technology firm case study

How six companies are using technology and data to transform themselves

The next normal: The recovery will be digital

A study referenced in the popular magazine Psychology Today concluded that it takes an average of 66 days for a behavior to become automatic. If that’s true, that’s good news for business leaders who have spent the past five months running their companies in ways they never could have imagined. The COVID-19 pandemic is a full-stop on business as usual and a launching pad for organizations to become virtual, digital-centric, and agile—and to do it all at lightning-fast speed.

Now, as leaders look ahead to the next year and beyond, they’re asking: How do we keep this momentum going? How do we take the best of what we’ve learned and put into practice throughout the pandemic, and make sure it’s woven into everything we do going forward? “Business leaders are saying that they’ve accomplished in 10 days what used to take them 10 months,” says Kate Smaje, a senior partner and global co-leader of McKinsey Digital . “That kind of speed is what’s unleashing a wave of innovation unlike anything we’ve ever seen.”

“The crisis has forced every company into a massive experiment in how to be more nimble, flexible, and fast.” Kate Smaje, senior partner, McKinsey & Company

That realization is coming not a moment too soon. Even before the global health crisis hit, 92 percent of company leaders surveyed by McKinsey thought that their business model would not remain viable at the rates of digitization at that time. The pandemic just put that whole scenario on steroids. The companies that are leading the way out of this crisis, the ones that will grab market share and set the tone and tempo for others, are the ones first out of the gate. “The fundamental reality is that the accelerating speed of digital means that we are increasingly living in a winner-take-all world,” Smaje says. “But simply going faster isn’t the answer. Rather, winning companies are investing in the tech, data, processes, and people to enable speed through better decisions and faster course corrections based on what they learn.”

Large incumbents who are winning the digital transformation battle get lots of things right. But McKinsey research has highlighted a few elements that really stand out:

• Digital speed. Leading companies just operate faster, from reviewing strategies to allocating resources. For example, they reallocate talent and capital four times more quickly than their peers.
• Ready to reinvent. While businesses need to maintain the profitable elements of their business, business as usual is a dangerous posture. Leading businesses are investing as much in upgrading the core of their business as they are in innovation, often by harnessing technology.
• All in. These companies aren’t just making decisions faster; the decisions themselves are bolder. Two of the most important areas where this kind of commitment shines through are major acquisitions (leaders spend three times more than their peers) and capital bets (leaders spend two times what their peers do).
• Data-driven decisions. “The road to recovery is paved with data,” Smaje says. Data is providing the fuel to power better and faster decisions. High-performing organizations are three times more likely than others to say their data and analytics initiatives have contributed at least 20 percent to EBIT (from 2016–19).
• Customer followers. Being “customer centric” is well established. But competing pressures and priorities mean that the customer can often be sidelined. Top companies that sustain a comprehensive focus on the customer (in addition to operational and IT improvements) can generate economic gains ranging from 20 to 50 percent of the cost base.

The companies you’re going to meet here are adopting and deploying these digital strategies and approaches at warp speed. Aside from moving thousands of employees from the office, call center, and factory floor to home overnight, they’re using these technologies to rejigger supply chains, stand up entirely new e-commerce channels, and leverage AI and predictive analytics to unearth smarter and more sustainable ways to operate.

I have clients saying that they’ve accomplished in 10 days what used to take them 10 months. Kate Smaje, senior partner, McKinsey & Company

Speed of digital

Most people don’t think of real estate as a particularly tech-savvy sector, but RXR Realty is proving that assumption wrong. Even before the pandemic hit, the New York City–based commercial and residential real estate developer began investing in the digital capabilities that would set it apart from competitors. “Historically, real estate has been a very transactional business,” explains Scott Rechler, CEO of RXR. “We felt that by leveraging our digital skills, we could create a unique and personalized experience for our customers similar to what they’re used to in other aspects of their lives.”

Prior to the global health crisis, RXR had established a digital lab . The company now has more than 100 data scientists, designers, and engineers across the organization working on digital initiatives. The investment in those capabilities—an app that enables move scheduling, deliveries, dog walking, and rent payments on the residential side, and real-time analytics on heating, cooling, and floor space optimization for tenants on the commercial side—allowed RXR to pivot quickly once the pandemic hit. Suddenly, physical distancing and the need for contactless interactions became paramount for RXR’s tenants.

Today, this team is working around the clock to put in place the health and safety protocols that allow tenants to feel safe as they return to the office. Its platform—RxWell—includes a new mobile app that provides information about air quality and occupancy levels of a building, cleaning status, food delivery options, and shift times for worker arrivals. Employees have their temperatures taken via thermal scanners when they enter a building, and heat maps are available online that show how full a restroom or conference room is at any given time. “The investments we made in our digital capabilities before the pandemic are why we’re able to give people peace of mind now as they begin to return to work,” Rechler says.

Reinventing yourself

The exponential growth in digitization coupled with consumer dissatisfaction with traditional brick-and-mortar banking has been driving the launch of fintechs with amazing speed over the past decade. That fact wasn’t lost on investment banking giant Goldman Sachs, which launched Marcus by Goldman Sachs in 2016. Marcus, the firm’s digital consumer business is, as global head Harit Talwar likes to describe it, “a 150-year-old startup that allows people to take control of their financial lives from their phone.” Over the past four years, this digital-first business has grown deposits to $92 billion and $7 billion in lending balances through a combination of organic growth, acquisitions, and partnerships with the likes of Apple and Amazon. Marcus has millions of customers in the United States and United Kingdom.

A digital-first philosophy, Talwar says, means that decisions on new products and services happen quickly. For instance, when the pandemic hit, Marcus realized that some of its customers were going to need assistance. The team decided to allow folks to defer payments on loans and credit cards for several months, without accruing interest. “The real news is not that we did this, but that we took just 72 hours from the time we realized customers needed help to when we rolled it out,” Talwar says. “We were able to do this because of our agile digital technology model.”

For Indonesian mining company Petrosea, the stakes involved in digital transformation were nothing less than survival. Industry changes, increased regulatory requirements, and society’s pushback on mining’s environmental footprint had culminated in what President Director Hanifa Indradjaya calls “an existential threat” for the company. “We’re not the biggest player in the industry, so that left us quite vulnerable,” he says. “If we were to survive, the status quo was not an option.”

In 2018, the company embarked on a three-pronged approach that addressed diversification away from coal, digitization, and decarbonization of its operations. At its Tabang project site, located in a remote area of East Kalimantan, Indonesia, the company employed a suite of advanced technologies, including artificial intelligence (AI) , smart sensors, and machine learning. The sensors enable predictive maintenance of its fleets of trucks, allowing the company to use fewer trucks and address breakdowns before they happen.

To move away from coal and toward copper, nickel, gold, and lithium—the minerals that are required as electrification of developing countries continues—the company is developing a suite of AI-enabled digital technologies to find these metals faster and more efficiently. Addressing its considerable reskilling needs—the majority of Tabang’s workers have no more than a high school education—resulted in the development of a mobile app with popular gamification elements, ensuring that employees would stay engaged and complete their training. The upshot: within six months, Tabang became one of the company’s most profitable operations by reducing costs and increasing production. “Technology enabled us to innovate our business model and remain relevant,” Indradjaya says. “A digital mindset now percolates through every aspect of the company.”

Data-driven decisions

Freeport-McMoRan is combining the power of AI and the institutional knowledge  of its veteran engineers and metallurgists to take its operations to another level. Harry “Red” Conger, chief operating officer of the Phoenix-based company, says real-time data is allowing Freeport to lower operating costs, stand more resilient in tough economic climates (and when commodity prices are falling) and make faster decisions. “A learn-fast culture means we put things into action,” he says. “We don’t sit around thinking about it.”

Case in point: in 2018, Freeport was looking to add capacity at one of its more efficient copper mines—the sprawling complex in Bagdad, Arizona. A $200 million expansion plan, it figured, would enable the company to extract more copper from the site. But a few months later, copper prices dropped—and so, too, was the expensive expansion plan.

Quickly, the company figured out another way. Rather than a huge capital outlay, Freeport began building out an AI model that would allow it to wring more productivity out of the Bagdad site. Decades of mining data—what Conger calls “recipes”—had always dictated the mining process, including how machines and other equipment were run. Data scientists were now being brought in to challenge those long-standing processes.

“Our engineers thought that it was blasphemy that data scientists, who don’t know anything about metallurgy, were proposing that they knew how to run the plant better than they did,” Conger says. But what the AI data showed was that some of the historical recipes were limiting what Freeport was getting out of the Bagdad plant. “The AI model was telling us how much faster the equipment could be run and its maximum capacity,” he adds. By analyzing every aspect of the mining process, the AI models were showing what was possible.

The engineers and metallurgists worked hand in hand with the data scientists. Over the next few months, they began to trust more of the AI recommendations on how to optimize the Bagdad plant. Today, the mine’s processing rate is 10 percent higher than it’s ever been, Conger says, and this same agile AI model is being used at eight of the company’s other mines, including one in Peru that has five times the capacity of Bagdad. Says Conger: “I have people tell me this is the only way they want to work.”

A follow-the-customer mindset

One of the biggest transformations that’s occurred throughout the pandemic is how customers shop. Store closings pushed millions of consumers online, many for the first time. Adapting to this shift quickly and seamlessly became the order of the day for so many retailers the world over. Among them: Levi Strauss and Majid Al Futtaim Retail.

As a company that’s been around for more than 100 years, Levi Strauss knows how to pace itself. But the pandemic threw into overdrive initiatives that were planned out for later this year and beyond. Chief Financial Officer Harmit Singh says the San Francisco–based apparel company was ready. Investments in digital technologies, including AI and predictive analytics, before the pandemic hit allowed Levi’s to react quickly and decisively as consumers switched to e-commerce channels in droves.

To meet demand, the company began fulfilling online orders not just with merchandise in fulfillment centers but from its stores. Prior to the health crisis, Singh says it would have taken weeks or months to work out the logistics of such a move, but as the pandemic rolled across the country, Levi’s was able to accomplish the shift in a matter of days. It quickly launched curbside pickup at about 80 percent of its roughly 200 US-based stores. And while it launched its mobile app before the appearance of COVID-19, the company has leveraged it in creative ways to connect with consumers during the pandemic. “It was important for us to enhance our engagement and stay connected with customers who were at home,” he says.

Even before the global health crisis hit, 92 percent of company leaders surveyed by McKinsey thought that their business model would not remain viable at the rates of digitization at that time.

Last year, Levi’s began making investments in AI and data in order to get a better handle on when and how to run promotions. A campaign that ran in May throughout Europe was launched using information gleaned from an AI model and wound up driving sales that were five times higher than in 2019. “AI gives us the ability to quickly transform data and facts into action,” Singh says. “We’re using this intelligence alongside our own consumer expertise and judgment to drive better results.”

Majid Al Futtaim, the Dubai-based conglomerate that operates the Carrefour grocery chain in the Middle East, Africa, and Asia, was building its digital muscle long before COVID-19. It decided back in 2015 that it needed to be as prominent online as it is in its 315 brick-and-mortar stores across 16 countries, says Hani Weiss, CEO of Majid Al Futtaim Retail. The company was making progress, but Weiss says there was little urgency to move any faster.

Then the pandemic hit. Online grocery orders for the company exploded, and they are now 400 percent higher than what they were in 2019. “The pandemic pushed us to accelerate our digital transformation,” Weiss says. “We are implementing in the coming 18 months things we originally said we wanted to achieve in five years.”

To accommodate increased online shopping demand, the company quickly converted some physical stores to fulfillment centers. When data showed that more capacity was needed, logistics managers quickly arranged to have a 54,000-square-foot online fulfillment center tent erected and operational in five weeks. Complete with rooms for frozen and chilled food, the facility stocks more than 8,000 items and is now handling 3,000 online orders a day, making it the latest and largest of 75 fulfillment centers launched this year.

Weiss says the company expanded delivery services through initiatives such as Click and Collect, redesigned its app to make it easier for customers to use, and launched contactless payment options such as Mobile Scan and Go in its stores, which allow customers to scan items on, and pay with, their smartphones. It also launched an online marketplace with 420,000 new products from other retailers whose stores were closed during the lockdown, enabling them to continue to sell their products online.

“No matter how our customers want to shop, we can be there for them,” Weiss says. “We developed this agility through the pandemic, and I want to keep it as we go forward.”

The road ahead will certainly have challenges, these leaders acknowledge. But there’s also a tremendous amount of hope because of the doors that a digital-first strategy can open. “The companies that are winning aren’t making incremental improvements,” Smaje says. “They’re harnessing technology to reimagine how business runs and committing resources at sufficient scale to make sure the change sticks.”

Go behind the scenes and get more insights with “ Kate Smaje: Why businesses must act faster than ever on digitization ” from our New at McKinsey blog.

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Microsoft: A Case Study in Strategy Transformation

If you’re leading your team through big changes, this episode is for you.

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In early 2015, Microsoft’s senior leaders were facing a set of difficult decisions. The firm had been struggling to innovate and grow as fast as its competitors. Now they were considering new opportunities that would yield higher growth but lower margins — like shifting away from perpetual licensing to focus on subscription sales.

Harvard Business School professor Fritz Foley studied this period of transformative change at Microsoft for a business case study he wrote. In this episode, he shares how Microsoft’s leaders analyzed different options and worked to get both investors and employees on board with new ideas about growth. He also explains how the company’s risk-averse culture evolved in order to execute such a huge transformation.

Key episode topics include: strategy, growth strategy, business models, corporate governance.  

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

• Listen to the original Cold Call episode: The Transformation of Microsoft (2018)
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• Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org

HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand selected to help you unlock new ways of doing business.

In early 2015, Microsoft’s senior leadership team was facing a set of difficult decisions. The firm had been struggling to innovate and grow as fast as its competitors. Now, they were considering new opportunities that would yield higher growth, but lower margins like shifting away from perpetual licensing to focus on subscription sales.

Today, we bring you a conversation with Harvard Business School professor Fritz Foley, who studied this period of transformative change at Microsoft for a business case study he wrote. In this episode, you’ll get a window into how Microsoft’s leaders analyzed different options and got both investors and employees on board with a different idea of growth. You’ll also learn how the company’s risk-averse culture had to evolve in order to execute such a huge transformation.

This episode originally aired on Cold Call in July 2018. Here it is.

BRIAN KENNY: Electronics enthusiasts in the 1970s looked forward to it every year: the January issue of Popular Electronics . That is because that issue was known for featuring the coolest up-and-coming products in the world of electronics. And when the January 1975 issue hit newsstands, it did not disappoint. The cover was adorned with the first available image of the Altair 8,800, the world’s first mini-computer kit. It may not have been the shot heard around the world, but many say that it was the spark that ignited the home computer revolution. That very magazine inspired a young Paul Allen and Bill Gates to turn their passion for computers into a business that subsequently became an empire.

Today, Microsoft Corporation is the third most valuable company in the world and the world’s largest software company. But after four decades of buffeting the headwinds of the very industry it helped to create, Microsoft is at a turning point and the way forward is not entirely clear. Today we’ll hear from Professor Fritz Foley about his case entitled “The Transformation of Microsoft.” I’m your host, Brian Kenny, and you’re listening to Cold Call .

SPEAKER 1: So, we’re all sitting there in the classroom.

SPEAKER 2: Professor walks in.

SPEAKER 3: And they look up and you know it’s coming. The dreaded cold call.

BRIAN KENNY: Professor Fritz Foley’s Research focuses on corporate finance. He’s an expert on investment capital structure, working capital management, and a range of related topics, all of which probably factor into the case today. Fritz, thanks for joining us.

FRITZ FOLEY: Thanks so much for having me.

BRIAN KENNY: So, everybody pretty much knows who Microsoft is, and I think people will be really interested in getting a glimpse into where they were at this turning point in the company’s history. Still a very, very important company in the landscape of the technology industry and beyond. So, I think people will relate right away to this, but let me ask you, if you could start just by setting the stage for us. How does the case begin? Who’s the protagonist and what’s on her mind?

FRITZ FOLEY: Yeah, so the protagonist is Amy Hood, who is Microsoft’s CFO. She also was a student here at HBS at the time that I was in the PhD program. So, I’ve known her for some time and she’s facing a set of choices that really revolve around whether or not Microsoft should try to pursue increased margin or increased growth.

