GLOBAL INDUSTRY STORIES IN FOCUS I ND U S T R I O US .

Industrious Magazine Vol. 2 2018 INDUSTRIOUS

Vol. 2 | Spring 2018 03 Letters from the editors

CMO and publisher: 04 AI, from science to business, I ND Sharon T. Driscoll by Garry Kasparov Head of content 06 Automotive and publisher: U S T George Hammer 10 Chemicals & Petroleum Guest editor: 12 Energy, Environment, Ann G. Rubin & Utilities

R I O Editor-in-chief: 16 Government Michael Todd Cohen 24 Insurance US Editorial staff: . Alex Hopson 28 Manufacturing: Justine Jablonska How IoT and AI are driving Rich McKay the manufacturing industry Jordan Teicher forward, by Ari Zoldan

Social lead: 30 Media & Entertainment Caitlin Weiss 38 Retail & Consumer Products Contributing editor: Marc Garbarini 44 Telecommunications

50 Travel & Transportation

For more industry stories: ibm.com/blogs/industries

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Sharon T. Driscoll, CMO Industry Letters Marketing & VP Sales Enablement, IBM The day-to-day of industry is a blur. Nimble competitors, shifting from the business models, and fast-paced emerging technologies blend into what can feel like an abstract landscape. editors So, what’s the solution? Focus.

In the second volume of INDUSTRIOUS, the editorial team and I have found and featured what we believe are the crucial trends coming into focus in retail, government, telco, insurance, manufacturing, and more.

I hope stories like How IoT and AI are driving the manufacturing industry forward, Coming soon to a theatre near you: Blockchain, and What today’s airlines can learn from the ‘golden age’ of flying, serve as inspiration for your unique business vision.

Ann G. Rubin, Vice President Corporate Marketing, IBM Clients are at the center of the boldest business models, but what do you do when the client’s focus is fragmented?

Tell a story no one can ignore.

The stories in INDUSTRIOUS volume 2 reach beyond the nuts and bolts of industry and into human problems addressed through tech—like solving the opioid crisis, addressing an aging workforce, and making transportation more intuitive and accessible for those with disabilities.

When attention is short, here is to focusing on the things that matter.

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AI, from Science to Business

Garry Kasparov, April 19, 2018

To become truly revolutionary, every industries will exploit these As AI technology and business technology has to make the jump remarkable new tools. processes advance and evolve, the from the laboratory to the boardroom. Since the abacus, we have built competitive advantage will be in how We fly on Boeing airplanes, not Wright machines to help us answer questions. well a company finds and formats the Brothers airplanes, because William The simplest calculator can tell you right questions. The goal is to extract Boeing saw the commercial potential of instantly what 484,382 x 89,348 is, useful answers from the increasingly being on the cutting edge of aeronautics but it has no idea why that question is intelligent algorithms that swim through and developed a strategy to realize important. AI is expanding the breadth a sea of data—a sea that threatens to that potential. Long before airplanes and depth of what questions we can become an overwhelming flood. A could carry cargo or passengers, Boeing ask of our machines—although it’s team of human experts cannot cope was busy planning for that day. The crucial to remember that they still with so much information, let alone automobile and the desktop computer don’t know which questions matter tease out connections and correlations were literally garage innovations, but and why. on which we can base our decisions. AI they required standardization and What are the common denominators can—if we know what we’re looking for. business models to change the world. for success across your product With enough good data and proper Consider the enormity of the questions lines, business units, employees? guidance, intelligent machines will CEOs and managers of the past century Which links in a supply chain can progress from demonstrating correlation had to face. How will the automobile be improved? What does the public to explaining causation, with a cascading change my industry? The mainframe, really think of our company and why? effect in our understanding of education the personal computer, the internet, Executives can no longer hide behind methods, health risks, and yes, even the smartphone? Artificial intelligence— “nobody can be sure why” when one big business. Some changes will be or as I prefer to call AI, “augmented initiative fails and another succeeds. slow, while sudden leaps will surprise intelligence”—is no different, and its The failure will be in not finding out. even the experts. What we can be sure time has come. of is that when it comes to business, Machines that learn have existed As AI technology and it’s better to be a Boeing than a since 1956, when an IBM 704 improved Wright—and that means having a plan. its play at checkers. (For better or worse business processes it would be quite a while before Big Blue advance and evolve, Former World Chess Champion Garry turned its sights on my game of chess Kasparov is a frequent speaker on with Deep Blue.) But it was another the competitive decision-making, strategy, and the half-century before there existed advantage will be in human-machine relationship. He is enough data and computers fast enough the author of Deep Thinking: Where to process it to turn machine learning how well a company Machine Intelligence Ends and into a transformative technology. Now, finds and formats Human Creativity Begins. as happened with cars and computers, and is still happening with the internet the right questions. and smartphones, the challenge is how quickly and how well different

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AI is expanding the breadth and depth of what questions we can ask of our machines— although it’s crucial to remember that they still don’t know which questions matter and why.

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Automotive

“The world of mobility is quickly evolving as visionary concepts like self-driving vehicles, electric cars, and new mobility services become reality. The data from connected vehicles represents a rapidly emerging market for auto makers with the potential for new revenue streams and business models, but they will need to make that data secure and private. As the connected car connects more to our daily lives, issues of security, data, and connectivity will become increasingly important. And to compete in the connected world of the future, auto- motive companies need to develop strategies today.”

Dirk Wollschlager, Global General Manager, Automotive, Aerospace, and Defense Industries, IBM

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The next stop: accessible mobility for all

Rich McKay, May 11, 2018

An estimated 15 percent of the And the disability community How would Olli recognize people world’s population has some form is underserved when it comes to with disabilities? of disability. Can AI, IoT, and other transportation. Their needs are O’Connell: Through two ways: autonomous vehicles technology help usually an afterthought when information sharing and address their mobility needs? companies design products or technologies like IoT and AI. Yes, through Olli, an AI-enabled, vehicles. Machine vision could detect electric shuttle bus created by Local visual cues that someone needs Motors. The #AccessibleOlli initiative, How does #AccessibleOlli help assistance—like people with jointly led by Local Motors, IBM, people with disabilities? wheelchairs, walkers, canes, or and the CTA Foundation, is piloting Gyimesi: We applied technology guide dogs waiting at bus stops. technologies that could help riders— to Olli in a subtle way that both Whatever information they share including the aging population—with assists and elevates people with about their needs will make Olli a range of disabilities. disabilities—enhancing their mobility smarter about helping them. Olli We talked with Gina O’Connell, and confidence. can recognize frequent riders: Director of Labs at Local Motors, and We designed the accessibility “Erich is getting on the bus. We know Kal Gyimesi, Automotive Marketing journey around four personas, each what he needs so he doesn’t have Leader at IBM Watson IoT, to learn with distinct needs: to ask for help each time.” more about #AccessibleOlli. Olli would continue to learn more 1. Erich has degenerative vision loss about people and personalize their What mobility challenges do and is nearly blind. Olli could use experience each time they ride, people with disabilities face? machine vision to identify open through AI. O’Connell: The unemployment rate for spots and guide him there via people with disabilities in 2016 was audio cues and a mobile app—or twice that of those with no disability. even haptic sensors that project It’s not because they can’t work; sensations through the air. it’s often because they don’t have a 2. Brent has hearing loss. Buses means to get to work. could employ machine vision and A lot of people with disabilities augmented reality to read and live below the poverty level. A lack speak sign language via onboard of transportation plays a big role in screens or his smartphone. preventing them from reaching their 3. Katherine is confined to a full potential: working, having a full wheelchair. Olli will have a smart quality of life, being active in their retractable wheelchair ramp and community. securement system to be able to Gyimesi: People are conscious of help her. their disabilities. Fear of hostility, for 4. Grace has a cognitive disorder and example, has stopped one in three is suffering from early dementia. people from leaving their homes to Technologies will give her gentle go out in their local areas. reminders to help keep her on track.

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Can accessible technologies Were there any surprising What are your future plans? benefit everyone? responses to Olli? Gyimesi: IBM has a long history O’Connell: The entire global popula- O’Connell: The aging community was of inventing technology that is more tion can use accessible technologies not fearful of autonomous driving. human, empathetic, and adaptive to in some way, just like wheelchair cut They simply wanted independence everyone’s age and ability. We hired outs in sidewalks. They were originally and mobility. We thought we’d our first person with disabilities in designed for people with disabilities, get pushback, but instead we got 1914 and have a dedicated IBM but now we all use them. applause and questions about when Accessibility Research group. We want everyone to benefit from it would be available. We’ll continue to advance the role Olli’s technologies. We’re not creating There were questions about not technology plays in helping the a paratransit vehicle and then a vehicle having a bus driver to help during aging population and people with for everyone else. It’s all one vehicle. a medical episode or if a person is disabilities. Technologies that help people with committing a crime. Through machine O’Connell: We will continue to disabilities will make their way to Olli, vision and audible cues, Olli would explore technology that makes Olli as so everyone can use them. potentially be able to anticipate trouble accessible as possible for everyone. Gyimesi: For the aging population before a bus driver and quickly call for A lack of accessibility is a problem who are unable to drive, the trans- help. Olli could even drive to a hospital that we want to help solve. Work with portation options can be limited or or police station or meet in the middle. us, tell us when we’re going in the inconvenient. By improving mobility right and wrong direction. We’ll listen for everyone, self-driving vehicles to you. It’s all too rare that people with could help older adults reconnect disabilities are heard and that design is to others and strengthen cherished truly inclusive. We want to change that. social relationships. Autonomous transportation can make a real difference. A self- driving car removes the driver from the equation and should work for everyone, including the almost 50 percent of adults over the age of 65 who have vision, hearing, mobility, or cognitive impairments.

