Innovation

Saudi Vision 2030: How Reforming a Nation Will Transform the World

17 October, 2019
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"Saudi Vision 2030 aims to wean the country off of its dependencies on fossil fuels through the creation of sweeping new reforms."

For many decades, Saudi Arabia — as a nation, culture and economic force — has been inextricably tied to oil exports and the energy industry. However, a bold new vision, named Saudi Vision 2030, aims to wean the country off its dependencies on fossil fuels through the creation of sweeping new reforms and policies. This vision looks to modernize Saudi Arabia, both as a domestic society and a global financial powerhouse.

The Power of Embracing Change

 

In 2016, Crown Prince Mohammad bin Salman bin Abdulaziz Al-Saud led the unveiling of the Saudi Vision 2030 initiative, which detailed the nation's unprecedented and extraordinary commitment to emerge as a leader in a rapidly evolving world. As oil prices continue to react to new economic realities and regional political forces shape the roles and objectives of nations throughout the Middle East, Saudi Arabia's decision to proactively embrace change could have extraordinary foreign and domestic ramifications.

With a population of more than 33.4 million people and a median age of 25, Saudi Arabia faces a future filled with significant challenges and opportunities.1 Saudi Vision 2030 is a road map for how the nation will empower its millions of young citizens to work and thrive in a globalized world that increasingly views petroleum as an outdated and harmful source of energy. A shift in long-established revenue resources and economic paradigms requires a fundamental shift in local workforce skill sets and proficiencies with modern technologies.

As other nations are slow to adjust to climate change and other geo-economic shifts, Saudi Arabia is poised to exemplify to the rest of the world how governments can leverage policy reform to enhance the lives of people both inside and outside the country's borders.2

Accommodating a Complex Global Economy

 

Saudi Vision 2030 will have a profound impact on rapidly growing economies, such as India, that seek to leverage digital transformation while implementing innovative domestic and workforce policies.

In fact, the fate of Saudi Arabia and India are becoming increasingly intertwined, as India — unlike many western economies — requires more oil to empower its robust economic rise. Industrialized markets, in areas such as Europe and the United States, are seeking greener alternatives and more electric vehicles for transportation demands, but India remains heavily dependent on fossil fuels. By 2040, India will need to process up to 10 million barrels of crude oil every day to support its expanding economy and progressively urbanized populations.3

Saudi Arabia, a nation that already has a few notable government policies elevating the standard of living for its citizens (such as offering free college education to all citizens), is further internationalizing its economy by prioritizing privatization. The 2030 plan encourages financial institutions to promote private sector growth, marking a significant development in how the country is aligning its domestic workforces to compete in a globalized economy. The focus on increasing privatization and other non-oil industries — such as construction, finance, healthcare, retail and religious tourism — will create new opportunities for Saudi businesses and entrepreneurs.4

Creating a Future Through Indigenous Resources

 

Saudi Vision 2030 addresses many of the local, cultural challenges facing the nation, such as the role of women in the workforce and society, the impact of digital transformation and automation, and the need to modernize the sensibilities of Saudi businesses. Allowing women to drive and granting them greater access to economic prosperity — with the goal of increasing women's participation in the workforce from 22% to 30% — has generated positive responses with global investors. The 2030 plan also prioritizes domestic issues and the overall health of its citizens, with the stated objective of raising the average life expectancy from 74 to 80 years and aggressively promoting daily exercise and healthier lifestyles for all Saudi citizens.5

The Saudi government also seeks to bring its society into the digital age by implementing more e-government services that will connect citizens to resources through smartphones, data-centric operations and other technologies. This push will also drive human capital out of government jobs and into the private sector. According to the Mercer Global Talent Trends 2019 report, companies in countries such as India, Brazil, and Japan will experience a 70% increase in automation, boosting their need — like Saudi Arabia — to find new roles and professional development opportunities for workers.

The 2030 plan offers an ambitious vision for the nation's indigenous resources. Empowering women and integrating modern technologies throughout its economy and government are just part of this comprehensive strategy. By inviting the global economy to invest in its progressive financial mechanisms and bolster tourism through campaigns highlighting the nation's history, Saudi Arabia is poised to lead its people, and the world, into a future forever defined by a new, modern view of the future. Will it work? The world will know in 2030.

