Today’s consumers are experiencing an eco-awakening and are more conscious about the impacts of their purchases on the environment. Therefore, the demand for sustainable products is higher than ever before, resulting in growing market opportunities for retail organizations across the globe.
Magdalena Gerger, CEO of Systembolaget, helps us understand how the focus on sustainability has affected the retail industry in terms of operations, leadership, customer experience, and more.
Why is there a growing urgency for sustainability in the retail industry? And do you think there is a link between this urgency and COVID-19?
The urgency comes across all parts of our societies and applies to all solutions. It is a question at the heart of everything we do these days. Retail is an industry at the forefront of it. Many retail organizations have expressed a higher purpose in sustainability as there is a constant flow of consumption.
We at Systembolaget have also done the same — making sustainability a higher purpose where everyone can get involved. It has made sustainability initiatives aspirational and interesting for both our suppliers and consumers.
It is the same for employees. These days, organizations that want to attract talent will start by explaining how they have a meaningful role in creating a better planet and better social conditions. This goes for owners and investors too.
Is it linked to the pandemic? Yes. The pandemic has snowballed effects and increased the pace and clarity of society’s thinking. Fundamentally, sustainability was there before. It has not changed in actual content or desire to do better things for the planet.
What are some immediate sustainable initiatives retailers can implement in their organizations?
Everyone, retailer or otherwise, needs to start creating the right conditions and ask themselves, “What is it all aiming to do?” They need to express that clearly, set goals, and ensure the following structures point in a sustainable direction:
Operations: Identify tasks in your organization that can be fixed and trigger your suppliers to do more. Once you start solving these issues, you will see a positive effect and it creates a hunger for more.
Products: The opportunities are endless when it comes to what is on your shelves. It is about designing your channel and products in the most sustainable way and thinking it through from start to finish. At Systembolaget, we have achieved our goal of providing more organic choices. It is now an overwhelming part of our offering.
Climate-smart packaging: This area requires a bit of education. Not everyone thinks about paper wrap packaging for a top-quality wine, but now it exists, and our consumers are choosing this product.
Relationship with suppliers: Do not come with finished solutions, work together with your suppliers instead. For example, regarding our climate-smart packaging — it was a co-creation and not a direct order of “We want this.”
Social aspects: It is vital to have human rights policies and the best working conditions throughout the supply chain.
Additionally, transparency and communication are essential when it comes to showing consumers the results of a sustainable cause to make them realize that they are making a difference.
What are the biggest challenges when it comes to maintaining sustainability at all levels of the supply chain?
Breaking things down into manageable changes that have an effect is a challenge. At the heart of that is traceability — that goes for whatever product we are talking about. Take clothing for example: What were the raw materials for this product and how was it produced? How were the working conditions? What about water consumption?
In our value chain, traceability is needed from the start. When we make a promise together to produce a sustainable product, we must try our best to guarantee it. Therefore, it is a challenge to have consistent traceability and transparency throughout the value chain. Without traceability, it is difficult to track any progress or improvements.
Another obstacle is having a common and right approach to ensure carbon emissions decrease and working conditions improve. We encounter so many challenges in different viewpoints, cultures, languages, and definitions of sustainability. This is why good communication is key in turning ideas into action.
In your opinion, how has sustainability changed the role of the CEO?
The sustainability movement and requirements have changed the role of the CEO and C-suites more than anything else in the last century. This is because it requires CEOs to take responsibility for the whole value chain, society, and the carbon footprint left over time. It requires leaders to think long-term and look at many more aspects.
Nowadays, it is much more challenging to communicate and lead. A CEO is now an informal leader of a much bigger group of people than their own company. I find myself leading local and international politicians, supply chain and transport operators, and raw material producers. I also spend much more time with NGOs and academics. To be deep and broad at the same time is a challenge — to have the required knowledge and to apply that in your own context.
There is one more huge movement, which is the technology shift that can be a tool for companies to improve their sustainability practices. We need to learn, grasp, and use new technology together in the best possible way to achieve sustainability goals. However, I think the greatest change of them all is for leaders to be more visionary, and inspirational and drive their organization to a higher purpose.
What are the most effective tech adoptions in retail to build business resilience and flexibility?
Digitalization and new techniques are a whole new toolkit and have many advantages if utilized correctly. With e-commerce, it has become easier to connect both your products and green initiatives to your customers. Information handling is helpful here via digital techniques. Personalized services are now made possible with technology to enhance customer experience.
In addition, automation in retail creates an efficiency that saves money and reduces carbon emissions. It also helps with traceability as I mentioned earlier. With automation, we were able to create a sustainability platform to collect important information from our suppliers.
A big retail trend made possible by technology is having an omnichannel presence. At Systembolaget, it is common now for customers to get information online and purchase what they want at our stores. Better yet, some customers even bring their own containers! There is a keener interest in purchasing locally which plays a big part in sustainability.
*The answers have been edited for length and clarity.
För sisådär 15 år sedan var det inte ovanligt att man som retailer krävde 10års- kontrakt för att skriva på en etablering. Små lokaler i rätt lägen överläts för miljonbelopp och det var självklart att ett läge på Drottninggatan eller Gallerian hade miljonprislapp för den som ville köpa sig en placering. När fotokedjorna avvecklade sina butiker som en konsekvens av teknikutvecklingen var det en köpfest för de som ville ha tillgång till heta lägen och jag vet en liten butik i Göteborg där hyreskontraktet gick för sju miljoner. Those were the days.