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Chemicals & Petroleum

“With cost pressures remaining and customer expectations continuing to rise, the need for improvements across the entire value chain is seismic. Businesses are looking at new strategies to grow and differentiate. Digital transformation is opening more doors to new markets, enabling new business models, and driving new levels of performance. The challenge for chemical and petroleum companies is where best to apply digital solutions, and how fast and how far to go.”

Luq Niazi, Global Managing Director, Chemical & Petroleum Industries, IBM

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As the energy landscape shifts, oil companies bet big on retail

Jordan Teicher, May 11, 2018

Oil companies don’t just sell oil. At sites in nearly 80 countries. In the see the technology’s impact largely at gas station convenience stores around years ahead, company leaders want checkout. But store managers will see the world, they also sell snacks, to grow that daily customer base to changes across multiple levels beverages, and hundreds of other 40 million. To make that happen, of the business. products that consumers use every they’re developing a breakthrough With the data from universal RFID day. Strategically located and open technology—Instant Checkout—with tags, managers can keep better tabs on 24/7, the stores are a destination all IBM in the UK to create a unique store their entire inventory. They can be their own for many consumers. experience they hope will eventually alerted when a product is about to attract millions of customers. expire and when shelves need to be By making customers The key to the Instant Checkout replenished. They can also figure out system is a radio frequency where best to place items in a store happier and inventory identification (RFID) chip, which is depending on the time of day or the management smarter, the placed on every product for sale in a weather. And they can help prevent theft. Shell store. Unlike bar codes, which “What we’re looking at is the potential companies plan to drive must be scanned individually, RFID of this technology not only as an more visits and more chips can be read all at once and instant checkout but as a component deployed effectively on any product of the connected store,” said Matt D. purchases at stores. regardless of its material. Boltwood, Associate Partner in the At Shell’s checkout, customers Industrial Sector with IBM Global As oil demand nears its peak and merely have to place their shopping Business Services. alternative energy sources rise, oil bag on a kiosk’s scanning platform, Currently, Claessens said, an companies are looking to expand open an app, and tap their phones on average purchase of non-fuel items and improve the retail side of their a reader to deduct the payment from at a fuel station is around $10 or $11. businesses. By making customers their mobile wallet. The process is 15 But when stores are stocked with happier and inventory management times faster than a standard self- the right products at the right time smarter, the companies plan to drive service checkout. and customers don’t have to wait in more visits and more purchases “Unlike other futurist concept long lines to check out, sales are sure at stores. stores where the goal is to eliminate to increase. That’s not just true for “The portfolio of products sold at the need for shop staff completely, convenience stores at gas stations— fuel stations needs to rebalance from the invention means that retail staff it’s true for stores everywhere. fuel to non-fuel items,” said Dirk can spend their time engaging with “What consumers want these Claessens, IBM’s Managing customers and enhancing the in-store days is a quick, efficient, frictionless Director for Royal Dutch Shell. experience, rather than facilitating experience. What’s incumbent on For Shell, the largest fuel retailer transactions and fixing self-checkout retailers is to figure out how to provide in the world, technology is a crucial bedlam,” IBM inventor iX digital leader that,” said National Retail Federation part of that rebalance. Today, the Lindsay Herbert wrote. VP of Research Development and company serves more than 30 As the system rolls out to more Industry Analysis Mark Mathews. million customers across 43,000 Shell stores in the UK, shoppers will

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Energy, Environment, & Utilities

“Today’s world is more electric, sustainable, and diversified than ever. EE&U companies must embrace their role in the energy integrator ecosystem to innovate business processes, with the added urgency of massive demographic shifts. The next few years will be an exciting time for our industry as we advance smart energy grids, water management, natural disaster responses, and health.”

Brad Gammons, Global Managing Director, Energy, Environment, and Utilities Industries, IBM

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The aging workforce will retire soon. Is the utilities industry ready?

Rich McKay, April 3, 2018

Fifty percent of the entire U.S. What challenges does an aging How can digital technology workforce will be ready to retire in workforce present for the industry? help preserve and transfer the the next five to ten years, according Utility employees are broadly split into knowledge in retiring workers’ to the U.S. Department of Labor. two categories: office-oriented (front brains? That includes 25 percent of the or back office operations) and field “In their brains” is a good way to utility workforce in the next five operations. describe it because that accumulated years, says the U.S. Department Workforce turnover is an especially knowledge might not be documented, of Energy. tricky issue for field operations. It can or might exist in the form of hundreds To learn more about the impacts, take up seven years to train a lineman of engineer notes, drawings, and daily we spoke with Eva Schulte, IBM worker. Why so long? Some training work logs. It’s too much information for Energy, Environment, and Utilities happens upfront through formal one person to process at a rapid pace. (EE&U) Industry Strategy Lead. training programs, employee manuals, However, unstructured data can be and on-the-job aids. But people gain analyzed by AI, which uses tools like According to a study a lot of experience and knowledge machine learning, natural language through exposure to different processing, and visual recognition to by CompTIA, three- scenarios over time: responding to uncover trends, digitize knowledge, and quarters of millennials infrequent major storms, for example. scale expertise across an organization. That specialized, hands-on expertise Woodside Energy, an energy company say technology usage by is valuable and at risk of being lost in Australia, used Watson, IBM’s AI a company affects their as the workforce ages–through a platform, to digitize and scale 30 years combination of the large amount of of engineering expertise and more than employment decisions. retiring Baby Boomers and the length 38,000 documents, like field notes, of training time for new field workers. drawings, and maintenance logs. It’s exciting to consider how technology Watson turned that data into could mitigate this problem. insights, used analytics to recommend the next best course of action, and enabled maintenance technicians to make smarter, faster, and evidence- based decisions.

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Are companies also looking Are there any particular skills in How can utilities prepare at keeping mature or older short supply? How could EE&U for the aging workforce? employees longer? companies hire or augment for From my perspective, utilities must The bigger issue is a lack of inflow future skills? answer three main questions: of talent. Millennials care about how Much of it depends on what the future much their employers use technology, of utilities looks like, and the industry 1. How do you retain the knowledge and whether they use it well, but is changing rapidly. The industry is accumulated by workers nearing utilities are not typically known for heading toward more integration of retirement? being disrupters or technological renewable resources, like solar and The answer could be digitization front-runners. wind. In some places, utilities are of unstructured data, skills According to a study by CompTIA, becoming more deregulated and assessment to understand where three-quarters of millennials say may face competition from outside the gaps are going to occur, technology usage by a company affects industries. All this puts the traditional or development of strategic their employment decisions. Only utility business model at risk. succession plans. about half of baby boomers say that Utilities are exploring new revenue tech usage factors into employment streams. The Los Angeles Department 2. How will you improve training decisions. This discrepancy highlights of Water and Power (LADWP) and programs of current employees the need to better integrate digital Électricité de France (EDF), for example, to fill these gaps more quickly? business processes to attract a variety use online marketplaces to sell energy One example is at DTE Energy, of employees. efficiency products to their customers. which is exploring the idea of Yes, this shift could be seen as a Many utilities worldwide are using virtual reality to simulate problem, but the fact that younger exploring or implementing electric high consequence scenarios for generations prefer to work differently vehicle charging station pilots. These employee training. This allows is an opportunity to make a company show the potential to cross typical employees to be trained more more efficient, digital, and agile—all industry boundaries and stretch the quickly, in a safe and observable resulting in lower operating costs. scope of what it means to be a utility. environment. These benefits are true for all To prepare for the future, utilities industries, including government. will need employees with new skills, 3. How do you entice younger like data science, app development, employees to work in this sector? customer-centric marketing, and It may mean creating a more digital analytics. workplace or focusing on other aspects of the job experience to appeal more to younger employees. This applies to recruitment and onboarding, throughout the employee’s tenure, and right up to retirement. Success will come from proactive planning and the adoption of new technology. Utilities need to have a strategy now for how they are going to address this demographic shift.

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Workforce turnover is an especially tricky issue for field operations. It can take up to seven years to train a lineman worker.

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Government

“We have just scratched the surface of how governments can digitally reinvent themselves. For decades, governments have used technology to support administrative processes. It is time for governments to leverage technology to reimagine their roles at the federal, state, and municipal levels. Governments will question processes, how services are delivered, the relationship with ecosystems, and how data insights drive every process. This technology-led reinvention will be spurred by an emerging group of digital leaders, passionate about shaping societies for future generations.”

