CEOs Are Feeling Better About Data Security But Hackers Aren’t Far Behind

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No matter what you do to protect your business from hackers, cybersecurity will always be a moving target. Increasingly sophisticated hacking techniques mean CEOs always have to stay one step ahead of the latest ploys. A November Inc. survey of CEOs and other senior executives from more than 150 Inc. 5000 companies asked respondents about their level of confidence in the security of both their company and personal data.

The results: 53 percent of respondents said they feel more confident about the security of their company’s data now compared to five years ago, while just 28 percent said the same about their personal data. Matt Singley, founder of Chicago real estate firm Pinnacle Furnished Suites, is concerned about new methods being used by hackers, but feels confident in his company’s defenses against them.

One way the company minimizes the potential impact of a breach is by storing customer information only when necessary. Pinnacle also performs regular audits to purge its system of data it doesn’t need. “The only way to be completely secure with your data,” he says, “is to not store it.”

John Kailunas II, CEO of wealth management firm Regal Financial Group, says that the external threats his company faces have increased in both quantity and complexity. The company has countered this by adding required security awareness training for every employee and hiring cybersecurity consultants to recommend changes.

Kailunas says cybersecurity is an issue that requires constant examination. “Still,” he adds, “we have seen a significant improvement in our ability to identify potential threats.” Advances in hacking practices aren’t the only factor that have made security more challenging. “More and more, people are working from different devices that companies own,” says Shana Cosgrove, CEO of cloud software firm Nyla Technology Solutions, which provides software and cybersecurity services to the Department of Defense. “It’s a lot harder to handle security when you don’t own the entire platform.”

Jack Wight, CEO of device rebate company Buyback Boss, says his company is under near-constant attack from hackers trying to access bank account information. Scammers will spoof the company’s vendors over email and ask for wire payments, so Buyback Boss has implemented a policy of always calling vendors before sending payments.

“Five years ago there just wasn’t as much of this going on,” he says. “Now we’re dealing with scammers almost on a daily basis.” Claude Burns used to work in data security for the U.S. Navy before founding corporate beverage service Office Libations. He says his knowledge of the cybersecurity field has led him to be constantly on guard.

“I don’t think any information is safe or secure,” he says. “Your personal information is out there. Companies whose whole job is to protect it, like Equifax, are getting breached and hacked repeatedly.” Burns compares being hacked to getting in a car accident: Drive enough miles, and it’s going to happen eventually.

For him, the key is making sure that if something does look weird, his team can detect it quickly. “That way,” he says, “when something does happen, you’re able to mitigate the damage from it. In other words, wear your seat belt.”

By Kevin J. Ryan

Source: CEOs Are Feeling Better About Data Security–but Hackers Aren’t Far Behind | Inc.com

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Twitter Facing Dual Threats – How Will The Platform Respond To Musk And Zatko?

Elon Musk’s legal team has continued to seek ways to allow the tech entrepreneur to back out of his $44 billion deal to buy social media platform Twitter. On Tuesday, Musk’s lawyers filed an additional notice, disclosed to the SEC, which cited allegations made last month by the company’s former security chief Peiter “Mudge” Zatko as additional reasons to terminate the deal.

Twitter must now deal with the threat from Musk, as well as the accusations contained in Zatko’s complaint. Though the accusations made by the two men are not exactly the same, neither are their motives. The social media platform, however, is still facing two separate challenges – and will be forced to respond to each.

The notice filed on Tuesday followed a July 8 that alleged the social media company had failed to comply with its contractual obligations. Musk is now citing claims made by Zatko – who has become known as the “Twitter Whistleblower” – as a justification for backing out of the deal.

“Allegations regarding certain facts, known to Twitter prior to and as of July 8, 2022, but undisclosed to the Musk Parties prior to and at that time, have since come to light that provide additional and distinct bases to terminate the Merger Agreement,” Mike Ringler, Musk’s legal representative, wrote in a letter to Twitter’s legal chief, Vijaya Gadde, CNBC reported.

Twitter’s legal team quickly responded, stating that Musk’s termination case was “invalid and wrongful under” the acquisition agreement.

“It is based solely on statements made by a third party that, as Twitter has previously stated, are riddled with inconsistencies and inaccuracies and lack important context,” the letter written by lawyer William Savitt said. “Contrary to the assertions in your letter, Twitter has breached none of its representations or obligations under the Agreement, and Twitter has not suffered and is not likely to suffer a Company Material Adverse Effect.”