Millenniets första årtionde var en etableringsfest inom detaljhandeln. Egentligen började den redan i samband med Sveriges EU-inträde några år tidigare, då integrationen med Europa möjliggjorde att varor kunde flöda över gränserna utan handelshinder, så som tullar. På några år kom mer än hundra nya aktörer att etablera i Sverige och skapade på så sätt ett helt nytt detaljhandelslandskap. Berlinmurens fall hade fördröjt utvecklingen med några år, eftersom detta öppnade upp en marknad i Östeuropa som i princip inte hade någon modern detaljhandel alls. Men till slut hade även den marknaden mättats och det var dags att rikta logistikflödena norrut, via Danmark och sedan över sundet till Sverige.
I etableringsfestens spår exploderade köpcentrumbyggandet i landet och mellan 2001 -2014 ökade andelen uthyrningsbar yta med 100%, samtidigt som populationen ökade med 10%. Med samtidigt utbyggnad av externa handelsplatser och en explosiv e-handelstillväxt nådde vi peak butik någon gång runt 2017 och därefter har marginalerna fortsatt varit utmanande för många av de traditionella kedjorna.
Jag tror självklart på den fysiska butiken och har skrivit flera artiklar om hur lågpris, ehandelsaktörer, varumärken som går D2C och även nya kedjor med stor sannolikhet kommer etablera i både köpcentrum och på volymhandelsområden – med det är ändå oundvikligt att konstatera att det finns för mycket butiksyta – både i Sverige och internationellt. Pandemin har varit en katalysator i utvecklingen och har också förändrat förutsättningarna på arbetsmarknaden, med en större acceptans för hemarbete som kommer göra ytor för kontor, mindre attraktiva för de fastighetsägare som sett möjligheten att justera sin exponering mot retail, genom att konvertera till kontor. Det kommer bli en stor utmaning för handelsplatser och stadskärnor att ställa om mot en långsiktigt hållbar disposition av ytor – hyresdiskussionen kommer bli en het potatis i samband med förnyelse av kontrakt och det är idag få handelsplatser som inte är utbytbara. På Manhattan i New York är vakansgraden över 20% och i vissa lägen har hyrorna sänkts med en fjärdedel…jämfört med tiden som jag beskrev i ingressen har situationen förändrats drastiskt på 20 år.
Med en situation där det krävs färre men bättre butiker, i kombination med nätet för att få både, marknadstäckning och ett starkt varumärke är det troligt att logiken förändras de kommande åren och en mix av traditionella butiker på fortsatt attraktiva handelsplatser, tillsammans med mindre butiker som ligger mer bostadsnära och kanske även ett par nya butikstyper. Utvecklingen inom last mile förändrar logiken även inom närliggande branscher som restaurang. Här skissar jag en utveckling av en av flera möjliga framtider, där kedjor, ehandlare, dagligvaruaktörer och restauranger påbörjar en ny nivå av konkurrens med också en optimering av affären med alla till buds stående medel.
Jag har tidigare skrivit en hel del om den fysiska butikens företräden, med varumärkesbygge, distribution och relationsskapande så jag utelämnar det här. Jag tror däremot att man kommer kunna använda fler koncepttyper för att kunna optimera butikstäckningen:
Ankarbutiker – är egentligen klassiska butiker som fortsatt etableras på väl valda lägen för att skapa rikstäckning. Vad ett väl valt läge är varierar från kedja till kedja men klart är att man behöver färre butiker för att uppnå vad man kan definiera som rikstäckning idag än för 20 år sedan. Färre butiker innebär också med stor sannolikhet bättre butiker eftersom det kommer innebära att färre butiker behöver underhållas och uppgraderas.
Feeder stores – ett begrepp jag fångade upp när Detaljhandelspodden hade besök av Clas Ohlson och där vi fick reda på att ett antal lite större butiker fungerade som framskjutna logistikpunkter för ehandeln och där man använde last mile-aktörer för att distribuera e-handelsorder i en radie runt dessa butiker.
Compact stores – pandemin har inte bara accelererat e-handelns tillväxt utan också förändrat kundströmmarna. Även om många längtar tillbaka till kontoret så finns det också de som ser en framtid där vi har en hybrid mellan kontoret och hemmet. McKinsey förutspår i en rapport att 20% av den globala arbetskraften kommer att tillämpa ett hybridbeteende även efter pandemin. Eftersom handeln finns där konsumenterna finns innebär det en marknad för mer bostadsnära lägen för såväl handel som restaurang. Detta innebär att destinationshandeln kommer minska till förmån för en mer lokal handel. I Paris gick borgmästaren till val på att skapa 15-minutersstaden, där all service finns inom 15 minuter från där man bor och lever – både för att skapa en levande stad, men också för att minska onödiga transporter.Mindre butiker innebär också större riskspridning och ökad varumärkeskännedom, något jag avhandlat i en tidigare artikel. En strategi med feeder stores och mindre, bostadsnära butiker skulle kunna illustreras såhär, i jämförelse med den traditionella etableringsprinciperna i förra bilden:
Obemannade butiker är också en reell möjlighet för att både utnyttja delar av befintliga butikslokaler utanför ordinarie öppettider, men också för etableringar på lägen eller i koncept där personal antingen blir för dyrt, eller där man helt enkelt stryker personlig service ur erbjudandeekvationen. Amazon Go och sedermera Amazon Fresh är ju de vanliga exemplen på detta fenomen, men i Sverige har såväl Coop, Pressbyrån och inte minst uppstickaren Lifvs etablerat obemannade butiker. Detaljhandelspodden fick ett samtal med Daniel Lundh, som är en av grundarna av Livfs (Avsnittet släpps vilken dag som helst) där han avslöjade att den teknologi man utvecklat för sina egna enheter, också kommer användas av en aktör inom sällanköpshandeln med start strax efter sommaren. Därmed kan gränserna för vad som är möjligt att erbjuda i termer av tillgänglighet också börja suddas ut inom flera branscher. I Asien finns obemannade butiker inom såväl mode som hemelektronik. Det gör det möjligt att etablera i helt andra lägen än tidigare.
