].’

Indeed, the EU Commission digital department has already recommended a regulatory framework for AI that would set transparency obligations on automated decision-making[iv]. Could Artificial Intelligence be the next GDPR? Wired notes that ‘…Intelligent systems at scale need regulation because they are an unprecedented force multiplier for the promotion of the interests of an individual or a group[v].’ Digital reality will also likely need some regulatory guidelines[vi], requiring business and government to work together.

An example of how this can be done lies in the sandbox format. Already adopted by developers of autonomous vehicles, virtual currencies, and fintech regulators, sandboxes provide a safe environment to encourage innovation while protecting consumer safety. ‘For example, the United Kingdom’s Financial Conduct Authority launched the first fintech regulatory sandbox in June 2016, allowing fintech players to test innovative products and services in a safe, live environment, with the appropriate consumer safeguards, and, when appropriate, is exempt from some regulatory environments[vii].’

While waiting, or planning for the future, organisations of all types would do well in policing themselves. A Stanford study, for example, found that companies that try to fix problems on their own may sidestep more onerous regulations in the future[viii], not to mention avoid damaging the trust of consumers and ceding brand value. If the future of business is trust, self-regulation is a must in developing a future-proof product and service.

[i] Source: Reuters, 2019

[ii][ii] Source: MIT Sloan Management Review, 2019

[iii] Source: MIT Sloan Management Review, 2019

[iv] Source: Politico, 2019

[v] Source: Wired, 2019

[vi] Source: Deloitte, 2019

[vii] Source: Deloitte, 2019

[viii] Source: Fast Company, 2019

Working with robots

Much has been written about the future impact of automation, with headline numbers or percentage of jobs being replaced the most common. Many of these numbers seem predicated on technological viability and economic rationale. Automation, however, remains a strategic challenge for organisations, not a strictly technological one.


Consider, for example, that 44 percent of organisations have not yet determined how their automation strategies will affect their workforce[i]. Without such an assessment, not only do organisations and their workers miss out on appropriate training and upskilling opportunities, but the challenge of transitioning norms, working practices and culture is also lost.

Over half of employees worldwide currently feel threatened by automation, with 77 percent wanting to learn new digital skills[ii] to be able to learn new roles and jobs that automation will help create.  In addition, 73 percent of business leaders cite company culture as the single most important contributor to corporate success[iii]. Unless ‘…executives are proactive in shaping and measuring culture, approaching it with the same rigor and discipline with which they tackle operational transformations[iv],’ it is almost impossible to see how any corporate culture survives almost constant disruption brought about by AI.

Working with and alongside robots (and how this impacts other person to person contact in the workplace) will prove one of the key challenges for workers of the 21st century, from both a cultural and skills perspective. Ensuring digital and cultural readiness amongst the workforce in an appropriate structure will be key in addressing an area that current change management cannot sufficiently cope with.

Some have even suggested that ‘…it’s time for a C-Level role dedicated to re-skilling workers[v].’ It is certainly time to elevate organisational continuous learning to board level priority. Accenture, for example, developed a ‘Job Buddy’ program that has helped to retrain almost 300,000 employees over the four years to January 2019. The program assesses which roles are most likely to be automated, offers advice on which adjacent roles can be learned within the company and provided relevant training. Within 18 months of launching the pilot, 85 percent of employees for whom it was made available had used the system to assess their current job and enroll in further training[vi]. With 76 percent of executives believing internal talent mobility is important, but only 6 percent of companies believing they are excellent at moving people from role to role[vii], such programmes are likely to become more popular.

Digital skills may be vital, but if automation is to yield its true potential, management and leadership skills are the ones most needed, both in crafting win-win proposals and building the core skills needed for tomorrow’s environment.


[i] Source: Deloitte, 2019

[ii] Source: Business Review, 2019

[iii] Source: HR Grapevine, 2019

[iv] Source: The Financial Brand, 2018

[v] Source: HBR, 2019

[vi] Source: Business Insider, 2019

[vii] Source: InnerMobility, 2019

A whole new industry – Insurance in the 2020’s.

Traditional planning and strategy aiming to project a year or two out will not cut it given the range and nature of change, especially technological change. This is shifting towards a five year plus horizon from both leadership and execution standpoints, although it remains that while some 75 percent of CEOs have innovation at the top of their agenda, close to only 25 percent are looking to self-disrupt.


Technology changes the very nature of insurance products and services, and so the core of industry itself. Insurance should remain an enabler for people to take on risk that is otherwise too large, yet its processes need to change. Some of the Insurtechs, for example, could be viewed as the outsourced R&D functions and innovation hubs of existing players. There is plenty of historical precedent – as with Microsoft –of large firms approaching the point of no return and failure, only to renew via purchases and new partnerships. Appropriately some insurers are setting up their own VC firms to experiment and hedge their bets.

Process innovation does not stop there. The whole supply chain needs to rethink their proposition as multiple new models for engagement emerge. Agents and brokers still have a role to play, but young talent is unlikely to want to work in current roles. Automation can help shift the role towards spending more time with customers, help provide strategic advice and generally shift into more personalised service. Many of the tasks agents and brokers currently do will be automated, yet a promising future is available should individuals be prepared to embrace it. When looking to reposition themselves, current professionals and firms should be cognizant of the key macro trends simultaneously creating both opportunities and presenting challenges

  • Consumer use of new channels (such as voice) and automation (i.e our own personal digital assistants. As consumers we embrace what make sour lives easier as it enables us to do more. This needs to be mirrored in the supply side.
  • Personalisation of the nature of risk/cover. Traditional annual products will be replaced by dynamic and variable cover.
  • Risk mitigation will trump compensation. This requires capabilities that can handle a flood of real-time data, often from the expanding IoT. Continuous underwriting for example, requires both a different process and different technological base.

