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Raisa Ghazi: What’s the Long-term ROI of Diversity, Equity, and Inclusion (DEI)?

In this exclusive interview, Raisa Ghazi reveals the challenges and long-term benefits of diversity, equity & inclusion (DEI) initiatives; provides insight on the rising importance of ethics in technology, and why female leaders are essential in the 5th Industrial Revolution.

 
Raisa Ghazi is a public speaker and executive coach focusing on inclusive and ethical leadership in technology as well as women’s leadership. She is also a member of the Forbes Coaches Council and the Dutch Social and Economic Board for high-achieving women. She was recently awarded Best Ally Europe by the international non-profit organization WOMEN IN TECH – Global Movement for her work as a public speaker, entrepreneur, and activist.
 

What are the common challenges faced by organizations with DEI initiatives?

There’s a lot of resistance from the people who attend workshops on DEI. They are confronted with something that’s very hard to deal with — the fact that they are probably biased. What doesn’t help is that many of these workshops and talks, even the ones I give, are forced on employees by HR, and people don’t want to be there. Some speakers will also criticize the company a lot and leave them just like that, with no suggestions for improvement. That creates a negative attitude towards DEI.  

So, there are techniques to make them understand what it’s like to be discriminated against. It’s very important to work with a speaker who can also spark that empathy. For example, as a speaker, I need to also be honest about my own biases. The way some speakers talk can cause a lot of aversion from the dominant group in the workforce, which are men, sometimes even attacking them verbally.  

On the other hand, companies must not make DEI a single event. It needs to happen back-to-back and be visible in the behavior of leaders, company policy, and employees. Just like how big tech companies like Microsoft and Google promote the growth mindset to thrive and be successful. There are reminders of the growth mindset everywhere in their offices. If you want to imprint something positive on your employees, you must go beyond having one Diversity Week or having just one talk.   

 

What are the long-term benefits of consistent DEI efforts for organizations?

There’s been so much research on this. Companies that are more inclusive and diverse make more money. They are also more innovative and ethical.  The fact that I have to mention money to convince a company to do the right thing, to be decent human beings, is unfortunate. But I also understand how the world works and C-levels need concrete results to report back when it comes to DEI.  

In addition, DEI has to go beyond recruitment. It must have a bigger commitment. It’s a vision for how you want your products to be built, how you want your people to behave, and how you want them to market themselves. When it’s not done in a genuine way, it’s always visible one way or another. If it’s not an employee who messes up, it will be a product or event or marketing message that completely misses the boat. If companies don’t want to do DEI the right way, they will be forced eventually. I am sure about that. 

 

In your Forbes article, Why the World Needs More Women in Leadership, you wrote that companies with more women on the board make more ethical decisions. Can you elaborate on that?

Women are more risk-averse, and that makes them more ethical because they’re going to think twice before risking someone’s life for example, or the environment. But women are also more community driven. After a decision is made, they will think about all the stakeholders that could be affected, not just their partners but people in general who are affected by their work. When it comes to the 7 global tech revolutions such as IoT, cloud computing, and blockchain, women consider the dangers that are associated with these technologies.  

What’s important is that we take the right precautions to make sure people are safe, and that’s why women are needed. It’s very important that they are involved, but it’s also for their own benefit. If you look at virtual reality and augmented reality, which are used a lot in education, women can’t use them well because they have been made for men. Therefore, women need to be involved to make sure that these technologies are developed in an inclusive way.  

 

You specialize in helping companies and governments develop more ethical and inclusive technologies. Can you tell us more?

The ethics in technology field is so new. Stanford University, in the heart of Silicon Valley, only started teaching this in 2018. Therefore, companies that hire me usually want to discuss the basics of DEI. It’s nowhere near getting into the ethical side of technology, and I don’t think they will unless the government forces them to.   