Robotiserade lagerlösningar. Dagligvaruhandelns e-handelstillväxt har varit makalös det senaste året men är också utmanande för ekonomin i affären, givet de små marginalerna och de höga kostnaderna att leverera varorna hem har inneburit ett negativt resultat på ehandelsaffären, samtidigt som utvecklingen pekar på att det är häråt utvecklingen går. För det är en sak att lägga ordern online och en helt annan sak att sitta i bilkö till dagligvarubutiken för att hämta upp sin order vid uthämtningsstället. Walmart har under pandemin riktat intresset emot flera lösningar som skapar flexibilitet i ehandelsaffären och både investerat i kyllösningar som möjliggör leverans av kylvaror till villaområden där boxar som håller kylan utanför dörren möjliggör leveranser även när mottagaren inte är hemma, självkörande fordon men också en investering i ett Israeliskt företag som utvecklar robotlager i miniformat. Lösningen möjliggör att man stoppar in ett e-handelslager, till exempel i en del av ett parkeringshus, så att man kan hämta sin order på väg mot bilen när man uträttat sina ärenden.
Vad gäller showrooms och pop-up-butiker så ser jag inte dessa som särskilt intressanta lösningar på lång sikt av det enkla skälet att det inte tillför något till ekvationen. Den fysiska butikens främsta företräde är att man får produkten här och nu, vilket är ett argument emot showroomtanken och vad gäller pop-ups så menar jag att styrkan i en fysisk butik bygger på att ha ett inarbetat läge. Det tar ett år eller mer att attrahera en tillräckligt stor publik för att skapa en hållbar affär och att montera upp och ned en butikslösning, för att flytta till nästa läge innebär inte bara icke-effektiv lönekostnad, utan också att hela idén med att bygga en basförsäljning försvinner.
Egna utlämningsställen, eller snarare att äga last mile är också en intressant utveckling givet vad som nu sker. I USA har Amazon och Target etablerat egna utlämningsställen, det vill säga fysiska gränssnitt där man både kan ha en skylt uppe och hantera både utleveranser och returer på ett “varumärkeslöftessäkrat” sätt. Det innebär såklart en kostnad men också en möjlighet i starkare relationer – här ser jag en absolut möjlighet i att ICA och Coop etablerar egna logistikhubbar i bostadsnära områden för att undvika att tvinga kunden till långa resvägar.Nordstroms Local är ett exempel på hur en traditionell aktör försöker utveckla sig för både vara e-handelsrelevant, men också skapa ett koncept för att säkerställa en relevans i den lokala affären som jag skrivit om tidigare.
Utvecklingen inom last mile som skett under pandemin är kanske en av de mest spännande aspekterna av transformationen – där det tidigare var självklart att behöva åka till en obskyr tobaksbutik i en förort för att hämta ut sin order, som nu kommer till Instabox, eller hem så snabbt som en halvtimme efter order. Och här finns det en hel del att resonera om. Amazon och övriga market places har byggt sitt värde genom all data man har tillgång till. Genom AI vet Amazon vad du egentligen vill köpa och alla har vi väl varit med om att råka få en annons riktad till oss på Fejjan, när vi just diskuterat ämnet med en vän – något som skapat en känsla av att vi är avlyssnade av våra mobiler. Sanningen är att logaritmerna har blivit extremt duktiga i att förutsäga vårt nästa steg. Vid sidan av market places så delar ehandlarna data med logistikoperatörerna som vet vilka volymer som går till vilket område. Snabbfotade uppstickare som Foodora har totalkoll på hur ordervolymerna ser ut över dygnet, veckan och året, helt enkelt eftersom det är en förutsättning både för att skapa en bra bemanningsplanering och ett högt kundvärde. Men på samma sätt som att Amazon använder den data som genereras från market place-delen till att både köpa in och sälja produkter själva och även utveckla EMV inom de kategorier som verkar rätt i marknaden, får ju också last mile- aktörerna underlag för att göra detsamma.
I Kina har Meituan, tidigare en ren budtjänst, börjat köpa in egna produkter och sälja till konsumenterna via både ehandel och robotlager, som jag nämnde ovan, där tiotusentals produkter står redo att packas på några minuter och hämtas ut som ur en jättelik varuautomat.
I Sverige och Norge har Foodora etablerat dark stores inom dagligvarusektorn där man kan förse närområdet med livsmedel och dagligvaruartiklar som man själv köpt in. Genom att fler kedjor kopplar sig till lösningen för hemleverans får man samtidigt en större förståelse för efterfrågan. Det finns ett skäl till att aktörer som Target och även andra större kedjor valt att hantera last mile, med egna resurser eller genom förvärv. Den som är närmast kunden vinner alltid. Foodora har även etablerat restauranglösningar tillsammans med leverantörer till dagligvaruhandeln som till exempel Fontana, vilka därmed också, på samma sätt som Nike och Adidas inom sportsegmentet, går D2C.