Dual Challenges For Twitter

“It’s hard to say whether either Musk or the whistleblower pose any substantial threat to Twitter at this point,” suggested technology industry analyst Charles King of Pund-IT. That could certainly change in the coming months.

“Heading into Delaware Chancery Court in October the Twitter vs. Elon Musk case is around the corner with both legal teams getting ready for this unprecedented battle around the $44 billion Twitter deal,” explained Dan Ives, managing director of Equity Research at Wedbush Securities, via an email.

“A potentially major development… has been whistleblower case from former security chief and Twitter executive Peiter ‘Mudge’ Zatko which could give Musk a much-needed small victory,” Ives continued.

Musk’s legal team has now subpoenaed Zatko to appear for a deposition in its legal fight against Twitter on September 9th. Zatko alleged in his 200-page whistleblower disclosure that Twitter has serious privacy and security vulnerabilities that could put users at risk, and pose national security risk given the data issues.

“Importantly, Zatko claims that Twitter does not have an accurate count of the number of spam and fake bot accounts on its platform, which will be front and center for the Musk team when they speak to Zatko as this could significantly beef up its claims vs. Twitter,” said Ives.

“There are also a number of other legal back and forths going on in this Twitter case,” Ives noted. “But ultimately the Zatko development and timing is a huge potential win for Musk, which could complicate the Twitter case.”

What Does It Mean For Twitter

Twitter’s board of directors now seems intent on holding Musk to his original agreement – but whether the deal is forced through or not, changes are likely coming to the platform.

“Despite his various protestations, their case looks pretty strong,” King told this reporter. “If Musk is forced to purchase the company, it is probably that he’ll make substantial changes to Twitter’s leadership and management corps but that assumes that the people he’d likely target would still be around. Overall, I believe that many Twitter employees would bail out rather than work for Musk.”

Even if Musk is able to get out of the deal to purchase the platform, Twitter could face future challenges.

“The whistleblower is a different situation,” King continued. “Depending on how his (Zatko’s) testimony to Congress proceeds, Twitter could be required to make substantial changes to the way it manages security and access to users’ accounts.”

That could be seen as a good thing for both the company and its users. “However, that assumes that there is substance to the whistleblower’s complaints,” King also noted, adding, “It isn’t entirely clear at this point.”

Source: Twitter Facing Dual Threats – How Will The Platform Respond To Musk And Zatko?

Critics by By , ,

Twitter has major security problems that pose a threat to its own users’ personal information, to company shareholders, to national security, and to democracy, according to an explosive whistleblower disclosure obtained exclusively by CNN and The Washington Post. The disclosure, sent last month to Congress and federal agencies, paints a picture of a chaotic and reckless environment at a mismanaged company that allows too many of its staff access to the platform’s central controls and most sensitive information without adequate oversight.

It also alleges that some of the company’s senior-most executives have been trying to cover up Twitter’s serious vulnerabilities, and that one or more current employees may be working for a foreign intelligence service. The whistleblower, who has agreed to be publicly identified, is Peiter “Mudge” Zatko, who was previously the company’s head of security, reporting directly to the CEO. Zatko further alleges that Twitter’s leadership has misled its own board and government regulators about its security vulnerabilities, including some that could allegedly open the door to foreign spying or manipulation, hacking and disinformation campaigns.

The whistleblower also alleges Twitter does not reliably delete users’ data after they cancel their accounts, in some cases because the company has lost track of the information, and that it has misled regulators about whether it deletes the data as it is required to do. The whistleblower also says Twitter executives don’t have the resources to fully understand the true number of bots on the platform, and were not motivated to. Bots have recently become central to Elon Musk’s attempts to back out of a $44 billion deal to buy the company (although Twitter denies Musk’s claims).

Zatko was fired by Twitter (TWTR) in January for what the company claims was poor performance. According to Zatko, his public whistleblowing comes after he attempted to flag the security lapses to Twitter (TWTR)’s board and to help Twitter (TWTR) fix years of technical shortcomings and alleged non-compliance with an earlier privacy agreement with the Federal Trade Commission. Zatko is being represented by Whistleblower Aid, the same group that represented Facebook whistleblower Frances Haugen.

John Tye, founder of Whistleblower Aid and Zatko’s lawyer, told CNN that Zatko has not been in contact with Musk, and said Zatko began the whistleblower process before there was any indication of Musk’s involvement with Twitter. After this article was initially published, Alex Spiro, an attorney for Musk, told CNN, “We have already issued a subpoena for Mr. Zatko, and we found his exit and that of other key employees curious in light of what we have been finding.”