The Dutch government has been a trailblazer in this area over the years that I’ve hosted conferences and training for them. They are discussing inclusion and diversity on a level most companies are not. They’ve been doing the work for years and it’s not a one-time thing. Most companies will just ask me to speak at their Diversity Day and it ends there.  

I’m very interested in measuring DEI outcomes in companies but in the Netherlands, there’s a lot of legislation that prevents effective assessment of inclusion and diversity. Another challenge with measuring DEI outcomes is that it’s an in-depth process that requires plenty of effort and money. Most companies don’t think it’s worth it.  

 

What do you hope attendees will take away from your presentation at ME Executive Day?

I hope to inspire the decision makers and show them a different side to diversity and inclusion. I want to spark a curiosity in what is about to happen in the next century and the changes to expect when it comes to diversity and inclusion in technology. These people are the best of the best and they want important information. I want to give it to them so that they are prepared to be visionaries in their organizations.  

 

*The answers have been edited for length and clarity. 

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The Global Inflation Crisis: What Will It Cost Your Business?

In the session, The Rise of Global Inflation Crisis: At What Cost to Your Business? Carsten Brzeski answers burning questions on the short-term and long-term effects of inflation on businesses, which industries will inflation hit the hardest, whether a recession is around the corner, and more.  

 
Carsten Brzeski is the Global Head of Macro Research and Chief Economist Eurozone at ING. Previously, he worked at ABN Amro, the Dutch Ministry of Finance, and the European Commission. He is also a member of the Advisory Council on International Affairs for the Dutch government and parliament.
 

What are the short-term and long-term effects of inflation on businesses and consumers?

Costs are increasing — energy, commodities, food, and input prices. If your cost position goes up, you will feel it as a business. If you’re in services, you will see the long-term effects in terms of wages. If you’re in manufacturing, you will feel it in input goods. Interestingly, in Europe, at least until this summer, businesses were able to pass most of their costs to other businesses or consumers. There was so much demand and people were buying everything they could.  

However, we have seen a turning point, prices have increased too much that buying something has become unaffordable. Businesses can’t buy input goods at this extremely high price because they can no longer sell them. We even have anecdotal evidence of production facilities closing because costs have increased. Inflation is clearly affecting businesses in different sectors.  

I think Europe is sliding into a recession because these costs can no longer be passed to consumers. High energy and commodity prices are here to stay, maybe not exactly at the same level as they’re currently, but they will be higher than before the war. The war in Ukraine is more of an economic game changer than two years of COVID have ever been.

What should not be underestimated is the possible shifts in the global economy — moving away from just-in-time delivery towards new supply chains and the end of globalization as we know it. A world that is dominated by more regional trade agreements. In this case, companies will have to restructure the production and processes of supply chains, and this comes with higher costs.   

During the stagflation crisis in the 1970s, there was the so-called price wave spiral: inflation goes up, wage growth goes up, and inflation increases again. Soon we will see higher wages as compensation for the loss of purchasing power in employees. Most of the western world, especially Europe, has an aging population. This results in a shrinking labor force and with inflationary pressure, we will see employees have more power to ask for higher wages.  

Unless you’re able to completely optimize or digitize labor, businesses must prepare for higher labor costs. My advice to employers is to invest in your workplace to make it an attractive place for people to stay and be open to innovation. The younger generation also values work-life balance so that has to be part of the job package.  

 

Besides oil and gas, which industries are most impacted by inflation?

Industries that are energy intensive such as chemical, automotive, and manufacturing. Energy has become expensive, which means businesses need to start or continue the transition to greener alternatives.    

All sectors will eventually be hit with inflation. The services sector will not be hit initially because it is less exposed to direct energy costs, but it will face the loss of purchasing power by consumers. While most sectors felt the heat from higher energy prices in the first half of the year, services were thriving because people were spending the money they saved during the lockdown. Let’s fast forward to the coming months when the heating season starts again. Energy bills will multiply fivefold, which will affect the services industry in the long run. 