Pandemins forcerade utveckling av last mile öppnar därmed upp en ny marknad, både för dark kitchens eller ghost kitchens , som det också kallas – kök utan serveringslokaler, där allt sker på beställning och med kundens hem som restaurang och där last mile är länken mellan de båda. Det innebär att framtidens restauranglösningar kan bedrivas från källarlokaler på bakgator med väsentligt lägre kapitalbehov än tidigare. I USA har det under året redan hunnit konceptualiserats nätverk av ghost kitchens som erbjuder ett brett urval av maträtter från världens alla hörn.
Hade jag varit någon av de stora dagligvaruaktörerna så hade jag investerat i egen logistik, både för att säkerställa alla touchpoints, men också för att inte skapa framtida konkurrenter. Jag hade också noga följt hur leverantörerna väljer att agera för att gå D2C själva.
Det finns många möjligheter i det som nu händer och sker och det är spännande att följa positioneringen och allas krig mot alla, i det nuvarande läget. Säkert är att det kommer ta några år innan läget stabiliseras och de stora flodfårorna skapar tydlighet i vad som de facto blir framgångsfaktorer som håller över tid.
Magnus Ohlsson
Skriven av Skriven av Magnus Ohlsson, grundare av Retailomania.
The banking industry is known for constantly innovating and evolving to meet customer demands and requirements in different financial climates. In 2020, banks were forced to make years’ worth of revamps to technology and business models in a short amount of time.
Crucial skills for leadership in banking
Strong leadership in banking is crucial in these post-pandemic times as it could make or break the entire organization. Here are 4 critical skills all banking leader needs to hone to navigate today’s everchanging financial landscape.
Forward-thinker
Visionary leaders are always on the lookout for new opportunities to elevate their organizations, especially during times of crisis. Since the pandemic hit, the banking industry quickly embraced technologies such as cloud computing, wearables, and AI chatbots, to enable a frictionless digital banking experience for customers.
Shanker Ramamurthy, Global Managing Partner, Banking for IBM states that cloud computing and artificial intelligence (AI) will continue to be key tech focus areas in 2021. “For the foreseeable future, banking will operate in a hybrid, multi-cloud world. Most financial institutions are in the process of transitioning parts of their workload from their data centers into a private cloud and into multiple public clouds.“
It’s worth noting that a major part of the banking technology vision now focuses on the use of blockchain, as it has the potential to solve the drawbacks in traditional SWIFT bank transfer and the client identification system.
A bank’s survival depends on how quickly it could respond to consumer needs by leveraging technology to update legacy systems and help employees adapt to working in the new normal.
Hugo Nájera Alva, Head of Business Development at BBVA Bancomer, shares that it is important for leaders to always be ahead of emerging technological trends.” Competitors are no longer financial institutions, but technology players,” he says. To get ahead of the competition, banking leaders must think outside of the portals of the finance mindset.
Digital banking has undeniably been one of the largest technological shifts in the finance industry. Banks are expected to grow digitally even more in 2021 and present the following trends:
Personalization: Consumers want instant access to information about their finances to make informed financial decisions with the impact of the pandemic. Future financial products should be customized to their needs to drive engagement and loyalty.
Automation: Banks will set up more autopayment features to make it easier for customers to pay bills on time and help them reach their savings goals.
Real-time payments: The use of cash will slowly dwindle this year with the rise of contactless payments and e-wallets.
Technology is the game-changer in modern banking institutions. A keen eye on the latest trends and technologies will enable leaders to gear up for forthcoming challenges in the industry, simultaneously introduce new solutions to existing problems and revolutionize the banking experience at large.
Adaptability and Agility
Banking leaders need to adapt to current times and grow a mindset rooted in flexibility and agility. Many aspects of banking are in a state of flux— the viability of the branch bank model, future technological adoptions and changing customer demands, among others. Stepping out of tradition is vital given the rise of disruptions such as fintech start-ups, cryptocurrency and banking-as-a-service (BaaS).
According to Ramamurthy, “70% to 80% of all the bank tech spend is for middle and back-office operations. Maybe 20% is spent on the front end, what we call the customer-oriented, multi-channel ecosystem.” The banking of tomorrow will invert that ecosystem, as technology will be primarily used to service customers and their respective needs.
There will also be a focus on cybersecurity given the abundance of sensitive data collected in digital banking. Deloitte’s 2020 Digital Banking Report revealed that organizations are prioritizing investments in privacy and security solutions more than any other technology.
Don’t miss out: Connect with like-minded finance leaders at our banking-focused events in the Netherlands, Sweden and Germany.
Strong Empathy and EQ
Banking leaders must not lose sight of the most important asset of their organizations, which is their employees. The mental health and wellbeing of employees have been brought to the forefront as the negative effects of the pandemic have taken a toll on many emotionally and physically. Immediate branch closures, shrinking revenue and preparation for a hybrid work environment are huge changes that can cause a lot of stress — potentially affecting job engagement and productivity in the long run.
A good banking leader should be able to help his employees regulate and navigate these emotional challenges. According to Gartner, 68% of organizations have already introduced at least one new wellness benefit to help improve their employees’ mental health. Additionally, banking leaders must restructure working environments to prioritize job satisfaction. For employees to deliver an effective customer experience, they should have a work culture where employee experience is given due importance.
The transformation of leadership in banking is defined by these four skills for banking leaders, and is essential to guide employees and customers into the future of banking.
Cities take a huge toll on our planet, consuming 78% of the world’s energy and producing more than 60% of greenhouse gas emissions. These statistics have led the EU to invest €100bn into the European Green Deal, which aims to make Europe the first climate-neutral continent in the world by 2050. As the infrastructure and real estate sectors play a major part in city development, the construction of smart buildings is the most viable solution for long-term sustainability.