CNN sought comment from Twitter on more than 50 specific questions regarding the disclosure. In a statement, a Twitter spokesperson told CNN that security and privacy are both longtime priorities for the company. Twitter also said the company provides clear tools for users to control privacy, ad targeting and data sharing, and added that it has created internal workflows to ensure users know that when they cancel their accounts, Twitter will deactivate the accounts and start a deletion process. Twitter declined to say whether it typically completes the process.

“Mr. Zatko was fired from his senior executive role at Twitter in January 2022 for ineffective leadership and poor performance,” the Twitter spokesperson said. “What we’ve seen so far is a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context. Mr. Zatko’s allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders. Security and privacy have long been company-wide priorities at Twitter and will continue to be.”

Some of Zatko’s most damning claims spring from his apparently tense relationship with Parag Agrawal, the company’s former chief technology officer who was made CEO after Jack Dorsey stepped down last November. According to the disclosure, Agrawal and his lieutenants repeatedly discouraged Zatko from providing a full accounting of Twitter’s security problems to the company’s board of directors.

The company’s executive team allegedly instructed Zatko to provide an oral report of his initial findings on the company’s security condition to the board rather than a detailed written account, ordered Zatko to knowingly present cherry-picked and misrepresented data to create the false perception of progress on urgent cybersecurity issues, and went behind Zatko’s back to have a third-party consulting firm’s report scrubbed to hide the true extent of the company’s problems.

The disclosure is generally much kinder to Dorsey, who hired Zatko and whom Zatko believes wanted to see the problems within the company fixed. But it does depict him as extremely disengaged in his final months leading Twitter – so much so that some senior staff even considered the possibility he was sick.

CNN has reached out to Dorsey for comment. A person familiar with Zatko’s tenure at Twitter told CNN the company investigated several claims he brought forward around the time he was fired, and ultimately found them unpersuasive; the person added that Zatko at times lacked understanding of Twitter’s FTC obligations. Zatko believes his firing was in retaliation for his sounding the alarm about the company’s security problems.

The scathing disclosure, which totals around 200 pages, including supporting exhibits – was sent last month to a number of US government agencies and congressional committees, including the Securities and Exchange Commission, the Federal Trade Commission and the Department of Justice. The existence and details of the disclosure have not previously been reported. CNN obtained a copy of the disclosure from a senior Democratic aide on Capitol Hill.

The SEC, DOJ and FTC declined to comment; the Senate Intelligence Committee, which received a copy of the report, is taking the disclosure seriously and is setting a meeting to discuss the allegations, according to Rachel Cohen, a committee spokesperson. Sen. Dick Durbin, who chairs the Senate Judiciary Committee and also received the report, vowed to investigate “and take further steps as needed to get to the bottom of these alarming allegations.”

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Why Expensive Social Media Monitoring Has Failed To Protect Schools

There’s a set of questions that comes up with grim hindsight after a shooting like the one in Uvalde, Texas: Were there signs? Did we miss them? Could we have caught this? An entire industry has sprung up claiming that it has the answer: software that scans social media for threats.

Ari Sen, a computational journalist for the Dallas Morning News, has reported that the Uvalde Consolidated Independent School District purchased one of these social media monitoring services, called Social Sentinel, a few years ago. Right now, Ari says it’s hard to know if the software was active in Uvalde at the time of the shooting—the school district hasn’t answered that yet.

But the bigger question is whether the posts on the gunman’s now-removed Instagram page—including lots of photos of AR-15-style rifles and weapons—would even have been flagged by the software. Why then are schools spending millions of dollars on this software, and why does the industry claim it helps protect students?

On Friday’s episode of What Next: TBD, I spoke with Ari Sen about what threat surveillance software promises and how it falls short. Our conversation has been edited and condensed for clarity.

Lizzie O’Leary: Can you explain what Social Sentinel is and who uses it?

Ari Sen: Social Sentinel is a social media monitoring technology. It’s used by dozens of colleges and hundreds of school districts all around the country. What they claim to do is to scan billions of social media posts with really sophisticated AI to identify threats of potential violence or self-harm. Now, some of the reporting that I’ve done suggests that these models may not be very sophisticated or that this might be a really hard problem to solve even if the models are very sophisticated.

In your reporting, you found that several school districts that bought this software, spending between $1 and $2 per student, weren’t getting all that much for their money.