BRIAN KENNY: Okay. What prompted you to write the case? Your connection with Amy obviously is part of that, but why Microsoft and why now?

FRITZ FOLEY: I think I have been struck by the transformation that they are in the midst of. This is a company that… I mean, it’s hard to remember this. In the early two thousands, the stock price was stuck in the 20 to $30 a share range. And there was a group of people who were calling for the firm to be managed essentially for cash distributions and for increased margins. And then there were some growth opportunities that the company faced simultaneously. So, there was a real choice as to what direction to head. And I think this is a compelling choice that many other companies face. So, it’s a powerful example for me to highlight in course I teach about chief financial officers.

BRIAN KENNY: Microsoft was the first player on this stage really, but then Apple came along and I think many people look at these two as fierce competitors. But can you just talk about the difference between these two companies in terms of how they manage their financial strategy?

FRITZ FOLEY: Yeah, I can say a bit about that. So, at one level, they certainly are similar. They’re in tech space and in fact, many things that Microsoft was attracted to phones in particular, is something that Apple has excelled at. And I think that at the time of the case, they were quite different in the eyes of investors, I would say. I would say that investors still viewed Apple as having a lot of a growth emphasis of a commitment to innovating new products and solving problems that people weren’t even sure they had. Whereas Microsoft was the older, more established tech firm that I think, in the eyes of some, had become not a relic of the past, but less relevant when thinking about future innovations. And in some sense, the cases about how Microsoft tried to shed that view and become a relevant growth-oriented entity again.

BRIAN KENNY: And they’d certainly been criticized over the decades for not moving quickly enough to innovate and getting caught up in their own. And you think about IBM maybe as a company that faced similar criticisms getting caught up in just their size and the bureaucracy of the place. What did Microsoft’s business look like in 2012? Because that seemed to be the beginning of the turning point?

FRITZ FOLEY: Yeah. I mean, it was one where there was varying performance across divisions. There was interest by value activist investors given the large cash holdings that the firm had. Obviously, their market share when it came to the office suite of products and windows, those were quite high. And they were obviously very successful in continuing to provide versions of that to a whole variety of users. They had emerging cloud business, but it wasn’t clear that they would win in that space and had really struggled in other spaces.

In search, Bing never got traction relative to Google. In phones, they were really struggling in 2012 right before they tried to make more headway in phones by buying Nokia, which also subsequently didn’t work out as well as they had hoped. So, I think along a series of dimensions, they were really trying to get some traction, trying to get footing in new spaces. And there were a group of investors that actually felt like that wasn’t what they should do. That they should just focus on Office, focus on Windows, enjoy the high margins that came with their on-premises server and tool business offerings. So, they faced some really hard choices.

BRIAN KENNY: And they were also, in terms of just the organization itself up against some issues, what were some of the things they were encountering culturally at the time?

FRITZ FOLEY: Yeah. I mean, it’s a fascinating story from a cultural standpoint. It was an environment where there were high returns to showing that you were the smartest person in the room. Some of the stories that I have heard are a little jarring. I am not sure I would’ve survived in this environment. There were these very long mid-year reviews that took place and were incredibly demanding. It was an environment that was beginning to really emphasize the desire to be efficient, to be right, and in fairness to them, and Microsoft was coming from a culture or their culture came from a place where they were selling a product that couldn’t really fail. People had very high expectations for the performance of everything Microsoft provided them. And unlike today where there’s more room to update things through online updates, a lot of the software, it shipped and it had to be close to perfect when it shipped.

BRIAN KENNY: Actually, I can remember a time when the launch of a new Windows system was similar to the launch of a new iPhone. People were really excited to get the new system, but inevitably there were bugs and those were highly publicized, and so they fell under a lot of criticism. They were really operating under a microscope for a long time.

FRITZ FOLEY: For sure. And we’re keenly aware that time to fail in their products, which is a measure of how long it took for some product or process to break down, had to be very long. Otherwise, they would meet with a lot of customer dissatisfaction.

BRIAN KENNY: Yeah. Okay. So, let’s move into the transformation phase for them. What was the fundamental shift they made in terms of changing or restructuring the organization?

FRITZ FOLEY: In my view, I think that they did a variety of things to adopt more of a growth orientation. And some of this dealt with their metrics. Some of it dealt with very explicit changes to the culture, and I think some of it also dealt with a realization that pursuing growth would enhance value much more than trying to increase margins and have large dividend payouts or larger dividend payouts to shareholders. So this was, I would say in the 2012, 2013 timeframe, we began to see pieces of this. And they also faced significant managerial changes at that time. That’s when Steve Ballmer retired and they needed to pick a new CEO and could have gone a variety of directions there. And by picking Satya Nadella, effectively we’re committing to more of a growth path.

BRIAN KENNY: Can you think of an example of a company that chose the margins path? And I mean, these are both potentially successful choices, but I would guess.

FRITZ FOLEY: For sure. And it’s a very hard trade-off to make. In teaching my MBA students and executive education students I’m always struck, when I ask them, “Would you sacrifice some margin for growth,” how hard that question can be and how many people don’t have much intuition for it. So, other companies did go the margin route.

BRIAN KENNY: Yeah. Is it a situation where the margin choice is one that’s probably more comfortable and the returns are going to come sooner and the growth choice is a little riskier, and for a risk-averse culture probably harder to implement and you’re betting on the future? Is that fundamentally what the choice is?

FRITZ FOLEY: Yeah. I think that’s a really good way of putting it. Many people find it easier to see the benefits that come with cutting costs and looking for efficiencies and worry that what may come with growth could be elusive. And in some regards, I have heard senior finance managers say that they had to earn the permission to go after growth. They have to get the buy-in from a group of investors who feel as if the senior leadership team has credibility in pursuing growth.

BRIAN KENNY: So, here we have Microsoft, an enormous company, 130,000 or so employees, something like that, large by any measure about to pursue an option that is in many ways counter to the culture of the organization. How do you do that? How do you cascade this kind of a change through an organization of that size?

FRITZ FOLEY: On the cultural side, one thing that they did was very explicitly dropped a growth mindset culture. And Satya Nadella writes about this in his recent book, Refresh. The story is, for me, very compelling. It’s incredibly hard to get any organization to change its culture. Whenever I’ve been a part of an organization that tried to engage in a cultural shift, whatever the tagline was, quickly became the punchline for a set of office jokes.

BRIAN KENNY: I’ve been on the other side of that. I’m the guy who writes the punchlines most often.

FRITZ FOLEY: Yeah. So, you know how hard this is. And I think that they were very wise in picking Kathleen Hogan who had led one of the divisions of Microsoft to head up the charge to describe and roll out this cultural change. They brought senior leaders on board, and ultimately, I think there was a lot of demand for it that many people who were working at Microsoft were innovative engineers and a very creative set of employees who wanted to pursue growth. And when given the choice to move away from review processes and given the opportunity to go to meetings where they didn’t feel like they had to be exactly right in making a point, but could stimulate the beginning of a discussion set of ideas that could lead to something that was new, people embraced that.

BRIAN KENNY: And here we are in the age of the millennial worker. Millennials don’t want to work for the old Microsoft for sure. And Microsoft is competing with the likes of Google and Apple and other firms that are definitely perceived as open and innovative, and they want people with energy and ideas. So, they have to adopt that same personality, I guess.

FRITZ FOLEY: Yeah, I agree with that. I think there’s a new buzz about Microsoft, at least among my students, they’re much more intrigued by what it would mean to work there and what opportunities exist to do some things that would be truly novel and have a big impact on how people get work done.

BRIAN KENNY: So, let’s go back to our protagonists. Amy Hood in the case actually delves into her mindset a little bit. She’s getting ready to communicate these changes to the financial community. What are the kinds of things a CFO would have to think about? Because I can imagine the financial probably is more comfortable with the margin choice than the growth choice

FRITZ FOLEY: Yeah, for sure. It’s fun for me to imagine her faced with this choice really of, okay, I can go this path of growth, but if I do this, I am going to have to go to my investors and say, our margins are going to go down for some period of time, and you’re not going to like that. But there’s going to be some upside and it will take some time for that upside to show up. So, I think she needed to find ways to communicate or signal what that upside would be and how big it might be to the investors so that she wouldn’t lose credibility with them and would have the permission essentially to pursue growth.

BRIAN KENNY: Yeah. Now we hear it all the time about the emphasis on the short-term, short-termism in the financial community, and people want returns and they want them right away. In your experience, are you seeing a shift in the financial community, or are the analysts getting a little more comfortable with this notion of you can’t always go for the margins, you’ve got to find some sustainable growth in the long term?

FRITZ FOLEY: Yeah. It’s a great question. It’s one that troubles me or is something I think about our financial system generally. I happen to be probably more optimistic relative to many when it comes to how short-term-oriented, or really how financial markets aren’t as, as some might worry, or that concern about short-termism doesn’t resonate as much with me. I do think there is a big burden on senior finance teams to explain how value is created by thinking long-term and embracing growth opportunities. And in some sense, when I look at what Amy has been doing at Microsoft, I applaud her and her team for taking on that challenge. They quite explicitly set a target of a $20 billion run rate for their commercial cloud business, and once analysts had that number, they could begin to build off of it and get a feel for how much value could be created if Microsoft succeeded at pulling this off.

So, by having the courage to commit to that path and help analysts understand what the path meant, I think that they have been effective in pursuing it. More generally, I do worry that there are some analysts that simply take an earnings-per-share number and apply some current multiple and don’t think much about what the future will look like. I am hopeful that finance teams and organizations will play a role in educating analysts as to how they should think about the future, when growth opportunities do exist and are attractive.

BRIAN KENNY: Yeah. You mentioned earlier that you’ve talked about this in class, and I’m just curious, do the MBA students come at this differently than the executive education students who have been in fiduciary roles and organizations already?

FRITZ FOLEY: Yeah. That’s an interesting question. Let me reflect on that for a moment. I think the approach is fairly similar. I would say that some MBA students are probably less aware of the constraints that capital markets may put on senior management teams to pursue growth. They’re less aware of what an activist who wants cash now might push management to do, whereas executive education students tend to be keenly aware of those pressures. If anything, I find that MBA students, it’s a little bit harder for them to articulate what is the case for pursuing margin for Microsoft in 2012, 2013. Many executive education students are quick to come up with lists of things that could be done strategically financially in picking leadership.

BRIAN KENNY: Yeah, it’s interesting. And anybody who’s worked in an organization for any period of time, going back to that whole notion of how hard it is to change a culture, it’s pretty easy to think of reasons why not to pursue that path. So, I thought maybe some of the exec ed students might come at with those constraints already wrapped around themselves.

FRITZ FOLEY: Yeah, I agree.

BRIAN KENNY: Yeah. Fritz, thanks for joining us today.

FRITZ FOLEY: Thanks very much for having me.

HANNAH BATES: That was Harvard Business School Professor Fritz Foley in conversation with Brian Kenny on Cold Call . We’ll be back next Wednesday with another handpicked conversation about business strategy from Harvard Business Review.

If you found this episode helpful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. And when you’re ready for more podcasts, articles, case studies, books, and videos with the world’s top business and management experts, find it all at HBR.org.

This episode was produced by Ann Saini and me, Hannah Bates. Ian Fox is our editor. Special thanks to Maureen Hoch, Adi Ignatius, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you, our listener. See you next week.

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Goldman Sachs' Digital Journey

• Format: Print
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About The Author

Sunil Gupta

Related work.

• February 2018
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• Goldman Sachs' Digital Journey  By: Sunil Gupta
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Hacking the Case Interview

If you’re interviewing with technology consulting firms, such as Accenture or Cognizant , you will almost definitely be given a few technology case interviews during the interview process. To successfully land a technology consulting job offer, you’ll have to nail each and every case interview.

While technology case interviews may seem intimidating and challenging, they can be consistently solved with the right strategies and practice. In this article, we’ll cover:

• What is a technology case interview?
• The 6 steps to solve any technology case
• Technology case interview frameworks
• 7 technology case interview examples to practice
• Recommended technology case interview resources

If you’re looking for a step-by-step shortcut to learn case interviews quickly, enroll in our case interview course . These insider strategies from a former Bain interviewer helped 30,000+ land consulting offers while saving hundreds of hours of prep time.

What is a Technology Consulting Case Interview?

Technology consulting is a specialized type of consulting that focuses on helping companies use technology better to be more productive and profitable. Just as with any consulting firm, technology consulting firms use case interviews to identify candidates that have the potential to become great consultants.

As you would expect, technology consulting case interviews focus on business problems that center around a company’s use of technology. Technology cases place you in a hypothetical business situation in which you will work with the interviewer to develop a recommendation or solution to a technology problem.

Types of business situations that you could expect to see in technology consulting cases include:

• Deciding whether a company should buy or build a particular technology solution
• Deciding which vendor a company should partner with for their technology solution
• Deciding whether a company should develop technology in-house or outsource development elsewhere
• Determining whether outsourcing of technology should be done onshore or offshore

Technology consulting firms use case interviews because they assess a variety of different qualities and traits in just a 20- to 30-minute exercise. There are five major qualities that technology case interviews assess:

Logical, structured thinking : Can you structure complex problems in a clear, simple way? Can you use logic and reason to make appropriate conclusions?

Analytical problem solving : Can you read and interpret data well? Can you conduct the right analyses to draw the right conclusions?

Business acumen : Do you have a basic understanding of fundamental business and technology concepts? Do your recommendations make sense from a feasibility perspective?

Communication skills : Can you communicate in a clear, concise way? Are you articulate in what you are saying?

Personality and cultural fit : Are you coachable and easy to work with? Are you pleasant to be around?

The 6 Steps to Solve Any Technology Case Interview

The approach to solving technology consulting cases is generally the same as traditional case interviews. Generally, you’ll want to follow these six steps.

1. Understand the case

Your technology case interview will begin with the interviewer giving you the case background information. While the interviewer is speaking, make sure that you are taking meticulous notes on the most important pieces of information. Focus on understanding the context of the situation and the objective of the case.

Don’t be afraid to ask clarifying questions if you do not understand something. You may want to summarize the case background information back to the interviewer to confirm your understanding of the case.

The most important part of this step is to verify the objective of the case. Not answering the right business question is the quickest way to fail a case interview.

2. Structure the problem

The next step is to develop a framework to help you solve the case. A framework is a tool that helps you structure and break down complex problems into smaller, more manageable components. Another way to think about frameworks is brainstorming different ideas and organizing them into different categories.

Before you start developing your framework, it is completely acceptable to ask the interviewer for a few minutes so that you can collect your thoughts and think about the problem.

Once you have identified the major issues or areas that you need to explore, walk the interviewer through your framework. They may ask a few questions or provide some feedback.

For a complete guide on how to create tailored and unique frameworks for each case, check out our article on case interview frameworks .

3. Kick off the case

Once you have finished presenting your framework, you’ll start diving into different areas of your framework to begin solving the case. How this process will start depends on whether the case interview is candidate-led or interviewer-led .

If the case interview is a candidate-led case, you’ll be expected to propose what area of your framework to start investigating. So, propose an area and provide a reason for why you want to start with that area. There is generally no right or wrong area of your framework to pick first.

If the case interview is interviewer-led, the interviewer will tell you what area of the framework to start in or directly give you a question to answer.

4. Solve quantitative problems

Technology cases typically have some quantitative aspect to them. For example, you may be asked to calculate a certain profitability or financial metric.

The key to solving quantitative problems is to lay out a structure or approach upfront with the interviewer before doing any math calculations. If you lay out and present your structure to solve the quantitative problem and the interviewer approves of it, the rest of the problem is simple execution of math.

5. Answer qualitative questions

Technology case interviews will also typically have qualitative aspects to them. You may be asked to brainstorm a list of potential ideas. You could also be asked to provide your opinion on a particular business issue or situation.

The key to answering qualitative questions is to structure your answer. When brainstorming a list of ideas, develop a structure to help you neatly categorize all of your ideas. When giving your opinion on a business issue or situation, provide a summary of your stance or position and then enumerate the reasons that support it.

6. Deliver a recommendation

In the last step of the tech case interview, you’ll present your recommendation and provide the major reasons that support it. You do not need to recap everything that you have done in the case, so focus on only summarizing the facts that are most important.

It is also good practice to include potential next steps that you would take if you had more time or data. These can be areas of your framework that you did not have time to explore or lingering questions that you do not have great answers for.

