The aforementioned Jerry Brown brought a lot to the governor’s office during his historic tenure. But one thing he didn’t bring was children. Not so for new Gov. Gavin Newsom and First Lady Jennifer Siebel Newsom, who have four kids under the age of 10. This includes two-year-old Dutch, who introduced himself to the world last Monday during his dad’s inauguration by climbing onto the podium during the elder Newsom’s address. After exploring for a bit, Dutch was scooped up by dad, who held him for several minutes before releasing the little guy back to mom. Or so he thought. The wily Dutch escaped again, returning to the stage for another round of exploration before mom got him for good.
-- By RICH EHISEN
When Risto Siilasmaa realized that Artificial Intelligence (AI) would transform the technology industry, he decided he had to learn what it was all about. Now the chair of Nokia’s board of directors is making sure all 100,000 of the company’s employees understand AI, Machine Learning (ML) and big data. In an interview in Nokia’s seaside villa in Helsinki, Mr Siilasmaa explained why companies who fail to adapt to AI will be left behind.
Why did you become interested in AI and ML technologies?
I’m an engineer by background and I’ve followed new tech since I was a kid of 12 years old, and the fascination of intelligent computers has never left me from the days I read science fiction books. Now that we’ve started seeing real life examples of things that machines can do better than the best human experts, that of course triggered one’s imagination. It’s becoming obvious that any business will draw much of its competitiveness from ML technologies in the future, and of course, I should understand what this means for the companies I work with.
Why should company leaders understand these technologies, rather than leave it to data scientists?
If I talk to an audience of CEOs, I often start by asking which ones feel that, in five years’ time, ML will be a critical piece of their competitiveness and all of them will raise their hands. Then I ask how many of them really understand how ML works and maybe one, two, three per cent of them raise their hands. This is exactly where I was. I believed a few years back that ML would be a key source of our competitive advantage, but I didn’t understand why, and I didn’t understand how it works. So, I could not ask the right questions when people came and talked about what we were working on.
If it is so strategically important for the company, I should understand and we all should understand, at least enough to ask the right questions, so that led me to a sort of wake-up moment that I don’t have to wait for others to explain this to me, I can actually move my butt and go back to school myself.
What is your advice for company leaders in the position you were in?
The problem with many leaders like myself is that we get used to people explaining things for us, we sort of delegate learning to others. Then we just get the gist of it from a very concise summary, but that doesn’t transfer real learning and understanding to us.
We should wake up from that paralysis that others do our thinking and learning for us, and then when there is something truly critical, we should feel that we can go back to school. Of course, we can get really top teachers who can condense the essentials for us, but we should ask them to truly go deep enough so that we can understand how this technology works. This is an attitude that I like to see in the companies I work with, throughout the company. It’s also an attitude of being brave enough to admit that I don’t understand something and there’s nothing wrong with it. There’s something wrong with claiming to understand something that I truly don’t. That can be it’s dangerous. It may lead us to making the wrong conclusions, so let’s just admit that we’re all learners, we’re all eternal students, and there’s nothing wrong with asking stupid questions.
What parts of the business is it changing?
We are in the process of getting transformed. We have a large number of ML projects underway in our internal functions, for improving the quality of our work and augmenting our people so that they become their better selves. For external purposes, we are adding new competitiveness and new functionality to our products and services.
We have also launched a program to educate all 100,000 Nokia employees, who will go through simple ML training, just like a code of conduct program, that is mandatory for everyone. We believe that our employees appreciate the fact we want them to learn. It’s important for them to be at the top of their profession and to understand broadly what’s happening, and it’s important for us that they develop themselves as human beings, that they know their expertise is appreciated, and that we’re investing in their development across the board.
Do you have any predictions for AI and ML in 2019?
There is of course research being done on ML widely, but regardless of the new findings and inventions the big bang will come from the already existing technology being applied widely. The technology itself is not very complicated, so companies broadly speaking will be experimenting with the datasets that they have, looking for new ways of using that data and getting productivity and so forth from that data.
But they may also at times find something uniquely valuable and surprising from the data, in the same way that we have been playing chess for thousands of years and really smart people have been writing books about chess, and not only have we lost to computers for the last decade but now we have had to acknowledge that our understanding of chess strategy has been flawed, it’s like there is another continent on earth that we didn’t know about and ML found it for us. This same thing can happen to companies as they start doing this work, they may realize something uniquely valuable that they were never even thinking about.
