Bcg Technology Advantage

APRIL 2019 BCG TECHNOLOGY ADVANTAGE • Are You Spending Enough on • Do You Have the Courage to Be an Cybersecurity? Agile Leader? • At Anheuser-Busch InBev, • Agile Leadership and the Art of Artificial Intelligence Is Letting Go Everywhere • When Agile Meets Outsourcing • Are Blockchain and the Internet • Using Agile to Help Fix Big Data’s of Things Made for Each Other? Big Problem • Bringing Digital Transformation to Airbus AI Is a Threat to Cybersecurity. It’s Also a Solution. Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries. For more information, please visit bcg.com. Preface Contents This is the first edition of BCG Technology Advantage that I FEATURE am bringing to you as global leader of the Technology AI Is a Threat to Cybersecurity. Advantage practice. I’m thrilled to be leading such an im- It’s Also a Solution. 2 portant practice at BCG at such an important time— when digital, data, and analytics are reshaping industries, ANALYSIS competitive environments, and societies. Are You Spending Enough on Cybersecurity? 8 I hope you will find the articles in this collection helpful as you consider new technology and the impact it may have across your own organiza- Q&A tion. They cover a variety of topics including scaling AI, perspectives on At Anheuser-Busch InBev, cyber, experiences of bringing digital transformation to aerospace, and Artificial Intelligence Is several important elements of our high-impact work in agile. Everywhere: An Interview with Tassilo Festetics, Vice President I have just attended my second Davos—the annual meeting of the World of Global Solutions 14 Economic Forum. Technology topics and technology leaders were preva- lent throughout the agenda. I was struck by the evolution in the nature ANALYSIS of the discussions in the course of just a year. The focus is shifting from Are Blockchain and the broader concepts of “digital” to a clear understanding of where and how Internet of Things Made for technology and data will affect our businesses, our societies, and our Each Other? 17 lives. We live in exciting times for sure! Q&A Three themes emerged for me as I engaged in conversations and listened Bringing Digital Transformation to presentations at Davos. One is the incredible impact of AI and data at to Airbus: An Interview scale. There are many real applications of these technologies in today’s with Marc Fontaine, Digital business environment (and even more are emerging), and the impacts Transformation Officer 22 are significant. Another theme: the fact that there are many issues still to be resolved. There’s a real call to action for leaders, particularly when it VIEWPOINT comes to how we build and use algorithms, how to ensure ethical and Do You Have the Courage appropriate uses of data, and, importantly, how we help our workforces to Be an Agile Leader? 25 adapt to the rapidly changing environment. And, finally, there is a need for convergence in our thinking about technology and humanity and PERSPECTIVE putting people at the center of transformations. There are some really Agile Leadership and the Art important topics—from embracing design thinking, to agile and new of Letting Go 28 ways of working, to new approaches to workforce management and en- ablement—for leaders to consider. FOCUS When Agile Meets What technology-related themes are you following? Let us know at Outsourcing 30 [email protected]. FEATURE Karalee Close Using Agile to Help Fix Big Global Leader, Technology Advantage practice Data’s Big Problem 36 Boston Consulting Group | 1 FEATURE AI IS A THREAT TO CYBERSECURITY. IT’S ALSO A SOLUTION. by Ryan Goosen, Anna Rontojannis, Stefan Deutscher, Juergen Rogg, Walter Bohmayr, and David Mkrtchian n May 2018, the New York Times reported that criminals, bad state actors, unscrupulous Ithat researchers in the US and China had competitors, and inside threats will manipu- successfully commanded artificial intelligence late their companies’ fledgling AI programs. (AI) systems developed by Amazon, Apple, The second is that attackers will use AI in a and Google to do things such as dial phones variety of ways to exploit vulnerabilities in and open websites—without the knowledge their victims’ defenses. of the AI systems’ users. It’s a short step to more nefarious commands, such as unlocking Companies are in a cybersecurity arms race. doors and transferring money. And while As cybersecurity firm Crowdstrike’s 2018 Alexa, Siri, and Google Assistant may be the Global Threat Report makes clear, attackers most widely used AI programs in operation, have easy access to more tools as the lines be- they are hardly the only ones. It’s not hard to tween state