 

How does the current economic situation compare to the stagflation crisis in the 1970s?

Other regions that are important for the global economy are not experiencing the same inflation crisis as the U.S. or Europe. The world has become much more fragmented with economic power being more spread out across the globe compared to the 1970s.  

It’s similar to the 1970s in the western world, namely higher energy prices and inflation rates. We are starting to see the difference between the U.S. and the Eurozone. In the U.S., we see the effects of higher wages which has not happened in Europe yet. Wage growth was strong in the 1970s. The happy ending would be from negative real wage growth, purchasing power declines, leading to weaker demand and lower inflation rates.  

In the 1970s, central banks were required to offer double-digit interest rate levels to kill inflation. Central banks today react faster, even the ECB. I have doubts about whether central banks can bring down inflation by changing business and consumer expectations. If they can, the recent interest rate hikes would already be sufficient to lower inflation.  

 

What actions should a business take to minimize risk during times of high inflation?

I don’t think businesses can fight inflation. Governments can lower inflation rates by introducing price caps and energy rebates. Secondly, central banks can help by hiking interest rates. Businesses cannot actively bring down inflation. They need to adapt.  

This means purchasing managers and procurement must be more efficient to save costs. When it comes to labor costs, it’s a very tough balancing act. On one side, businesses can consider a one-off wage increase to offset higher inflation. Additionally, businesses that are exposed to high energy costs can find alternatives. This can hardly be done without upfront investments which means more initial costs.  

 

Policies to reduce inflation like tighter fiscal policies and wage control have fared poorly in the past. What are your thoughts on this?

We have a supply side revenue inflation with higher energy and commodity prices. Tackling this is impossible to do in a year, but what needs to be done is finding new energy sources that are not from Russia and providing commodities that are not exposed to supply chain problems in Asia. Of course, that means tighter fiscal policies. That’s what we hear from central banks now.  

They will bring economies down on their knees by hiking interest rates, which will then lower demand and eventually inflation. It can be a painful process. We’re listening to the Fed and the ECB and on what they’re currently willing to do. Another angle with tighter fiscal policies is to support the demand side by giving subsidies which could support the economy in the short run but increase the risk of a longer period of inflation. 

 

Is the world heading into another recession? How will Europe compare to the rest of the world?

The IMF defines a global recession as global GDP growth of below 2.5%. But considering what’s going on in other countries, I do not expect a global recession. The U.S. is still going strong and there’s a good chance we might see a soft landing there. China is slowing down, but we need to see how it will deal with its Zero-COVID strategy going into winter. My assumption is China will not slip into recession. The most exposed region is Europe and I predict a winter recession. The severity of this recession will depend on how much additional fiscal stimulus we will get in the coming weeks. 

 

Will the U.S. dollar become stronger than the euro?

We will see more rate hikes by the Fed than the ECB, which will result in the further weakening of the euro. I also think the recession in Europe will be more severe than any slowdown in the U.S., which will favor the dollar. We would need to see a resolve in the Ukraine war for the euro to improve, but I do not see this realistically happening. That means the dollar will strengthen further at least up until the summer of 2023.

 

When will we see inflation rates reduce in Europe?

Government measures over the last month have blurred the inflation picture. Every time a government measure to bring down prices expires; prices will go up again and have an imminent impact on inflation. The so-called passing on of market gas prices to consumers and companies takes a while. Consumers have been hit by high prices of food, gasoline, and energy. This means inflation in Europe will still accelerate. Several countries in the Eurozone already have inflation rates above 10%.  

I think the rates will remain until Q1 2023 and then we should start seeing inflation gradually coming down. Obviously, a lot depends on the war in Ukraine and how gas prices will develop. I see the average inflation rate for 2022 coming in at around 8% and 5% in 2023.  