What do companies need to do to adapt successfully?
Adapting ML widely takes time because you need to educate a lot of people and you need to take a different approach to how you think about business problems. If you want to be an AI player, one of
the knee-jerk reactions that you must have is to acquire data. If you have a problem, the first thought is where do I get the data that I need to solve this problem, and then you buy data, you buy companies for the data that they have access to, you may buy datasets or do R&D work that you give away to people for free so that you get data in return. Then you need to reorganise, to structure your business and your organization in such a way that this tool can be effectively used, and this is a long transition, it’s not easy. I’m not saying that every company should become an AI company—not all can—but the ones who want to be need to think deeply about it.
Is it important that companies buy in external datasets rather than just use their own data?
It is important that companies think strategically about data, both the data that they have or have access to, but especially about data that they can foresee needing in a few years’ time.
Why is data valuable and what sort of datasets have the most value?
Well that depends on the business of the company, but data is the food that most ML needs, that’s the way they are trained. In simplest terms the way ML systems work is that you have a certain set of training data that you use for the training and then you have weights in the system that reflect what data is meaningful in what context. In the training process, those weights are adjusted so that the mistakes the system makes are minimized. You do that training many times, perhaps thousands of times or tens of thousands of times, and each time the mistakes that the system makes are getting smaller and smaller, so the real value is in the trained weights. If you have bad data you will get bad weights, and the system will make mistakes; it can’t answer questions correctly. If you have high quality data that fits the problem that you are trying to solve, you may get excellent results, far beyond human capabilities in these narrow fields of problem solving.
How can firms ensure the data they use is high quality and relevant?
They need experience to do that; it’s not easy. The problem is that we all have biases and sometimes we don’t understand our biases. Some can be pretty simple—when universities build systems, if the researchers are all white Caucasian males, then they may forget that there are other types of people. They don’t have any intention to skew the system so that it doesn’t deal fairly with people of color, it just happens. They may only find out after they launch the system for public use, and then it’s a big PR crisis. So of course you can measure the quality of data in many ways—mechanically, you test it—but then there may be deeper level thoughts or missing subsets of data that you only realize way afterwards, so you really need to approach it very thoughtfully and it’s another thing that people need to train for, it’s not something we automatically can do well. This is a new frontier; there are lots of things to learn and get adjusted to.
What external datasets are most important to a company like Nokia?
That purely depends on the business and the problem. Let’s say if we want to automate accounting then we need data of accounting sentries and of course all companies have lots of that data because they do accounting themselves. It’s only a question of if they want to use it and to automate accounting themselves or if they use a third party who is specialized in that and builds the systems and helps them to use it. Then there are some things that only one particular company does, and they have access to that type of data and then they will have to do something themselves, they can’t just resort to third parties. Sometimes the problem is when the company doesn’t have access to suitable data and they just have to figure out where to get that.
So how would you summarize the benefit to companies of investing in AI?
I think all companies probably start with attempting to maintain at least their current competitive advantage because everybody is investing in machine learning, especially in the tech space, so you have to run to stay in your current place. But of course, if we are better at this, if we are more innovative, if we actually come up with something new or apply it in an area that others don’t, our products will be cheaper, faster, better quality, they will make fewer mistakes, they will be more intuitive, cheaper to build and cheaper to operate. Those are the opportunities and advantages. In addition, there may be some things that would be completely impossible without machine learning and those are allegorical to situations like AI finding new chess opening strategies or Alpha Go making moves that no human being has ever played, or curing illnesses that were never curable before.
January 11 is National Human Trafficking Awareness Day. Established in 2007 by a Senate resolution, the day shines a spotlight on the issue of trafficking men, women and children for financial gain. Many associate trafficking with sexual exploitation, however among an estimated 16 million human trafficking victims:
That’s right. There is a clear correlation between human trafficking and forced labor.
What defines human trafficking and forced labor?
The U.S. Department of Homeland Security notes that “Human trafficking is modern-day slavery and involves the use of force, fraud, or coercion to obtain some type of labor or commercial sex act.” Human trafficking disproportionately impacts marginalized groups—migrants, women and children, teenage runaways, LGBTQ individuals. It can happen within a single country’s borders or trans-nationally.