Sreeram Visvanathan, Global Managing Director, Government Industry, IBM

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An ancient seaport meets the age of AI

Rich McKay, March 15, 2018

The 800-year-old port of Rotterdam So how do you connect an entire to eight weeks, it’s estimated this 3D handles 140,000 vessels and 461 port? The key is a combination of printing process could reduce that million tons of cargo annually, but IoT sensors, data from the Weather down to just over eight days. when does size meet efficiency? How Company (an IBM business), and does Europe’s largest seaport become AI that learns from data, analyzes While the traditional the smartest? options, and predicts the best path. “It’s one of the greatest ports in With those tools, port operators can manufacturing process the world, but we need to change identify the most favorable conditions might take six to eight and transform because the future is for ships to enter and relay that to somewhere else: digitization,” said the ships in real time through a digital weeks, it’s estimated this Paul Smits, Port of Rotterdam Chief dashboard. 3D printing process could Financial Officer. The breadth of data is impressive. What does it take to become the It includes information about tides, reduce that down to just smartest, and most sustainable, port currents, air temperature, wind over eight days. in the world? The answer, port officials speeds, humidity, turbidity and salinity say, is Internet of Things technology, of the water—all of which help better The port also created smart quay which can uncover new insights from predict visibility on a given day to walls and sensor-equipped buoys data shared across the port’s 42 calculate clearance heights for ships. dubbed “digital dolphins.” These kilometer (26 mile) site. Insights into that data help reduce provide insights into a berthing shipping costs by allowing ships to terminal’s use and the surrounding Shaving even an hour come and go more quickly and safely water and weather conditions. They and to carry more cargo. Shaving even also identify the optimal time and from the berthing process an hour from the berthing process location for ships to dock. AI then can save ship operators can save ship operators $80,000. The learns from those data patterns to potential extends beyond operational feed accurate, immediate data about $80,000. saving: The digitized information the port’s infrastructure into the allows shipping companies to plan digital dashboard. “When ships approach our port, delivery times with greater certainty. The Port of Rotterdam aims to we need to tell them everything they Another port innovation is a 3D host autonomous ships by 2025, need to know for a seamless journey printing field lab, which produces meaning that vessels themselves to the berth, including the depth of quality industrial spare shipping will calculate optimal shipping routes, water, weather conditions, whether parts whenever and wherever they’re flag unsafe conditions, communicate they need tugboats, when they are needed. The production process, with other connected vessels to avoid expected at the berth and more,” said which uses a robotic welding arm to collision, and operate autonomously. Smits. “IoT lets us coordinate through create on-demand ship components an easy-to-use digital dashboard.” like propellers, infuses both AI and IoT technology. While the traditional manufacturing process might take six

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The port created smart quay walls and sensor- equipped buoys dubbed “digital dolphins.” These provide insights into a berthing terminal’s use and the surrounding water and weather conditions. They also identify the optimal time and location for ships to dock. AI then learns from those data patterns to feed accurate, immediate data about the port’s infrastructure into the digital dashboard.

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For health and human services, data is the key to prevention

Justine Jablonska, April 19, 2018

According to the U.S. Department of What are the biggest issues health Prevention also requires an upfront Health and Human Services, 1 in 25 and human services faces today? investment. But agencies can’t just adults in the U.S. had a serious mental And how can we address them? shift dollars without negatively illness in 2016. In 2017, more than Addressing individuals with complex impacting outcomes. They need 550,000 Americans were homeless needs—particularly people who receive additional funds to invest in prevention. on any given single night. And in 2018, services across multiple programs Complicating funding is the “wrong more than 115 Americans die every or agencies. They’re between 5–20 pocket problem,” which means that day after an opioid overdose. percent of individuals receiving services, the agency that spends money on Some or all of these issues may but account for between 50–80 percent preventive actions is not the agency be related—but agencies often have of the total cost. that saves money from those actions. limited data to help solve them. To It’s critical that agencies identify There are opportunities to leverage learn how to increase prevention, we complex clients, and more proactively models similar to accountable care spoke with Mary-Sara Jones, IBM address the root causes of their needs. organizations (ACOs), where the Health & Human Services Industry One of the ways agencies can better healthcare provider receives money Lead for US State & Local Government. improve outcomes for this population from Medicaid for achieving certain is by addressing the social determinants healthcare targets. It’s win‑win Baltimore citizens, of health, because housing, food vul- because the cost is less than what nerability, physical activity, education, Medicaid saves overall. for example, can have and income can account for over 50 There’s also the issue of data a 20-year difference in percent of a person’s overall wellness. sharing. Data today is siloed within Baltimore citizens, for example, health and human services, and many life expectancy, although can have a 20-year difference in life federal, state, and agency policies individuals live just six expectancy, although individuals live restrict the way data can be shared. just six blocks apart. So your ZIP code But technology has finally advanced to blocks apart. So your may be more important than your where we can more safely and widely ZIP code may be more healthcare. share data, and remain compliant with all the relevant privacy restrictions. important than your What will it take for HHS to shift This would enable multi‑disciplinary healthcare. towards increased prevention? teams to more effectively collaborate Agencies are primarily mission- to achieve improved outcomes for focused, which creates a lack of complex clients. visibility. So the housing agency is not aware of somebody at risk until they become homeless. Prevention requires visibility to the individuals who will be homeless tomorrow, but are not today.

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Having comprehensive understand how different correlations Some municipalities are enacting of factors result in certain risk levels. new legislation that focuses on data helps agencies With the opioid crisis, for example, permitting data sharing for multidis- connect people to the agencies know some factors common ciplinary teams, which bring together to individuals with substance use individuals with different expertise to appropriate services, disorder, like mental health issues, work together to help a single client. which improves access lack of a strong social network or and outcomes. And income level. What will health and human If agencies understood all the services look like in 2025? ultimately it reduces patterns, they could build a more I’m very optimistic that agencies costs. accurate risk indicator to proactively will move to new business models address the driving factors and change and develop the data management What’s possible through insights the client’s trajectory. capabilities necessary to deliver services into that data? in a more individual-focused manner. Most of the valuable, rich data What does “single view” As costs become more constrained, within health and human services is mean for HHS? community‑based organizations will unstructured and in different formats, Today, client data lives in many become increasingly important in like case notes, hotline audio files, different organizations. Single view the service delivery chain. This will and images. means pulling all the data together increase the need for integration and Tapping into and analyzing that in one place so agencies can better data sharing to send service delivery unstructured data greatly improves deliver care and optimize outcomes. data back to agencies so they make an agency’s ability to provide person‑ Say Ted has Type 2 diabetes. With better decisions and more informed centered care, and helps agencies a more holistic view, an agency can policies. address underlying issues as well as see that Ted recently went through the symptoms. a divorce, lost his job, and is being What agencies already effectively Homelessness, for example, tends treated for severe depression—all of share data? to be a symptom of unemployment, which exacerbated his physical health. Sonoma County is just starting a project mental health, or substance abuse. Effectively addressing Ted’s diabetes to provide a shared data platform to Providing housing alone would probably requires understanding and assisting address the health, housing, and social not be a sustainable solution without Ted with his underlying issues. services needs of homeless families. also addressing the underlying issues. LA County has introduced legisla- Having comprehensive data helps How can agencies evolve to meet tion that allows data sharing across agencies connect people to the citizens’ expectations? multidisciplinary teams based on appropriate services, which improves By emphasizing digital government specific use cases, such as child access and outcomes. And ultimately and user‑focused design, agencies can welfare investigations. For the first it reduces costs. Earlier intervention create an integrated experience across 30 days of an investigation, child yields better results, higher client processes, solutions, and devices. welfare investigators have access to satisfaction, and lower costs. Many health and human services an extensive amount of data, such as clients may not have computer access, criminal history and mental health. How can AI help? but may have a smartphone, so they When they complete the investigation, Although caseworkers bring great can access mobile-ready services. they have the information needed expertise about their clients, they Agencies are also starting to to determine if a child is safe in an don’t necessarily understand all the overcome data sharing challenges by environment. issues impacting each client. using a memorandum of understanding AI will be increasingly important to create trust agreements between because of the vast amounts of data agencies. being created. AI can digest all of the data and discover new patterns to

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Can AI help stop the opioid crisis?

Rich McKay, February 14, 2018

Every day, more than 115 Americans As many agencies are discovering, One of those key technologies is AI, die after an opioid overdose. this phase of gathering information is which can help sift through mountains And some public safety agencies where things get incredibly challenging, of data, much of it unstructured—like are using new technology to respond. said Bill Josko, IBM’s GBS Public video, photo, or audio files. New York state’s Nassau County Safety Practice Leader for the U.S. AI can mine for the golden nuggets Police Department has rolled out new “The more data agencies collect — lurking right below the surface: real-time overdose mapping technology from more sources and formats — the uncovering insights and patterns that with an early warning system. This more difficult their jobs will be,” can speed up investigations or provide technology reveals multiple overdoses said Josko. a complete view of a situation as it in a neighborhood within 24 hours, That’s because the volume and unfolds. which helps agencies identify and variety of digital evidence data causes Agencies will need that technological communicate about a potentially bad complex management and analytical firepower to address the complex, batch of heroin. issues. One investigation may have entrenched issues that comprise Public safety solutions can help law thousands of hours of video and audio opioid addiction. enforcement fight the opioid crisis. footage, IoT sensor data, dispatch The mapping system also helps reports, and officer narratives. police spot opioid-adjacent crime While the epidemic primarily trends, like pharmacy robberies, impacts the United States — costing and shift resources to focus on more than $500 billion yearly since reducing that crime. It can also 2015 — it is becoming a global help governments provide targeted problem. resources for education, prevention, Prescription drug abuse among and access to treatment. teenagers in Canada, Australia, Nassau County Executive Laura and Europe in 2017 were at rates Curran sees the mapping technology comparable to U.S. teenagers. In as an important advance in the fight Lebanon, Saudi Arabia, and parts of against opioids. China, one in ten students had used “Our police department continues prescription painkillers for non- to innovate ways to gather information medical purposes in 2017. crucial to battling this epidemic,” said Applying technology and analytics Curran. And it “will allow Nassau can help the fight against this County to combat the epidemic of decades-long crisis. “It affords us addiction in real-time.” an incredible opportunity for the additional discovery of clues and answers to questions we did not yet know to ask, and further, what the data is trying to tell us,” said Josko.