However, prices will remain high even if inflation goes down. I do not think there will be enough wage growth over the next two years. The loss of purchasing power will mean that Europe will lose economic wealth and international competitiveness due to higher cost pressures on the business side and high inflation on the consumer side. 

 

Are there any hidden opportunities for businesses during this economic crisis?

We have so many crises, particularly here in Europe. We are amid a perfect storm. The wild card is how will governments react. What we learned from the pandemic is that governments can cushion any economic slowdown via fiscal stimulus. Currently, Europe has an average fiscal stimulus measure of around 2% to 3% of GDP, aimed at bringing relief against high energy prices. During the pandemic, we had fiscal stimulus from European governments between 10% and 15% of GDP.  

I think the silver lining is when you get to investigate the reasons for inflation. The main reason is energy prices. Prior to the war, there was the European Green Deal initiative. This transition offers enormous business and investment opportunities for organizations. There will also be opportunities for some regions in Europe if organizations decide to reshore production processes and supply chains closer to home. In addition, financial services and fintech providers could thrive in the upcoming years as consumers want to be more efficient with their money.  

 

*The transcript has been edited for length and clarity.  

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Stephanie Stanislawski: HR is Changing the Rules of Engagement

Stephanie Stanislawski, Senior Platform Product Manager at Personio and TEDx speaker, provides insights on the future of Human Resources (HR) and employee engagement, strategies for how HR teams can become key business advisors, and how to shift from reactive to proactive recruitment. 

 

The Future of HR is Content and Branding

 

I want to share with you a few things that I know are coming your way in terms of the future of HR. The first thing is that the old recruitment ways are dead. We cannot assume that job boards work the same way as they used to. We cannot assume that great talents are actively looking for jobs. The best talents are usually not looking, and they may not even want to be approached for a job.  

The new generation also does not want to stay in a company for 15 years. What used to work before in terms of benefits like having an amazing office with full pantries and a ping pong table are no longer alluring because people prefer to work from home.  

The other thing we’re seeing is that content is becoming more important than ever. One of the main things that new generations consume is content as we move towards a content-based society. So, companies need to change their focus quite a bit and become more proactive with recruitment efforts.  

Obviously, employer branding is directly linked to this. The content you create has to be connected to your overall employer branding.  

I think the role of recruiters and HR professionals will start to evolve to meet these new demands from being passive or reactive to proactive and strategic.  

 
Keep up with the latest trends and technologies with our 90Minutes HR Insights webinars featuring industry experts and thought leaders.
 

Nurturing A Global Network of Talent

 

Companies also must move towards long-term nurturing of global networks of talent – which they can build via content creation. This includes building videos around company culture, blogging, and creating courses. They need to find ways to engage the global community and build a network of talent.  

There are already some systems in place, and new ones coming up, that allow HR professionals to assess these global networks to find the right talent. These companies, like Pymetrics, are already helping you sort out talent by skills, knowledge, and preferences. There is more focus on skills rather than academic performance.  

That then gives you a pool of passive and engaged talent that are ready to go when you need them. So as soon as you have a vacancy, you can tap into your talent pool and find the right person to fill the seat. This entire process of skills assessment is becoming automated, which helps tremendously in predicting future organizational needs and ensuring that companies are ready for it.  

There are also tools that track internal team structures and communications to measure engagement. With that, you will be able to quantitatively support recruitment efforts by identifying risks, learning opportunities, and skills that will perform best in specific roles.  A data-driven approach can help match the right skills to the right roles. 

 

HR as a Disrupter 

 

HR will stop being a liability or drain on resources. Instead, HR can start to build new sources of income. For example, by charging for courses or becoming part of a global network of talent. 

Beyond that, HR becomes a disrupter and changes the rules of engagement. This can look like allowing people to choose the kind of benefits they want, or even renting out talent to NGOs or other companies.  