Technology Case Interview Frameworks

While the approach to solving technology case interviews is typically the same as traditional case interviews, there are some frameworks you should be familiar with that are specific to technology issues.

Some of these frameworks are more technical than others.

Generally, if you have a strong IT or technology background and are interviewing for a more senior role, you should expect your technology case interviews to be more technical. However, if you are interviewing for an entry level technology consulting role, you’ll likely not need to know many of these frameworks.

PPT Framework

The PPT framework stands for people, process, and technology. These are the three components that are necessary for organizational transformation and management. To achieve organizational efficiency, a company needs to have all three of these components streamlined.

People : Do employees have the right skills, experience, and attitude for the job? Do they have clear roles and responsibilities? Does the project have buy-in from the right people?

Process : Are the right processes in place? Are these processes run smoothly and efficiently? Are there potential bottlenecks or roadblocks?

Technology : Are the right technologies being used? Are these technologies being used to their maximum potential?

Factors to Evaluate Technology Framework

Often, you’ll need to use a framework to evaluate different pieces of technology or different potential technology vendors to work with. One of the most common ways of doing this is by assessing each option on the basis of the following three factors.

Ability to meet requirements : Does the technology or vendor satisfy all of the requirements?

Cost of project : What is the fully-loaded cost of the project? Do the costs meet the designated budget?

Time to launch : How long will it take to launch and implement the solution? Does this timeline satisfy goals and expectations?

ITIL Framework

ITIL stands for Information Technology Infrastructure Library. It is the first of our more technical frameworks for technology case interviews.

The ITIL framework is one of the most widely used approaches for managing IT services. IT services use the ITIL framework to ensure that their services are delivered in a customer-focused, high-quality, and economical way.

There are five stages in the lifecycle of information technology.

Service Strategy : Decide on a strategy to serve customers by starting with an assessment of customer needs and the market place. Determine which services the IT organization should offer and what capabilities need to be developed.

Service Design : Design new IT services, which includes making changes and improvements to existing services.

Service Transition : Build and deploy IT services. Ensure that changes to services are carried out in a coordinated way.

Service Operation : Ensure that IT services are delivered effectively and efficiently. This includes fulfilling user requests, resolving service failures, fixing problems, and carrying out routine operational tasks.

Continual Service Improvement : Learn from past successes and failures to continually improve the effectiveness and efficiency of IT processes and services.

TOGAF Framework

TOGAF stands for The Open Group Architecture Framework. It provides an approach for designing, planning, implementing, and governing an enterprise information technology architecture.

TOGAF is based on four areas of specialization called architecture domains:

Business architecture : The business strategy, governance, organization, and key business processes of the organization

Data architecture : The structure of an organization’s logical and physical data assets and the associated data management resources

Applications architecture : The blueprint for the individual systems to be deployed, the interactions between application systems, and their relationships to the core business processes of the organization

Technical architecture : The hardware, software, and network infrastructure needed to support the deployment of core and mission-critical applications

CMMI Framework

CMMI stands for Capability Maturity Model Integration and is used to guide process improvement across a project, division, or entire organization. CMMI defines five maturity levels for processes.

Level 1: Initial : Processes are unpredictable, poorly controlled, and reactive.

Level 2: Managed : Processes are characterized for projects and are often reactive.

Level 3: Defined : Processes are characterized for the organization and are proactive.

Level 4: Quantitatively Managed : Processes are measured and controlled.

Level 5: Optimizing : Processes are not only measured and controlled, but also focused on process improvement.

Technology Case Interview Examples

There are much fewer technology practice cases available online compared to traditional case interview cases. However, Deloitte’s case interview website offers two technology consulting cases that you can work through on your own.

• MedX: The Smart Pill Bottle (business technology case)
• Architecture Strategy: Federal Finance Agency (business technology case)

For more practice, check out our article on 23 MBA consulting casebooks with 700+ free practice cases .

Land Your Dream Consulting Job

Here are the resources we recommend to land your dream consulting job:

For help landing consulting interviews

• Resume Review & Editing : Transform your resume into one that will get you multiple consulting interviews

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• Comprehensive Case Interview Course (our #1 recommendation): The only resource you need. Whether you have no business background, rusty math skills, or are short on time, this step-by-step course will transform you into a top 1% caser that lands multiple consulting offers.
• Case Interview Coaching : Personalized, one-on-one coaching with a former Bain interviewer.
• Hacking the Case Interview Book   (available on Amazon): Perfect for beginners that are short on time. Transform yourself from a stressed-out case interview newbie to a confident intermediate in under a week. Some readers finish this book in a day and can already tackle tough cases.
• The Ultimate Case Interview Workbook (available on Amazon): Perfect for intermediates struggling with frameworks, case math, or generating business insights. No need to find a case partner – these drills, practice problems, and full-length cases can all be done by yourself.

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• Behavioral & Fit Interview Course : Be prepared for 98% of behavioral and fit questions in just a few hours. We'll teach you exactly how to draft answers that will impress your interviewer.

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Microsoft: A Case Study in Strategy Transformation HBR On Strategy

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In early 2015, Microsoft’s senior leaders were facing a set of difficult decisions. The firm had been struggling to innovate and grow as fast as its competitors. Now they were considering new opportunities that would yield higher growth but lower margins — like shifting away from perpetual licensing to focus on subscription sales. Harvard Business School professor Fritz Foley studied this period of transformative change at Microsoft for a business case study he wrote. In this episode, he shares how Microsoft’s leaders analyzed different options and worked to get both investors and employees on board with new ideas about growth. He also explains how the company’s risk-averse culture evolved in order to execute such a huge transformation. Key episode topics include: strategy, growth strategy, business models, corporate governance. HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week. · Listen to the original Cold Call episode: The Transformation of Microsoft (2018) · Find more episodes of Cold Call · Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org ]]>

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A Fortune 50 tech giant answers big questions with AI

Dig deeper, faster

The team leverages the finely-tuned Relevance score algorithm to surface the most meaningful search results

One platform, all the right info

This firm reduced inter-platform friction and gained efficiency by having all the content they need, all in one place

Ensure first-rate output

Real-time email alerts notify the MD&I team about competitors and ensure their insights keep pace with the market

The company

The Market Development and Insights (MD&I) team at this Fortune 50 multinational technology firm has professionals located around the world that consult with executive decision makers across geographies and business units to provide strategic insights that help drive better business outcomes. In this new era, the firm is reshaping industries with expertise in Cloud, Analytics, Security, Mobile, and the Internet of Things—changing how businesses create, collaborate, analyze, and engage. At the heart of this transformation are Market Development & Insights analysts, who provide a trusted, objective view of the market and its impact on the company, empowering employees to drive actions that grow the business. This AlphaSense user is a Corporate Initiatives Advisor on the company’s MD&I team.

The challenge

In the MD&I team’s ongoing work to support the organization’s innovative vision, certain pain points emerged:

• Complex data searches . The MD&I team has several sources to consult but historically encountered friction when researching a theme or broad question. Since many data firms only allow a search by individual company name or aren’t clear where the specific data point is within a document, thematic search results are often limited and can be time consuming.
• Non comprehensive results for fire drills . Like many big companies, requests for data or insights happen fast and frequently at the firm. Turnaround time can be limited, and manually parsing search results hindered their ability to provide comprehensive answers quickly.
• Incomplete sources . It’s critical that the MD&I team shows a variety of perspectives and insights when presenting results. The sources available didn’t always give them all perspectives.

“The value seemed obvious very quickly.” Corporate Initiatives Advisor

Always on the lookout for the latest tools, the MD&I team started using AlphaSense and as this user pointed out, “The value seemed obvious very quickly.” Big questions could be answered much more comprehensively and rapidly: executives want to know what the competition is doing in AI, and in order to do so they need to understand: where’s the money going? Who’s investing? What type of client is buying and for what use case? How many people within a company are actually dedicated to that project? It always comes down to, what is the impact? What does it mean for the company?

To give a complete answer, MD&I needs to get behind the “marketing veil” all these competitors are hyping, and find hard facts and numbers. With AlphaSense, they feel like they can. Given that their work is shared with high-profile, high-impact teams at the company, AlphaSense has changed the game for them. The team now feels more confident in its analysis and knows it is focusing less on hunting for data and more on high ROI analysis. And that confidence is demonstrated in their workflow: AlphaSense is often the first source the team consults for topic/theme searches

Other critical sources of value:

• Relevance score : AlphaSense Relevance score leverages finely tuned algorithms to surface the most meaningful search results. When running a complex search with broad results, sorting by Relevance allows the team to hone in on the most salient information, fast.
• Depth of insight : AlphaSense content is broad and deep. The MD&I team has examples in which data from months ago was just as important as a document released yesterday. This user mentioned an example: an acquisition in an industry she follows was announced but no external analysis was available yet. But in AlphaSense, she was quickly able to find an old broker report that had hypothesized the acquisition with multiple ideas and outcomes that helped her provide an external view for her analysis.
• Instant alerts : Some MD&I team members are interested in specific competitors. Using email alerts, they are immediately notified of any key changes, data, or results, which not only makes their job easier, but also ensures their output is first rate.

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Cracking the code to smarter B2B technology sales

A multinational tech company unlocks big revenues with a rapid pilot approach to selling cloud services across segments, regions & partner channels.

• Call for Change
• When Tech Meets Human Ingenuity
• A Valuable Difference
• Related Capabilities

Call for change

This tech platform company carved out a top spot in the cloud market with its easy-to-use products and services. But while its solutions were designed for simplicity, the company found selling in the B2B space was getting more complex.  

With an expanding array of cloud solutions and millions of prospects and customers, the company must coordinate across countless channels, global regions, and segments, including small- and medium-sized businesses (SMB), corporate, enterprise, public sector, and education.

The tech platform company knew if it could better manage these moving parts, it stood to capture a greater piece of the B2B market. It set out an ambitious plan to make more effective use of channels, rapidly test and deploy fresh go-to-market strategies, and scale sales processes to better serve its growing customer base.

When tech meets human ingenuity

With Accenture’s help, the tech platform company has reinvented its inside sales strategy to a scalable, human + machine model that rapidly tests new products and segments and optimizes existing ones.

The program has three key areas of focus:

Sales development

Scaling up inbound and outbound demand for the United States, Canada, and Latin America, covering enterprise, corporate, SMB, and public sector segments. Accenture helped the company

• Enrich & prioritize leads across all product categories.
• Qualify leads into new revenue opportunities. 

Partner enablement

Providing enablement and demand and account development services to channel partners across North America and Latin America. This includes:

• Onboarding support
• Ongoing consulting
• Lead generation

Full-cycle SMB sales

Shaping a highly efficient and connected experience for SMBs in Latin America through the full customer journey:

• Acquisition
• Customer success

The result: a scalable, human + machine model that rapidly tests new products and segments and optimizes existing ones—and drives revenue.

A valuable difference

With a new ability to quickly test and optimize go-to-market strategies, the company is seeing pipeline, revenue, and partner satisfaction soar to new heights. Key results to date include:

in new pipeline

in upsell, cross-sell, and net-new revenue

increase in lead-to-pipeline conversion rate

In addition to the sales impacts, Accenture’s SMB team has outperformed their expected revenue goal by 28%, and Accenture’s partner team has helped the client achieve a partner satisfaction score of 95%, a 20% increase over previous programs.

The tech platform company now hopes to build on these impressive results by expanding programs in North America and Latin America, and establishing similar programs in Europe, and Asia-Pacific—setting the company on course for even greater growth in sales opportunities and revenues.

Related capabilities

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Helping sales leaders evolve their operating models, launch new products and services, and delight customers.

Discover how Grow SMB is enabling success. Because when SMB customers and partners prosper, we all do.

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Harness talent, data and intelligence to deliver superior customer experiences and business outcomes.

"These sessions support our innovation agenda. They force us to take time and space for creative thought, which then stimulates innovation by being open to serendipity and making creative connections.”

Organization

A selection of short stories

Cross-Functional Participant Roles

An ongoing global program of Reflection Point sessions designed to strengthen and embed this leading company’s values, as well as advance inclusion through better understanding of other perspectives.

Reflection Point partnered with a well-known global technology company to deliver both in-person and virtual programming—facilitated sessions around a single short story chosen in cooperation with the respective leaders, with the firm’s corporate values and inclusion in mind.

Participants have expressed the belief that the Reflection Point program strengthens companywide commitment to its Respect, Accountability and Integrity corporate values. The sessions also aimed to support improved inclusion, innovation, collaboration and learning. Several who participated during the pandemic said the activity was particularly welcome during the time of separation.

Program Outcomes and Participant Reflections In interviews, participants reflected on the way Reflection Point:

Strengthens core commitment to the company’s Respect, Integrity, Accountability values. “There were some deep conversations connecting the concepts with personal experiences and our company values.”

“We see how the power of stories helps with team connections and collaborations while anchoring on our values.”

“Reflection Point is one of those few avenues where we went from talking about our opinions at work and why we think they are valid to here's how this aligns with my values and what I think our company stands for.”

“I think it helps with the company culture that we want to have, which is being open and respectful, appreciating others' opinions—living our company's values and showcasing them. The Reflection Point program is a vehicle to drive better collaboration and better understanding.”

"I wish we could sustain these conversations. It is imperative for every organization to spur these discussions among its employees. After all, we are human at our core and our personal perspectives/values/biases create the workplace culture. Reflection Point is a great catalyst for such transformations.”

"The experience provided individuals an opportunity to speak from a place of authority—their own opinions, backgrounds, etc.—at work. Sometimes, our meetings are led by the most senior people in the room and giving people the chance to speak openly in a safe environment is a good exercise to help build confidence in speaking up in team/business-oriented meetings."

Supports inclusion across the company. “It had a clear application to the workplace—helping better understand how differently people see the world.”

"People were immediately speaking more from their personal insights and their personal experience, their frame of reference. In the other diversity and inclusion experiences, there's some of that that goes on, but in Reflection Point there is this element of everybody starting from the same point. It leveled the playing field because we all were discussing this piece of literature that we didn't have any previous exposure to.”

“The entire experience during the three sessions was representing diversity and inclusion, encouraging open conversation with your colleagues on topics where some of us have completely different perspectives and points of view. We are all culturally diverse and come from different backgrounds, thus listening to a wide range of opinions helps to form a more inclusive mindset.”

"I think Reflection Point contributes to shaping the inclusive environment. Overall it just helps you understand that you can open up and be yourself and be very transparent in your point of view. It pushed the curiosity out, and I personally had fruitful discussions with some of my colleagues afterwards."

Advances innovation and collaboration. “That removing-of-the-armor is a really valuable way to break down those barriers and ultimately create stronger connections.”

“Reflection Point was a very valuable learning experience for me. Learning about my colleagues, learning about their opinions, their backgrounds, the assumptions that we make every day.”

"It's great to be able to practice a deeper level of engagement when we're just talking about a piece of literature. Because the next time we're talking about something where we have more skin in the game in terms of our professions, we will have worked through practicing that communication dynamic."

Program Leader Feedback Program leaders saw the value of Reflection Point as well:

"In the Reflection Point session we discussed multiple scenarios and how one could perceive the situation, which provided a rich discussion on perspectives and multiple narratives. That then allowed us to continue the discussion with real life examples at work that fostered a ‘common language.’ The power of these stories could help with team connections and collaborations while anchoring on our values.”

“Definitely positive feedback. The team is still talking about the different perspectives. I think it worked well that we started with the values discussion… so there was a common language we could use.”

“The story “Good Hunting” was beautiful. Here, we are beacons of innovation and disruption. The story caused us to consider what collateral damage we create when we strive to be faster, better, more efficient. How do you balance culture with progress?”

"Particularly in an environment where people are focused on success through teamwork, this is a really great way to build bonds and connections.”

More success stories

National retail company.

A national retail company's Women of Color ERG met across functions and geographies to deepen relationships and explore common and diverse experiences.

Several programs in a global NGO designed to foster connection, cohesion and collaboration among colleagues.

Global Financial Services Firm

A Women's History Month event to reflect on the role of women in the workplace and the world, through story.

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Leading transformation in manufacturing: Case studies in technology-driven innovation

Social share:.

