Technology, Media & Telecommunications Industry Perspectives - March 2017

Technology, Media & Communications
Technology, Media & Telecommunications Industry Perspectives - March 2017

Staying Agile a Top Concern for Technology, Media & Telecommunications Companies in 2017

The phrase “innovate or die” has long been a mantra for businesses in the technology, media & telecommunications (TMT) industry. As Satya Nadella wrote to employees on his first day as CEO of Microsoft, “Our industry does not respect tradition — it only respects innovation.”

But the results of a recent survey, Executive Perspectives on Top Risks for 2017, from Protiviti and North Carolina State University’s ERM Initiative, suggest that many executives in the TMT industry group now consider “innovate or die” to be more of an urgent warning than a motivational slogan. They are concerned that their firms will struggle to sustain the agility needed to compete in an increasingly complex and dynamic technology landscape.

According to the survey, executives’ top concern for 2017 continues to be the same as the two previous years: Rapid speed of disruptive innovations and/or new technologies may outpace our organization’s ability to compete and/or manage the risk appropriately, without making significant changes to our business model.

There are two key reasons this risk continues to preoccupy the minds of executives and directors at many TMT companies:

  • Rapid changes are becoming routine for organizations. More important, these so-called “changes” are anything but ordinary; rather, they are industry-shifting innovations, especially in the areas of digital transformation: mobility, data analytics, artificial intelligence and robotics, 3D printing and sensors that require more than a mere adjustment to one or two parts of the business. These are shifts that have executives thinking more about how — and if — they can effectively harness these forces of disruption to shift their own internal operations and those of their partners in the supply chain to maintain a competitive position.
  • Disruptive companies that are created today are launched with systems and processes incorporating current digital capabilities; often, these companies enjoy an “out of the gate” advantage over more established companies that must make substantial changes to legacy systems and processes to compete.

The way for TMT companies to keep pace with agile competitors is, of course, to become more agile themselves. Following are strategies these organizations should consider adopting so they can compete effectively in the rapidly evolving digital economy while managing risk appropriately:

  • Make innovation a top — and ongoing — priority for the entire organization; an innovation mindset should be deeply engrained in the corporate culture.
  • Strive to become an “early mover” — e.g., become adept at detecting early signs of market shifts that affect the validity of the enterprise’s critical strategic assumptions and make decisions on whether to act on those signs.
  • Encourage cross-departmental collaboration on technology and innovation initiatives, especially at the C-level, so that the business, IT and internal audit leaders understand and are actively discussing potential risks and opportunities.
  • Ensure discussions about technology risks are happening at the board level.

A final suggestion for TMT organizations to consider as they work to become more agile: Make sure employees are engaged and committed to new corporate strategies, which increases the likelihood of gaining a sustainable competitive advantage.

To this end, TMT companies should take the advice of Pat Wadors, senior vice president of LinkedIn’s global talent organization, who wrote recently: “Leaders in today’s organizations [must] figure out the best ways to identify, reward, and motivate top agile talent while supporting the constant need to learn. To atrophy is to lose in the market.”

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Cybercrime, Brand Damage Among Top Risks for Technology, Media & Telecommunications Companies, Executives Say

If improving brand protection isn’t a top-line agenda item in the cybersecurity discussions happening at the highest levels in your organization, it needs to be. In today’s era of lightning-quick social media sharing, brand protection has become even more important — and far more challenging — for technology, media & telecommunications (TMT) companies. Two factors play a role:

  • Expanding use of social media and mobile applications by customers and employees: It is all too easy for outsiders to acquire and misrepresent personal and proprietary information.
  • The relentless tide of cyberthreats: The Identity Theft Resource Center (ITRC) reports that the number of U.S. data breaches reached an all-time high in 2016. Several leading TMT companies were among the businesses hit with high-profile, far-reaching, costly and reputation-damaging breaches last year.

In the face of these realities, including growing public disclosures of data leaks and breaches, many TMT companies are beginning to re-evaluate how they interact with other organizations and how they safeguard against breaches. Most C-level executives in this industry group also now realize that they themselves could be targets for hackers and other malicious actors seeking to gain access to personal records and other sensitive data.

There is no doubt that TMT executives, in general, are thinking a lot more about brand protection these days. In the latest Executive Perspectives on Top Risks Survey from Protiviti and North Carolina State University’s ERM Initiative, TMT executives ranked the following risks among the top five for their industry group in 2017:

  • Social media, mobile applications and other internet-based applications may significantly impact our brand, customer relationships, regulatory compliance processes and/or how we do business, and
  • Our organization many not be sufficiently prepared to manage cyberthreats that have the potential to significantly disrupt core operations and/or damage our brand.

On the cyber-risk front, it is important for TMT companies to recognize that the customer and financial data they handle are not the only targets for hackers. An organization’s intellectual property (IP) can be even more valuable to some threat actors, including nation states. The loss or theft of IP not only could undermine a company’s ability to compete but damage its brand and reputation in unanticipated ways.

Without question, loss or theft of any type of high-value data can have lasting, negative effects on an organization from both operational and brand perspectives. Everything negative that happens to a company and becomes public can damage its brand – and cyber breaches and loss of IP are some of the fastest ways for this damage to occur. Given these considerations, management and the board must work together to manage the brand and make brand protection one of the company’s top priorities.

To engage in effective dialogue on this topic, a recent issue of Protiviti’s Board Perspectives: Risk Oversight offers some guidance: Executives should take the lead in deciding what type of interaction they would like from the board and define how they want to involve the board in the brand protection process. And if the executives haven’t done this yet, then the board should waste no time in asking for their input.

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