With the rapidly changing landscape, HR professionals must upskill their own profiles. One thing they can do immediately is to learn as much as possible – about employer branding, content creation, and the evolving technology ecosystem. Keeping an eye on these changes and starting to build that talent network is crucial. Even if you’re not offering them a job, just initiating a connection first could pay off in the long run.  

 

Talent Mobilization Will Be Crucial

 

We know that Europe, Canada, Australia, and some other regions will very soon see a significant need for fresh talent coming from other geographies where there is plenty of young talent but a lack of opportunities.  

With this, I do see a need for mobilization. Global mobility will remain an important discussion, and hopefully governments will figure out an efficient process around taxes, migrations, and visas.  

Additionally, remote work will continue to be the norm. If companies want to engage talent from wherever they are in the world, they can. Because it may be difficult for people to move countries for various reasons. This will be a growing trend and we will see plenty of development in this area.  

 

Modernize Recruitment Strategies to Attract Younger Talent 

 

Gen Z will be approached through content. It’s extremely important for them. Even marketing is changing. They no longer care if celebrities like Britney Spears have the latest Adidas shoes. They just want to see influencers, people like them to whom they can relate.  

So, I think companies need to focus on engaging that talent in a more human way through content like videos and talking about the benefits of working in a company via reviews. Essentially, things that are working in e-commerce will probably also work for talent and engagement. HR teams must step it up in terms of employer branding, content creation, and even looking to influencer programs to engage the younger generation.  

 

*The transcript has been edited for length and clarity. 

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Christoph Matschke: Rewe International’s Roadmap to IT-Business Synergy

Christoph Matschke, Board Member of Rewe International AG, provides insight into the importance of looking at IT through a business lens, strategies for successful IT-business collaboration, and ways to tackle the IT labor shortage. He also speaks about the organization’s new and exciting IT modernization project, sPORT.  

 

In the recent 90minutes IT Insights session, you spoke about “How Much IT Is Too Much IT?”. Do you see many companies struggling to find a balance between not having enough automation and too much IT?

At first sight, the answer is no. Investments are increasing. Both business and IT departments seem to be aligned here. There are probably cases where too little automation is an issue. For example, we are adopting our IT to the needs and specifics of our organization, not the other way around. As for too much IT, I haven’t seen this yet. What I do see sometimes is a lack of resources. 

 

What do you think is needed to build an IT strategy that is fully aligned with the business goals?

First of all, you need a strong business strategy, which is developed together with all relevant parties right from the start. Of course, both business and IT must understand each other’s needs. IT must not be a mere service provider but a proactive partner of the business by being able to talk to them on the same level. On the other hand, some managers must not use IT like drunks using streetlamps – not looking for light but for something to hold on to. They must work together to find the best solutions and not just quick fixes for day-to-day problems. 

 

Tell us more about the recently launched sPORT project. How will it change the IT landscape at REWE Group?

sPORT stands for “strategic development of processes, organization, and technology”. It is a project that will significantly change our IT and business processes. In the past, our IT always focused on providing the best services on a small budget. This created some development and innovation backlog. The processes are not ideally supported and thus the business is limited in its operations. sPORT will be responsible for steering the modernization over the next few years and ensuring its success.  

Of course, technological modernization is key. But this transformation of our IT gives us the opportunity to also fully rethink our process landscape, which will have a significant impact on the organization. As a consequence, our project team will gather processes, and assess and reshape them into state-of-the-art end-to-end processes with which business and IT will be able to harmonize and standardize the historically diverse landscape of our IT systems. Naturally, we will also roll out variants across our countries and business lines.  

 

How did the IT team collaborate with the business side on this project to make sure both sides are aligned and working on the same goal? Are there any steps you could name that are crucial for effective collaboration?

It is simple – You have to prepare all relevant parties, get both IT and business ready and make sure there is collaboration. It is crucial that there is an understanding of each other’s roles so you can talk on the same level. Also, you must win the hearts of all participants for this project – not only top management. Finally, you must make sure that both sides are equally represented. For this reason, the sPORT program has two heads, a “power couple” you could say – one person for IT@sPORT and one person for Business@sPORT. 