To examine the opportunities and challenges this convergence presents, and to understand the role of technology executives in leading the organisational transformation required to capitalise on it, The Economist Intelligence Unit interviewed executives from three manufacturers pursuing digital transformation: 

• Juha Pankakoski, executive vice president of technology, Konecranes
• Andrea Roero, chief information officer, Celli Group 
• Michael Johnson, EMEA chief information officer, Bridgestone

We also interviewed Ryan Martin, principal analyst at ABI Research, and thank all our interviewees for their time and contribution.

This report presents insights and findings from the interviews. Key findings include: 

• The merging of operational technology (OT) and information technology (IT) is one of the main roadblocks to transformation. These two domains have traditionally been managed and led separately, but the opportunities presented by digitisation require concerted effort. Engineering teams may be able adopt IT without the IT department’s involvement but this presents risks, so IT must position itself to offer guidance and input.
• Advanced analytics capabilities are increasingly pivotal. All three executives interviewed for this report are bolstering their analytics capabilities in order to extract greater value from the data collected over the course of the manufacturing process. The added value typically derives from improving efficiency and maintenance, but some companies are increasing customer value too.
• Digital transformation in manufacturing requires IT leaders to play many roles. These include security advocates, radars for emerging technologies and catalysts for agile innovation. A crucial development is that IT leadership no longer has a monopoly on ITrelated decisions. This means their approach to driving change must be more ‘collaborate and advise’ than ‘command and control’.

Introduction

Manufacturing has a long history of transformation driven by wave after wave of technology innovation. But incorporating today’s emerging technologies may prove to be the sector’s toughest transition to date. 

These technologies, which include advanced analytics, artificial intelligence (AI), additive manufacturing, augmented and virtual reality and digital prototyping, offer opportunities to become more agile, more efficient and to create more value for customers. 

But there are signs that manufacturers are dragging their feet. Digitisation across the sector has so far been patchy according to a 2018 report from PwC. In a survey of manufacturers, it found that two-thirds have only just started—or not yet embarked upon—digital transformation.

The study reveals that just 5% of manufacturers in Europe, the Middle East and Africa are “digital champions”; the companies best-placed to benefit from Industry 4.0. This compares to 11% in the Americas and 19% in Asia-Pacific. 

One roadblock is the convergence of OT, which controls the machines on the factory floor, with IT, which collects and analyses the data needed for decision-making. Ryan Martin, principal analyst at ABI Research, explains how, until recently, OT and IT co-existed as distinct areas of responsibility. “But with increased collection and analysis of data from previously unconnected plant-floor machinery, and more pervasive use of digital technologies at the operational level, the lines between the two are blurring fast,” he says.

The importance of data in this amalgamation means chief information officers (CIOs) and their teams have an pivotal role to play. In fact, the three executives interviewed for this report describe not one new role for IT leadership but many. Many of these roles depend on the ability of IT executives to steer technology strategy not through direct control but through influence and guidance to peers. Those who adapt to this style of leadership have greater opportunity to elevate IT’s contribution to the manufacturing sector.

Related content

Accelerating urban intelligence: People, business and the cities of tomorro...

About the research

Accelerating urban intelligence: People, business and the cities of tomorrow is an Economist Intelligence Unit report, sponsored by Nutanix. It explores expectations of citizens and businesses for smart-city development in some of the world’s major urban centres. The analysis is based on two parallel surveys conducted in 19 cities: one of 6,746 residents and another of 969 business executives. The cities included are Amsterdam, Copenhagen, Dubai, Frankfurt, Hong Kong, Johannesburg, London, Los Angeles, Mumbai, New York, Paris, Riyadh, San Francisco, São Paulo, Singapore, Stockholm, Sydney, Tokyo and Zurich.

Respondents to the citizen survey were evenly balanced by age (roughly one-third in each of the 18-38, 39-54 and 55 years and older age groups) and gender. A majority (56%) had household incomes above the median level in their city, with 44% below it. Respondents to the business survey were mainly senior executives (65% at C-suite or director level) working in a range of different functions. They work in large, midsize and small firms in over a dozen industries. See the report appendix for full survey results and demographics.

Additional insights were obtained from indepth interviews with city officials, smart-city experts at NGOs and other institutions, and business executives. We would like to thank the following individuals for their time and insights.

The report was written by Denis McCauley and edited by Michael Gold.

Talent for innovation

Talent for innovation: Getting noticed in a global market incorporates case studies of the 34 companies selected as Technology Pioneers in biotechnology/health, energy/environmental technology, and information technology.

Leonardo Da Vinci unquestionably had it in the 15th century; so did Thomas Edison in the 19th century. But today, "talent for innovation" means something rather different. Innovation is no longer the work of one individual toiling in a workshop. In today's globalised, interconnected world, innovation is the work of teams, often based in particular innovation hotspots, and often collaborating with partners, suppliers and customers both nearby and in other countries.

Innovation has become a global activity as it has become easier for ideas and talented people to move from one country to another. This has both quickened the pace of technological development and presented many new opportunities, as creative individuals have become increasingly prized and there has been greater recognition of new sources of talent, beyond the traditional innovation hotspots of the developed world.

The result is a global exchange of ideas, and a global market for innovation talent. Along with growth in international trade and foreign direct investment, the mobility of talent is one of the hallmarks of modern globalisation. Talented innovators are regarded by companies, universities and governments as a vital resource, as precious as oil or water. They are sought after for the simple reason that innovation in products and services is generally agreed to be a large component, if not the largest component, in driving economic growth. It should be noted that "innovation" in this context does not simply mean the development of new, cutting-edge technologies by researchers.

It also includes the creative ways in which other people then refine, repackage and combine those technologies and bring them to market. Indeed, in his recent book, "The Venturesome Economy", Amar Bhidé, professor of business at Columbia University, argues that such "orchestration" of innovation can actually be more important in driving economic activity than pure research. "In a world where breakthrough ideas easily cross national borders, the origin of ideas is inconsequential," he writes. Ideas cross borders not just in the form of research papers, e-mails and web pages, but also inside the heads of talented people. This movement of talent is not simply driven by financial incentives. Individuals may also be motivated by a desire for greater academic freedom, better access to research facilities and funding, or the opportunity to work with key researchers in a particular field.

Countries that can attract talented individuals can benefit from more rapid economic growth, closer collaboration with the countries where those individuals originated, and the likelihood that immigrant entrepreneurs will set up new companies and create jobs. Mobility of talent helps to link companies to sources of foreign innovation and research expertise, to the benefit of both. Workers who emigrate to another country may bring valuable knowledge of their home markets with them, which can subsequently help companies in the destination country to enter those markets more easily. Analysis of scientific journals suggests that international co-authorship is increasing, and there is some evidence thatcollaborative work has a greater impact than work carried out in one country. Skilled individuals also act as repositories of knowledge, training the next generation and passing on their accumulated wisdom.

But the picture is complicated by a number of concerns. In developed countries which have historically depended to a large extent on foreign talent (such as the United States), there is anxiety that it is becoming increasingly difficult to attract talent as new opportunities arise elsewhere. Compared with the situation a decade ago, Indian software engineers, for example, may be more inclined to set up a company in India, rather than moving to America to work for a software company there. In developed countries that have not historically relied on foreign talent (such as Germany), meanwhile, the ageing of the population as the birth rate falls and life expectancy increases means there is a need to widen the supply of talent, as skilled workers leave the workforce and young people show less interest than they used to in technical subjects. And in developing countries, where there is a huge supply of new talent (hundreds of thousands of engineers graduate from Indian and Chinese universities every year), the worry is that these graduates have a broad technical grounding but may lack the specialised skills demanded by particular industries.

Other shifts are also under way. The increasing sophistication of emerging economies (notably India and China) is overturning the old model of "create in the West, customise for the East". Indian and Chinese companies are now globally competitive in many industries. And although the mobility of talent is increasing, workers who move to another country are less likely to stay for the long-term, and are more likely to return to their country of origin. The number of Chinese students studying abroad increased from 125,000 in 2002 to 134,000 in 2006, for example, but the proportion who stayed in the country where they studied after graduating fell from 85% to 69% over the same period, according to figures from the OECD (see page 10).

What is clear is that the emergence of a global market for talent means gifted innovators are more likely to be able to succeed, and new and unexpected opportunities are being exploited, as this year's Technology Pioneers demonstrate. They highlight three important aspects of the global market for talent: the benefits of mobility, the significant role of diasporas, and the importance of network effects in catalysing innovation.

Brain drain, or gain?

Perhaps the most familiar aspect of the debate about flows of talent is the widely expressed concern about the "brain drain" from countries that supply talented workers. If a country educates workers at the taxpayers' expense, does it not have a claim on their talent? There are also worries that the loss of skilled workers can hamper institutional development and drive up the cost of technical services. But such concerns must be weighed against the benefits of greater mobility.

There are not always opportunities for skilled individuals in their country of birth. The prospect of emigration can encourage the development of skills by individuals who may not in fact decide to emigrate. Workers who emigrate may send remittances back to their families at home, which can be a significant source of income and can help to alleviate poverty. And skilled workers may return to their home countries after a period working abroad, further stimulating knowledge transfer and improving the prospects for domestic growth, since they will maintain contacts with researchers overseas. As a result, argues a recent report from the OECD, it makes more sense to talk of a complex process of "brain circulation" rather than a one-way "brain drain". The movement of talent is not simply a zero-sum gain in which sending countries lose, and receiving countries benefit. Greater availability and mobility of talent opens up new possibilities and can benefit everyone.

Consider, for example, BioMedica Diagnostics of Windsor, Nova Scotia. The company makes medical diagnostic systems, some of them battery-operated, that can be used to provide health care in remote regions to people who would otherwise lack access to it. It was founded by Abdullah Kirumira, a Ugandan biochemist who moved to Canada in 1990 and became a professor at Acadia University. There he developed a rapid test for HIV in conjunction with one of his students, Hermes Chan (a native of Hong Kong who had moved to Canada to study). According to the United States Centers for Disease Control, around one-third of people tested for HIV do not return to get the result when it takes days or weeks to determine. Dr Kirumira and Dr Chan developed a new test that provides the result in three minutes, so that a diagnosis can be made on the spot. Dr Kirumira is a prolific inventor who went on to found several companies, and has been described as "the pioneer of Nova Scotia's biotechnology sector".

Today BioMedica makes a range of diagnostic products that are portable, affordable and robust, making them ideally suited for use in developing countries. They allow people to be rapidly screened for a range of conditions, including HIV, hepatitis, malaria, rubella, typhoid and cholera. The firm's customers include the World Health Organisation. Providing such tests to patients in the developing world is a personal mission of Dr Kirumira's, but it also makes sound business sense: the market for invitro diagnostics in the developing world is growing by over 25% a year, the company notes, compared with growth of only 5% a year in developed nations.

Moving to Canada gave Dr Kirumira research opportunities and access to venture funding that were not available in Uganda. His innovations now provide an affordable way for hospitals in his native continent of Africa to perform vital tests. A similar example is provided by mPedigree, a start-up that has developed a mobile-phone-based system that allows people to verify the authenticity of medicines. Counterfeit drugs are widespread in the developing world: they are estimated to account for 10-25% of all drugs sold, and over 80% in some countries. The World Health Organisation estimates that a fake vaccine for meningitis, distributed in Niger in 1995, killed over 2,500 people. mPedigree was established by Bright Simons, a Ghanaian social entrepreneur, in conjunction with Ashifi Gogo, a fellow Ghanaian. The two were more than just acquaintances having met at Secondary School. There are many high-tech authentication systems available in the developed world for drug packaging, involving radio-frequency identification (RFID) chips, DNA tags, and so forth.

The mPedigree system developed my Mr Gogo, an engineering student, is much cheaper and simpler and only requires the use of a mobile phone — an item that is now spreading more quickly in Africa than in any other region of the world. Once the drugs have been purchased, a panel on the label is scratched off to reveal a special code. The patient then sends this code, by text message, to a particular number. The code is looked up in a database and a message is sent back specifying whether the drugs are genuine. The system is free to use because the drug companies cover the cost of the text messages. It was launched in Ghana in 2007, and mPedigree's founders hope to extend it to all 48 sub-Saharan African countries within a decade, and to other parts of in the developing world.

The effort is being supported by Ghana's Food and Drug Board, and by local telecoms operators and drug manufacturers. Mr Gogo has now been admitted into a special progamme at Dartmouth College in the United States that develops entrepreneurial skills, in addition to technical skills, in engineers. Like Dr Kirumira, he is benefiting from opportunities that did not exist in his home country, and his country is benefiting too. This case of mPedigree shows that it is wrong to assume that the movement of talent is one-way (from poor to rich countries) and permanent. As it has become easier to travel and communications technology has improved, skilled workers have become more likely to spend brief spells in other countries that provide opportunities, rather than emigrating permanently.

And many entrepreneurs and innovators shuttle between two or more places — between Tel Aviv and Silicon Valley, for example, or Silicon Valley and Hsinchu in Taiwan — in a pattern of "circular" migration, in which it is no longer meaningful to distinguish between "sending" and "receiving" countries.

The benefits of a diaspora

Migration (whether temporary, permanent or circular) to a foreign country can be facilitated by the existence of a diaspora, since it can be easier to adjust to a new culture when you are surrounded by compatriots who have already done so. Some observers worry that diasporas make migration too easy, in the sense that they may encourage a larger number of talented individuals to leave their home country than would otherwise be the case, to the detriment of that country.

But as with the broader debate about migration, this turns out to be only part of the story. Diasporas can have a powerful positive effect in promoting innovation and benefiting the home country. Large American technology firms, for example, have set up research centres in India in part because they have been impressed by the calibre of the migrant Indian engineers they have employed in America. Diasporas also provide a channel for knowledge and skills to pass back to the home country.

James Nakagawa, a Canadian of Japanese origin and the founder of Mobile Healthcare, is a case in point. A third-generation immigrant, he grew up in Canada but decided in 1994 to move to Japan, where he worked for a number of technology firms and set up his own financial-services consultancy. In 2000 he had the idea that led him to found Mobile Healthcare, when a friend was diagnosed with diabetes and lamented that he found it difficult to determine which foods to eat, and which to avoid.

The rapid spread of advanced mobile phones in Japan, a world leader in mobile telecoms, prompted Mr Nakagawa to devise Lifewatcher, Mobile Healthcare's main product. It is a "disease selfmanagement system" used in conjunction with a doctor, based around a secure online database that can be accessed via a mobile phone. Patients record what medicines they are taking and what food they are eating, taking a picture of each meal. A database of common foodstuffs, including menu items from restaurants and fast-food chains, helps users work out what they can safely eat. Patients can also call up their medical records to follow the progress of key health indicators, such as blood sugar, blood pressure, cholesterol levels and calorie intake.

All of this information can also be accessed online by the patient's doctor or nutritionist. The system allows people with diabetes or obesity (both of which are rapidly becoming more prevalent in Japan and elsewhere) to take an active role in managing their conditions. Mr Nakagawa did three months of research in the United States and Canada while developing Lifewatcher, which was created with support from Apple (which helped with hardware and software), the Japanese Red Cross and Japan's Ministry of Health and Welfare (which provided full access to its nutritional database).

Japanese patients who are enrolled in the system have 70% of the cost covered by their health insurance. Mr Nakagawa is now working to introduce Lifewatcher in the United States and Canada, where obesity and diabetes are also becoming more widespread — along advanced mobile phones of the kind once only found in Japan. Mr Nakagawa's ability to move freely between Japanese and North American cultures, combining the telecoms expertise of the former with the entrepreneurial approach of the latter, has resulted in a system that can benefit both.

The story of Calvin Chin, the Chinese-American founder of Qifang, is similar. Mr Chin was born and educated in America, and worked in the financial services and technology industries for several years before moving to China. Expatriate Chinese who return to the country, enticed by opportunities in its fast-growing economy, are known as "returning turtles". Qifang is a "peer to peer" (P2P) lending site that enables students to borrow money to finance their education from other users of the site. P2P lending has been pioneered in other countries by sites such as Zopa and Prosper in other countries.

Such sites require would-be borrowers to provide a range of personal details about themselves to reassure lenders, and perform credit checks on them. Borrowers pay above-market rates, which is what attracts lenders. Qifang adds several twists to this formula. It is concentrating solely on student loans, which means that regulators are more likely to look favourably on the company's unusual business model. It allows payments to be made directly to educational institutions, to make sure the money goes to the right place. Qifang also requires borrowers to give their parents' names when taking out a loan, which increases the social pressure on them not to default, since that would cause the family to lose face.