Most of the school districts that we talked to that had used Social Sentinel did not find the service to be useful. I contacted every school that we could find that had used Social Sentinel and the three other social media monitoring services that we studied in the state of Texas. Over 200 school districts had used one of these four services since 2015. Most of them did not respond to my questions, but there were a handful, maybe five or six, who did actually respond. I would say four or five of those said that “We canceled the service after a year. We didn’t find it to be useful. Or we found something, an anonymous reporting tool, a team of humans to monitor this stuff. We found that to be as good or better than the Social Sentinel service.”

One thing that I’ve heard a lot, not only from school districts but from colleges, is that 90 percent, 99 percent of the stuff that they were getting from the Social Sentinel service was false alerts. I’ve seen stuff like song lyrics, Bible verses, obvious jokes. If you just think about the way that people talk on social media, it’s a lot of sarcasm. It’s a lot of irony. It’s a lot of hyperbole. That can be really difficult for machine learning models to catch in general and particularly the less sophisticated stuff.

Do you have any examples of posts that got flagged where you thought, “Oh, come on. That’s someone tweeting lyrics”?

There is a college in Florida that I was able to get some flagged tweets from. Somebody tweeted the lyrics to the 2010 B.o.B song “Airplanes.” I think it picked up on the phrase “shooting stars.” Obviously, we’ve seen people tweeting about their favorite characters on TV shows: “If X character doesn’t get together with Y character, I’m literally going to die,” things like that. There’s a really funny tweet from one of these Florida colleges about Hamburger Helper and how Hamburger Helper needs to accept that it needs help.

They thought that was a mental health problem?

Evidently. Like I said, it’s hard to inspect these machine learning models. We don’t know for sure what exactly is going on behind the scenes there. But I am able to look at some of the things that they have flagged, and they don’t seem to be threatening at all. What we’ve heard anecdotally from schools and colleges is like, “Yeah, most of what we were getting is just not actionable.”

Is the algorithm searching for keywords? Does it look for shoot, kill, stab?

If you looked at Social Sentinel, the way they talked about the service early on, it very much sounds like a keyword-based service. They talk about how they have thousands of terms that they’re able to flag to school districts. The company now says that they have very sophisticated machine learning models. They have these eight different machine learning models that are able to classify text appropriately.

It’s also unclear exactly how these models work because the companies treat their algorithms as proprietary. They also say it would defeat the purpose of their work to disclose too much.

We don’t know what sorts of training data they have to go into the models, whether that training data has been audited for racial bias. All of that stuff is opaque to us. It really raises questions about, if schools are going to use this for such a serious and important purpose, should there be some transparency about the models, the training data, and how effective they are?

Moreover, machine learning models often struggle with slang and the way kids talk. That can mean posts from students of color are disproportionately flagged by the algorithms.

There was a really interesting paper by some UMass Amherst researchers a couple years ago where they took African American Vernacular English and they plugged it into language identification machine learning models. Obviously, what it should spit out is that this is English. In actuality, one of these models flagged that language as Dutch with 99 percent confidence. So these models do poorly on non-Anglicized English text in general and may exhibit the biases from the training data which they were trained on. If you look at Social Sentinel’s claims, for example, on their website, they say, “We don’t perpetuate any biases.” The experts that I’ve talked to have said that’s very difficult to do if the underlying models you’re using behind the scenes have these sorts of biases built in.

While Social Sentinel claims it covers almost all of social media, your reporting and work from BuzzFeed News suggests it mostly just monitors Twitter. Do you think these services can even keep up with how students use social media as they jump from platform to platform?

Obviously, you have the problem with young people hopping between different services. The big thing now is TikTok, for example. Maybe 10 years ago, it was Facebook. It’s hard for these platforms to keep up. Then you also have the ways in which language changes naturally over time. Then, as we were just talking about, language differs very widely across groups and geographies. The way people talk in California is not the same way that people talk in North Carolina.

I saw that the Uvalde shooter was using a service called Yubo, which I suspect these companies are not monitoring.

I hadn’t even heard of Yubo. One of the things I’ve seen in my reporting on Social Sentinel is that police chiefs going back to 2015 were constantly bugging Social Sentinel: Can you add this platform? Can you add this platform? Sometimes they did, and sometimes they didn’t. But it’s very, very difficult to keep up with the fast-paced nature of how young people are acting online.

Listening to you, there seems to be a pretty substantial body of evidence that these services are largely ineffective. Do you think that’s a fair assessment? And if it is, why are they still being touted as a solution?

We haven’t really been able to identify a clear case of this service working. We have heard some anecdotes about maybe some of the other services preventing kids from harming themselves. But I think the question we have to ask is, is it worth the privacy invasion? I found in my reporting last year that most of the time students and parents weren’t told at all that these services were in place and had no way to opt in or opt out. What needs to happen is a more open conversation about, “This is the service that we’re using, this is why we’re using it, and this is the things that it looks for.”