 

What do you hope sPORT will achieve for REWE Group three years and five years from now?

The IT department in Austria is responsible for 12 organizations in nine countries all over Europe. Those organizations operate supermarkets with BILLA, IKI in Lithuania, discount stores with PENNY International, and also BIPA as a drugstore – so there are a lot of stakeholders. It is our aim in this project to create unique and optimal processes for the entire organization. It is not about merely changing applications, but changing the organization as well as developing and using standards for the whole group. To sum it up, in three to five years we will have achieved this: 

  • IT is an acknowledged technology competence center 
  • Business and IT work together on the same level, jointly improve the processes and develop the most effective tools  
  • We focus on standardized systems for all our organizations – as much as possible and of course only when it makes sense 
  • We will have gained speed and efficiency in our business approach and will have a system of constant process optimization. 

We do not merely hope to achieve these goals, but we know that we will get there. 

 

What are the biggest challenges you’ve encountered with sPORT and how do you plan to solve them?

Of course, it is a huge challenge to change central IT applications as well as the process design of an organization. You need commitment, transparency, participation, and centralized decisions at the same time. To illustrate the importance of transparency, our way of standardizing means that people can voice their special wishes, but most often they will not be fulfilled according to the original intention. At the same time, it is crucial that our first solutions address the needs of the organization. Consequently, we will have to communicate in a very transparent way by involving and informing the people. 

 

How has REWE Group built resilience against ongoing retail and supply chain disruptions over the last three years? What was the role of the tech team in building up these capabilities?

We operate in a very competitive environment where you have to be resilient at all times. In this way, we deal with these disruptions well. We have an amazing tech team who are there for their line tasks in developing and running the IT systems. They have also shown incredible dedication and work ethic during these times of stress and disruptions. 

 

Many industries have been hit with an IT labor shortage. How does REWE Group attract and retain the right IT talent?

We have taken all measures here that you can think of. For example, we have installed a task force which is completely focused on getting the best people for our IT department. Of course, with supply being low and demand being high in the job market, you have to offer more attractive salaries among other benefits like flexible working hours. We have also clarified the roles and development paths within IT to offer perspective. Lastly, we emphasize the following whenever possible – our colleagues have the chance to be part of creating the new IT system for REWE Handel International which will be the basis for thousands of people in the coming decades. This is one of the biggest projects in Austria and an amazing challenge for motivated people who want to show their excellence and be part of an exciting new development. 

 

*The answers have been edited for length and clarity.

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CFO Planning for 2023: What Finance Leaders Must Prioritize

The past three years have seen CFOs increasing efforts in digitalizing financial tools and processes. They also had to ensure operations ran smoothly amid unprecedented economic disruptions, shifts in the workforce environment, and fluctuating consumer and investor expectations. As 2022 comes to a close, what should CFOs prioritize for the coming year?

 

Recession

The worsening energy crisis in Europe may lead to a severe recession in 2023, according to JPMorgan. It will be the biggest economic risk CFOs have to tackle – potentially facing a slowdown in manufacturing, reduction in consumer spending, and loss of jobs.  

How CFOs manage their cash flows and reserves will impact how well the company survives during an economic downturn. Campbell Harvey, a professor of finance at Duke’s Fuqua School of Business, says, “Often when a company goes into a slowdown or a recession, they effectively have to spend the cash that they’ve got. A company that has been really wise in terms of its debt management and cash management, they can seize that opportunity. A very bad strategy is to make cuts that are relatively easy to do but damage your long-term position.” 

There are finance leaders who are on the same page as Harvey, like Bill Betz, CFO of NXP Semiconductors NV. When asked how he is preparing for a recession, he says, “It’s all around protecting our free cash flow. Our actions would potentially include reducing variable compensation, discretionary spending, and noncritical capex.” 