Mr Chin has thus tuned an existing business model to take account of the cultural and regulatory environment in China, where P2P lending could be particularly attractive, given the relatively undeveloped state of China's financial-services market. In a sense, Qifang is just an updated, online version of the community group-lending schemes that are commonly used to finance education in China. The company's motto is that "everyone should be able to get an education, no matter their financial means".

Just as Mr Chin is trying to use knowledge acquired in the developed world to help people in his mother country of China, Sachin Duggal hopes his company, Nivio, will do something similar for people in India. Mr Duggal was born in Britain and is of Indian extraction. He worked in financial services, including a stint as a technologist at Deutsche Bank, before setting up Nivio, which essentially provides a PC desktop, personalised with a user's software and documents, that can be accessed from any web browser.

This approach makes it possible to centralise the management of PCs in a large company, and is already popular in the business world. But Mr Duggal hopes that it will also make computing more accessible to people who find the prospect of owning and managing their own PCs (and dealing with spam and viruses) too daunting, or simply cannot afford a PC at all. Nivio's software was developed in India, where Mr Duggal teamed up with Iqbal Gandham, the founder of Net4India, one of India's first internet service providers. Mr Duggal believes that the "virtual webtop" model could have great potential in extending access to computers to rural parts of India, and thus spreading the opportunities associated with the country's high-tech boom. A survey of the bosses of Indian software firms clearly shows how diasporas can promote innovation.

It found that those bosses who had lived abroad and returned to India made far more use of diaspora links upon their return than entrepreneurs who had never lived abroad, which gave them access to capital and skills in other countries. Diasporas can, in other words, help to ensure that "brain drain" does indeed turn into "brain gain", provided the government of the country in question puts appropriate policies in place to facilitate the movement of people, technology and capital.

Making the connection

Multinational companies can also play an important role in providing new opportunities for talented individuals, and facilitating the transfer of skills. In recent years many technology companies have set up large operations in India, for example, in order to benefit from the availability of talented engineers and the services provided by local companies. Is this simply exploitation of low-paid workers by Western companies?

The example of JiGrahak Mobility Solutions, a start-up based in Bangalore, illustrates why it is not. The company was founded by Sourabh Jain, an engineering graduate from the Delhi Institute of Technology. After completing his studies he went to work for the Indian research arm of Lucent Technologies, an American telecoms-equipment firm. This gave him a solid grounding in mobile-phone technology, which subsequently enabled him to set up JiGrahak, a company that provides a mobile-commerce service called Ngpay.

In India, where many people first experience the internet on a mobile phone, rather than a PC, and where mobile phones are far more widespread than PCs, there is much potential for phone-based shopping and payment services. Ngpay lets users buy tickets, pay bills and transfer money using their handsets. Such is its popularity that with months of its launch in 2008, Ngpay accounted for 4% of ticket sales at Fame, an Indian cinema chain.

The role of large companies in nurturing talented individuals, who then leave to set up their own companies, is widely understood in Silicon Valley. Start-ups are often founded by alumni from Sun, HP, Oracle and other big names. Rather than worrying that they could be raising their own future competitors, large companies understand that the resulting dynamic, innovative environment benefits everyone, as large firms spawn, compete with and acquire smaller ones.

As large firms establish outposts in developing countries, such catalysis of innovation is becoming more widespread. Companies with large numbers of employees and former employees spread around the world can function rather like a corporate diaspora, in short, providing another form of network along which skills and technology can diffuse. The network that has had the greatest impact on spreading ideas, promoting innovation and allowing potential partners to find out about each other's research is, of course, the internet. As access to the internet becomes more widespread, it can allow developing countries to link up more closely with developed countries, as the rise of India's software industry illustrates. But it can also promote links between developing countries.

The Cows to Kilowatts Partnership, based in Nigeria, provides an unusual example. It was founded by Joseph Adelagan, a Nigerian engineer, who was concerned about the impact on local rivers of effluent from the Bodija Market abattoir in Ibadan. As well as the polluting the water supply of several nearby villages, the effluent carried animal diseases that could be passed to humans. Dr Adelagan proposed setting up an effluent-treatment plant.

He discovered, however, that although treating the effluent would reduce water pollution, the process would produce carbon-dioxide and methane emissions that contribute to climate change. So he began to look for ways to capture these gases and make use of them. Researching the subject online, he found that a research institution in Thailand, the Centre for Waste Utilisation and Management at King Mongkut University of Technology Thonburi, had developed anaerobic reactors that could transform agro-industrial waste into biogas. He made contact with the Thai researchers, and together they developed a version of the technology

suitable for use in Nigeria that turns the abattoir waste into clean household cooking gas and organic fertiliser, thus reducing the need for expensive chemical fertiliser. The same approach could be applied across Africa, Dr Adelagan believes. The Cows to Kilowatts project illustrates the global nature of modern innovation, facilitated by the free movement of both ideas and people. Thanks to the internet, people in one part of the world can easily make contact with people trying to solve similar problems elsewhere.

Lessons learned

What policies should governments adopt in order to develop and attract innovation talent, encourage its movement and benefit from its circulation? At the most basic level, investment in education is vital. Perhaps surprisingly, however, Amar Bhidé of Columbia University suggests that promoting innovation does not mean pushing as many students as possible into technical subjects.

Although researchers and technologists provide the raw material for innovation, he points out, a crucial role in orchestrating innovation is also played by entrepreneurs who may not have a technical background. So it is important to promote a mixture of skills. A strong education system also has the potential to attract skilled foreign students, academics and researchers, and gives foreign companies an incentive to establish nearby research and development operations.

Many countries already offer research grants, scholarships and tax benefits to attract talented immigrants. In many cases immigration procedures are "fast tracked" for individuals working in science and technology. But there is still scope to remove barriers to the mobility of talent. Mobility of skilled workers increasingly involves short stays, rather than permanent moves, but this is not yet widely reflected in immigration policy. Removing barriers to short-term stays can increase "brain circulation" and promote diaspora links.

Another problem for many skilled workers is that their qualifications are not always recognised in other countries. Greater harmonisation of standards for qualifications is one way to tackle this problem; some countries also have formal systems to evaluate foreign qualifications and determine their local equivalents. Countries must also provide an open and flexible business environment to ensure that promising innovations can be brought to market. If market access or financial backing are not available, after all, today's global-trotting innovators increasingly have the option of going elsewhere.

The most important point is that the global competition for talent is not a zero-sum game in which some countries win, and others lose. As the Technology Pioneers described here demonstrate, the nature of innovation, and the global movement of talent and ideas, is far more complicated that the simplistic notion of a "talent war" between developed and developing nations would suggest. Innovation is a global activity, and granting the greatest possible freedom to innovators can help to ensure that the ideas they generate will benefit the greatest possible number of people.

Integrated Transformation: How rising customer expectations are turning com...

Modern customers have it good. Spoilt for choice and convenience, today’s empowered consumers have come to expect more from the businesses they interact with. This doesn’t just apply to their wanting a quality product at a fair price, but also tailored goods, swift and effective customer service across different channels, and a connected experience across their online shopping and in-store experience, with easy access to information they need when they want it. 

Meeting these expectations is a significant challenge for organisations. For many, it requires restructuring long-standing operating models, re-engineering business processes and adopting a fundamental shift in mindset to put customer experience at the heart of business decision- making. Download our report to learn more. 

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10 Major Cyberattacks And Data Breaches In 2024 (So Far)

Data extortion and ransomware attacks have had a massive impact on businesses during the first half of 2024.

Biggest Cyberattacks And Breaches

If the pace of major cyberattacks during the first half of 2024 has seemed to be nonstop, that’s probably because it has been: The first six months of the year have seen organizations fall prey to a series of ransomware attacks as well as data breaches focused on data theft and extortion.

And while recent years had been seeing intensifying cyberattacks, by and large they spared the general public from significant disruption — something that has proven to not be the case during 2024 so far.

[Related: Network Security Devices Are The Front Door To An IT Environment, But Are They Under Lock And Key?]

For instance, the February ransomware attack against UnitedHealth-owned prescription processor Change Healthcare caused massive disruption in the U.S. health care system for weeks — preventing many pharmacies and hospitals from processing claims and receiving payments. Then in May, the Ascension health system was struck by a ransomware attack that forced it to divert emergency care from some of its hospitals.

Most recently, software maker CDK Global fell victim to a crippling ransomware attack that has disrupted thousands of car dealerships that rely on the company’s platform. As of this writing, the disruptions were continuing, nearly two weeks after the initial attack.

The attacks have raised questions about whether threat actors are intentionally targeting companies whose patients and customers would be severely affected by the disruptions, in order to put increased pressure on the organizations for paying a ransom. If so, the tactic would seem to have been working, since UnitedHealth paid a $22 million ransom to a Russian-speaking cybercrime group that perpetrated the Change Healthcare attack, and CDK Global reportedly was planning to pay attackers’ ransom demands, as well.

It’s not certain that this has been the attackers’ strategy, however, said Mark Lance, vice president for DFIR and threat intelligence at GuidePoint Security, No. 39 on CRN’s Solution Provider 500 for 2024.

“Do I think that it was indirect or there was intent to have an impact all these kinds of downstream providers? You never know,” Lance said. When it comes to ransomware groups, “a lot of times, they might not even recognize the level of impact indirectly [an attack] is going to have on downstream providers or services.”

Still, he said, it can’t be entirely ruled out that attackers “might be using that as an opportunity to leverage [the disruption] and make sure they get paid.” And if there continue to be mass-disruption attacks such as these that point toward a “distinct trend,” that would represent a notable shift in attacker tactics, given that threat actors have usually steered clear of attacks that would put a government and law enforcement spotlight on them, Lance noted.

Other high-profile cyberattacks during the first half of 2024 included the widespread compromise of Ivanti VPNs and the breach of Microsoft executive accounts—both of which impacted U.S. government agencies—as well as widespread data-theft attacks targeting customers of Snowflake.

What follows are the details we’ve gathered on 10 major cyberattacks and data breaches in 2024 so far (in chronological order).

Ivanti VPN Attacks

Ivanti’s widely used Connect Secure VPNs saw mass exploitation by threat actors following the January disclosure of two high-severity, zero-day vulnerabilities in the systems. Researchers said thousands of Ivanti VPN devices were compromised during the attacks, with the list of victims including the U.S. Cybersecurity and Infrastructure Security Agency (CISA). Other victims included Mitre, a major provider of federally funded R&D and the promulgator of a cyberattack framework that’s become ubiquitous in the security industry.

While several additional vulnerabilities ultimately were disclosed, researchers at Google Cloud-owned Mandiant reported that the two original Ivanti VPN vulnerabilities saw “broad exploitation activity” by a China-linked threat group tracked as UNC5221, as well as “other uncategorized threat groups.” The attacks by UNC5221 — a “suspected China-nexus espionage threat actor” — went back as far as Dec. 3, the researchers at Mandiant said.

The attacks prompted CISA to issue an urgent order to civilian executive branch agencies, requiring the unusual measure of disconnecting their Ivanti Connect Secure VPNs within 48 hours. Ivanti released the first patch for some versions of its Connect Secure VPN software on Jan. 31, three weeks after the initial vulnerability disclosure. “In this case, we prioritized mitigation releases as patches were being developed, consistent with industry best practices,” Ivanti said in a statement provided to CRN.

Microsoft Executive Accounts Breach

In January, Microsoft disclosed that a Russia-aligned threat actor was able to steal emails from members of its senior leadership team as well as from employees on its cybersecurity and legal teams. The tech giant attributed the attack to a group it tracks as Midnight Blizzard, which has previously been connected to Russia’s SVR foreign intelligence unit by the U.S. government and blamed for attacks including the widely felt 2020 breach of SolarWinds.

Customers known to have been impacted in the incident included multiple federal agencies, CISA confirmed. Through the compromise of Microsoft corporate email accounts, Midnight Blizzard has “exfiltrated email correspondence between Federal Civilian Executive Branch (FCEB) agencies and Microsoft,” CISA said in an emergency directive.

In June, Microsoft confirmed that it had sent out more notices to customers impacted by the compromise, which were notified that their emails were viewed. “This is increased detail for customers who have already been notified and also includes new notifications,” the company said in a statement.

The breach, which is believed to have begun in November 2023, saw hackers initially gain access by exploiting a lack of MFA (multifactor authentication) on a “legacy” account, Microsoft said.

SOHO Routers Attacks

The FBI said in February that a China-linked threat group was found to have hijacked “hundreds” of small office/home office (SOHO) routers based in the U.S. as part of a campaign to compromise U.S. critical infrastructure providers. The FBI said it succeeded at disrupting the efforts of the group, known as Volt Typhoon, which is backed by the Chinese government. Targets of the Volt Typhoon attacks included providers of critical services including communications, energy, water and transportation, the FBI said.

The routers compromised by the group together formed an assembly of malware-infected devices, known as a botnet, which the threat group could use for launching an attack against U.S. critical infrastructure, the FBI said.

Later in February, the FBI said it disrupted a widespread campaign by Russia-aligned hackers that had compromised “hundreds” of SOHO routers. The attacks were pinned on the Russian intelligence agency GRU, which had also been attempting to use the hijacked routers as a botnet for the purposes of espionage, according to the FBI.

Change Healthcare Attacks

First disclosed Feb. 22, the Change Healthcare attack caused massive disruption in the U.S. health care system for weeks. The IT system shutdown initiated in response to the ransomware attack prevented many pharmacies and hospitals, as well as other health-care facilities and offices, from processing claims and receiving payments.

The Russian-speaking cybercriminal group known by the names of Blackcat and Alphv claimed responsibility for the ransomware attack. Witty confirmed in his Congressional testimony in May that UnitedHealth paid a $22 million ransom following the attack.

Subsequently, a different cybercriminal gang, known as RansomHub, posted data it claimed was stolen from Change Healthcare. UnitedHealth said in late April that data belonging to a “substantial proportion” of Americans may have been stolen in the attack against prescription processor Change Healthcare, a unit of the insurer’s Optum subsidiary. During testimony at a U.S. House Of Representatives hearing on May 1, UnitedHealth Group CEO Andrew Witty said that “maybe a third” of all Americans were impacted in the attack.

In June, Change Healthcare disclosed that it now believes sensitive patient medical data was exposed in the attack. Medical data stolen during the attack may have included “diagnoses, medicines, test results, images, care and treatment,” according to a data breach notification posted by Change Healthcare.

ConnectWise ScreenConnect Attacks

In February, ConnectWise disclosed that two vulnerabilities had been found that affect its ScreenConnect tool, impacting MSPs using ScreenConnect both on-prem and in the cloud. Mandiant subsequently identified "mass exploitation" of the vulnerabilities by various threat actors. “Many of them will deploy ransomware and conduct multifaceted extortion,” a post on Mandiant’s website states.

ConnectWise said that it quickly “recognized the heightened risk of exploitation with any patching delay” and “employed additional preventative measures,” before releasing patches within days of the disclosure. CISA issued a notice that ConnectWise partners and end customers should pull the cord on all on-prem ScreenConnect servers if they could not update to the latest version amid the attacks.

XZ Utils Compromise

In March, Red Hat and CISA warned that the two latest versions of XZ Utils, a widely used set of data compression tools and libraries in Linux distributions, were found to have been compromised . However, the software supply chain hack—described as a “nightmare scenario” by multiple experts— was discovered by a Microsoft engineer before the compromised software could be distributed broadly.

As disclosed by the original maintainer of the XZ Utils project, a contributor to the XZ Utils was responsible for the insertion of malicious code.

A Microsoft engineer, Andres Freund, said in a post that he discovered the vulnerability after noticing “odd” behavior in installations of Debian, a popular Linux distribution—including that logins were taking longer and using more CPU than usual. Security researchers credited Freund with going the extra mile to hunt down the issue, ultimately revealing the backdoor in the software.

AT&T Breach

In March, AT&T said it was investigating a possible data breach after personal data from more than 70 million current and former customers was discovered on the dark web. The telecommunications giant said it had determined that “AT&T data-specific fields were contained in a data set released on the dark web approximately two weeks ago.” Based on a preliminary analysis, the company said the data set appeared to be from 2019 or earlier and impacts approximately 7.6 million current AT&T account holders and approximately 65.4 million former account holders. The company said the discovered data includes personal information such as social security numbers.