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“The more data agencies collect — from more sources and formats — the more difficult their jobs will be.”

IBM’s Bill Josko

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Insurance

“Technology is disrupting traditional insurance operations. While the changes may allow for greatly reducing risk and increasing premium revenues, insurers must first react with new products and new underwriting processes. The industry impact of autonomous autos on auto insurance demonstrates that insurers must figure out how to incorporate emerging technologies to seek out new revenue streams.”

Sandip Patel, Global Managing Director, Insurance Industry, IBM

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Will autonomous automobiles drive auto insurers away?

Patrick Sheridan, March 29, 2018

In the last year, we’ve seen a number Insuring who, or what? How long until we’re completely automobile manufactures take big This is soon to move from a theoretical autonomous? steps towards releasing widely debate to real questions for the Will autonomous driving vehicles available, fully autonomous vehicles. industry. Who do we insure for an replace today’s cars in the near This has led to speculation that we autonomous vehicle? Is it the driver, future? The simple answer is not will see a massive decrease in the the car manufacturer or the software with current trends. Let’s use the number of automobile accidents, and writer(s)? This is only the beginning US market as a sample. There are this also has led to a big question in of the list. Undoubtedly the industry approximately 17 million cars sold in the industry: Do we need traditional will change, and a safe bet is that auto the US each year. Current replacement auto insurance if cars are no longer insurance and companies are here to rates indicate that autonomous cars involved in accidents? Obviously, this stay for the foreseeable future. There’s would not replace current vehicles for is a key discussion around the world even a good chance that they will grow 15 years. Simple observation shows for insurers because the immediate in the short term. us that there are still a reasonable next question is, if we don’t need auto First, let’s put the premise on the number of cars manufactured in the insurance, what happens to the auto table that self-driving cars will be 1960’s and 70’s on the road today. insurance companies? This question smart enough not to drive into one This makes any complete takeover by has significant economic importance; another. While this may be a safe autonomous vehicles likely to be more auto insurance is a $200 billion premise for marketability, it is not than 50 years away. global market. exactly reality. Volvo has announced that it will insure its self-driving cars, What happens when there Using these raw numbers, and that Volvo itself will cover the is an accident? costs of any car repairs associated Next, let’s look at accidents. While the current replacement with an accident when in autonomous premise that autonomous vehicles will rates indicate that driving mode. While these cars will be not run into one another could have introduced in various modes over the merit, recent news proves that “no autonomous cars would next few years, the number of models accidents” are unlikely. In March, an not replace current will be small for a while. Tesla is autonomous vehicle hit and killed a currently leading the industry, offering pedestrian in Tempe, Arizona. There vehicles for 15 years. a self-driving mode on all of their cars are arguments on both sides as and trucks. Cadillac is advertising a to whether the technology should self-driving mode for the CT6 as part have detected the pedestrian and of the 2018 model offerings, Volvo stopped the vehicle. Regardless of is claiming 2020. Most other major fault, this tragic accident will lead to automakers are in various stages of improvements in the technology, but design, testing or implementation. as the situation shows, accidents are still a reality.

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Let’s also discuss what makes the unknown exposure of the legal making the following adjustments now up auto insurance. Typical auto system. Who is responsible if a vehicle to streamline operations for the future, insurance products include coverage moving in autonomous mode is in an specifically: for comprehensive damages for things accident? Is it the manufacturer? Is it the owner or driver can’t control. For the autonomous software developer? • Modernize core insurance platforms example, hail damage to the body, Is it an independent testing service? to allow for easy introduction of a tree branch falling on a car and These costs most likely will have to be new products (groups of coverages) causing damage, someone running covered by insurance companies and • Move the appropriate pieces of into the car while parked, theft, indirectly lead to higher premiums. technology platform to the cloud to vandalism, etc. While there are always While these simple logic arguments take advantage of economy of scale improvements to minimize these imply that the need for automobile when growing or shrinking damages, these risks can’t be fully insurance will not go away any time • Enhance claims processing to allow eliminated. Unless autonomous cars soon, it doesn’t mean the industry for efficient processing of less are going to be significantly cheaper, won’t change. Certainly, as the severe non-bodily injury claims, your average consumer will still want number of autonomous vehicles streamlined further by using protection from these perils. increases the number of accidents cognitive technologies Paying careful attention to auto will decrease or at least the severity • Build a solid base of policy holders’ manufacturers press releases about of accidents will decrease. This profiles today so as market trends autonomous vehicles they all refer to trend will also be impacted by things change, the insurance company can “autonomous” as a feature or mode for like urbanization, shared cars and model the impact on its specific the car, which implies there are other remote workers. The combination of book of business and react to modes, for example, being controlled these factors implies that that the changing market conditions faster by a human. Therefore, there’s still a size of the traditional automobile than competitors. very good chance that if there is an insurance market will decrease—but While the coming explosion of option for humans to control a vehicle, not go away. Open for discussion autonomous cars will not eliminate there will be accidents. So, barring any is whether this will this lead to new the auto insurer we know today, it major change in our legal system, as types of insurance designed for the will certainly force change. Given long as there is the risk of an accident, unique circumstances surrounding the volumes that insurance com- the mandate for insurance remains. autonomous vehicles? panies deal with and the historical Another common notion is that lack of success with large projects, with more self-driving cars on the Industry must embrace change time is of the essence to prepare road, there will be fewer accidents. A summary of this logic implies that for the changing market now. Fewer accidents imply fewer claims. the industry is likely to consolidate. But can we let the logical argument There will be a smaller number of progress that fewer claims equate to people paying premiums, fewer lower repair costs, leading to lower severe auto-related accident claims, insurance premiums? Perhaps, but potentially higher repair costs of more it is not very likely. There has been complex technology, and a larger nothing specific that indicates these number of “products” to address the newer autonomous vehicles are combination of coverages that the cheaper to build or maintain than public will want. current vehicles. All the technology An assessment indicates that an required for autonomous driving insurance company planning may be more expensive to fix than to be in the automotive insurance today’s standard vehicle. There is also market in 20 years needs to be

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Who is responsible if a vehicle moving in autonomous mode is in an accident?

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How IoT and AI are driving the manufacturing industry forward

Ari Zoldan, May 10, 2018

Manufacturing is entering a new be outfitted on checkpoints in the Armed with contextualized and stage of development widely distribution process, where they can actionable data, manufacturers can known as Industry 4.0. A synthesis keep tabs on parts and products engage in predictive maintenance, of manufacturing processes and as they are shipped from factory to the technique of servicing a machine emerging technologies, Industry warehouse and beyond. before it fails and gums up production. 4.0 promises greater efficiency and A manufacturing operation that has Decision makers in an organization higher productive capacity, all for been outfitted with IoT devices will see can also identify sources of energy less operational expenses. a sharp uptick in the amount of data waste, drilling down to the level of Industry 4.0 is still in its early captured. But, of course, there remains individual components to identify and stages, but now is the time for the question of how to process all this address pain points. manufacturing businesses to get data. That’s where AI and machine IoT and AI are critical parts of on board. According to Advanced learning algorithms come in. Industry 4.0, but they aren’t the only Manufacturing, 27 percent of In order to contextualize the vast technologies changing the way the companies in the industry have troves of data and make it usable, industry operates. Mixed reality, for already “experienced substantial AI sifts through the information and instance, is allowing workers to view transformation,” while 36 percent of identifies important patterns. It digital overlays based on the data organizations were in the process of can find anomalies in machinery captured and contextualized by IoT and implementing new technologies. operations that decision-makers need AI systems. Blockchain can employ a “Technology is fundamentally to be aware of, or it could discover system of smart contracts to track and remaking every industry, worldwide,” opportunities to streamline processes record supply chains that are crucial to said Serge Beck, CEO of global fintech and reduce waste. In this way, AI the manufacturer’s end-product. company Optherium Labs. “These does not replace human intelligence While early adopters will reap the disruptions are helping to push the but augments it. AI allows humans competitive advantages of Industry world forward.” to make better decisions about 4.0, make no mistake: adoption is Industry 4.0 starts with data how they organize and manage the not optional. Failure to recognize capture. IoT devices incorporate manufacturing process. the inevitability of this transition is a sensors that capture data and “The activities of every modern death sentence for any manufacturer. transmit it over a network into a manufacturing plant produce an “Enterprises have a choice to make central depository, where it can extraordinary amount of data every in this period of disruption and be accessed for the benefit of the minute of every day,” said Elisha transition: embrace it or resist it,” organization at large. These devices Tropper, CEO of Cambridge Security Beck said. “Those who embrace make “dumb” assets intelligent, Seals. “The challenge for companies technological development and allowing them to communicate with is to determine which data can be implement new technologies in smart one another and a central database. utilized to directly improve or expand ways will be the winners of tomorrow. IoT devices can be applied to their businesses, and then utilize the Those who resist the inevitable march machinery on a factory floor, capturing available tools and systems to capture of technology are bound to fall behind.” data on energy usage, temperature, that data and effectively manage it.” and output. IoT devices can also

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IoT and AI are critical parts of Industry 4.0, but they aren’t the only technologies changing the way the industry operates. Mixed reality, for instance, is allowing workers to view digital overlays based on the data captured and contextualized by IoT and AI systems.