CFOs are also ramping up scenario planning initiatives. According to CFO of Shell PLC, Sinead Gorman, the company is stress testing each investment in high scenario, low scenario, and base scenario environments, “and that allows us to be prepared.],” she says. This is in line with our findings in the CFO Investments 2022 report, where 69% of surveyed CFOs are cultivating organizational resilience by investing in rolling forecast tools and scenario planning.  

 

Business Intelligence

High-quality data is essential for forecasting and scenario planning – this is where business intelligence (BI) comes in. Findings in the CFO Investments 2022 report support this, with 53% of CFOs citing the need for advanced BI tools for better data-based forecasting, and 68% of finance leaders investing between €100,000 to €500,000 of their annual budget in BI. Here’s how BI is utilized in:  

  • Planning and analysis: BI dashboards collate historical and real-time data to provide insights on business trends, cash flow, scenario modeling, and variance analyses, to help finance teams compare current performance with what was forecasted. SKF, a Sweden-based global manufacturer, implemented BI as a solution to solve product demand forecasting challenges. They no longer had to rely on outdated Excel spreadsheets as BI allowed them to centralize data assets and improve forecasting efforts between departments.

In addition, BI is a game changer when it comes to:  

  • Customer retention: BI gives a comprehensive view of a company’s customer data and financial performance. This is especially important in the financial services industry when it comes to customer retention. For instance, American Express utilized BI to produce new products and offers to customers, as well as protect them from credit card fraud.  
  • Financial efficiency: Finance leaders can tap into important business insights using BI platforms to make strategic decisions on the company’s short-term and long-term financial needs. For example, international cement company Cementos Argos invested in an entire business analytics center and hired business analysts to harness BI to streamline decision-making and finance processes. With BI, the company applied BI to gain insights into customer behavior which yielded higher profits.   
 

Environmental, social, and governance (ESG)

Sustainability continues to be a focus area for finance leaders, as investors, shareholders, and consumers take a company’s ESG initiatives into consideration when making purchasing decisions. ESG compliance is a new responsibility for the CFO and has transformed their role from pure finance leader to a more strategic business partner in their organizations.  

Interestingly, there seems to be a disconnect between how organizations perceive their CFO’s duties towards ESG, and how CFOs view themselves in that area. According to this study by Anaplan and Deloitte, 78% of CFOs expressed weakness in addressing ESG initiatives, even though 91% of organizations named it one of their CFO’s top three successes. 

Although 53% of CFOs are keen to make long-term investments in ESG, they face difficulty making finance operations greener due to inconsistent ESG reporting frameworks. A solution has been tabled by the EU in the form of the Corporate Sustainability Reporting Directive (CSRD), which is expected to roll out in October 2022. The directive is part of the larger Sustainable Finance package which aims to channel private investments to transition to a climate-neutral economy. European CFOs will be pressured to produce more regular ESG reports as the directive applies to more companies operating in EU-regulated markets.  

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Quantum Computing in Business: Risk or Reward?

As a rapidly growing market, McKinsey & Partners estimates that quantum computing will have a global market value of USD 1 trillion by 2035. In fact, more business leaders are considering the use of quantum computing, with 81% of senior executives expecting it to impact their industry, according to EY’s Quantum Readiness Survey. Almost half also believe that quantum technology will start to transform industries as early as 2025.  

This trajectory is supported by Gartner’s prediction that 20% of organizations will budget for quantum computing projects by 2023, compared to less than 1% today. This means that quantum consulting as a service will also see a rise as organizations try to leverage quantum computing to extract a business advantage. 

The question still remains as to what kind of benefits quantum computing can bring and how it will impact businesses going forward. To iron out these mysteries, we spoke to Dr. Angie Qarry, a quantum physicist and entrepreneur,

 
Dr. Angie Qarry holds a Ph.D in Physics and has worked in applied research in the field for over a decade. She is a scientific, technological, strategic, and innovation advisor and entrepreneur in quantum & deep tech innovations.
 