If these schools and universities are under such pressure to do something, but the debate around guns is either a nonstarter where they are or completely out of their hands, maybe this software feels like a reed they can grasp.

We’re obviously having a larger political conversation about what gun restrictions we do and we don’t want. But I think for schools, they’re desperate to do something to protect their kids, whether that’s school safety drills, monitoring services, like the ones we’ve been talking about here, whether it’s physical security, like metal detectors or other sorts of physical security measures. But I think one of the things that the Uvalde shooting shows us is that even school districts that have all of those things in place and have all of the training and all the officers, these things can fail and do fail. So there needs to be a different conversation that’s happening about what measures are effective and whether new approaches are needed to tackle this problem.

These kinds of programs ingest a tremendous amount of information and data. To work best, they need to do that. It does make me wonder for what other reasons a school or a school district or university might want to have this information or might utilize this information?

Some of the things that I’ve been seeing in my reporting, particularly at the college level, is that colleges are adopting these services to monitor protests and activism. Obviously, that’s very chilling. In 2016, there was a company called Geofeedia that got caught monitoring Black Lives Matter protesters. But Geofeedia is not the only player out there obviously. My reporting has suggested that these other services, particularly Social Sentinel, at the college level may be used to monitor protests and activism.

What did the schools say when you asked them about this?

I have contacted every college that we know of that’s used Social Sentinel and asked about this question specifically. A lot of them don’t want to talk about this. We haven’t really heard a full-throated defense of, “We’re monitoring this protest to keep students safe.” A lot of them are very tight-lipped, so we have to rely on documents and whistleblowers inside of the company to give us information.

Does the company say, “Yeah, we know our stuff is being used to monitor protesters”?

The company fervently denies any ability or use of the service to monitor protesters in any way, and they have since the beginning. But that claim is very dubious.

It’s worth remembering that most of these services are being paid for with public money. An investigation by BuzzFeed News examined contracts from 130 schools and found that they collectively spent $2.5 million on social media monitoring over five years. If you are listening to this and you’re a parent or a teenager or a college student, what other kinds of questions you think you should be asking your educators, your administration about these services?

Well, first of all, I think it’s just important to know whether the service is in place or not. For example, when I was reporting on these four social media monitoring companies last year, I discovered that my high school had used Gaggle, one of the monitoring services. I knew from previous reporting that my undergraduate institution, UNC Chapel Hill, used Social Sentinel. First of all, we should just ask the campus police department, the school administrators, “What service are you using? What does it monitor for, and why are you using it?”

The next questions are, is it effective? Is it doing what it’s set out to do, what they claimed it could do when they were marketing the service to you? If it’s not, then I think people really have to raise questions about, why are we still using this thing if it doesn’t work for the thing that they said it works for?

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How Corporate Intelligence Teams Help Businesses Manage Risk

The word “intelligence” is loaded: While some confuse it with corporate espionage, today nearly every major company has an intelligence function or is building one. Prior to Covid-19, many corporate intelligence teams largely focused on security, but the pandemic has demonstrated the broader value of intelligence.

In a world of contradictory and misleading information, smart business leaders use intelligence to see around corners, mitigate risk, provide insight, and shape their decision-making. The authors offer an overview of corporate intelligence functions and provide advice on how to structure these internal teams.

In January 2020, a small team at the global financial services technology company Fiserv began closely watching early warning signs of a new disease outbreak in the regional capital of Wuhan, China. The team triangulated reliable media sources and applied their best analytical judgment based on comparable early indicators from historic outbreaks, such as SARS.

Prescient analysis revealed a potentially major disease was in the offing. The team recommended against executive travel even before the virus had been detected in the U.S., earlier than most companies or governments. Scenario assessments of the potential human and economic impact led the company to invest in protective equipment for personnel early on and mitigate risks by swiftly transitioning to remote work.

Why did Fiserv correctly anticipate looming risk while others languished behind the news cycle? Because it had a dedicated and trusted geo-political analysis team, which practices intelligence work, scanning the horizon and keeping senior leadership informed of growing risk and consequent business implications.

In a world of contradictory and misleading information, this kind of intelligence provides situational awareness of cyber threats, security risks, political instability, or other trouble brewing. Smart business leaders consciously use intelligence to shape their decisions.