Forced labor is even more prevalent, impacting 24.9 million people around the world, including close to 10 million children. Migrant workers are particularly vulnerable because of language barriers, lack of advocates or friends nearby, and financial dependence on their employers.
Countries that have weak rule of law, rampant corruption or economies dependent on cheap labor have higher incidences of human trafficking and forced labor, but it happens everywhere. Countries with more robust economies—and laws against trafficking and forced labor—still face the problem.
And rampant consumerism for low-priced goods incentivizes those who want to take advantage of forced labor to keep costs down.
This isn’t a problem for governments alone to solve. This is a problem that requires collaboration between governments, NGOs, companies and consumers.
Document your entire supply chain. Why is this important? Often, companies don’t take their due diligence beyond Tier 1 or Tier 2 suppliers. However, forced labor is often most prevalent in the collection of raw materials, such as cobalt mining or cotton harvesting. Dig deeper so you know WHO is supplying the vendors you rely on.
Conduct a forced labor risk assessment. Forced labor is currently most common in South Asia, China and Central Africa. It is also more common in certain industries, such as mining or agriculture. With the assessment complete, you can ‘right-size’ your risk mitigation process to align with the risk level.
Establish financial penalties in your supplier contracts. You know the saying, “Money talks”? You can exert pressure on key suppliers to mitigate the risk of human trafficking in their own supply chains (and protect yourself at the same time) by requiring that they meet the standards you’ve set—or pay the price.
Monitor for signs of forced labor risk.Due diligence is just one piece of the puzzle. By implementing PESTLE-based risk monitoring, you can stay alert to potential threats as they arise. Isn’t that better than being blind-sided because a supplier you trust made changes in their own practices that put your reputation on the line?
Train your employees and suppliers on spotting the signs. Airlines, bus companies and other transportation-related businesses increasingly provide this type of training. Recently, CSP reported on the vital role that the convenience and fuel-retailer industry can play in ending trafficking.
Human trafficking and the resultant forced labor represents a considerable reputational and financial risk to companies. When news breaks about forced labor in the supply chain, social media can ignite a PR crisis.
Boycotts gain momentum. Class-action suits ensue. Share prices suffer. And trust is lost.
Fortunately, procurement, supply chain and risk management professionals are ideally positioned to help eradicate these types of human rights abuses.
Next Steps
In our ongoing series of Expert Q&As, we speak with Alison Taylor, Managing Director of Business for Social Responsibility (BSR), a nonprofit organization that works with companies and other partners on sustainable business strategies. She tells LexisNexis that there is a trend of businesses prioritizing ESG issues and the United Nation’s Sustainable Development Goals and contends that the use of data is becoming an “existential issue” for all companies.
What are the main trends in business regarding sustainability over the past few years?
First, increasing interest in environmental, social, and governance (ESG) issues from mainstream investors, not just socially-responsible ones. Our financial services work has grown exponentially as banks and private equity firms focus on establishing systems to measure ESG risks and opportunities in acquisitions, corporate finance, and their own portfolios. The growth in interest is most striking on climate and diversity, but there is a broad, underlying shift in thinking as to how business interacts with society. This focus on sustainability from the financial services industry is directly impacting how seriously corporations take the issue. We are seeing companies increasingly request “ESG” rather than “sustainability” strategies, and this shift in terminology is a direct response to investor scrutiny.
We have also seen the establishment and maturation of internationally-accepted frameworks to measure and frame sustainable business efforts: the Paris Agreement on climate, the Sustainable Development Goals, and the UN Guiding Principles on Business and Human Rights are a few examples. This is shifting the focus to how companies implement sustainability efforts inside the organization, and how they incorporate them into governance, management structures, and incentives.
Finally, we are seeing a convergence between issues of integrity and sustainability. Hyper-transparency means that companies need to behave as if anything they say or do might become public. Societal trust in business is falling, social and political activism is increasing (especially in the U.S.), and legal
compliance is no longer a reliable proxy for reputational risk. All these trends require rethinking on how companies manage a broad range of ethical issues.
What are the advantages for a business in focusing on sustainability, and what are the risks in ignoring it?