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Media & Entertainment

“Cloud-based video is the breakthrough the media industry has needed. Whether they’re live streaming to subscribers or launching a new service, cloud-based video offers media and entertainment companies a way to not only better manage current video strategies but also a flexible platform to support future innovation.”

Steve Canepa, Global Managing Director, Telecommunications, Media & Entertainment Industry, IBM

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Coming soon to a theater near you: Blockchain

Jordan Teicher, April 24, 2018

Mitzi Peirone was excited to start “We had to fight off a lot of VP of Entertainment Finance and making her first feature film, a skepticism,” she said. “Anything that Development at the blockchain- psychological thriller set in a creepy goes against regular business models based digital content distribution and mansion. But like any filmmaker, she is always a risky thing.” management platform SingularDTV. first had to figure out how she was “Braid” is the first film to get full going to pay for it. Every single person in blockchain-based funding. But it won’t None of the traditional funding be the last to use the technology, options, however, looked good, Peirone this industry plays a very Hyman said. In June, another indie said at a panel at the Tribeca Film important role. But the film, “No Postage Necessary,” will be Festival, where her film, “Braid,” made distributed through Vevue, a peer-to- its debut. The most obvious route problem with all these peer video network app running on was to go through a production studio. people is they’re all the Qtum blockchain platform. It will When she approached one, however, also be available to purchase using she was told she’d have to simplify operating in silos. cryptocurrency. her script to get a green light. The “There are many advantages to alternative was to ask her family and The risk paid off. The crowdsale, blockchain distribution, including friends for money, but Peirone said Perione said, hit its goal in two weeks. immutable proof of intellectual they probably couldn’t provide enough A blockchain-based equity property rights, transparent royalty to sufficiently fund the film anyway. crowdfunding model, Peirone said, payments, and, since all data on the “I was facing either seeing my is a win-win for businesspeople and blockchain is resistant to duplication, creative freedom taken away or not artists alike. In this model, people we can now envision a world where having enough money to make [the who contribute money to films are films are no longer pirated,” Jeremey film],” she said. not just donors providing favors, Culver, the film’s writer, director and And then, in 2015, Peirone but investors who have a financial producer said in a release. discovered another option: blockchain. incentive to help the project succeed. As a tool for decentralized Last summer, Peirone launched a Filmmakers meanwhile, can get information sharing, blockchain has token sale on blockchain-based equity funding without making undue artistic many exciting applications across the crowdfunding platform WeiFundwith compromises. And with blockchain, media and entertainment industry. In the goal of raising at least $1.4 million all parties see more transparency and the music world, for instance, leaders for her film. Token holders would more efficient spending. like Benji Rogers are advocating for recover their investments, plus 15 “Every single person in this a decentralized blockchain-based percent interest and a proportional industry plays a very important ledger that can solve problems share of 30 percent of the film’s role. But the problem with all these of ownership, payments and profits. Both parties would agree to people is they’re all operating in transparency in the industry. IBM, a decentralized, immutable ledger silos. And that’s where money is meanwhile, believes blockchain tracking all financial transactions. constantly being taken away from can transform everything from filmmakers and creatives who telecommunications to advertising. deserve it,” said Daniel Hyman, the

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“The whole point of blockchain… is to make the supply chain visible to all the participants so everyone can get compensated for what they contribute,” Peter Guglielmino, the CTO for IBM’s Media & Entertainment Industry, said at the panel. While blockchain is just beginning to change the film world, Peirone is eager to share her experience with the technology, in the hope that fellow filmmakers will follow her example and bring change to the industry. “If we can enable independent artists to truly follow their heart, to follow what they think is worth portraying instead of having to fall back into established algorithms of storytelling we’ve seen over and over, we can reestablish an entertainment industry we want to see,” Peirone said.

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How T Brand Studio created a culture of reinvention

Jordan Teicher, April 20, 2018

When The New York Times first The studio started small, with just If you’re looking for a study in how debuted T Brand Studio, its branded a handful of employees producing to disrupt your own organization, look content unit, in 2014, branded content content hosted on The New York no further than T Brand Studio. didn’t exactly have the best reputation Times’ website. But it soon proved its “Even when sitting on an incredible in the industry. Other publishers mettle with the release of “Women foundation of writing, reputation, generating branded content at the time Inmates: Why The Male Model Doesn’t and loyal customers, change isn’t had a tendency to confuse readers by Work,” a beautiful interactive piece for easy,” Aston said. “The Studio’s failing to clearly differentiate between Netflix to promote the second season success is part of a much larger digital content from the newsroom and of “Orange Is the New Black.” This, transformation across the Times’ content from advertisers. Some would clearly, was not branded content newsroom and business operations further muddy the waters by using as usual. that’s accelerated in the past five years.” newsroom editors and writers A crucial ingredient in T Brand’s to create that content. Even when sitting on an success has been its mix of personnel. Newsroom leadership was initially While similar content organizations “very anxious” about the new unit, said incredible foundation of essentially hired the usual cast of T Brand Vice President and Executive writing, reputation, and characters one might find at a creative Editorial Director Adam Aston. But the agency, Aston said, T Brand looked for need to create a new revenue stream loyal customers, change content makers who were “a little bit in the organization was clear. The isn’t easy. different than your standard marketing Times had to move from a print sales- copywriter creative type.” In hiring, based ad model to a digital-first model, Four years later, T Brand Studio he said, the intent was to “borrow the and they had to get it right. has grown 25-fold, employing more best of the Times journalism and fuse “We were watching our print than 100 people across offices in New it with the kind of goals brands would advertising on a linear straight path York, London, Paris and Hong Kong. be pursuing.” down, which is where most publishers In 2016, it acquired HelloSociety, “That’s a rule of thumb for all up to that point were getting most an influencer marketing agency, business—you’ve got to master the of their revenue and profit. That and FakeLove, a Brooklyn-based best of disciplines and bring them undermined the economics of experiential agency. (IBM’s “Outthink together in ways that haven’t been subsidizing a news operation. And if Hidden” campaign was T Brand’s done before. Getting the chemistry you’re cutting back on getting news first project with the agency.) And right can be hard and getting the it’s a vicious cycle. For many of our it has expanded beyond producing casting right can take time,” Aston said. peers it was a death cycle,” Aston said. native branded content to providing a whole suite of creative services for companies on their own platforms. T Brand Studio is not simply an in-house creative unit, it’s an agency—and it’s successful, growing both production and media revenue by double digits every year.

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Another crucial differentiator “The more we experiment and for T Brand has been its use of new the more it’s successful, the more technology, including VR, AR and comfortable the Times has gotten 360 video. But while the studio has at experimenting,” Aston said. been an early adopter—and in some “The organization is more confident cases, a first adopter—of those knowing, ‘Hey you can try this. It may technologies at the Times, Aston be complicated, it may be hard, it said it’s just as important to know might not always be a home run, but when not to use a new technology you have to experiment.’” as it is to know when to use it. VR, AR, and 360 video are incredible storytelling tools, he said, but they’re not right for every project. “You don’t want to add gratuitous technology to something just because it’s neat,” Aston said. Once a source of anxiety within its organization, T Brand is now a source of inspiration as it drives innovation within the Times while contributing to a viable new business model. As T Brand gears up to launch its 400th paid post this quarter, it’s intent on carrying that spirit of innovation into the future.

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The more we experiment and the more it’s successful, the more comfortable the Times has gotten at experimenting.

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How Oovvuu harnesses AI to chart the future of content

Jordan Teicher, April 15, 2018

In 2009, Ricky Sutton was in charge roll with the punches, they know AI Have you observed any big changes of video at Fairfax Media in Australia is important but it’s also another in the media landscape, in terms when he heard that a plane had potential threat. The result is that they of how and where people are miraculously ditched in the Hudson are approached by many promising consuming video, since you River in New York City. them the world, but they struggle to started Oovvuu? Over the coming days, Sutton saw navigate who to trust. Oh, far too many to list. The big ones— new stories breaking about the event, Our advantage is that we emerged the industry changing developments— but it was the video of the crash itself from media and publishing so we are that a billion people are watching that people kept watching. A little over know their problems and challenges news video daily but still want more. a year later, the Deepwater Horizon first hand. It’s also important to note Despite this demand, major publishers oil rig exploded. Again, in story after that we did not set out to create still only publish video in around story, Sutton saw that the explosion an AI. It was an accident. We just seven per cent of their articles, which was the video people kept watching. wrote code to read articles, watch means a huge customer demand The conclusion to draw, he realized, videos and match them together and was not being met until Oovvuu. The was that people wanted to be able then optimize the results based on other is that the balance of trust has to access video instantly without user consumption. It was IBM who shifted, and is now shifting back. For a needing to go find it. But further informed us we had created a nascent while, Google and Facebook became research into the subject revealed machine learning tool. We had no idea. the place billions trusted to access to Sutton that only seven percent of The result is that our customers know news and information. Then scandals news articles had a relevant video we are honest brokers. around fake news, brand safety and embedded. Clearly, there was a data mining made people think again. business need to match the best video What made you interested, as The result is that the world is now on with the best articles on a global scale. a startup, in working with a big a flight back to quality. When big news Thus, Sutton’s AI-powered video legacy organization like IBM? happens, they run to the BBC, or to distribution start-up Oovvuu was born When you are a C-suite executive with Bloomberg, or to The Times. People in 2014. an ergonomic desk and the best chair, are learning that journalism matters if IBM caught up with Sutton to people pay attention to you. When you they want the truth. discuss how Oovvuu and the digital quit, don a T-shirt and start working media landscape have changed in the out of a garage, you become invisible years since. very fast. We knew we had something special in Oovvuu and we knew we What were the challenges, if any, needed to get back on the front foot to of selling content owners on the tell people about it. It was clear that notion of an AI-powered curation? IBM was winning at AI with Watson. Many people are excited and We met with the global entrepreneur fearful about AI at the same time. team and it was love at first sight. You The broadcasting and publishing had access to potential customers and industries are in the midst of we had a Watson-powered tool that unprecedented disruption. As they everyone could understand, see and touch.