What is the link between smart buildings and sustainability? The answer lies in the emerging smart building trends we are about to discuss.
Drivers for Smart Buildings
According to the study, The Future of the European Built Environment, urban planning in Europe will be shaped by the following drivers:
Urbanization – Rising urbanization will result in rurban (rural/urban) areas and the relocation of cities
Climate change – A strong focus on climate-neutral buildings to slow down the negative impact of climate change
Resource scarcity – From design to deconstruction, there will be a need for biobased alternatives and circular resources
Changes in population – A growing aged population may decrease the availability of labor
Focus on health and wellbeing – Buildings will integrate more green spaces and preventive health measures such as the removal of toxic components
The study also predicts that buildings will embody these eight characteristics by 2050:
Climate-resilient structures to withstand natural disasters
Flexible buildings that are scaled to facilitate multiple functions
Focus on performance in terms of sustainability and energy use will determine the building’s value
Enabling working and living in a 24-hour economy with combined working and living spaces as well as 24-hour connectivity
Circular buildings consisting of reusable and biobased materials
Energy-positive buildings that are efficient and free from fossil fuels
Support a healthy lifestyle through healthy noise management, optimal temperature and clean air
Several cities in Europe are already making strides to become greener and smarter. For example, Copenhagen is on the way to becoming carbon neutral by 2025 with business clusters powered by renewable energy and high R&D investments in sustainable sectors. In addition, Lahti was named the European Green Capital 2021 by the European Commission. The city aims to be carbon neutral in four years’ time, setting an example for the rest of Europe and bringing Finland closer to its target of achieving carbon neutrality by 2035.
Smart buildings and COVID-19
As the world slowly recovers from the pandemic, we will see people returning to public and shared spaces to restart their professional and social lives. Therefore, living and working spaces need to be upgraded to safeguard our health and well-being. Facilities managers must equip their buildings with effective ventilation and air quality to minimize the spread of the virus.
Besides that, touchless technology such as voice-activated elevators, hands-free doors, and phone-controlled door locks will lower the risk of touching contaminated surfaces. Smart buildings will also enable data collection on tenants, allowing building managers to easily identify and inform occupants if an individual has been infected with the virus.
Trend #1: Predictive Maintenance in Smart Buildings
One way for buildings to become smarter and more sustainable is with the integration of predictive maintenance. It allows full cost optimization by recognizing equipment that needs fixing before it fails – reducing the amount of expensive last-minute repairs and renovations.
Predictive maintenance also plays an integral role in running a building’s heating, ventilation, air conditioning, and refrigeration (HVACR) systems efficiently. This is especially important for buildings where continual and correct operations are critical, such as airports and hospitals.
In addition to making buildings smarter, predictive maintenance also makes them more intuitive. These buildings have systems in place to automatically turn the lights on when people are detected in a room, adjust an area’s ventilation depending on its CO₂ levels, and regulate heating and air conditioning. Predictive maintenance allows for optimal energy efficiency, reliability, and comfort.
In this IBM case study, the 24/7 Connected Services offering on IBM Cloud has helped KONE embed predictive maintenance in their elevators. With 24/7 Connected Services, elevator safety has improved with the reduction of equipment downtime, detailed information about equipment performance, and fewer faults.
Trend #2: Smart Building Data Management
IoT is an irreplaceable component in smart buildings to power data-driven digital services. These services are not only useful for building management but also for the overall tenant experience. Nowadays, tenants can download and utilize apps with features that maximize convenience and safety. Examples of features include navigating available parking spots, booking shared facilities, and receiving notifications on building updates.
The complexity of the real estate landscape today with large numbers of stakeholders, growing portfolios, and siloed systems demands for a streamlined data-driven platform. That is exactly what Fabriq created to manage Google’s European real estate assets which include offices and data centers. The IoT platform not only tracks the consumption of energy and resources but also flaws in building operations. This resulted in fewer carbon emissions, lower costs, and efficient use of resources.
The surge of smart technology in buildings will give rise to challenges such as data overload, difficulty in selecting the right data source, and issues with data verification. Therefore, it is imperative for building managers and owners to address these challenges to ensure the chosen smart technology works seamlessly and brings about attractive ROI over time. They must conduct thorough reviews of the building and its facilities, carry out interviews with potential occupants, identify data points and filter out important information, and streamline data verification techniques.
Trend #3: Cybersecurity for Smart Buildings
As buildings become smarter, they naturally are at a higher risk of cyberattacks. Common vulnerabilities with smart building systems are minimal password protection, multiple connected devices and systems, maintenance from third-party companies, and security limitations with old buildings.
Physical security is no longer enough to protect a building’s occupants. Building owners and managers must ensure effective cybersecurity measures are in place to steer away from cybercriminals. Products like the Desigo PXC4 and PXC5 controllers by Siemens are designed to help smart building managers prevent security breaches by having a strong protection policy, signed firmware, and encrypted communication with the embedded web interface.
Fortinet also recommends the following steps for creating a robust security-first strategy – develop an overarching security plan, increase the visibility of smart building devices, and form strategic relationships with security technology suppliers.
Trend #4: Smart Materials in Construction
The contribution of smart buildings to sustainability begins in the construction phase. Emission levels can be greatly reduced in the following areas:
Materials: The use of fewer materials, more climate-friendly production of materials, and finding more sustainable alternatives.
Transport: Introduce modes of transportation with less climate impact and increased electrification.
Energy and heating: Increased energy efficiency through renovation, higher sustainable energy requirements, and fewer fossil fuels for district heating production.