The word “intelligence” is a loaded one. Some confuse it with corporate espionage, as described in Barry Meier’s Spooked, which portrays private-sector intelligence practitioners as dangerous renegades. Companies can cross the line. Among other egregious examples, an eBay team targeted and harassed bloggers and Credit Suisse used private investigators to surveil employees. These are the bad news exceptions.

Every day, private-sector intelligence professionals legally and ethically steer companies away from trouble and towards opportunity and decisiveness. Organizations, such as the Association of International Risk Intelligence Professionals, are establishing standards and codes of conduct, and academic institutions, such as Mercyhurst University, are producing a new generation of private-sector focused intelligence professionals.

Companies invest in security and intelligence because it helps the bottom line. According to Lewis Sage-Passant, a doctoral researcher at Loughborough University studying private sector intelligence, these functions are now “ubiquitous”: Virtually every major company either has a security intelligence capacity or is building one.

Seeing Around Corners

The best intelligence functions help leaders understand what is happening and what is likely to happen next. Erica Brescia, who until recently served as chief operating officer at GitHub, described the value of their intelligence team during the Covid-19 pandemic: “Our team helped us to identify threats and communicate effectively with multiple audiences throughout the company and across national and cultural boundaries to keep our employees safe and the business running.”

Likewise, Microsoft Global Intelligence Program Manager Liz Maloney told us: “Intelligence is the first step in understanding your risk…Our mission is to enable decision makers to mitigate risk and to respond to residual risk that we can’t avoid.”

A survey of 94 private-sector intelligence professionals revealed that their positions were often created in response to a “threat or crisis.” In the aftermath of terror attacks, cyber assaults, disinformation campaigns, and sudden political shifts, companies belatedly realized that a small investment in situational awareness is better than costly late reaction to unanticipated problems.

In a stark example, a fatal 2013 terror attack on a BP/Statoil/Sonatrach joint venture in In Amenas, Algeria, led both BP and Statoil to significantly enhance their intelligence capabilities to better identify hidden threats.

Mitigating Risk, Providing Insight

Intelligence can create a competitive advantage by enabling operations where others fear to tread. In high threat environments, strong intelligence enables companies to efficiently target security resources on the most relevant risks.

When entering new markets, intelligence teams help executives avoid becoming entangled with dodgy partners or overspending on security while closing the deal. “Information is king,” an aviation security intelligence professional told us. “You don’t need all the armed guards if you have good intelligence.”

The value of private-sector intelligence, according to Maloney, is “giving the business confidence and avoiding overreactions.” For example, after Microsoft executives saw alarming external reporting about security dangers in Puerto Rico in the aftermath of Hurricane Maria in 2017, Microsoft’s in-house intelligence team provided a nuanced assessment, specific to the company’s footprint, that gave the C-suite the confidence to continue operating safely.

Offering Much More than Security

Prior to Covid-19, many corporate intelligence teams largely focused on security, but the pandemic has shown the broader value of intelligence. Diana Dragon, head of global insights at Standard Industries, noted: “The same skills used to assess security risks can be used in identifying trends and opportunities.” According to the aviation security intelligence professional we spoke to, prior to Covid-19, his team was known as “the security guys.” Now they provide widespread strategic intelligence.

Intelligence analysis can simply relay facts to protect people and assets (baseline level of the pyramid below) but is most valuable when used for strategic, proactive decision-making support (top level). At Fiserv, the geopolitical analysis team, which sits outside of security, already had a broad remit and provided critical intelligence analysis early on that prepared the company for the impending Covid-19 pandemic.

Similarly, teams at Microsoft and GitHub tapped into the top-level potential, analyzing security or geopolitical trends to support strategic business decision making.

Managing Intelligence Better

Intelligence roles are often buried deep in an organization, scattered across corporate functions, or obscured under opaque job titles. Surveys reveal intelligence roles popping up in 20 different business units.

This approach often makes intelligence employees invisible to senior leaders who would benefit from their skills, experience, and networks. “Not having direct contact with decision makers significantly degrades the quality of the service,” says Ryan Long, co-founder and co-host of the Business of Intelligence podcast, “and will likely cause the practitioner to miss mark altogether.”

There is no one-size-fits-all answer for structuring intelligence teams, but specific characteristics lead to success. First, direct connectivity to decision makers is critical. As explained by Brescia in her time at GitHub, “the intel team has direct contact with decision-makers across the company.” From the outset, she met with her head of intelligence, set expectations and priorities, and empowered the intelligence team to come to her if they identified risks that needed to be brought to leadership’s attention.

The intelligence team is also included in working groups on issues of concern to leadership from early on, giving them visibility on executive priorities. Intelligence teams provide the best value when they are clear on the decisions to be made, the questions to be answered, and the company’s strategic goals.