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How, in your view, has Watson’s intelligence evolved alongside your company? I fundamentally believe that the future of content will be AI-led. I think of it like this: Hypertext gave us the web. Search organized it. AI will now personalize it. For that to work, we need to fill the cloud with brilliant video and learn from how people consume it so we can improve their experience. As a newspaper editor, I used to choose the story that millions of people got to see. Now, with AI, I can tell the news to billions of people individually. Watson has come along every step of that and continues to surprise and teach us every day. What we learn, we teach back. That’s what our relationship with IBM is all about.

As a newspaper editor, I used to choose the story that millions of people got to see. Now, with AI, I can tell the news to billions of people individually.

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Retail & Consumer Products

“Each brand has a unique set of opportunities and actions to improve the shopping experience for its customers. The common thread is that brands must use new tools and technologies such as analytics and cloud to capture data regarding people, products, preferences and store facilities—and then leverage that information at a hyperlocal level to provide a more expansive, personalized, and effective experience wherever consumers want to shop.”

Laurence Haziot, Global Managing Director, Consumer Industries, IBM

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Legacy retailers are opening pop-up shops, but are they worth the cost?

Jordan Teicher, April 5, 2018

For two days last December, shoppers “Pop-ups are no longer one of expense worthwhile? Pop-up shops, in New York City’s SoHo neighborhood these trendy kind of things. It’s really clearly, present multiple benefits for entered a sleek boutique with a vaguely become a mainstream alternative retailers, but they’re not huge profit- French-sounding name, “Jacques model for doing retail. You’d be hard- generators. They’re also big logistical Penné.” There, they encountered pressed to find a really iconic brand undertakings. holiday gifts curated by celebrities that isn’t doing pop-ups,” Larry Baras “Whether you’re a big brand or and influencers presented in a of the pop-up industry service provider small brand, you think that creating millennial-friendly, pared-down PopUp Republic told IBM. a pop-up shop might be easy. Then environment—think geometric wood Pop-ups can serve multiple you start getting into it and realize shelving, copper accents, and tiny functions for big retailers. Some open virtually every element associated houseplants. If they didn’t look pop-ups to test new markets and with opening a permanent retail closely at the signage, they might have products, drive online business, or establishment—rent, staffing, design missed that the store was a pop-up by attract new segments. Others are and fabrication, insurance, point of J. C. Penney. simply looking to generate buzz, or, sale capability, PR and marketing— Jacques Penné might not have been like J. C. Penney, change the company applies to a pop up, just at a smaller exactly the sort of thing you’d expect image. At a time when empty scale,” Baras said. from a big-box department store chain storefronts are plentiful and short- But for many legacy retailers, like J. C. Penney—which was exactly the term leases are relatively cheap, a the reasons for opening a pop-up point of the retailer’s pop-up venture. pop-up is an appealing option. outweigh the cost. As a slew of digital “Overall, [we] wanted to inspire Last summer, in an effort to “defy stores disrupt the industry, retailers customers to rediscover J. C. the conventions,” Ikea Canada are learning that innovation in the Penney. ‘Jacques Penné’ showcased operated a Play Café in downtown brick-and-mortar arena is pivotal to our amazing value and unexpected Toronto, where visitors could play generating interest and sales. Opening newness, therefore updating the with a giant pinball machine, compete pop-ups, incorporating food and perception of J. C. Penney during in a dance-off, and shop with RFID- beverage programs in stores, and the holiday season and beyond,” a activated wooden spoons. In February, exploring cutting-edge technologies company spokeswoman told IBM. Nike created a pop-up in LA to like AI, IoT and blockchain, are all part J.C. Penney is just one of many promote its new “90/10” collection. of that strategy. legacy retailers that have organized a That same month, Macy’s debuted a What does the future hold for the pop-up shop in recent years, marking pop-up marketplace, “The Market @ pop-up industry? If the past five years a big shift in the pop-up sphere. Once Macy’s,” that gives temporary space are any indication, Baras said, it’s the domain of small upstarts and to brands and companies on the likely more growth, and undoubtedly online retailers wanting to experiment retailer’s ground floor to promote or more change. with a physical presence, pop-ups sell products. The initiative is designed “When I look back five years, it’s are now a go-to tool for retailers and to “drive customers to stores by giving like we’re in a totally different industry. consumer brands that have been a constant break of discovery.” There are shifting sands underneath our doing business for decades. In 2016, PopUp Republic valued the feet, and we need to change what we pop-up model at $50 billion. But is the do as more people get into it,” he said.

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Apple store designer Tim Kobe: Stores are “as important as they’ve ever been”

Jordan Teicher, April 12, 2018

When Apple first asked Tim Kobe to On April 18, as part of World Eight Inc. promises to design design a retail store, the company Retail Congress, Kobe will join the “meaningful human experiences.” only had four products in its line-up. London College of Fashion’s Matthew What role does technology play So Kobe created a store experience Drinkwater and TheCurrent’s Rachel in that? that revolved entirely around the Arthur for “Store design + technology= It’s about making sure you’re creating consumer and served as a space for future of customer experience,” a deeper meanings. Technology is service and learning. That formula workshop on the power of cutting- just a tool to get to that. The human helped make Apple one of the world’s edge technologies to create incredible outcome is what should be the most successful consumer technology customer experiences. primary objective and then you use brands. (Apple and IBM are currently IBM spoke with Kobe over the the right tool to achieve that outcome. working together to bring enterprise phone about stores, technology and It’s not about just checking the box AI to mobile.) the future of retail. The conversation and getting the latest technology. It’s has been edited for length and clarity. one of those things where you have to Those who are more be consistently evaluating what the As e-commerce continues to human outcome is in order to have digitally savvy are those boom, what role do stores play the business outcome. that are going to succeed for retailers today? Their role is shifting but they’re also as rather than those who important as they’ve ever been. When Now more companies ride the old model. you look at retail today, good retail is see their stores as brand not suffering, bad retail is—I’m talking touch points, rather than As the founder and CEO of the about the people who haven’t decided strategic design firm Eight Inc., Kobe to be competitive or work on solutions just a transaction space. has continued to create stores for that impact the end user experience. some of the world’s biggest brands. It’s sort of a sorting out of the market. A lot has changed in retail since If you compare in America the number Kobe started his firm in 1989, and of stores per person to other parts technological disruption has been a of the world, we’re something like big part of that. 10 times more saturated…In a way I Technology, he said, will also be a think it’s a natural evolution but I think big part of what comes next. those who are more digitally savvy are those that are going to succeed rather than those who ride the old model.

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Do you think the Apple store has The Nissan Crossing Experience Retail is very interesting changed the way retailers have Center in Ginza functions as a base looked at their brick-and-mortar for communicating Nissan Intelligent because to me it’s one spaces? Mobility and showcasing future driving of the businesses where What the Apple work helped develop experiences to customers. was making the store a brand tool if you’re not refreshing that could convey aspects of the How might the role of the store your offer every five years brand that were previously left to change in the future? you’re probably behind a communications role. You can I think retail is very interesting feel what the Apple brand is by the because to me it’s one of the your competition. experience you have in the space. businesses where if you’re not Now more companies see their stores refreshing your offer every five as brand touch points, rather than just years you’re probably behind your a transaction space. competition. A lot of companies that haven’t been looking at disrupting Some companies are taking that themselves end up being beaten by idea to an extreme, and choosing someone who is. Retail is especially not to sell any products at their competitive, especially challenging stores. What do you make of that? and I think it’s quite complex when There’s probably some balance that you think about the human psychology has to happen there. I don’t know in addition to all the other functional if in the near term you can just be parts that go into a successful retail an experience store and not sell program. anything. A few have tried it, but the idea that you could just do a brand store and not attribute any other values to it is a tough one for some companies to make work. The store is the point where you’re driving the highest emotional connections, and we know that tends to drive the most conversions. If you’re creating that emotional environment and not doing a conversion, then you’re kind of wasting that opportunity.

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Setting your customer service benchmark? Look outside your industry.