Ascension Ransomware Attack

Ascension, a health system with 140 hospitals and operations in 19 states and Washington, D.C., said in May that its clinical operations were disrupted after it was struck by a ransomware attack. The nonprofit and Catholic health system said that on May 8 “we detected unusual activity on select technology network systems.”

The May attack, which began when an employee inadvertently downloaded malware, forced Ascension to divert emergency care from some of its hospitals.

Ascension later confirmed that data, including health data belonging to patients, was likely stolen in the attack. “We now have evidence that indicates that the attackers were able to take files from a small number of file servers used by our associates primarily for daily and routine tasks,” the health system said.

Snowflake Customers Targeted

In June, widespread attacks targeting Snowflake customers led to a “significant” volume of data stolen and more than 100 customers known to be potentially impacted, according to researchers from Mandiant.

Neiman Marcus Group is among the latest to join the list of victims of the Snowflake attacks, with other impacted companies including Ticketmaster, Santander Bank, Pure Storage and Advance Auto Parts. The wave of data theft attacks are believed to be utilizing stolen passwords.

A cybercriminal group has been “suspected to have stolen a significant volume of records from Snowflake customer environments,” researchers at Mandiant said. Impacted accounts have not been configured with MFA (multifactor authentication), Mandiant researchers confirmed.

In its advisory, Snowflake said it is “developing a plan to require our customers to implement advanced security controls, like multi-factor authentication (MFA) or network policies.”

CDK Global Attack

CDK, a provider of software used by 15,000 dealerships, shut down most of its systems after a pair of cyberattacks struck on June 18 and 19. The company provides SaaS-based CRM, payroll, finance and other key functions for dealerships. In a recorded message for customers heard Monday, the company indicated that the disruptions from the attacks are continuing to impact customers, though CDK said that its “customer care support channels are now live.”

The company said on Friday that it had brought “one of our large public dealers” back on to its core dealer management system (DMS), along restoring the DMS access for a second “small group” of dealerships. CDK had said the first small group was restored onto its DMS system Thursday.

While CDK was working to recover from the first attack on June 18, the company said it was struck by a second attack the following day. “Late in the evening of June 19, we experienced an additional cyber incident and proactively shut down most of our systems,” CDK said in a previous statement provided to CRN. The system shutdown resulted in an outage that has severely affected thousands of car dealerships.

CDK has declined to comment on media reports indicating that the company was planning to make a ransom payment, purportedly worth tens of millions of dollars, with the goal of recovering its systems more quickly.

More From Forbes

Payments 3.0: how payment strategies will determine who wins and loses—an igaming case study.

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Danny Shader is the founder and CEO of PayNearMe .

No matter the business, payments play a critical role in the consumer experience—which means getting the payment process right is essential for attracting and retaining customers.

Any business hoping to thrive in a Payments 3.0 world must offer a frictionless experience. That’s no more evident than in the iGaming industry, where the ability to deposit and withdraw funds quickly and easily is essential to the experience successful operators must offer to players.

To succeed, operators look to payment platforms that support all of the deposit and withdrawal methods players use—from digital wallets to the ability to receive instantaneous credit for cash deposited at the casino cage or a retail store—with a single integration. With modern technology, they can add and remove payment types and channels, compliance and reconciliation and data collection, all of which are essential to providing a hyper-personalized customer experience.

As part of our Payments 3.0 series, let's explore an iGaming case study to see how delivering better payment experiences can influence which operators win and lose players. As the CEO of one of several companies developing Payments 3.0 technology, there are several ways that this technology can evolve to create better payment experiences.

While the focus in this case is on iGaming, the lessons learned are universal. Regardless of your industry, I hope these insights encourage you to reassess the impact your payment experience has on acquiring and retaining customers.

Suspected Trump Shooter Remembered By Rifle Team Member As ‘Comically Bad Shot’: What We Know About Thomas Matthew Crooks

‘house of the dragon’ season 2, episode 5 recap and review: the seeds of the dragon, will smith’s ‘bad boys: ride or die’ gets digital streaming date, the meteoric rise of igaming.

It has been a wild ride for iGaming operators in the U.S. as more states approve the practice and consumer interest grows. Currently, six states allow online casino betting, 30-plus states plus the District of Columbia have approved online sports betting, and others are debating proposals. The total annual revenue for iGaming is projected to reach $124 billion by 2027.

This dramatic growth has prompted operators to make enormous investments in the development and marketing of iGaming apps to capture market share while consumers are up for grabs.

My company, PayNearMe, recently sponsored a new study of iGaming players in partnership with Betting Hero that suggests that the iGaming operators who offer a seamless, elegant experience for players will rise to the top since payments sit at the center of the overall user experience in betting apps.

Do bettors care about payment? You bet.

iGamers require fast, hassle-free transactions so they can engage in events and enjoy their play. But here’s the rub: As one respondent said in the survey, “Other industries seem to get funds moved more quickly than any type of gaming payments.”

The iGaming study supports this perspective:

• Nearly a quarter (23%) of respondents said they would abandon an app if they had any problems depositing funds.

• About a third (32%) said they would abandon an app if it took too long to fund their account.

• 17% would leave if their payment was often declined.

Consumers initially gravitate toward brands they know, but they'll go elsewhere unless those brands provide a great customer experience. Payments are an integral part of that experience.

Payments 3.0 technologies can streamline deposits and withdrawals and enhance the user experience. Here are three tech-forward strategies that will shape the future of iGaming—and are equally applicable to other industries:

1. Enable seamless payment through a hyper-personalized interface.

iGamers are typically savvy consumers of online experiences, and today’s e-commerce sites set a pretty high bar that most gaming operators don’t yet meet. In the aforementioned survey, 22% of respondents listed UX and UI issues as their primary day-to-day frustration.

With Payments 3.0 technology, each customer’s payment history and practices can be used to personalize the experience; for instance, simplifying the player’s payment screen to display the individual’s preferred payment types, while facilitating quicker, faster payments with higher acceptance rates.

2. Make a great first impression with AI-assisted initial deposits.

When the process of setting up an account is cumbersome or doesn’t work, the opportunity to make a good first impression is gone forever—often along with the player.

In the survey, 20% to 27% of players said they were unable to fund their accounts on nine popular gaming apps. Twenty-three percent immediately abandoned the app, causing operators to forfeit both their player acquisition costs and future revenue; and 21% reached out for assistance, adding to customer service expenses.

Payments 3.0 will continue to evolve to deliver modern, AI-powered payment platforms with user interfaces (UIs) that make the initial deposit experience seamless.

In the event of a declined deposit, sophisticated AI and machine learning algorithms will recognize the reason and suggest corrective actions. This can be achieved by making real-time adjustments to the player's payment options within the user interface or initiating a push notification or text message with recommended steps to resolve the issue.

3. Improve the security and speed of withdrawals.

iGaming is all about the immediacy and excitement of the experience, including celebrating wins. About half of players overall (49%), and 60% of those who experienced payment issues, said they would be likely to switch to a new or competitor app if it promised faster withdrawals.

As Payments 3.0 solutions employ machine learning, this will help to verify player identities and prevent fraudsters from withdrawing winnings with less manual intervention. When operators spend countless hours manually reviewing and verifying each withdrawal, a player’s ability to withdraw winnings is delayed.

AI/ML can analyze large sets of payment data to detect issues substantially faster than an operator’s staff can do manually, which promises faster withdrawals for players.

Improving The Odds Of Success—In iGaming And Beyond

The iGaming industry, while unique, offers valuable lessons about creating frictionless payment experiences that apply to every competitive business. A Payments 3.0 platform that delivers fast, personalized transactions is crucial for customer retention and loyalty across all industries.

Companies that prioritize seamless payments alongside a strong sales and marketing strategy will ultimately build the successful enterprise they and their investors desire.

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Case study on adoption of new technology for innovation: Perspective of institutional and corporate entrepreneurship

Asia Pacific Journal of Innovation and Entrepreneurship

ISSN : 2398-7812

Article publication date: 7 August 2017

This paper aims at investigating the role of institutional entrepreneurship and corporate entrepreneurship to cope with firm’ impasses by adoption of the new technology ahead of other firms. Also, this paper elucidates the importance of own specific institutional and corporate entrepreneurship created from firm’s norm.

Design/methodology/approach

The utilized research frame is as follows: first, perspective of studies on institutional and corporate entrepreneurship are performed using prior literature and preliminary references; second, analytical research frame was proposed; finally, phase-based cases are conducted so as to identify research objective.

Kumho Tire was the first tire manufacturer in the world to exploit the utilization of radio-frequency identification for passenger carâ’s tire. Kumho Tire takes great satisfaction in lots of failures to develop the cutting edge technology using advanced information and communication technology cultivated by heterogeneous institution and corporate entrepreneurship.

Originality/value

The firm concentrated its resources into building the organization’s communication process and enhancing the quality of its human resources from the early stages of their birth so as to create distinguishable corporate entrepreneurship.

• Corporate entrepreneurship
• Institutional entrepreneurship

Han, J. and Park, C.-m. (2017), "Case study on adoption of new technology for innovation: Perspective of institutional and corporate entrepreneurship", Asia Pacific Journal of Innovation and Entrepreneurship , Vol. 11 No. 2, pp. 144-158. https://doi.org/10.1108/APJIE-08-2017-031

Emerald Publishing Limited

Copyright © 2017, Junghee Han and Chang-min Park.

Published in the Asia Pacific Journal of Innovation and Entrepreneurship . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial & non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licenses/by/4.0/legalcode

1. Introduction

Without the entrepreneur, invention and new knowledge possibly have lain dormant in the memory of persons or in the pages of literature. There is a Korean saying, “Even if the beads are too much, they become treasure after sewn”. This implies importance of entrepreneurship. In general, innovativeness and risk-taking are associated with entrepreneurial activity and, more importantly, are considered to be important attributes that impact the implementation of new knowledge pursuing.

Implementation of cutting edge technology ahead of other firms is an important mechanism for firms to achieve competitive advantage ( Capon et al. , 1990 ; D’Aveni, 1994 ). Certainly, new product innovation continues to play a vital role in competitive business environment and is considered to be a key driver of firm performance, especially as a significant form of corporate entrepreneurship ( Srivastava and Lee, 2005 ). Corporate entrepreneurship is critical success factor for a firm’s survival, profitability and growth ( Phan et al. , 2009 ).

The first-mover has identified innovativeness and risk-taking as important attributes of first movers. Lumpkin and Dess (1996) argued that proactiveness is a key entrepreneurial characteristic related to new technology adoption and product. This study aims to investigate the importance of corporate and institutional entrepreneurship through analyzing the K Tire’s first adaptation of Radio-frequency identification (RFID) among the world tire manufactures. Also, this paper can contribute to start ups’ readiness for cultivating of corporate and institutional entrepreneurship from initial stage to grow and survive.

K Tire is the Korean company that, for the first time in the world, applied RFID to manufacturing passenger vehicle tires in 2013. Through such efforts, the company has built an innovation model that utilizes ICTs. The adoption of the technology distinguishes K Tire from other competitors, which usually rely on bar codes. None of the global tire manufacturers have applied the RFID technology to passenger vehicle tires. K Tire’s decision to apply RFID to passenger vehicle tires for the first time in the global tire industry, despite the uncertainties associated with the adoption of innovative technologies, is being lauded as a successful case of innovation. In the global tire market, K Tire belongs to the second tier, rather than the leader group consisting of manufacturers with large market shares. Then, what led K Tire to apply RFID technology to the innovation of its manufacturing process? A company that adopts innovative technologies ahead of others, even if the company is a latecomer, demonstrates its distinguishing characteristics in terms of innovation. As such, this study was motivated by the following questions. With regard to the factors that facilitate innovation, first, what kind of the corporate and institutional situations that make a company more pursue innovation? Second, what are the technological situations? Third, how do the environmental situations affect innovation? A case study offers the benefit of a closer insight into the entrepreneurship frame of a specific company. This study has its frame work rooted in corporate entrepreneurship ( Guth and Ginsberg, 1990 ; Shane and Venkataraman, 2000 ) and institutional entrepreneurship ( Battilana, 2006 ; Fligstein, 1997 ; Rojas, 2010 ). As mentioned, we utilized qualitative research method ( Yin, 2008 ). This paper is structured as follows. Section two presents the literature review, and section three present the methodology and a research case. Four and five presents discussion and conclusions and implications, respectively.

2. Theoretical review and analysis model

RFID technology is to be considered as not high technology; however, it is an entirely cutting edged skills when combined with automotive tire manufacturing. To examine why and how the firm behaves like the first movers, taking incomparable high risks to achieve aims unlike others, we review three kinds of prior literature. As firms move from stage to stage, they have to revamp innovative capabilities to survive and ceaseless stimulate growth.

2.1 Nature of corporate entrepreneurship

Before reviewing the corporate entrepreneurship, it is needed to understand what entrepreneurship is. To more understand the role that entrepreneurship plays in modern economy, one need refer to insights given by Schumpeter (1942) or Kirzner (1997) . Schumpeter suggests that entrepreneurship is an engine of economic growth by utilization of new technologies. He also insists potential for serving to discipline firms in their struggle to survive gale of creative destruction. While Schumper argued principle of entrepreneurship, Kirzner explains the importance of opportunities. The disruptions generated by creative destruction are exploited by individuals who are alert enough to exploit the opportunities that arise ( Kirzner, 1997 ; Shane and Venkataraman, 2000 ).

Commonly all these perspectives on entrepreneurship is an appreciation that the emergence of novelty is not an easy or predictable process. Based on literature review, we note that entrepreneurship is heterogeneous interests and seek “something new” associated with novel outcomes. Considering the literature review, we can observe that entrepreneurship is the belief in individual autonomy and discretion, and a mindset that locates agency in individuals for creating new activities ( Meyer et al. ,1994 ; Jepperson and Meyer, 2001 ).

the firm’s commitment to innovation (including creation and introduction of products, emphasis on R&D investments and commitment to patenting);

the firm’s venturing activities, such as entry into new business fields by sponsoring new ventures and creating new businesses; and

strategic renewal efforts aimed at revitalizing the firm’s ability to compete.

developing innovation an organizational tool;

allowing the employees to propose ideas; and

encouraging and nurturing the new knowledge ( Hisrich, 1986 ; Kuratko, 2007 ).

Consistent with the above stream of research, our paper focuses on a firm’s new adaptation of RFID as a significant form of corporate entrepreneurial activity. Thus, CE refers to the activities a firm undertakes to stimulate innovation and encourage calculated risk taking throughout its operations. Considering prior literature reviews, we propose that corporate entrepreneurship is the process by which individuals inside the organization pursuing opportunities without regards to the resources they control.

If a firm has corporate entrepreneurship, innovation (i.e. transformation of the existing firm, the birth of new business organization and innovation) happens. In sum, corporate entrepreneurship plays a role to pursue to be a first mover from a latecomer by encompassing the three phenomena.

2.2 Institution and institutional entrepreneurship

Most literature regarding entrepreneurship deals with the attribute of individual behavior. More recently, scholars have attended to the wider ecosystem that serves to reinforce risk-taking behavior. Institution and institutional entrepreneurship is one way to look at ecosystem that how individuals and groups attempt to try to become entrepreneurial activities and innovation.

Each organization has original norm and intangible rules. According to the suggestion by Scott (1995) , institutions constrain behavior as a result of processes associated with institutional pillars. The question how actors within the organizations become motivated and enabled to transform the taken-for-granted structures has attracted substantial attention for institutionalist. To understand why some firms are more likely to seek innovation activities despite numerous difficulties and obstacles, we should take look at the institutional entrepreneurship.

the regulative, which induces worker’s action through coercion and formal sanction;

the normative, which induces worker’s action through norms of acceptability and ethics; and

the cognitive, which induces worker’s action through categories and frames by which actors know and interpret their world.

North (1990) defines institutions as the humanly devised constraints that structure human action. Actors within some organization with sufficient resources have intend to look at them an opportunity to realize interests that they value highly ( DiMaggio, 1988 ).

It opened institutional arguments to ideas from the co-evolving entrepreneurship literature ( Aldrich and Fiol, 1994 ; Aldrich and Martinez, 2001 ). The core argument of the institutional entrepreneurship is mechanisms enabling force to motivate for actors to act difficult task based on norm, culture and shared value. The innovation, adopting RFID, a technology not verified in terms of its effectiveness for tires, can be influenced by the institution of the society.