Waste: Buildings designed with increased flexibility, rebuilding, and material recycling in mind.
Several technologies are already in the works to enhance and create smarter materials to withstand external changes. The materials used to construct a building plays a big role in how energy efficient and sustainable it will be in its lifetime. A good example is Helsinki’s Wood City – a sustainable urban hub with wood as its main construction material. The multi-story buildings of Wood City are made from fire-resistant Laminated Veneer Lumber (LVL) and timber, which is reusable, cost-effective, and low carbon.
The demand for climate-resilient and sustainable projects in the form of smart buildings is expected to grow exponentially. Buildings in the future will continue to leverage smart technology to maximize their lifespans and mitigate the effects of climate change.
The rising number of cyber attacks has caused IT leaders across industries to take cybersecurity measures more seriously than ever before. This is reflected in our interviews with CIOs on cybersecurity investments who revealed cloud security and cybersecurity strategies as top priorities. A number of industries have also adopted digital twins to protect their digital assets, allowing cyber security platforms to perform at higher efficiency and accuracy.
However, CIOs and CISOs face continuous challenges with implementing high-level cybersecurity due to limited budget and online security obstacles in a hybrid workforce.
Monica Verma, CISO of Helsedirektoratet, podcast host of We Talk Cyber, and blogger on MonicaTalksCyber.com, shares valuable insights on operational and cyber resilience, effective cybersecurity programs for critical infrastructure, the evolution of the CISO role, and more.
What are your top cybersecurity lessons learnt from the pandemic?
There’s no absolute security. Things can and will go wrong. That’s true for both a pandemic and a cybersecurity crisis. The pandemic has shown us an increasing need for adaptive security as a part of building resilience and crisis management.
Operational resilience is as much dependent on the human and communications aspect as the technical capabilities in place. It’s not a matter of “if”. It’s no longer even a matter of “when”. It’s a matter of:
How long ago did attackers infiltrate?
How quickly can/did we detect it?
How quickly and effectively can we respond?
How do we handle the unknowns?
How do we adapt and continue critical services?
Preventive controls are not enough. Effective crisis management requires planning for both the known-unknowns and the unknown-unknowns.
How do you think the role of CIO/CISO has evolved in terms of ensuring the security of their organization?
Traditionally, the CISO role started as a technical role — a younger sibling or a distant cousin of the C-Suite. It’s mostly a title associated with a lack of budget, mandate, or even a seat at the grown-ups’ table.
However, an effective CISO role is that of a business leader itself, an advisor to the board, top management, and the rest of the business. The role has evolved from a “glorified” security engineer to a business and organizational advisor. As data breaches and ransomware attacks have skyrocketed recently, particularly during the pandemic, more organizations look up to the CISO to help them identify, understand and manage their threats and risks better.
Today, many organizations understand that a CISO’s job is not just to build an information security management system (ISMS) with a bunch of policies and other governing documents. Organizations are beginning to employ a CISO/CIO to rather effectively invest in security with timely risk management and provide sound advice tailored to the stakeholders.
As a result of this evolution, there’s also been a shift in the skills required to be an effective CISO:
Professional skills such as risk advisory and business understanding, which span very well outside the technical realm, and;
Soft skills such as concise, clear, and effective communication, are a driving force behind the vision and strategy of an effective leader.
There are many organizations that still see and employ a CISO role as a technical role, but we are seeing a shift in terms of budget, investments, and better mandate — transforming the CISO into a cross-functional advisory role worthy of an actual seat at the table.
Today’s organizations have a higher risk of exposure due to a more complex and global digital footprint. What strategies can organizations implement to better prepare for cyber attacks?
There are three critical aspects that need to be addressed in order to better manage the ever-increasing risk exposure and ever-complex digital footprint:
a. Always have a holistic view of both the current state within the organization and its supply chain as a fundamental input to your cybersecurity strategy. You are as strong as your weakest link. It’s not your employees. It’s the weakest link in your entire supply chain. You need to be aware of the weakest link in your supply chain, in order to be better prepared for cyberattacks.
b. Always have a risk-based approach when developing your strategy, operationalizing your cybersecurity plan, and investing in security controls (people, process, and technology). Your organization’s risk profile is affected by other risk profiles in your entire supply chain. A risk-based supplier management is as important as a risk-based security governance within your organization. Additionally, an effective risk-based approach will also take into account the threat landscape.
c. Balance your security investment effectively between preventive controls, predictive controls, and adaptive and other response controls, based on your risk exposure. The more critical data, services, and infrastructure you have, the higher your exposure in case of a cyberattack. It’s the difference between an e-commerce website going down for weeks vs. critical data or service not available for even a few hours or days. Preventive controls and cyber hygiene are a must. But as there is no 100% security, these will fail. Your cybersecurity strategy must take into account effective crisis management and building operational resilience over time.
Based on your cybersecurity adoption lifecycle model, how can an organization build cyber and operational resilience?