Second, corporate intelligence units must break down silos and engage stakeholders across all business units. “It’s critical,” says Long, “that the intelligence practitioner engage with the customer to understand their needs, receive frequent feedback, and develop rapport.” Teams closely tied to strategy give better support. Better questions lead to better responses.

And finally, an intelligence professional must lead the effort. Whether from government or the private sector, they must be versed in analytic tradecraft, understand collection methodology for the private sector, be able to evaluate vendors’ quality and ethics, and have the skills and experience to understand what the business needs.

Some companies are leading the way and have built intelligence capacities that harness the potential of intelligence to both mitigate risk and facilitate business opportunities. Fiserv’s geopolitical analysis team reports alongside security to the head of global services.

At Standard Industries, the intelligence function moved out of security in 2021 and now the head of global insights sits on the executive leadership team. This new structure arose due to intelligence’s demonstrated ability to provide strategic guidance and support to senior executives on opportunities and trends, as well as risks, across the gamut of corporate activities.

If your company does not have an intelligence function, your competitors likely do. And even if you do, you may not be using it to optimum effect. Are you engaged with the team? Does the team understand your strategy, timelines, and gaps in information? Are you using intelligence beyond security issues to inform wider business challenges?

Executives must empower their intelligence teams, sharing goals and objectives. Likewise, intelligence teams must understand the business, tailoring their products to maximize opportunity and minimize risk. When the right insight arrives at the right time to shape an important decision, a firm gains enormous advantage. It is well worth the modest investment of time and resources to make that happen.

Source: How Corporate Intelligence Teams Help Businesses Manage Risk

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The Role of Industry in Strategy

I had another question/provocation recently on the role of industry in strategy. They keep coming, along with specific requests to write something on the subject. So, I thought I would initiate Year II of the Playing to Win/Practitioner Insights (PTW/PI) series with a piece on The Role of Industry in Strategy: Set a Strategic Goal of Shaping Yours.

The Trendy Critique

The trendy critique these days holds that strategy assumes that industries are fixed and stable, and you should find one that is structurally attractive, get advantage there, and milk it for all you can. The notion is generally attributed to Michael Porter, of Five Forces Model fame, despite the fact that he never said or even implied such a thing.

In contrast, the supposedly enlightened way of thinking about strategy is to recognize that because industries are ‘continuously morphing,’ there is no such thing as competitive advantage anymore. Thus, you should be ‘continuously reconfiguring’ rather than doing this terribly old-fashioned thing called strategy because, apparently, it is old-fashioned!

Most readers know I have worked with P&G for a long time, 35 years and counting, in fact. The Tide brand managers over those 35 years, plus the 40 years before that, would find hilarious the idea that their brand was incapable of sustaining competitive advantage when Tide has been the top laundry detergent in the US for the past 75 years — and arguably may now be the strongest it has been in those three-quarters of a century. The same would apply to the Head & Shoulders brand managers over the past 60 years.

And I can’t help wonder what Facebook, Amazon, Netflix and Google would think if they were told their advantages are fleeting because their industries have morphed so continuously that each will soon be in the ashbin of history. Or great old-guard companies like Vanguard or Four Seasons or Southwest for that matter — with their strategies, industries and competitive advantages that have been around for around half a century for each of the three.

Are their industries completely stable, so they haven’t had to do a thing to maintain their leading positions? No. But have their core competitive advantages had to change dramatically? Nope. Not for any one of the abovementioned winners.

So, let’s dispense with the trendy critique and instead reconfirm that winning in your industry matters and can matter for a long, long time — for generations in some cases.

But How Should You Define Your Industry?

A get a lot of questions about and fretting over the question of how to define one’s industry. The general concern tends to be that industry definitions are too narrow and rigid. This is, of course, not a particularly new idea. Theodore Levitt made that critique in 1960 in one of the most famous Harvard Business Review articles of all time, Marketing Myopia, in which he used the example of the passenger railway business generating its own demise by considering its competition to be other railways and not paying attention to alternative transportation — like cars and planes.

Michael Porter tends to get beaten up for this too with folks criticizing him for his Five Forces Model considering competition narrowly. Again, I come away wondering if his critics actually read his stuff prior to criticizing. A quick perusal of the model reveals that, per Levitt, if other railways are the only actors included in the Rivalry Among Existing Competitors box, then cars and planes will be included in Threat of Substitutes box.

And future kinds of players in Threat of New Entrants. If you actually read Porter, he tells you that if you want to understand your strategy context, you had better consider all three of Rivalry, Substitutes and New Entrants.