A firm is the organizations. An organization is situated within an institution that has social and economic norms. Opportunity is important for entrepreneurship. The concept of institutional entrepreneurship refer to the activities of worker or actor who have new opportunity to realize interest that they values highly ( DiMaggio, 1988 ). DiMaggio (1988) argues that opportunity for institutional entrepreneurship will be “seen” and “exploited” by within workers and not others depending on their resources and interests respectively.

Despite that ambiguity for success was given, opportunity and motivation for entrepreneurs to act strategically, shape emerging institutional arrangements or standards to their interests ( Fligstein and Mara-Drita, 1996 ; Garud et al. , 2002 ; Hargadon and Douglas, 2001 ; Maguire et al. , 2004 ).

Resource related to opportunity within institutional entrepreneurship include formal or informal authority and power ( Battilana, 2006 ; Rojas, 2010 ). Maguire et al. (2004) suggest legitimacy as an important ingredient related to opportunity for institutional entrepreneurship. Some scholars suggest opportunity resources for institutional entrepreneurship as various aspects. For instance, Marquire and Hardy (2009) show that knowledge and expertise is more crucial resources. Social capital, including market leadership and social network, is importance resource related to opportunity ( Garud et al. , 2002 ; Lawrence et al. , 2005 ; Townley, 2002 ). From a sociological perspective, change associated with entrepreneurship implies deviations from some norm ( Garud and Karnøe, 2003 ).

Institutional entrepreneurship is therefore a concept that reintroduces agency, interests and power into institutional analyses of organizations. Based on the previous discussion, this study defines institution as three processes of network activity; coercion and formal sanction, normative and cognitive, to acquire the external knowledge from adopting common goals and rules inside an organization. It would be an interesting approach to look into a specific company to see whether it is proactive towards adopting ICTs (e.g. RFID) and innovation on the basis of such theoretical background.

2.3. Theoretical analysis frame

Companies innovate themselves in response to the challenges of the ever-changing markets and technologies, so as to ensure their survival and growth ( Tushman and Anderson, 1986 ; Tidd and Bessant, 2009 ; Teece, 2014 ). As illustrated above, to achieve the purpose of this study, the researcher provides the following frames of analyses based on the theoretical background discussed above ( Figure 1 ).

3. Case study

3.1 methodology.

It is a highly complicated and tough task to analyze the long process of innovation at a company. In this paper, we used analytical approach rather than the problem-oriented method because the case is examined to find and understand what has happened and why. It is not necessary to identify problems or suggest solutions. Namely, this paper analyzes that “why K Tire becomes a first mover from a late comer through first adoption of RFID technology for automotive tire manufacture with regards to process and production innovations”.

To study the organizational characteristics such as corporate entrepreneurship, institutional entrepreneurship, innovation process of companies, the qualitative case study is the suitable method. This is because a case study is a useful method when verifying or expanding well-known theories or challenging a specific theory ( Yin, 2008 ). This study seeks to state the frame of analysis established, based on previously established theories through a single case. K Tire was selected as the sample because it is the first global tire manufacturer, first mover to achieve innovation by developing and applying RFID.

The data for the case study were collected as follows. First, this study was conducted from April 2015 to the end of December 2015. Additional expanded data also were collected from September 12 to November 22, 2016, to pursue the goal of this paper. Coauthor worked for K Tire for more than 30 year, and currently serves as the CEO of an affiliate company. As such, we had the most hands-on knowledge and directed data in the process of adoption RFID. This makes this case study a form of participant observation ( Yin, 2008 ). To secure data on institutional entrepreneurship, in-depth interviews were conducted with the vice president of K Tire. The required data were secured using e-mail, and the researchers accepted the interviewees’ demand to keep certain sensitive matters confidential. The interviewees agreed to record the interview sessions. In this way, a 20-min interview data were secured for each interviewee. In addition, apart from the internal data of the subject company, other objective data were obtained by investigating various literatures published through the press.

3.2 Company overview

In September 1960, K Tire was established in South Korea as the name of Samyang Tire. In that time, the domestic automobile industry in Korea was at a primitive stage, as were auto motive parts industries like the tire industry. K Tire products 20 tires a day, depending on manual labor because of our backward technology and shortage of facilities.

The growth of K Tire was astonishment. Despite the 1974 oil shock and difficulties in procuring raw materials, K Tire managed to achieve remarkable growth. In 1976, K Tire became the leader in the tire sector and was listed on the Korea Stock Exchange. Songjung plant II was added in 1977. Receiving the grand prize of the Korea Quality Control Award in 1979, K Tire sharpened its corporate image with the public. The turmoil of political instability and feverish democratization in the 1980s worsened the business environment. K Tire also underwent labor-management struggles but succeeded in straightening out one issue after another. In the meantime, the company chalked up a total output of 50 million tires, broke ground for its Koksung plant and completed its proving ground in preparation for a new takeoff.

In the 1990s, K Tire expanded its research capability and founded technical research centers in the USA and the United Kingdom to establish a global R&D network. It also concentrated its capabilities in securing the foundation as a global brand, by building world-class R&D capabilities and production systems. Even in the 2000s, the company maintained its growth as a global company through continued R&D efforts by securing its production and quality capabilities, supplying tires for new models to Mercedes, Benz, Volkswagen and other global auto manufacturers.

3.3 Implementation of radio-frequency identification technology

RFID is radio-frequency identification technology to recognize stored information by using a magnetic carrier wave. RFID tags can be either passive, active or battery-assisted passive (BAP). An active tag has an on-board battery and periodically transmits its ID signal. A BAP has a small battery on board and is activated when in the presence of an RFID reader. A passive tag is cheaper and smaller because it has no battery; instead, the tag uses the radio energy transmitted by the reader. However, to operate a passive tag, it must be illuminated with a power level roughly a thousand times stronger than for signal transmission. That makes a difference in interference and in exposure to radiation.

an integrated circuit for storing and processing information, modulating and demodulating a radio frequency signal, collecting DC power from the incident reader signal, and other specialized functions; and

an antenna for receiving and transmitting the signal.

capable of recognizing information without contact;

capable of recognizing information regardless of the direction;

capable of reading and saving a large amount of data;

requires less time to recognize information;

can be designed or manufactured in accordance with the system or environmental requirements;

capable of recognizing data unaffected by contamination or the environment;

not easily damaged and cheaper to maintain, compared with the bar code system; and

tags are reusable.

3.3.1 Phase 1. Background of exploitation of radio-frequency identification (2005-2010).

Despite rapid growth of K Tire since 1960, K Tire ranked at the 13th place in the global market (around 2 per cent of the global market share) as of 2012. To enlarge global market share is desperate homework. K Tire was indispensable to develop the discriminated technologies. When bar code system commonly used by the competitors, and the industry leaders, K Tire had a decision for adoption of RFID technology instead of bar code system for tires as a first mover strategy instead of a late comer with regard to manufacture tires for personal vehicle. In fact, K Tire met two kinds of hardship. Among the top 20, the second-tier companies with market shares of 1-2 per cent are immersed in fiercer competitions to advance their ranks. The fierceness of the competition is reflected in the fact that of the companies ranked between the 11th and 20th place, only two maintained their rank from 2013.

With the demand for stricter product quality control and manufacture history tracking expanding among the auto manufacturers, tire manufacturers have come to face the need to change their way of production and logistics management. Furthermore, a tire manufacturer cannot survive if it does not properly respond to the ever stricter and exacting demand for safe passenger vehicle tires of higher quality from customers and auto manufacturers. As mentioned above, K Tire became one of the top 10 companies in the global markets, recording fast growth until the early 2000. During this period, K Tire drew the attention of the global markets with a series of new technologies and innovative technologies through active R&D efforts. Of those new products, innovative products – such as ultra-high-performance tires – led the global markets and spurred the company’s growth. However, into the 2010s, the propriety of the UHP tire technology was gradually lost, and the effect of the innovation grew weaker as the global leading companies stepped forward to take the reign in the markets. Subsequently, K Tire suffered from difficulties across its businesses, owing to the failure to develop follow-up innovative products or market-leading products, as well as the aggressive activities by the company’s hardline labor union. Such difficulties pushed K Tire down to the 13th position in 2014, which sparked the dire need to bring about innovative changes within the company.

3.3.2 Phase 2. Ceaseless endeavor and its failure (2011-2012).

It needs to be lightweight : An RFID tag attached inside a vehicle may adversely affect the weight balance of the tires. A heavier tag has greater adverse impact on the tire performance. Therefore, a tag needs to be as light as possible.

It needs to be durable : Passenger vehicle tires are exposed to extensive bending and stretching, as well as high levels of momentum, which may damage a tag, particularly causing damage to or even loss of the antenna section.

It needs to maintain adhesiveness : Tags are attached on the inner surface, which increase the possibility of the tags falling off from the surface while the vehicle is in motion.

It needs to be resistant to high temperature and high pressure : While going through the tire manufacture process, a tag is exposed to a high temperature of around 200°C and high pressure of around 30 bars. Therefore, a tag should maintain its physical integrity and function at such high pressure and temperature.

It needs to be less costly : A passenger vehicle tire is smaller, and therefore cheaper than truck/bus tires. As a result, an RFID tag places are greater burden on the production cost.

Uncountable tag prototypes, were applied to around 200 test tires in South Korea for actual driving tests. Around 150 prototypes were sent to extremely hot regions overseas for actual driving tests. However, the driving tests revealed damage to the antenna sections of the tags embedded in tires, as the tires reached the end of their wear life. Also, there was separation of the embedded tags from the rubber layers. This confirmed the risk of tire separation, resulting in the failure of the tag development attempt.

3.3.3 Phase 3. Success of adoption RFID (2013-2014).

Despite the numerous difficulties and failures in the course of development, the company ultimately emerged successful, owing to its institutional entrepreneurship and corporate entrepreneurship the government’s support. Owing to the government-led support project, K Tire resumed its RFID development efforts in 2011. This time, the company discarded the idea of the embedded-type tag, which was attempted during the first development. Instead, the company turned to attached-type tag. The initial stages were marked with numerous failures: the size of a tag was large at 20 × 70 mm, which had adverse impact on the rotation balance of the tires, and the attached area was too large, causing the attached sections to fall off as the tire stretched and bent. That was when all personnel from the technical, manufacturing, and logistics department participated in creating ideas to resolve the tag size and adhesiveness issues. Through cooperation across the different departments and repeated tests, K Tire successfully developed its RFID tag by coming up with new methods to minimize the tag size to its current size (9 × 45 mm), maintain adhesiveness and lower the tag price. Finally, K Tire was success the adoption RFID.

3.3.4 Phase 4. Establishment of the manufacture, logistics and marketing tracking system.

Whenever subtle and problematic innovation difficulties arise, every worker and board member moves forward through networking and knowledge sharing within intra and external.

While a bar code is only capable of storing the information on the nationality, manufacturer and category of a product, an RFID tag is capable of storing a far wider scope of information: nationality, manufacturer, category, manufacturing date, machines used, lot number, size, color, quantity, date and place of delivery and recipient. In addition, while the data stored in a bar code cannot be revised or expanded once the code is generated, an RFID tag allows for revisions, additions and removal of data. As for the recognition capability, a bar code recognizes 95per cent of the data at the maximum temperature of 70°C. An RFID tag, on the other hand, recognizes 99.9 per cent of the data at 120°C.

The manufacture and transportation information during the semi-finished product process before the shaping process is stored in the RFID tags, which is attached to the delivery equipment to be provided to the MLMTS;

Logistics Products released from the manufacture process are stored in the warehouses, to be released and transported again to logistics centers inside and outside of South Korea. The RFID tags record the warehousing information, as the products are stored into the warehouses, as well as the release information as the products are released. The information is instantly delivered to the MLMTS;

As a marketing, the RFID tags record the warehousing information of the products supplied and received by sales branches from the logistics centers, as well as the sales information of the products sold to consumers. The information is instantly delivered to the MLMTS; and

As a role of integrative Server, MLM Integrative Server manages the overall information transmitted from the infrastructures for each section (production information, inventory status and release information, product position and inventory information, consumer sales information, etc.).

The MLMTS provides the company with various systemic functions to integrate and manage such information: foolproof against manufacture process errors, manufacture history and quality tracking for each individual product, warehousing/releasing and inventory status control for each process, product position control between processes, real-time warehouse monitoring, release control and history information tracking across products of different sizes, as well as link/control of sales and customer information. To consumers, the system provides convenience services by providing production and quality information of the products, provision of the product history through full tracking in the case of a claim, as well as a tire pressure monitoring system:

“South korea’s K Tire Co. Inc. has begun applying radio-frequency identification (RFID) system tags on: half-finished” tire since June 16. We are now using an IoT based production and distribution integrated management system to apply RFID system on our “half-finished products” the tire maker said, claiming this is a world-first in the industry. The technology will enable K Tire to manage products more efficiently than its competitors, according to the company. RFID allows access to information about a product’s location, storage and release history, as well as its inventory management (London, 22, 2015 Tire Business).

4. Discussions

Originally, aims of RFID adoption for passenger car “half-finished product” is to chase the front runners, Hankook Tire in Korea including global leading companies like Bridgestone, Michaelin and Goodyear. In particular, Hankook Tire, established in 1941 has dominated domestic passenger tire market by using the first mover’s advantage. As a late comer, K Tire needs distinguishable innovation strategy which is RFID adoption for passenger car’s tire, “half-finished product” to overcome shortage of number of distribution channels. Adoption of RFID technology for passenger car’s tire has been known as infeasible methodologies according to explanation by Changmin Park, vice-CTO (chief technology officer) until K Tire’s success.

We lensed success factors as three perspectives; institutional entrepreneurship, corporate entrepreneurship and innovation. First, as a corporate entrepreneurship perspective, adopting innovative technologies having uncertainties accompanies by a certain risk of failure. Corporate entrepreneurship refers to firm’s effort that inculcate and promote innovation and risk taking throughout its operations ( Burgelman, 1983 ; Guth and Ginsberg, 1990 ). K Tire’s success was made possible by overcome the uncountable difficulties based on shared value and norms (e.g. Fligstein and Mara-Drita, 1996 ; Garud et al. , 2002 ; Hargadon and Douglas, 2001 ; Maguire et al. , 2004 ).

An unsuccessful attempt at developing innovative technologies causes direct loss, as well as loss of the opportunity costs. This is why many companies try to avoid risks by adopting or following the leading companies’ technologies or the dominant technologies. Stimulating corporate entrepreneurship requires firms to acquire and use new knowledge to exploit emerging opportunities. This knowledge could be obtained by joining alliances, selectively hiring key personnel, changing the composition or decision-making processes of a company’s board of directors or investing in R&D activities. When the firm uses multiple sources of knowledge ( Branzei and Vertinsky, 2006 ; Thornhill, 2006 ), some of these sources may complement one another, while others may substitute each other ( Zahra and George, 2002 ). Boards also provide managers with appropriate incentives that better align their interests with those of the firm. Given the findings, K Tire seeks new knowledge from external organizations through its discriminative corporate entrepreneurship.

When adopting the RFID system for its passenger vehicle tires, K Tire also had to develop new RFID tags suitable for the specific type of tire. The company’s capabilities were limited by the surrounding conditions, which prevented the application of existing tire RFID tag technologies, such as certain issues with the tire manufacturing process, the characteristic of its tires and the price of RFID tags per tire. Taking risks and confronting challenges are made from board member’s accountability. From the findings, we find that entrepreneurship leadership can be encouraged in case of within the accountability frame work.

Despite its status as a second-tier company, K Tire attempted to adopt the RFID system to its passenger vehicle tires, a feat not achieved even by the leading companies. Thus, the company ultimately built and settled the system through numerous trials and errors. Such success was made possible by the entrepreneurship of K Tire’s management, who took the risk of failure inherent in adopting innovative technologies and confronting challenges head on.