Building cyber and operational resilience requires effective planning and response to manage both the known-unknowns and the unknown-unknowns. Additionally, this takes into account people, processes, and technical aspects. Here are the key things organizations can do to build resilience over time:
a. Building resilience requires a clearly defined accountability at the top level as well as a resilient, collaborative, and prepared workforce. Accountability and awareness are key. Train your employees and train them regularly. It’s vital that the board and top-level management understand their accountability, as well as that every employee understands their role and responsibilities both during normal operations and an ongoing crisis. Test your preparedness and crisis management plans. Make sure your crisis management team works like a well-oiled machine. Run table-top exercises, learn and repeat.
b. Map, understand, and have a comprehensive overview of the dependencies that your critical services have on the underlying assets within your entire supply chain. Do your homework to have effective planning and preparedness in place. Build your crisis management and preparedness plans based on disruption scenarios for your business and critical services towards society, dependencies within your organization and on your third parties, your risk exposure, and your risk tolerance. Your crisis management plan should also take into account the steps you execute in case an unknown scenario occurs.
c. Invest in adaptive response management. As there are always unknown factors in play, an effective response management will include adaptive mechanisms, in addition to preventive controls. For example, can we activate certain policies in real-time as certain events or anomalies are detected? How can we fail-safe both within our IT and particularly our OT environments, while keeping critical services up and running? How do we adapt the use of our people, processes, and environment in real-time to reduce the impact? How quickly can we segment (parts of) our infrastructure, in order to contain the spread? How quickly do we predict a threat or detect an attack before it becomes a crisis? How do we reduce recovery time?
What are some of the technological disruptors to cybersecurity?
In my opinion, the top three technological disruptors to cybersecurity are:
a. Cloud Cloud is no longer a new technology. However, the skyrocketed migration to cloud in recent years demands an urgent shift in mindset, especially when it comes to cybersecurity and privacy. Moving to the cloud is no longer just a lift and shift operation, even if that’s what you may be doing with some of your services and data. To effectively utilize the benefits of cloud computing, in a secure and privacy-friendly manner, a shift in the mindset is required right from the very beginning, integrated right from the planning stages of a migration, through operating in the cloud and all the way to the exit stage.
b. Convergence of physical, biological,and digital worlds With the adoption of Internet of Things (IoT) and other emerging technologies, there is an even stronger convergence of the physical, biological, and digital worlds in progress. However, there is a big gap in understanding what risks this entails and the lack of management of these risks as a part of a cybersecurity strategy. As we go forward, there is a stronger need to address these issues at a strategy and business level to ensure that security, safety, and privacy continue to be a top priority.
c. Machine Learning and Artificial Intelligence Machine learning and the emerging applications of artificial intelligence are some of the key technological disruptors, as ethics, safety, and other risks emerge along with it. We are already seeing Proof of Concept (PoC) cyberattacks enhanced by machine learning. As we go forward, these emerging technologies will be abused by cyber criminals and other threat attackers in various ways, including but not limited to, increased scale and effectiveness of cyberattacks, discovering new unknown vulnerabilities and exploits faster, bias, discrimination, and other ethical, security and privacy violations. As the threat landscape evolves, the use of machine learning and artificial intelligence within cybersecurity will be critical.
What are the elements of an effective cybersecurity program for critical infrastructure?
Due to the ongoing convergence between Information Technology (IT) and Operational Technology (OT) environments including Industrial IoT (IIoT), along with accelerated digitalization as a result of the pandemic, we have seen a massive rise in cyberattacks, particularly ransomware, against critical infrastructure. The key with critical infrastructure is operational resilience both during normal operations and under crisis. An effective cybersecurity program for critical infrastructure addresses three key areas:
a. Legacy systems within the OT environment As the threat landscape and attack vectors have evolved, the convergence has left the legacy OT systems even more vulnerable to cyberattacks. Additionally, the lack of visibility and the difficulty of maintenance pose an even bigger threat as both old and new vulnerabilities and attack vectors are discovered. The basic cybersecurity hygiene e.g. patching, awareness and other preventive controls are even more important in the OT environment, as these systems get connected to emerging technologies. Hence, the basics is still one of the key aspects.
b. Over-increasing complexity and attack surface Due to technological disruptions and ever-increasing convergence, both the complexity and the attack surface of OT environments including the critical infrastructure are increasing drastically. This increases the likelihood of a successful cyberattack, as the threat actors now have a much larger attack surface to begin with. Going back to the point, it’s not if or even when you’ll get hacked, but rather how quickly we detect, adapt, and respond to an attack. Hence, building operational resilience is a critical aspect to be addressed in an effective cybersecurity program.
c. Managing the consequences and risks to life, safety, and society As with every cyberattack, a key aspect is to understand and contain the impact, as early and efficiently as possible. To do that, it is vital to have a comprehensive overview of what risks are associated with critical infrastructure, along with how it impacts the business, the organization, and society at large. As we move from traditional IT to OT environments, we switch from just talking about downtime or data breaches to risks to life, safety, and functions with society as a whole. A good security investment is always risk-based. This is even more vital for critical services, as the impact can be tremendous.
What are some of the key challenges with regards to diversity, inclusion, and equity within the cybersecurity industry and how can we address them?
We have seen an increasing awareness of diversity, inclusion, and equal rights over the last decades, both within society in general and in the cybersecurity industry. However, we still face massive challenges when it comes to pay grade, job requirements and hiring, reasons and motivations behind diversity and inclusion, as well as a lack of understanding of equity and the role it plays.
On one hand, we need to have continued conversations and take further actions for better representation within the cybersecurity industry. On the other hand, we need to do that while breaking down the labels and stereotypes. I am a CISO. Not a female CISO. My professional experience and contributions are independent of my gender, background, and other labels.
That means, while on one hand, we need definitive actions to reduce the pay gap, include diversified talent, and ensure effective and streamlined hiring processes including neutrally worded job positions with realistic requirements, on the other hand, we need to break down the barriers to bring in a diversified workforce independent of their labels. That includes diversity in both what we see and what we hear, i.e. diversity and inclusion of opinions.