Sources:

1. Kingdom of Saudi Arabia. "Saudi Census: The Total Population." General Authority for Statistics, Accessed 11 July 2019,https://www.stats.gov.sa/en/node.
2. Mohammed bin Salman bin Abdulaziz Al-Saud. "Vision 2030." Vision 2030, 9 May. 2019,https://vision2030.gov.sa/en.
3. Critchlow, Andrew. "India is too important for oil titan Saudi to ignore." S&P Global Platts, 6 Mar. 2019,https://blogs.platts.com/2019/03/06/india-important-oil-saudi/.
4. Nuruzzaman, Mohammed. "Saudi Arabia's 'Vision 2030': Will It Save Or Sink the Middle East?" E-International Relations, 10 Jul. 2018,https://www.e-ir.info/2018/07/10/saudi-arabias-vision-2030-will-it-save-or-sink-the-middle-east/.
5. "Saudi Arabia Vision — Goals and Objectives." GO-Gulf, 14 Jul. 2016,https://www.go-gulf.com/blog/saudi-arabia-vision-2030/.

more in innovation

Varun Khosla | 03 Oct 2019

For decades, any conversation involving startups and executive compensation conjured images of Silicon Valley and shiny office buildings full of technology virtuosos working for innovative companies striving to be the next billion-dollar unicorn. Now, a new era of global startups is taking root in previously unexpected regions around the world. In fact, recent research reveals that $893 million was invested in 366 startups throughout the Middle East and North Africa. That number represents a $214 million increase from 2017, which saw $679 million in startup investments.1 Similarly, startups are increasing in Southeast Asia, largely driven by "SEA turtles" — locally born residents who studied and worked overseas (mostly in the West, in places like Silicon Valley) and are returning home to launch their own startup companies. The region has experienced a major inflection point, with VC investors in Southeast Asia investing over $7.8 billion across 327 deals.2 There's one key component all these startups need, however: leadership. But attracting and retaining executive-level talent and management teams can be a major challenge for these burgeoning startup hotbeds, especially when it comes to compensation. Corporate Investors Are Changing Executive Compensation   Many of the world's most recognizable startups were launched by charismatic, individual founding partners, such as Jeff Bezos, Jack Ma and Mark Zuckerberg. However, the rise of these luminaries and their compelling stories do not mirror the new era of startups blossoming around the world. In the Middle East and North Africa (MENA), for example, investment companies are providing the initial financial backing needed to launch startups. These investment companies are there from day one to ensure the startups have the capital needed to secure subsequent rounds of funding. Additionally, the executives of these startups are not the original founders and, therefore, desire different compensation models to secure their continued loyalty, creativity and commitment. Acquiring top C-level talent for startups can be a daunting task, as the risk level is high for businesses that do not have a proven track record — or any record at all. Traditionally, western-based startups have fashioned executive compensation packages around medium- to long-term benchmarks predicated on the company's expected growth, but triangulating growth models, investment strategies and executive payment packages can be a complicated and tenuous proposition. Since most global startups today are built around investment companies instead of inspirational individual founders, these companies must be diligent when determining how or how much to pay the executives — who can ultimately mean the difference between success and failure. How Much Should Executive Compensation Be?   Investment companies naturally want to maximize their profits, which means they want to retain as much equity in the startup and as many shares of the startup as possible. Every dollar, share of stock or option paid to startup executives is money the investment companies surrender to operational costs. However, low-balling startup executives or opting to hire those who aren't as skilled or experienced also comes with the risk of undermining the startup's ability to compete, grow and drive revenue. Financial arrangements that provide management with a potential share of equity (or shadow equity) require careful thought and consideration. An executive compensation plan must act as an incentive and retention device for startup executives while delivering a fair return to investors and shareholders who have funded the company. Investors and shareholders must decide how much dilution of equity they are willing to accept to provide an appropriate equity pool for the management team. This is why many companies decide to execute a scaled approach that decreases the size of the equity pool with each round of funding to accommodate the increasing value of the company. This type of program impacts the dilution of equity and can allow for more creative compensation strategies — particularly when dealing with more sophisticated startups, such as in the pharma and fintech industries, which require the talent and knowledge of more accomplished professionals and leaders. Investment companies can offer either share options, which give employees the right to buy or sell stock at a designated time and price, or full-value shares, which offer employees actual ownership in the company. Both contribute to the dilution of equity, but options typically contribute more to the equity dilution than full shares. For example, an equity pool comprised of options may amount to 15% to 20% of a company's capital, while a pool comprised of shares may amount to as little as 3% to 5%. This indicates the same amount of long-term incentive awards paid in options will lead to higher equity dilution than awarding full shares. Investment companies must determine which strategy best suits their objectives. When to Pay Executives and Management   Should investors pay their executives and management teams only after they have received a return on their investments? Or should executive compensation be based on employees performing their jobs to the best of their abilities, regardless of the outcomes — which are often determined by external economic forces beyond their control. Many startups now implement the former strategy, believing that benchmarks for returns on investments motivate executives and provide them with the extra incentive to do everything possible to create shareholder value. In fact, in a majority of cases, long-term incentive plans only pay out when investors receive a return. Alternately, some startups choose to compensate executives and management based on specific, mutually agreed upon corporate goals and objectives. Compensation can then be provided as cash or shares, though there may be restrictions on when those shares can be sold or vested or whether they come in the form of options or full-value shares. Startups are popping up all over the world, ushering in a new frontier of ideas and innovation, as well as investors and executives who will create the next generation of future unicorns. As new trends continue to emerge for how executives in these startups are compensated, global startups will need to review their options with scrutiny to attract the best executive talent while maximizing returns for investors. Sources: 1. "2018 MENA Venture Investment Summary." MAGNiTT, January 2019,https://magnitt.com/research/2018-mena-venture-investment-summary. 2. Maulia, Erwida. "Southeast Asian 'turtles' return home to hatch tech startups." Nikkei Asian Review, 22 May 2019,https://asia.nikkei.com/Spotlight/Cover-Story/Southeast-Asian-turtles-return-home-to-hatch-tech-startups.