actors and criminal gangs fade. imagine cyberthieves targeting a financial Malware and identity theft kits are easy to institution’s AI-controlled customer recogni- find and inexpensive to buy on dark web ex- tion software or a shady competitor attacking changes. AI-enabled attack kits are on the another company’s AI pricing algorithm. In way, and we can expect that they will be fact, more than 90% of cybersecurity profes- readily available at commodity prices in the sionals in the US and Japan expect attackers next few years. to use AI against the companies they work for, according to a survey by cybersecurity Yet for all the inherent risk AI presents, part firm Webroot. of the answer might lie in harnessing the power of AI itself to strengthen existing cybersecurity set-ups. Our experience shows Companies can protect that companies can begin to protect their systems by integrating AI into their security, their systems by integrating starting now. AI into their security. A New Risk for Companies… The list of actual AI applications is already For people with responsibility for corporate long and growing. Faster and more accurate security—everyone from CIOs to CISOs and credit scoring for banks, improved disease di- CROs—AI presents two types of risk that agnosis and treatment development for change the nature of their jobs. The first is health care companies, and enhanced engi- 2 | BCG Technology Advantage neering and production capabilities for man- neers in this field, cybersecurity is of less con- ufacturers are just a few examples. A survey cern to companies that are lagging behind. in 2017 by BCG and MIT Sloan Management (See Artificial Intelligence in Business Gets Real, Review found that about 20% of companies a report by the MIT Sloan Management Review have already incorporated AI in some offer- in collaboration with the BCG Henderson In- ings or processes and that 70% of executives stitute, Fall 2018.) expect AI to play a significant role at their companies in the next five years. Companies’ AI initiatives present an array of potential vulnerabilities, including malicious With all the benefits, however, come substan- corruption or manipulation of the training tial risks. For example, machine-learning al- data, implementation, and component config- gorithms and certain other types of AI work uration. No industry is immune, and there are by using “training” data to learn how to re- many categories in which machine learning spond to different circumstances. They then and AI already play a role and therefore pres- learn by doing, incorporating additional data ent increased risks. For example: as they work, refining their approach in an iterative manner. (See “The Building Blocks • Financial (credit fraud might be easier, for of Artificial Intelligence,” BCG article, Sep- example) tember 2017, and “The Big Leap Toward AI at Scale,” BCG article, June 2018.) From a secu- • Brand or reputational (a company might rity perspective, that methodology presents appear discriminatory) two challenges. • Safety, health, and environment (systems might be compromised that control Companies’ AI initiatives cyberphysical devices that manage traffic flow, train routing, or dam overflow) present an array of potential • Patient safety (interference might occur in vulnerabilities. medical devices or recommendation systems in a clinical setting) First, AI systems are generally empowered to • Intervention in, or meddling with devices make deductions and decisions in an auto- connected to the Internet of Things (IoT) mated way without day-to-day human in- that use machine learning or AI systems volvement. They can be compromised, and that can go undetected for a long time. …And an Opportunity, Too Second, the reasons that a machine-learning The good news for companies is that they can or AI program makes particular deductions tap the power of AI to both upgrade their cy- and decisions are not always immediately bersecurity capabilities and protect their AI clear to overseers. The underlying deci- initiatives (so long as they layer in appropri- sion-making models and data are not neces- ate protections to the AI systems being used sarily transparent or quickly interpretable (al- for defense). Moreover, investments in AI will though significant effort is underway to likely have multiple forms of payback. improve the transparency of such tools). This means that even if a violation is detected, its For one, companies can build in better purpose can remain opaque. As more ma- protection and the potential to at least stay chine-learning or AI systems are connected even with the bad guys.

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