Equity is yet another term that is highly misunderstood. Equity is not the same as equality. While equality is important and talks about equal opportunities and resources, e.g. equal pay grade, equity is about fairness, i.e. giving people what they need in order to make things fair and level the playing field. Due to stereotypes and lack of a balanced representation over decades, there is a need for equity to ensure we can reach equality. Equality is the end goal, but equity is the means to reach it. Equity is not about giving too little to people who need it or too much to those who don’t, but rather to provide fairness in order to reduce thedifferences of inequalities and pave the way to a more equal society and cybersecurity industry.
In recent years, Insurers have sought to digitalize their processes and improve their customer experience, making it more seamless and tailored to the needs of today’s digital consumers. Many large incumbents have partnered with insurtechs and invested in technology platforms to digitalize their selling or claims management process, establish virtual payment options, or improve their websites’ usability with chatbots.
While digitalizing parts of the customer journey was a great initial step, it did not address the industry’s core problem. That is, adopting a truly digital-first mindset, rather than offering unchanged products with an online quote and bind journey and putting band-aid solutions on outdated business models.
Silos Across Business Lines and Distribution Channels
Purchasing insurance products is a cumbersome process, and most customers utilize both offline and online channels to research their options and gather the necessary information before they are confident of making a purchase.
For this reason, digitalizing processes in insurance companies should not be seen as a replacement for the existing agency model. On the contrary: digital technology should help insurers to automate standard processes and enable the agent as they advise the client to add an extra layer of personalized services. From a productivity perspective, digital technology can free up the human workforce to focus on more value-added tasks and extend the capability of selling insurance at the point of sale or through non-traditional partners, let it be for valuables, travel, mortgage insurance, or SME risk covers.
As Manisha Bhargava, Head of Global Sales at Innoveo explains, “Consumers are merely covering their risk to insulate themselves, their families and their lifestyle from potentially disruptive events that may impact them financially. They are not seeking to buy “insurance”. Innovative Insurers should put their customer first as they build products, with the changing customer lifestyle at the center of their offerings.”
To achieve that, insurance companies have a lot of customer data on their hands. The trouble is that it is siloed across multiple legacy systems. For example, when it comes to the integration of online and offline distribution channels, a 2019 McKinsey survey concluded that in the vast majority of cases, insurance customers who switch between digital and non-digital channels still cannot continue their journeys online. In other words, even though many insurers have some type of lead routing from their landing page to their offline sales and service channels, due to the lack of channel integration, this usually remains a one-way street, leaving customers with a broken digital journey. Those who have compared product offerings online and then called an agent to seek in-person advice, no longer have the possibility to get back to the digital buying journey that they started in the first place.
Source: McKinsey & Company: Moving to a user-first, omnichannel approach, January 7, 2021.
Strong Demand for Digital-native Insurance Products
As E&Y points out, the penetration rate of both life and non-life insurance segments already had a declining tendency years before COVID-19, especially in the USA. The number of policies sold has fallen, as products that were once attractive to consumers no longer meet their needs.
Traditionally, large insurance carriers operate with separate business lines, based on the type of risk that they cover. This operational logic does not reflect our current lifestyle, where we make decisions in a digital space and expect to have instant access to information. As consumers are getting used to seamless online journeys like ordering products on Amazon or signing up for Netflix based on their individual preferences, it is logical that they would expect the same, sophisticated experience when looking for insurance coverage online.
Despite the increasing demand for digital-native products, the percentage of insurers who offer more complex insurance products for purchase online remains low, according to another recent McKinsey research for the European market. McKinsey also finds that approximately 66 percent of insurtechs specialize in select parts of the value chain, such as data collection, while less than 10 percent aim to disrupt the full business model. If we add the fact that most of the industry still relies on face-to-face interactions, we can see that there is a huge opportunity for digital disruptors and those who are willing to embrace new technology.
The Relevance of No-Code for Insurers
To maximize customer lifetime value and increase conversion rates, it is key to reduce the complexity of the buying journey for customers and agents alike, and this is where no-code platforms come into play. If an agent or broker wants to scale his business, it is no longer sustainable that three different customer calls’ data would land in three different CRM systems. To connect the dots across those data silos, insurance companies need software that could sit on top of all their legacy systems.
“Because of hard-coded legacy systems that incumbents depend on for specific product lines, their adaptability is painful and expensive. A no-code platform like Innoveo Skye® has a pivotal role in making this digital transformation smooth and incredibly fast”, Manisha Bhargava argues. “When you adopt a broader, turn-key solution like Innoveo’s no-code platform, an insurance product becomes nothing but a data model. And the moment you abstract the process this way, you will be able to make systematic improvements and break silos across the whole value chain.”
Overall, no-code platforms present an untapped opportunity for the insurance industry. With Innoveo Skye®, insurers can have all their business lines, agents, brokers, and customers in one platform, creating an omnichannel experience. The platform also lets them configure private and public channels and define which functionality is available to each one of them, which provides the flexibility to combine and package various products for their customers.
If insurance companies truly want to get closer to their customers and cater to their needs, then it is crucial to increase the frequency of touch with their end customers and understand that they are looking for an effective, secure, and easy way to cover their risk. They want products that offer holistic coverage, and they expect insurance providers to be proactive in risk prevention, by using the data available in their possession.
In the words of Manisha, “True digitalization in insurance means to deliver on the 5Es (excite, educate, enable, execute and empower the buyer) through the buying journey without the need for any physical interaction.”
Written by Barbara Péterfi, Content Marketing Manager, and Manisha Bhargava, Head of Global Sales at Innoveo.