Second, institutional entrepreneurship not only involves the “capacity to imagine alternative possibilities”, it also requires the ability “to contextualize past habits and future projects within the contingencies of the moment” if existing institutions are to be transformed ( Emirbayer and Mische, 1998 ). New technologies, the technical infrastructure, network activities to acquire the new knowledge, learning capabilities, creating a new organization such as Pioneer Lab and new rules to create new technologies are the features. To qualify as institutional entrepreneurs, individuals must break with existing rules and practices associated with the dominant institutional logic(s) and institutionalize the alternative rules, practices or logics they are championing ( Garud and Karnøe, 2003 ; Battilana, 2006 ). K Tire established new organization, “Special lab” to obtain the know technology and information as CEO’s direct sub-committees. Institutional entrepreneurship arise when actors, through their filed position, recognize the opportunity circumstance so called “norms” ( Battilana et al. , 2009 ). To make up the deficit of technologies for RFID, knowledge stream among workers is more needed. Destruction of hierarch ranking system is proxy of the institutional entrepreneurship. Also, K Tire has peculiar norms. Namely, if one requires the further study such as degree course or non-degree course education services, grant systems operated via short screen process. Third, as innovation perspectives, before adopting the RFID system, the majority of K Tire’s researchers insisted that the company use the bar code technology, which had been widely used by the competitors. Such decision was predicated on the prediction that RFID technology would see wider use in the future, as well as the expected effect coming from taking the leading position, with regard to the technology.

Finally, K Tire’s adoption of the RFID technology cannot be understood without government support. The South Korean government has been implementing the “Verification and Dissemination Project for New u-IT Technologies” since 2008. Owing to policy support, K Tire can provide worker with educational service including oversea universities.

5. Conclusions and implications

To cope with various technological impasses, K Tire demonstrated the importance of institutional and corporate entrepreneurship. What a firm pursues more positive act for innovation is a research question.

Unlike firms, K Tire has strongly emphasized IT technology since establishment in 1960. To be promotion, every worker should get certification of IT sectors after recruiting. This has become the firm’s norm. This norm was spontaneously embedded for firm’s culture. K Tire has sought new ICT technology become a first mover. This norm can galvanize to take risk to catch up the first movers in view of institutional entrepreneurship.

That can be cultivated both by corporate entrepreneurship, referred to the activities a firm undertakes to stimulate innovation and encourage calculated risk taking throughout its operations within accountabilities and institutional entrepreneurship, referred to create its own peculiar norm. Contribution of our paper shows both importance of board members of directors in cultivating corporate entrepreneurship and importance of norm and rules in inducing institutional entrepreneurship.

In conclusion, many of them were skeptical about adopting RFID for its passenger vehicle tires at a time when even the global market and technology leaders were not risking such innovation, citing reasons such as risk of failure and development costs. However, enthusiasm and entrepreneurship across the organization towards technical innovation was achieved through the experience of developing leading technologies, as well as the resolve of the company’s management and its institutional entrepreneurship, which resulted in the company’s decision to adopt the RFID technology for small tires, a technology with unverified effects that had not been widely used in the markets. Introduction of new organization which “Special lab” is compelling example of institutional entrepreneurship. Also, to pursue RFID technology, board members unanimously agree to make new organization in the middle of failing and unpredictable success. This decision was possible since K Tire’s cultivated norm which was to boost ICT technologies. In addition, at that time, board of director’s behavior can be explained by corporate entrepreneurship.

From the findings, this paper also suggests importance of firms’ visions or culture from startup stage because they can become a peculiar norm and become firm’s institutional entrepreneurship. In much contemporary research, professionals and experts are identified as key institutional entrepreneurs, who rely on their legitimated claim to authoritative knowledge or particular issue domains. This case study shows that authoritative knowledge by using their peculiar norm, and culture as well as corporate entrepreneurship.

This paper has some limitations. Despite the fact that paper shows various fruitful findings, this study is not free from that our findings are limited to a single exploratory case study. Overcoming such limitation requires securing more samples, including the group of companies that attempt unprecedented innovations across various industries. In this paper, we can’t release all findings through in-depth interview and face-to-face meetings because of promise for preventing the secret tissues.

Nevertheless, the contribution of this study lies in that it shows the importance of corporate entrepreneurship and institutional entrepreneurship for firm’s innovative capabilities to grow ceaselessly.

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Acknowledgements

 This work was supported by 2017 Hongik University Research Fund.

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New York's viral new trash cans unveiled nearly 2 years after a $1.6 million contract with consultancy giant McKinsey

• New York's viral new trash bins were unveiled following a $1.6 million contract with McKinsey.
• Mayor Eric Adams revealed the new bins as part of his "Trash Revolution," launched Monday.
• New York is embracing containerization — putting your garbage bag in a bin, not just on the street.

New York's much-discussed new trash cans have been shown off nearly two years after the city spent $1.6 million to contract with consulting giant McKinsey in 2022.

On Monday, NYC Mayor Eric Adams revealed the wheeled bin alongside NYC Department of Sanitation Commissioner Jessica Tisch , who symbolically put a black bag from his official residence, Gracie Mansion, into the container.

Video of the launch, which saw Adams wheeling a bin onto the street while Jay-Z and Alicia Keys' "Empire State of Mind" played, quickly went viral, drawing memes and ridicule from citizens of cities that have had similar bins for decades.

Time to Get (EVEN MORE) Stuff Clean! Join us right now in Manhattan as we kick off the next phase in our trash revolution: https://t.co/AEDRQNXmUT — NYC Mayor's Office (@NYCMayorsOffice) July 8, 2024

Under the new rules, which come into force on November 12, 2024, all properties with one to nine residential units will be required by law to use one of the latch-lidded waste collectors, now available to purchase online from $46.

The newly introduced requirement seeks to minimize the number of sidewalk rats . It isn't known exactly how many rats are in NYC, but a 2014 study suggested there were around two million, and a pest control firm in 2023 estimated there were close to three million rats in NYC.

Adams said the program was part of his administration's "Trash Revolution," which aims to clean up the city's streets. Officials estimate New Yorkers produce around 14 billion pounds of trash each year. But with the new rule directed at removing about 70% of this, curbside garbage piles are hoped to become a problem of the past.

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Plans for the new bins follow the city's work with consulting giant McKinsey & Company, which was drafted in to help the city assess how to contain its waste. A Sanitation Department official told New York Streetsblog at the time that the project was worth around $4 million, but a spokesperson for the department told Business Insider $1.6 million was paid out to McKinsey for the contract.

According to an October 2022 New York Times article, McKinsey was scheduled to spend 20 weeks working with the Sanitation Department to determine what sort of bins would suit different streetscapes, what they should look like, and which vendors to use. The department told Business Insider that work on the contract concluded in April 2023.

The goal was to design a program capable of combating New York's decadeslong garbage problem, looking at waste collection methods used in urban areas around the world and focusing on containerization — or, in simple terms, putting trash bags in bins rather than on the street.

A New York City Sanitation Department spokesperson told Business Insider, "DSNY's limited work with McKinsey a couple of years ago is not directly related to this week's wheelie bin announcement."

"McKinsey did not determine or recommend policy — they did math around the fact that the City was interested in waste containerization, a strategy the Adams Administration is now aggressively pursuing," the spokesperson added. The bin design was the result of work conducted by city employees, another DSNY spokesperson told BI.

The solution decided upon is similar to systems already used in cities like Barcelona, where fleets of colored, uniform bins are often found on residential blocks.

The bin project is far from the firm's first consultation in New York. The Office of the New York State Comptroller shows that McKinsey has worked on at least 10 other projects with the state.

McKinsey declined to comment when contacted by Business Insider.

Correction: July 11, 2024 — An earlier version of this story misstated McKinsey's role in working with the New York City Sanitation Department. The department said that it hired McKinsey to help inform its efforts at waste management but that the decision to pursue the wheeled bins unveiled Monday was the city's and not a McKinsey recommendation. The story was also updated with a statement from a New York City Sanitation Department spokesperson and with new information from the department that the contract with McKinsey, originally said to be as high as $4 million, was ultimately worth $1.6 million.

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A prosthesis driven by the nervous system helps people with amputation walk naturally

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State-of-the-art prosthetic limbs can help people with amputations achieve a natural walking gait, but they don’t give the user full neural control over the limb. Instead, they rely on robotic sensors and controllers that move the limb using predefined gait algorithms.

Using a new type of surgical intervention and neuroprosthetic interface, MIT researchers, in collaboration with colleagues from Brigham and Women’s Hospital, have shown that a natural walking gait is achievable using a prosthetic leg fully driven by the body’s own nervous system. The surgical amputation procedure reconnects muscles in the residual limb, which allows patients to receive “proprioceptive” feedback about where their prosthetic limb is in space.

In a study of seven patients who had this surgery, the MIT team found that they were able to walk faster, avoid obstacles, and climb stairs much more naturally than people with a traditional amputation.

“This is the first prosthetic study in history that shows a leg prosthesis under full neural modulation, where a biomimetic gait emerges. No one has been able to show this level of brain control that produces a natural gait, where the human’s nervous system is controlling the movement, not a robotic control algorithm,” says Hugh Herr, a professor of media arts and sciences, co-director of the K. Lisa Yang Center for Bionics at MIT, an associate member of MIT’s McGovern Institute for Brain Research, and the senior author of the new study.

Patients also experienced less pain and less muscle atrophy following this surgery, which is known as the agonist-antagonist myoneural interface (AMI). So far, about 60 patients around the world have received this type of surgery, which can also be done for people with arm amputations.

Hyungeun Song, a postdoc in MIT’s Media Lab, is the lead author of the paper , which appears today in Nature Medicine .

Sensory feedback

Most limb movement is controlled by pairs of muscles that take turns stretching and contracting. During a traditional below-the-knee amputation, the interactions of these paired muscles are disrupted. This makes it very difficult for the nervous system to sense the position of a muscle and how fast it’s contracting — sensory information that is critical for the brain to decide how to move the limb.

People with this kind of amputation may have trouble controlling their prosthetic limb because they can’t accurately sense where the limb is in space. Instead, they rely on robotic controllers built into the prosthetic limb. These limbs also include sensors that can detect and adjust to slopes and obstacles.

To try to help people achieve a natural gait under full nervous system control, Herr and his colleagues began developing the AMI surgery several years ago. Instead of severing natural agonist-antagonist muscle interactions, they connect the two ends of the muscles so that they still dynamically communicate with each other within the residual limb. This surgery can be done during a primary amputation, or the muscles can be reconnected after the initial amputation as part of a revision procedure.

“With the AMI amputation procedure, to the greatest extent possible, we attempt to connect native agonists to native antagonists in a physiological way so that after amputation, a person can move their full phantom limb with physiologic levels of proprioception and range of movement,” Herr says.

In a 2021  study , Herr’s lab found that patients who had this surgery were able to more precisely control the muscles of their amputated limb, and that those muscles produced electrical signals similar to those from their intact limb.

After those encouraging results, the researchers set out to explore whether those electrical signals could generate commands for a prosthetic limb and at the same time give the user feedback about the limb’s position in space. The person wearing the prosthetic limb could then use that proprioceptive feedback to volitionally adjust their gait as needed.

In the new Nature Medicine study, the MIT team found this sensory feedback did indeed translate into a smooth, near-natural ability to walk and navigate obstacles.

“Because of the AMI neuroprosthetic interface, we were able to boost that neural signaling, preserving as much as we could. This was able to restore a person's neural capability to continuously and directly control the full gait, across different walking speeds, stairs, slopes, even going over obstacles,” Song says.

A natural gait

For this study, the researchers compared seven people who had the AMI surgery with seven who had traditional below-the-knee amputations. All of the subjects used the same type of bionic limb: a prosthesis with a powered ankle as well as electrodes that can sense electromyography (EMG) signals from the tibialis anterior the gastrocnemius muscles. These signals are fed into a robotic controller that helps the prosthesis calculate how much to bend the ankle, how much torque to apply, or how much power to deliver.

The researchers tested the subjects in several different situations: level-ground walking across a 10-meter pathway, walking up a slope, walking down a ramp, walking up and down stairs, and walking on a level surface while avoiding obstacles.

In all of these tasks, the people with the AMI neuroprosthetic interface were able to walk faster — at about the same rate as people without amputations — and navigate around obstacles more easily. They also showed more natural movements, such as pointing the toes of the prosthesis upward while going up stairs or stepping over an obstacle, and they were better able to coordinate the movements of their prosthetic limb and their intact limb. They were also able to push off the ground with the same amount of force as someone without an amputation.

“With the AMI cohort, we saw natural biomimetic behaviors emerge,” Herr says. “The cohort that didn’t have the AMI, they were able to walk, but the prosthetic movements weren’t natural, and their movements were generally slower.”

These natural behaviors emerged even though the amount of sensory feedback provided by the AMI was less than 20 percent of what would normally be received in people without an amputation.

“One of the main findings here is that a small increase in neural feedback from your amputated limb can restore significant bionic neural controllability, to a point where you allow people to directly neurally control the speed of walking, adapt to different terrain, and avoid obstacles,” Song says.

“This work represents yet another step in us demonstrating what is possible in terms of restoring function in patients who suffer from severe limb injury. It is through collaborative efforts such as this that we are able to make transformational progress in patient care,” says Matthew Carty, a surgeon at Brigham and Women’s Hospital and associate professor at Harvard Medical School, who is also an author of the paper.

Enabling neural control by the person using the limb is a step toward Herr’s lab’s goal of “rebuilding human bodies,” rather than having people rely on ever more sophisticated robotic controllers and sensors — tools that are powerful but do not feel like part of the user’s body.

“The problem with that long-term approach is that the user would never feel embodied with their prosthesis. They would never view the prosthesis as part of their body, part of self,” Herr says. “The approach we’re taking is trying to comprehensively connect the brain of the human to the electromechanics.”

The research was funded by the MIT K. Lisa Yang Center for Bionics and the Eunice Kennedy Shriver National Institute of Child Health and Human Development.

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Researchers at MIT and Brigham and Women’s Hospital have created a new surgical technique and neuroprosthetic interface for amputees that allows a natural walking gait driven by the body’s own nervous system, reports Adam Piore for The Boston Globe . “We found a marked improvement in each patient’s ability to walk at normal levels of speed, to maneuver obstacles, as well as to walk up and down steps and slopes," explains Prof. Hugh Herr. “I feel like I have my leg — like my leg hasn’t been amputated,” shares Amy Pietrafitta, a participant in the clinical trial testing the new approach.

Researchers at MIT have developed a novel surgical technique that could “dramatically improve walking for people with below-the-knee amputations and help them better control their prosthetics,” reports Timmy Broderick for STAT . “With our patients, even though their limb is made of titanium and silicone, all these various electromechanical components, the limb feels natural, and it moves naturally, without even conscious thought," explains Prof. Hugh Herr. 

Financial Times

A new surgical approach developed by MIT researchers enables a bionic leg driven by the body’s nervous system to restore a natural walking gait more effectively than other prosthetic limbs, reports Clive Cookson for the Financial Times . “The approach we’re taking is trying to comprehensively connect the brain of the human to the electro-mechanics,” explains Prof. Hugh Herr.  

The Washington Post

A new surgical procedure and neuroprosthetic interface developed by MIT researchers allows people with amputations to control their prosthetic limbs with their brains, “a significant scientific advance that allows for a smoother gait and enhanced ability to navigate obstacles,” reports Lizette Ortega for The Washington Post . “We’re starting to get a glimpse of this glorious future wherein a person can lose a major part of their body, and there’s technology available to reconstruct that aspect of their body to full functionality,” explains Prof. Hugh Herr. 

The Guardian

MIT scientists have conducted a trial of a brain controlled bionic limb that improves gait, stability and speed over a traditional prosthetic, reports Hannah Devlin for The Guardian . Prof. Hugh Herr says with natural leg connections preserved, patients are more likely to feel the prosthetic as a natural part of their body. “When the person can directly control and feel the movement of the prosthesis it becomes truly part of the person’s anatomy,” Herr explains. 

The Economist

Using a new surgical technique, MIT researchers have developed a bionic leg that can be controlled by the body’s own nervous system, reports The Economist . The surgical technique “involved stitching together the ends of two sets of leg muscles in the remaining part of the participants’ legs,” explains The Economist . “Each of these new connections forms a so-called agonist-antagonist myoneural interface, or AMI. This in effect replicates the mechanisms necessary for movement as well as the perception of the limb’s position in space. Traditional amputations, in contrast, create no such pairings.”  

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Tesla CEO Elon Musk on Monday signaled the automaker would take more time to unveil its robotaxi so it can incorporate an important design change to the front of the vehicle and "show off" some other things.