Our assumptions of what insurance is, are being challenged. This is perhaps especially dangerous for those who have had recent success, as it reduces the need they feel to change. For any players, several key questions need addressing in helping chart a way forward

  • Higher purpose is fundamental – what are we about as a company? It’s about protection and the management/mitigation of risk. Does allowing harm to come to people and then compensating them count as protection? What does protection mean now and in the future? What does that mean we do? Someone will play in this space, how do we?
  • Too many people have a future vision of doing more of what they already do. What’s driving towards the future we want? Can we acquire the skills and capability to do what we want to do when we get there?
  • Can we remain relevant? A lot of new products take advantage of digital models of engagement, but we have not yet looked at what we do differently as a result.
  • As a consumer I need someone to tell me what I need, I’m not smart enough to know what I want. I don’t care about products (rotary requirements aside), I want answers. Life-cycle and lifestyle products will be key. Can insurers deliver?


Your short term goal? To create long term thinking

Whether we like to admit it or not, short-term thinking is entrenched in many of our political and economic systems, and as a result in many of our working assumptions as business people. Many policy level decisions are taken with the next election in mind – usually a four or five year process, whilst quarterly reports dominate stock market sentiment and many business’ outlooks.


The focus on the short-term certainly has tactical benefits and for certain companies, short-term trends assume an understandable primacy. However, short-term trends offer at best a glimpse, and at worst a misrepresentation of deeper seated megatrends that take longer to evolve but are more disruptive, and potentially advantageous.

Our current climate is characterized by incredible uncertainty; political, economic and social norms are being rewritten globally. This perhaps partially accounts for the ever-shortening business horizon detected in research since uncertainty breeds limited outlooks. Harvard Business Review notes that in its analysis of the ‘…extent to which the share prices of S&P 500 firms are driven by a firm’s present value of future growth options (PVGO) rather than cash flow from current operations[i].’ In the decade to 2015, firms’ degree of exploration decreased by 7% points—larger firms, including Apple and IBM, are even more affected with an average 10%-point reduction. The bottom line is that the focus on the short-term and on defending business models rather than exploring new ones represents a significant loss in future option value. HBR estimates that collectively, investors now value the future growth options of these firms relatively less, by $1Trillion[ii].’ This would seem proof enough that a myopic focus tends to generate less growth and value over the long term[iii].

Organisations across a range of industries and a spectrum of sizes are being forced to adapt to ever changing consumers, rapidly evolving technology and a quickening of the business environment. Opportunities will increasingly need to be ‘discovered’ since technology alone does not constitute a strategy nor is it plug and play in the sense that a new tech overlay cannot compensate for a fundamental legacy infrastructure – whether mindset, technology or organisational structure. Business would do well to begin a process of alignment, using deep-seated changes that fundamentally create change as a guide. Several of the key drivers of changes are forces larger and more complex than many standard industry-level trends normally interrogated by standard strategic tools such as Five Forces.  Even three horizons has been cited as unable to keep up with the rate of change. However, taking the longer view – often beyond ten years – can often feel too abstract, and beyond the job tenure of most CEOs.

As most businesses are becoming aware, either through business model pressures, friction from grafting new technologies onto legacy systems or else organisational issues, a new level of planning is needed. A yearly competitive analysis of predefined competitors no longer suffices. New competitors, new pressures and new opportunities are emerging and cannot be ignored.






The next geopolitical imperative: space

Despite a 1967 United Nations treaty calling for the peaceful use of space ‘…there is not an agreed upon code of conduct,’ for space operations[i]. From a security perspective, this is cause for alarm: the twin realities of huge civilian and military dependence on satellites concurrent with rising geopolitical tension presents an obvious and relatively easy target. Michael Schmitt, professor of public international law and a space war expert at the University of Exeter warns that ‘…we cannot wait until it starts happening to then try to figure out what the law is. By then, it will be too late.’ He also believes without such safeguards, ‘…it is absolutely inevitable that we will see conflict move into space[ii].’


The rationale for his argument is simple enough; the future of space is linked to geopolitics and there are more than 70 nations operating earth-orbiting satellites today. Nano-satellites launches by universities and corporations are no longer rare and given the growing list of companies able to launch and recover payloads on demand, even small states, and potentially non-state actors, can purchase advanced equipment ‘off the shelf[iii].’

This accompanies a key shift on how we conceive of space. It is noted that state actors are transitioning from situational awareness in space towards toward a battlespace awareness[iv], one exemplified by President Trump’s mooted space force but also one that goes beyond it. DARPA’s Robotic Servicing of Geosynchronous Satellites programme, for example, seeks to develop a robotic system capable of servicing satellites in geosynchronous orbit. The agency also wants to demonstrate the utility of constellations of dozens to hundreds of satellites ‘…to provide a persistent, resilient ISR (intelligence, surveillance & recon) network unlike any that we’ve seen before[v].’ To this end it has a goal of placing a 20-satellite ‘subconstellation’ into orbit by 2022.

Other developments in space are also likely; the U.S has announced the presence of space based sensors by 2023 and while these could be a precursor to weaponry, the possibility of the Internet of Space also emerges[vi]. To that end, the European Space Agency has indicated a desire to ‘…start mining the moon by 2025[vii],’ and China to put a solar farm in space by the same date[viii]. Space tourism, meanwhile, is forecast to be a $3 billion market by 2030[ix].

The political and economic implications of space could be significant. Bank of America sees the space industry growing to $2.7 trillion in 30 years, nearly triple Morgan Stanley’s still sizeable estimate of $1.1 trillion by 2040[x].