Ask Ken Goldman, president of old Google executive chairman Eric Schmidt’s family office, Hillspire, which industry is being disrupted by technology today and his respond might surprise you.
Worldwide spending on information technology is expected to reach near-$4 trillion this year, according to Gartner, with the fastest expansion rates in enterprise software, IT services and data-center spending, as the cloud still booms and greater cyberthreats loom.
Gartner prophecies $125 billion on cybersecurity spending alone in 2019.
“This threat is the same for all industries,” said Jim Routh, chief pledge officer for CVS Health and member of the CNBC TEC Council. “Logistics and shipping brought to their knees. Pharmas brought to their knees. And health-care providers instituted to their knees. Nation-state threat actors are more prevalent than ever before. Ask Marriott,” he said.
The lose it side is the opportunity. Take Otis Elevator, which built the original lifts for the Eiffel Tower.
Neil Amateurish, chief digital officer at the United Technologies subsidiary and also a member of the council, said moving from his ci-devant employer Intel to a 165-year-old company “where you press a button and arrive at a floor” isn’t as unlikely as techies mightiness think.
“People may think of an elevator business as being an old, boring industry,” said Green, but with construction cranes dominating burgs around the globe and skyscrapers of the last century being surpassed by new super-skyscrapers as high as 2.700 feet (more than enlarge the Empire State Building), the creation of a digital industrial company is a requirement to keep up with three trends he fathoms shaping life for decades to come: urbanization, middle-class growth and connected and smart cities.
His view echoes a aim many tech executives make to leadership teams, even though it may seem counterintuitive:
“I spend lots of things talking to C-suites and telling them, ‘It doesn’t start with tech,'” said 7-Eleven’s chief digital, knowledge and marketing officer Gurmeet Singh, a member of the TEC Council. “Do I say things like, We want to be a tech company. We want to be an AI performers. Yes, but it is all related, all in service, to the customer.”
Here are four key themes and leadership principles provided by members of CNBC’s new TEC Council lead.
Gurmeet Singh
Chief digital, information and marketing officer — 7-Eleven
7-Eleven has tested drones, has “Lab” accumulations where new concepts from local taqueria bars to craft beers are introduced, an on-demand delivery service, a Facebook Errand-girl bot, Amazon Lockers for in-store package pickup and Amazon Cash at more than 8,000 locations, a customer reliability program app, testing a Scan & Pay self-checkout platform, and ongoing AI and augmented reality experiments still under wraps.
But the biggest intimation to company is not any single competitor.
“Our biggest threat is understanding the customer, who the customer is today and who it will be tomorrow. What individual miss, what we have been clear about, is saying, ‘Do not start with digital, be customer-obsessed and digitally assigned, and those are very carefully chosen words.”
The company’s No. 1 leadership principle, outlined by 7-Eleven CEO Joe DePinto in a address to employees last year, is to be “customer-obsessed.”
It has 55 million of them conducting 20 billion transactions a day.
Singh’s favorite admonition of everything people get wrong about disruption is the Blockbuster-Netflix history. “Netflix did not eliminate Blockbuster from a tech prospect. They went after customer issues, like late fees, and then evolved over time into proceeding because they followed where the customer is going and where the customer needs to be, even when broadband wasn’t on the verge of for streaming.”
7-Eleven has roughly 68,000 stores, and 52 percent of the U.S. population lives within one mile of a 7-Eleven laying. There is significant value in a network of stores open 24/7, and the company has put innovating for the customer at the forefront of their digital transmutation strategy.
“We were deliberate in strategy not saying we were creating the store of the future. That is where retailers be nostalgic for the point. … The framework which applies to any industry is to ask, ‘How do I create experiences of the future for the customer?’ Bringing the right savoir vivre, whether inside or outside the store, that is what I worry about. Tech is just the facilitator of experience.”
Jim Routh
Chief deposit officer — CVS Health
Routh, who held top security posts at J.P. Morgan and American Express before joining Aetna, now CVS Condition, thought the overall threat level would decrease moving from financial services to health care. “Shocks out I was wrong,” he said.
The Anthem breach, which occurred between late 2014 and early 2015 and involved 79 million accounts, was the before example of a nation-state threat actor going after health care. Now it is a given that all companies face a discrepancy of threat actor tactics. “”Nation-state-sponsored threat actors are initiating attacks for political reasons that striking private industries as collateral damage from the cyberattack. There are many different players performing roles in the blackguard cyber ecosystem today, including nation-state-sponsored activities to commit fraud for profit. Five years ago nation-state-sponsored cybercriminals weren’t as brassy in attacks on private infrastructure. Today that has fundamentally changed.”