Maybe because I worked a lot with Mike in the olden days, I am pretty lackadaisical about defining the boundaries of industries for purposes of strategy. It recalls for me the tag line from the old Fram Oil Filter commercials: pay me now or pay me later.

You can define your industry narrowly — say, steel — and thereby show it as having less intense Rivalry. But then aluminum and ceramics have to be in the Substitute box, and you have a huge threat from them. And even further, one always has to think about Threat of New Entrants, as the traditional steelmakers should have done with respect to scrap steel/mini-mill entrant, Nucor.

Of course you can’t just punt on industry definition in strategy because you can’t develop a strategy in a vacuum. You do need some sort of definition of the playing field on which you plan to compete in order to develop strategy. But I am quite flexible in exactly how that playing field is defined. The definition just needs to have self-correcting elements to it.

For example, the theory of one’s industry can be that the industry is just me. Lots of entrepreneurs think of it that way. They say: “I am truly unique.” I don’t try to convince them that they aren’t, and that they are part of a bigger industry. What is the use?

I focus instead on getting them to think about the task of recruiting customers out of other industries into theirs. That has the same effect as defining their industry more broadly. They have to compete with players that they see as being in other industries to get the customers of these other players to defect to them.

Sometimes the definition can be less singularly extreme but still very narrow. In this case, executives do acknowledge direct competition but define their competitive set narrowly. Again, I don’t waste time fighting their narrow definition. I just make sure that they think carefully and robustly about substitutes and how their strategy must consider the threat from them.

If instead they define their industry overly broadly, I get them to focus on the strategic group within which they compete most directly and intensely, because winning there should be their first task.

My overall approach is to expend my energy on taking account of any vulnerabilities in the industry definition rather than directly fighting the definition itself.

It’s About the Role of Strategy in Industry

There is a much more important task than haggling or obsessing about industry definition. Instead, your focus should be on working to influence your industry, on shaping it to better benefit your strategy. That is because all good strategies have the effect of influencing/evolving/shaping their industry.

Did Vanguard win in a way that maintained the boundaries and shape of its industry? No. It created a gigantic new industry: index mutual funds. Did Southwest Airlines win in a way that maintained the boundaries and shape of its industry? No, it created a very attractive substitute for the Greyhound Bus. How about Four Seasons? No, it heralded the splitting of the hotel development industry from the hotel management industry.

Why is Tide on top after 75 years? It has kept shaping its industry to its own advantage — and always also to the benefit of consumers. At its inception, it became the default detergent as the automatic washing machine penetrated American households by giving out a free box of Tide with every machine sold. Later, it became the dominant liquid detergent, driving the shift from powdered to liquid detergent.

Still later, it showed that detergent and bleach aren’t necessarily two distinct products if it is more convenient for it to be one. Most recently in converted the entire high end of the industry from pourable liquid to uni-dose pods. Tide won by influencing the shape and contours of its industry in ways that strengthened its position with consumers by making the lives of consumers better.

I am sure there are examples of great companies that won without shaping their industries meaningfully. But none come to mind, which generally means they are the exceptions that prove the rule!

Practitioner Insights

It is largely a waste of time to argue about industry definition. Just make sure you have a definition that is self-correcting by taking into account the aspects that you don’t include in the industry. If you think the definition is overly narrow, make sure that you consider the role of substitutes and potential entrants. If you think it is overly broad, focus attention on winning the narrower battle first before tackling the industry broadly.

Be flexible in your industry definition but inflexible in your theory of winning. The job of strategy is to offer a superior value proposition to a target set of customers. There are lots of ways to conceptualize that target set — the whole market, a big chunk, or a tiny slice. All will be workable if you have discipline on finding a way to win, not to just play.

And a key to winning in the long term is to shape your industry in a direction that benefits your strategy. The worst thing to do is to simply sit back and let the industry in which you operate evolve in whatever way the relevant forces drive or more dangerously, in a way that a key competitor seeks to evolve it.

That will put your strategy perpetually on its back foot — always needing to respond. If your strategy doesn’t shape the industry in which you compete, somebody else will be evolving it in a way that benefits them. So, take the task of shaping your industry’s evolution as seriously as you take competing today.

 

By: Roger Martin

Professor Roger Martin is a writer, strategy advisor and in 2017 was named the #1 management thinker in world. He is also former Dean of the Rotman School.

Source: The Role of Industry in Strategy. Set a Strategic Goal of Shaping Yours | by Roger Martin | Nov, 2021 | Medium

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