There is considerable evidence at this point that a focus on sustainability improves growth over the long term. It can help with employee retention, particularly of younger generations. It improves reputation and access to capital. Environmental efforts can reduce operating costs; efforts focused on societal value can improve license to operate. Conversely, ignoring sustainability increasingly signals that the company has a short-term mindset and an old-fashioned attitude holding that a business’ impact on society and the environment is just a matter of “negative externalities.” Such a mindset is no longer acceptable to many consumers, so businesses that think this way risk undermining public and investor trust.
What advice do you have for a business looking to increase its focus on sustainability?
The focus of sustainability efforts over the last several years has been to identify and act on issues that are in the interest of both the business and society: the “shared value” concept. This is a shift from earlier iterations of sustainability whereby it was regarded as philanthropic and divorced from the business, or as a risk-management and compliance effort. Today, the focus is on opportunity identification, and alignment with core business interests. Sustainability is a broad and evolving concept. Businesses should prioritize and have a clear strategy that is aligned with core business interests—ideally demonstrating leadership on a few key issues.
And how important is leadership?
Extremely important. The sustainability function inside companies remains poorly-defined and inconsistent. Executive and board support is critical to driving visibility and traction for sustainability efforts. Sustainability leaders that have a strong track record in business tend to be more credible and are adept at driving the organizational change needed to make this work succeed. We believe that change management skills are highly underrated in the field of sustainability—subject matter expertise varies enormously, but a sophisticated approach to organizational dynamics is always going to help.
Did any findings in your latest annual survey on sustainable business surprise you?
This is the tenth year of our annual State of Sustainable Business survey, which we refreshed to take account of the new trends we are seeing. I was surprised to see ethics and integrity emerge as the top issue for sustainability practitioners at companies, as this subject has traditionally been the domain of compliance teams. Still, although companies clearly understand the link between sustainability and reputation management, they are clearly not yet ready to tackle some issues that concern the public. Our partners at Polecat conducted social and online media analysis of ESG issues and found considerable attention being paid toward lobbying and business influence on politics—to an even greater degree than toward climate, water, or diversity. At the same time, directly addressing concerns over political influence did not show up as a priority among companies.
It was also interesting to see diversity and inclusion flagged as the second-highest priority, alongside the finding that 41 percent of companies have so far done nothing to address the #MeToo movement. There
remains a lack of focus on such major societal issues as inequality and inclusion, which is troubling, given their dramatic effect on our lives.
The survey found that AI is the main “mega-trend” in sustainable business. What does this mean?
I think it may reflect the overwhelming media and business focus on this issue. Companies are getting to grips with the fact that the use and misuse of data and technology is an existential issue for most businesses, not just technology firms. Compelling changes are happening in real time, and the future is highly uncertain. There is no clear playbook for how to proceed.
How do you think AI and big data will change businesses in the future?
AI and big data have the potential to transform supply chains, customer interactions, market knowledge, and much more. Abusing this new capability (intentionally or not) can violate a broad range of human rights and constitute deeply unethical behaviour. We are at the start of efforts to understand, regulate, and manage the capabilities of this powerful new technology.
Next Steps
The pharmaceutical sector is one of the most-at risk industries for bribery and corruption. In a new White Paper, we look at some of the recent bribery enforcement actions against pharma firms and strengthened anti-bribery legislation. And we suggest ten steps for enhanced risk mitigation.
Rising risk of bribery enforcement
Pharma is one of the most at-risk industries for bribery and corruption enforcement. In 2016 Teva Pharmaceutical paid $519 million to settle U.S. charges of bribery in Mexico and Ukraine. This is still the eighth highest FCPA-related fine of all time. In September this year, French firm Sanofi agreed to pay more than $25 million to settle charges that its Kazakhstan and Middle East subsidiaries made corrupt payments to win business.
Outside the U.S., regulation is strengthening, most notably in the UK’s Bribery Act of 2011 and France’s Sapin II law. And earlier this year, Israel’s regulatory authorities fined Teva and additional $22 million. It has never been more important that firms have a good due diligence and risk monitoring process in place.
A risk mitigation checklist for pharma
Our new white paper explores recent pharma enforcement actions in more detail and outlines best practices for mitigating risk—from implementing training for staff and third parties agents to implementing due diligence and ongoing monitoring aligned to the risks you face. Download the white paper today to find out more.
Next Steps