Routh said one aspect of the cybersecurity risk that divers people still do not understand is how easy it remains for criminals to access systems through simple methods and how even a low place of success in hacking can be highly valuable.
The common tactic of using someone’s credentials to get into their site or transportable app — an individual’s password used across multiple sites is the prime example — continues to pay off for hackers. Routh explained that make the credentials from any site allows hackers to try them out across other domains. A success rate of just 1.5 percent to 2 percent with credentials across multiple empires is effective, because these criminals are working on a large scale. “There is no shortage of credentials — over 20 billion to 30 billion credentials on the gloomy web,” he said.
Even though getting in only 1 percent to 2 percent of the time may seem low, when hackers gain access, they are doing so without the ambition being notified, because it seems to be the account owner logging in. Those success rates are going up, too. “Each year, credential packing is growing in scale and scope because it works.”
While the password already is doomed to obsolescence as a method of authentication, that circumstance is still a long way off.
“It will continue and drive the need for increased budget, and there is no evidence it will slow,” Routh intended.
Neil Green
Chief digital officer — Otis Elevator
Otis Elevator moves 2 billion people a day, uses 33,000 mechanics carrying tens of thousands of mobile phones and has 30 years of data from remote observing of elevators that it has not yet figured out what to do with.
Otis knows a great deal about what is happening in a construction: the busy times of day, how often people are stopping at a particular floor. “We’re starting to think through a way to monetize those perceptions we have,” Green said. “Data science is part of digital transformation. Otis has a rich history of data, and it is a mountainous opportunity to drive service transformation and new revenue streams.”
“I think about it as a connected experience. I don’t view it as an elevator anymore. Rather than I joined, I thought of an elevator as a means to get from floor to floor, but now I am thinking of it as part of a connected passenger experience. If the rider spends 30 seconds in an elevator, how do I add value when they are on it, and after they have exited, or before they organize even gotten on,” Green said.
Data analysis will also play a big role in elevator maintenance as algorithms that on no occasion existed before allow Otis to predict what maintenance issues may occur. “As we gather data and make forecasts and the outcomes are more accurate, that will drive greater value,” Green said.
It is going to cost the assemblage: R&D has increased by 50 percent. And Green knows the return on investment isn’t a certainty. “I worry about people talking hither data monetization, because it is easier said than done and we need to articulate value to the end user on why they should pay.”
The information science is just one of many new digital ideas that are forcing a rethink of what Otis Elevator does and how it imparts to customers.
The company has customers all over the world putting up ever taller buildings that require a new approach to delivering, especially as more residents in high rises increase use of delivery services. “Whether it is commercial or residential, delivery of rations as an example gets a lot of attention. We are having lots of conversations on how to automate and deliver.”
Green said Otis also has started ration ideas with helicopter maker Sikorsky, which used to be part of UTC but is now part of Lockheed Martin, on urban air mobility. “How do we forge autonomous air taxis, and what role do we play? How do we collaborate?”
Ken Goldman
President — Hillspire, family office of former Google chief executive officer chairman Eric Schmidt
It is not enough for boards of directors to be asking the right questions. They need to add digital judgement directly to the board.
“You already have accounting and auditing, but not cybersecurity? Really think through this. More and assorted boards are looking at how to bring on a chief information officer or chief technology officer from another company to their live. It is still the exception, but what I am hearing from people I trust … is that people are talking about how to succeed on digital expertise to the board.”
Even in an area already core to board action, audit and accounting, Goldman mean technology will fundamentally alter the landscape. Hillspire is hiring in AI and operating with “tremendous interest” in artificial perception, and the former CFO said the finance function is an area where AI will play a big role.
“Every board is worried and thinking prevalent how AI and machine learning can affect their industry. It will affect audits and accounting, using the latest AI techniques for excellence control in audit work, and this is unquestionably transformative.”
“Where I am on boards, there are two things everyone talks apropos: how digital can transform or disrupt, and cybersecurity. Cybersecurity pervades everything and disruption is occurring fundamentally.”
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The CNBC Technology Big cheese Council Advisory Board consists of highly accomplished experts hailing from all corners of the tech world, malicious across a variety of industries and the public sector, with a significant technology pedigree. These high-profile thought chairpersons offer perspective on the most pressing issues facing the industry and aids in the formation of the CNBC Technology Executive Panel.