Jordan Teicher, May 10, 2018

Trying to figure out how to improve they do business with. Today, I tell to you and I’m not going to jeopardize your customer service? Shep Hyken companies they shouldn’t benchmark my relationship by spamming you with has been coming up with solutions themselves against their competition, content that’s not relevant to you.’ for more than 30 years. they should benchmark themselves Since 1983, Hyken has advised against who they want to be most like, What are the potential pitfalls hundreds of clients, from Fortune even if that’s someone outside their for companies using technology 100-size organizations to companies industry. to connect more effectively with with less than 50 employees, on how In retail, marketers are using customers? to build loyal relationships with their technology to make the shift from I’ll give you an example. Recently, customers and employees. He’s written messaging customers by segment to I made a purchase from a new six books on the subject, and has given messaging customers as individuals. company. I was so impressed with talks about it around the world. their customer service, how they sent Today, retailers are looking to improve What does that kind of approach me a message right away thanking customer service online and in stores do to improve customer loyalty and me and telling me when I should through a mix of technologies including customer experience? expect to receive my package. I was IoT, AI, Cloud and Blockchain. IBM I believe marketing is part of the like, ‘Wow this is good.’ A day later, I spoke with Hyken about the oppor- customer experience because if you got a marketing message. It looked tunities and pitfalls retailers need to do it right, the customer is going to interesting, and I looked at it. Two consider as they innovate. feel you’re talking to them specifically. days later I got another one. Two What’s amazing to me is when you days later I got another one. Now I’m Customers have higher expectations tell a retailer or a company that you feeling spammed. The company could than ever. Why are they comparing need to personalize your marketing have said, ‘Every once in a while we’ll experiences across industries, and messages so that each person feels send you a promotion. If you want to what kind of challenge does that they’re getting an individual message, hear our weekly specials, we’re happy present for businesses? they’re worried they’re going to have to send you that.’ That’s an opt-in Way back even before I got into my to create 10,000 messages from culture. I think it’s very important business, companies started to win scratch. That’s not the case, because when you’re looking to strike the awards for great customer service, with AI and data analytics you can balance is to ask the customer. and what would happen is these segment your customers based on companies would brag that they’ve buying patterns. If you’re talking to a won these awards and then you’d do customer just like nearly 5,000 other business with them and you’d see customers, you can look at what the why. All that did is start to educate the other 5,000 customers have done customer about what great customer and predict they’ll most likely do the service looks like. It took a while same thing. When you do that, you’re before the expectations of customers saying to your customers, ‘I respect became so high that they started you enough to give you the right to expect the same from everybody messages that are most appropriate

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It took a while before the expectations of customers became so high that they started to expect the same from everybody they do business with.

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Telecommunications

“Cloud-based video is the breakthrough the media industry has needed. Whether they’re live streaming to subscribers or launching a new service, cloud-based video offers media and entertainment companies a way to not only better manage current video strategies but also a flexible platform to support future innovation.”

Steve Canepa, Global Managing Director, Telecommunications, Media & Entertainment Industry, IBM

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The race to scale network virtualization through automation is accelerating

Jordan Teicher, February 23, 2018

Telcos, buckle up: The race to bring “While widespread network “The requirements for lifecycle virtualized networks to scale is automation is still early, expect service management can overwhelm traditional speeding up. provider automation projects to ramp business process automation. A new The idea of network function virtual- in 2018,” wrote FierceTelecom’s approach across multiple domains of ization (NFV) first emerged in 2012 as a Sean Buckley. orchestration and resource manage- way for telcos to meet rising demand for Why this year? Quite simply, the ment is required to enable consistent bandwidth, cut down costs, and speed market forces that inspired the idea for performance for emerging cloud native up delivery of new services. But for the NFV in the first place have continued, services at scale,” wrote IBM’s Denis most part, implementations have been raising the pressure on telcos to make Murphy. slow and modest in their scope. big changes. Mobile data usage is The need for quicker time to market That’s changing, said Ian Roy, exploding with the growth of over-the- for new services, improved customer Associate Partner for Network and top businesses like Uber and Netflix, experience and capital expense OSS Transformation in IBM’s Telecom, while the revenue per megabyte of reduction are evergreen for telcos. But Media & Entertainment Center of data has continued to shrink. In five today, said Rich Michos, IBM’s Global Competency. In the coming year, he years, mobile video usage will grow & North America Marketing Director said, NFV transformations will pick by 870 percent. In that environment, for the Telco, Media & Entertainment up speed in earnest. telcos simply cannot survive if they fail industry, “those forces are converging “2018 is the year when it starts. to create “living networks” that can right now and creating a burning issue Up to now it’s been pilots and proof think ahead and continually transform. for telcos.” The imperative for action of concept trials. This is the year they “They have a business imperative has never been stronger. really start to do this at scale,” Roy said. to figure out how it will work at scale,” The signs of that acceleration in the Roy said. industry are coming into focus. Early Telcos have been virtualizing some this year, Bell Canada implemented network functions through software its first automation use case using the for years. But the only way to bring Open Network Automation Platform virtualized networks to scale—and (ONAP). Epsilon expects its core fundamentally transform their business— networks to be fully automated by the is to automate operations by leveraging first quarter of the year. And AT&T is AI and cloud technology. To do that, reportedly well on its way to reaching they’ll also need an operational model its goal of virtualizing 75 percent of its like IBM’s Agile Lifecycle Manager, network by 2020. which provides a comprehensive services design, testing and automated deployment platform to address the challenges and complexities of the NFV paradigm.

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Telcos have been virtualizing some network functions through software for years. But the only way to bring virtualized networks to scale— and fundamentally transform their business— is to automate operations by leveraging AI and cloud technology.

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‘I felt absolutely horrible’: The world record-holder for binge watching looks back

Jordan Teicher, March 21, 2018

Binge-watching is a quintessential I have a really strange Were you nervous before 21st-century pastime, a fact that’s the attempt? driving video demand through the ability to just zone out When they told us we couldn’t look roof and straining networks. But few and watch something away from the screen—even a glance— have binged like 27-year-old Brooklyn or hold any serious conversation while resident Alejandro “AJ” Fragoso. for a long time. The doing it, both of us were pretty upset. In 2016, after outlasting two other focusing part I knew We almost tried to get out of it when record-attempters, Fragoso watched I could do. It was really we found out. 94 consecutive hours of TV—with one five-minute break every hour— the staying awake part What are your TV watching to break the Guinness record for TV I wasn’t sure about. habits generally? binge watching . Last year, he and Alex I would say generally when Netflix Christison spent 50 hours in VR to set How did you end up attempting drops a series I’ll watch quite a bit Guinness’ VR binging record. Both a TV-binging world record? of it at once. I think the most recent record attempts were sponsored by My friend from high school, Tim long-term binge I did was the new CyberLink, a Taiwanese multimedia Williams, manages the PR account for Stranger Things season. Molly and I software company. CyberLink. I was out drinking with my watched that whole thing in a day. “Some people were actually pretty girlfriend at the time and bumped into upset that I did it,” Fragoso told IBM him. He told me how Cyberlink was You started hallucinating during recently. “If you look at some of the organizing this world record attempt the attempt, right? What was comments of the news postings or but didn’t have anyone to attempt that like? on Instagram, people were like, ‘This it and they had two weeks to get I would liken it to when you take a is disgusting. How dare the media everything together. We were like, hallucinogen. Your thoughts are just promote this kind of behavior?’ “We could totally do that!” And he not quite right. After day two was Meanwhile, other people were like, texted me the next day and he was when things got bad in terms of lack ‘This is incredible. I want to do this now.’ like, “All right, I told my boss you and of appetite, incoherent thoughts, the Other people were like, ‘Four days is Molly are up for it.” By then it kind of beginning of hallucinations, and just nothing. I could totally do a week!’” felt like the control was taken out feeling run down. The one example I A year since his last record attempt, of my hands. still remember is being in the bathroom Fragoso isn’t hankering for another and looking at the wall and seeing binge fest, but he’s looking back What made you think you could the folds in the paint morph into a proudly on his accomplishments. do it? handwritten shopping list. I remember I have a really strange ability to just seeing “eggs” and “milk” on the wall zone out and watch something for a and I remember thinking, “I know long time. The focusing part I knew that’s not there, but I can see it.” I could do. It was really the staying awake part I wasn’t sure about.

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What happened after you Was there a moment during either broke the record? record attempt when you thought I felt absolutely horrible, but somehow of quitting? I was able to walk around and be Yeah. When Molly was disqualified on semi-functioning. They called us a taxi. day three of the TV record attempt, at I don’t remember much about the taxi that point there was another 24 hours ride. I thought that as soon as we got to go, which just seemed impossible. I back home I’d fall asleep before my wasn’t sure I’d be able to do it. head hit the pillow. But I was just so wired at that point it took a while for What kept you going? my brain to shut down. I don’t know. I was kind of on autopilot at the time. I figured I’d done it three When did the opportunity for days, so I could do another one. A lot the VR binge come about? of people took a lot of time and effort It was about a year after. Tim came to put the things together, and Molly to me and said, “CyberLink wants to and I had put a lot in to stay awake. To do another of these things. Can you throw that all away at that point would do it?” I thought, “Sure, 50 hours is have been devastating. nothing next to 94. Let’s do it.” Would you do another record What would make you want to attempt? do something like that again? I said I wouldn’t after the TV one and VR is a really cool technology and I then a year later I ended up doing the kind of took pride in the fact that I VR thing. They refer to those types could maybe be part of the movement of records as endurance records. to increase its adoption. I’d say I really wouldn’t want to do another endurance record. I think really pushing myself, testing my will power and doing off-the-wall things that people think are outrageous is something I’m interested in, but I really wouldn’t prefer to do something that has me staying awake for too long.

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Travel & Transportation

“The incumbent travel companies, whether providers or resellers, are in a position of power because they have access to such a broad range of data. We think it’s time for what we’re calling the incumbents to drive the disruption of our industry.”