Quantum technology is for optimization

 

Speaking on how quantum computing can be applied in the business world, Dr Qarry explained that it will be about using the technology to optimize or improve upon existing processes by applying quantum algorithmic thinking to solve problems. 

“It’s just thinking differently about computability. Taking this problem that you have and thinking differently in order to take advantage of this computability,” she said.  

While there is hope that quantum computing can solve many of the current optimization problems, Dr. Qarry cautioned that we must be careful with this thinking: “We can have an advantage only in the class of problems that quantum computing can solve. The technology cannot solve all the problems on earth, because these problems fall in a class of problems that do not have an efficient solution.” 

Once that is understood, business leaders may consider how this technology can solve certain optimization problems within their organizations to give them a business advantage.  

“The moment you start to accept and learn about emergent technology, or adopting it in your business use case, you will have the advantage when the technology is ready,” said Dr Qarry. 

Citing an example, Dr Qarry shared BMWs usage of quantum technology to discover optimal sensor positioning for their automated vehicles. This is an optimization problem that quantum computing can solve – finding the best position for each sensor while limiting interference. 

 

Building a quantum-ready workforce 

 

As with any emergent technology, there is a lack of talent in the current pool. On the question of what organizations can do to build a quantum-ready workforce, Dr Qarry suggested two pathways.  

First is to think about how to build internal quantum teams. Specifically, a quantum computer lead who understands the technology on a hardware level as well as quantum computer engineers and software engineers who will be able to run the circuit and applications.  

The other option is to simply outsource the talent.  

“What you need are thinkers who can map your business to the application, and then run it. This is a skill in itself,” noted Dr Qarry. She added that to start off, it may be easier for businesses to outsource this while building their own quantum team.  

However, she advised looking at this in a broader view. It’s not just about building a workforce to run new equations – it’s about building a new workforce for a new computability area.   

 

Security risks of quantum technology 

 

One of the main concerns with the advancement of quantum technology is the security risk it poses. The United States Department of Commerce’s National Institute of Standards and Technology (NIST) announced in mid-2022 that it has chosen the first group of encryption tools designed to withstand attacks from quantum computers in the future.  

Apart from network security, quantum technology also poses a threat to certain aspects of blockchain technology, and therefore cryptocurrency. Specifically, Dr. Qarry singled out the risk to signature schemes in blockchain technology that are needed for authentication before a transaction. Though some cryptocurrencies are trying to stay ahead of the curve by adopting signature algorithms that are quantum-resistant for now, it is a race.  

On the other hand, Dr. Qarry also noted that quantum computing can help cryptocurrency by providing quantum verification. As with any emergent technology, it works both ways.  

 

Can quantum computers change the world? 

 

Though quantum computers have the potential to solve many problems, scaling remains a challenge due to issues like fault tolerance and error correction. This is one of the reasons skeptics don’t think the technology will ever scale.  

However, Dr. Qarry is more optimistic. She said, “In 25 years, we have increased the lifetime of a qubit from nanoseconds to 10s of milliseconds. In 25 years, we already have 127 qubits with IBM and 2,003 with D-Wave. So there is huge progress even if the technological or engineering aspects are extremely challenging.” 

As an emergent technology, quantum computing has the potential for major social impact. In fact, it may not even need to succeed in achieving a specific technological level in order to see the social impact.  

Dr Qarry added: “It’s in the development phase and there will be huge social impact if it scales. We’ll never know if we stop now.” 

Addressing business leaders, Dr Qarry said that waiting to invest only when the technology is ready may be too late.  

“Those that entered earlier have already prepared all the algorithms and applications to be ready with just one click, giving them the business advantage. So it depends on your level of risk-taking and how you accept emerging technologies.” 

 

*The insights have been edited for length and clarity.