Dee Waddell, Global Managing Director, Travel & Transportation Industries, IBM

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What today’s airlines can learn from the ‘golden age’ of flying

Jordan Teicher, March 27, 2018

Several times a month, a few dozen “I think the way we used to fly was But today’s common passenger people dressed to impress board a more of a luxury event. In the old complaints are valid, Ranieri said, and Boeing 747 in Los Angeles, where days, you’d pay a single price for a full they can’t be ignored. If airlines want they’re met with a smile and the service flight. You were really taken to stay in business, they must figure cocktail of their choosing. They then care of,” Ranieri said. out how to improve the customer sit back in a plush Sleeperette seat, experience within the regulatory and and spend the evening socializing with A changing industry economic constraints of the day. fellow passengers, enjoying an open To a certain extent, Ranieri said, “Passengers want the best value for bar, and eating a five-course meal that there’s no going back to the golden their money, but on the other hand they includes a Chateaubriand carved from age. Deregulation and the growth of want to enjoy traveling,” Ranieri said. a trolley. low-cost carriers has fundamentally It would be the perfect flight, if only changed industry dynamics. Airlines, Prioritizing personalization it were on a real plane. he said, have economized in an effort Finding that balance is tricky, said Passengers on this “flight,” known to get passengers from A to B at the IBM Global Travel & Transportation as the Pan Am Experience, never cheapest possible cost. That means Industries Executive Partner Heidi get off the ground. Instead, they sit more seats on board, less legroom, a Fillmore, but it’s possible. With the in a Boeing 747 replica parked in a smaller flight crew, and fewer built-in right technological tools, she said, Southern California aviation-themed amenities. airlines can make passengers feel as motion picture studio called Air Security protocols have also personally cared for as they did in the Hollywood. Their time on board is irrevocably changed. Even if there 70s while keeping costs down. designed to recreate the experience were extra room on board for At the gate, Fillmore said, agents of a flight with the now-defunct Pan communal bars and lounges today, with better access to customer data Am airline during the late 1960s and Ranieri said, post-9/11 safety can be empowered to make smart early 70s. Tickets, which cost $300, concerns would keep passengers in decisions that earn customer loyalty. typically sell out within a few minutes their seats rather than roaming freely Currently, she said, most ticket after they’re made available. about the cabin. For practical reasons, agents are only able to access limited “We’ve had people walk on to our flights simply can’t be as social as information on passengers, including airplane and start crying because it they were in the 70s. their seat and meal preference, and reminded them of the old days and the The golden age, of course, wasn’t all the number of trips they’ve taken with good time they had,” Talaat Captan, roses. Flights were so expensive that the airline previously. CEO & Founder of Air Hollywood, most people could only fly a handful “But when you start to layer in all told IBM. of times a year. Planes were louder. the other elements beyond what’s just In an age of shrinking legroom, There were fewer routes. And cabins sitting in your loyalty database—things diminishing onboard service, and in- were full of cigarette smoke. like, ‘We lost your bag last time,’ or, creasing hidden charges it’s no wonder ‘Your flight was delayed last time, or that nostalgia for the so-called the last three times’—this is now a “golden age” of air travel is so strong, point where you have the opportunity said IBM Travel & Transportation Industry VP Rob Ranieri.

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to do something about that,” Fillmore data for passengers booking flights Passengers want the said. “It’s about having a richer set of and accommodations. information at your fingertips so you The allure of the golden age of best value for their have the opportunity to provide some travel encapsulated in the Pan Am money, but on the better service or perks.” Experience will likely not lose its On board, flight attendants armed appeal any time soon. But airlines other hand they want with a similarly robust set of data in 2018 can’t parrot the past, and to enjoy traveling. could be more efficient and more luckily they don’t need to in order to attentive. Having access to each provide an excellent experience for passenger’s preferences on an iPad, passengers. The golden age glistened, for instance, can help a single flight in part, because it strove to provide attendant provide more personal the same elevated experience for service to more people. American all passengers. Today, with cutting Airlines became the first airline to edge technology, airlines can instead equip all its flight attendants with provide a unique experience for each tablets in 2012. passenger, one that considers their “Equipping crew members with unique tastes and desires. digital devices gives them access “The reality is not everyone wants to information that allows them to a meal and drinks and everything address passengers in a relevant that came with the old way of flying,” way,” Raymond Kollau, founder of Ranieri said. “The way to do this cost airlinetrends.com, told Fortune. effectively is to cater more personally “It’s also a way to increase inflight to each individual.” revenues, as the transaction process is quicker.” In the event of a flight cancellation, Fillmore said, airlines could use AI to quickly find a passenger’s next best travel option. Airlines could also use AI on their websites to provide personalized recommendations based on both structured and unstructured

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Irregular operations are the new norm. Here’s what airlines are doing about it.

Jordan Teicher, May 11, 2018

Over the course of 50 years in the make operations and services more On the operational side, AI is beginning airline industry, Nawal Taneja has seen seamless. The International Air to add much value in aircraft main- it all. Transport Association is forecasting tenance planning by increasing the He’s served as the president of an the doubling of traffic in the next 20 speed of human decision making and airline. He’s led a research organization years. The big airports are already reducing human error, when looking that provided consulting services to constrained; they can’t expand that for anomalies, for instance. airlines. He’s advised government much. So where is this expansion agencies on the aviation and tourism going to come from? Again, we’re How can blockchain improve sectors. talking about technology. Biometerics, the industry? Taneja has also channeled his expe- roving self-service check-in kiosks, Blockchain technology will help to rience as an airline business strategist roving intelligent robots that label reduce costs, increase revenues, to write 10 books for practitioners bags and transport them to the correct and improve customer service and about the industry, which are available loading points, and self-driving cars experience. An example on the from Routledge Books. are just a few examples of such commercial side of the business is Today, Taneja is an Executive-in- technologies. the potential impact blockchain will Residence at The Ohio State University’s have on distribution. It will change Fisher College of Business, and a What’s the opportunity, in your fundamentally the role of, and charges distinguished fellow at the University’s view, presented by AI? related to, intermediaries. Airlines College of Engineering. Keeping an eye In the commercial airline business, having direct access to customers will on developments in both business and they call operations regular or not only reduce distribution costs, but engineering affords him a comprehen- irregular. When I started my career, also provide better ways to engage sive understanding of the industry as there were irregular operations once with customers. Airlines can, for it evolves. a week or month. Now, irregular example, present more personalized In this interview, IBM talks with operations are regular. They’re content. On the operations side, Taneja about the unique challenges happening all the time. Customer blockchain will bring about step facing the industry today, and the role engagement in real time and at all changes in tracking assets, physical technology is playing to address them. touch points, to provide meaningful and human. Physical assets can recommendations, is important for be entire aircraft, individual parts, What are the major forces shaping regular operations—when everything maintenance equipment, baggage, the airline industry today? is going fine—but it’s even more catering trucks, and so forth. Human Customer expectations and behaviors important during irregular operations. assets can be the location of flight are changing, and the industry is If I’m sitting on a plane, I’m more attendants, gate agents, ramp becoming increasingly complex. But concerned about whether my bag got agents, mechanics, etc. The bottom at the same time there are emerging loaded and if I am going to make my line is substantial reduction in costs technologies that can help airlines connection than whether the flight (operating and investment) and an cater to the needs of the changing attendant knows my favorite drink. increase in the revenue generating customer base and manage the Various aspects of AI will play an capability of assets, not to mention complexities of the business to essential role in that engagement. the higher value relating to customer

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experience. Blockchain can also help There’s a lot of frustration directed The International Air in all these areas when it comes to at airlines these days. What’s the flight planning. cure for that? Transport Association is The frustration relates to friction forecasting the doubling We often talk about how technology at almost every touch point—from can improve the airline customer shopping to baggage collection. of traffic in the next 20 experience. What about the Consider the complexity associated years. The big airports are employee experience? with navigating an airline’s website— already constrained; they On the commercial side, we ask, the lack of transparency with some “What if you could make the right offer fares, and the uncertainty involving can’t expand that much. to the right customer at the right price the best time to make a booking in So where is this expansion through the right channel?” On the light of the dynamic pricing aspect of operations side, we can ask, “What the airline business. Consider next going to come from? if we could get the right part for the the hassles relating to the processing right airplane at the right gate with the at airports—not so much the length right mechanic with the right tools?” of time but the uncertainty as to the Technologies that can help are data, amount of time needed. Airlines are mobile communications, AI, and IoT. making progress, for example, now Take an airplane engine, for example. with the capability of passengers to An airplane engine now has sensors track their own bags. Besides making that can tell you all sorts of things booking flights a lot less complex, about how it’s working. But what are technology will enable airlines to you going to do with that data? How get the right information to the right will you store and analyze it to look customer and the right employee at for patterns, and use it to predict the right time. that one particular component, for instance, is going to fail in the next What’s holding airlines back from 20 hours? And beyond that, how are making some of these changes? you going to use that data to know It’s not that executives at airlines don’t when and where exactly to replace know what to do. They know what to that part? Prescriptive analytics is do but they’ve been constrained, at going to change the operating costs of least, in four ways. First, they have not the airplane. It’s going to change the had access to the right data. Airlines investment cost, it’s going to increase do have lot of data but the data is revenue generation capability, and it’s siloed and is transactional data not going to contribute to an improvement behavioral data, and it’s structured in on-time performance and, in turn, data not unstructured. Second, they customer satisfaction. are reluctant to share the data, for example, with airports. Third, they haven’t had access to analytics. There are at least four kinds of analytics you need to have—descriptive, diagnostic, predictive and prescriptive. Airlines have used descriptive and perhaps diagnostic analytics, but not predictive and prescriptive analytics. The final barrier is that they have been working with legacy technology systems. Those are all being changed but they’re being changed slowly.

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