Jackson Kam | 05 Sep 2019

Over the past few years, China has emerged as a powerhouse in the increasingly digitized, e-commerce-driven world. Its digital economy accounted for 38.2% of its GDP growth in the first half of 2018,1 and it also happens to be home to 9 of the top 20 internet companies in the world, including the search engine Baidu, e-commerce behemoth Alibaba and internet services provider Tencent.2 China's success can serve as a lesson for companies and economies around the world that are pushing to remain relevant and keep a competitive edge. Policy Initiatives Help Drive Digitization   One driver behind China's success is the government's focus on shifting to a digital economy. In 2015, China's State Council, the highest organ of state administration, issued a report called "Made in China 2025." The document outlines its strategy for transforming China's manufacturing base through digital innovation. Its strategic goals include greatly increasing manufacturing digitization and "informationization." For instance, within the category of integrating IT and industrialization, the report lists a goal of increasing broadband penetration from 37% in 2013 to 82% by 2025.4 That said, the initiatives outlined have also prompted concern among policymakers across the globe.5 Some fear that an industrial policy directed by the government will include financial assistance to Chinese companies, creating an uneven global playing field. Some also worry about China's investments in foreign technology firms. At the same time, the goals and strategies outlined in the report signal that China's leadership intends to focus on ensuring the country is prepared for an increasingly digital world. Investments Are Bringing the Digital Future Into Focus   To that end, investments in research and development from Chinese companies, research institutes and the government have skyrocketed. Since 2000, it's gone from about $40 billion to $443 billion, just shy of the $484 billion invested within the U.S., according to data from the Organization for Economic Co-operation and Development.6 China is also working to minimize any digital divide between citizens in its major cities and more remote areas. Several provinces have developed plans to digitize their economies. For example, the province of Guizhou plans to grow its digital economy by 20% annually.7 The World Economic Forum also explains that, in what are known as Taobao villages, at least 10% of households run online stores for Taobao, which is the shopping site for e-commerce behemoth Alibaba. Across one such village, this generates e-commerce revenues of at least $1.6 million, and more than 1,000 of these villages dot the Chinese countryside.8 Along with financial investment, policies that enable technology companies to thrive are essential to an economy's digital transformation and success in an e-commerce world. This includes an educational model that helps students develop critical-thinking and problem-solving skills, as well as digital literacy. Moreover, education shouldn't stop once students graduate — instead, it needs to continue through training programs that help those employed stay abreast of advancing technology. Robust capital markets, solid protection for intellectual property and mechanisms to prevent and detect corruption are additional requirements for a strong, innovative technology sector. Collaboration between private and public sectors, such as programs that nurture new businesses, also contributes to a thriving digital environment. Start with Your Employees to Build a Digital Workforce   Businesses, as well as governments, can prepare for a growing digital environment and remain relevant and competitive. Somewhat surprisingly, it makes sense to focus on the workforce first and then the technology. Employees can make or break even the most advanced technology solutions. Here are three requirements for an innovative work culture: 1.  Means: This refers to the tools and authority employees need to conceive an idea, establish the right team, build the business case, and develop and test it. 2.  Motive: Organizations provide motivation by encouraging employees to think beyond their immediate job function and even take risks within a predefined framework. They can also enable them to participate, perhaps through a bonus, in any financial upside resulting from their work. 3.  Opportunity: Employees need time, tools and space for brainstorming and innovation. Agility is also key to an innovative digital workplace. Employees should feel confident collaborating with colleagues across functions and sharing ideas without encountering undue criticism. A solid budget for training will also ensure employees obtain the skills they need to contribute to their employers' success on an ongoing basis. Invest in Technology to Keep Pace with Innovation   Of course, technology plays a vital role in digital success. Constraints, such as inadequate network capabilities and legacy applications that can't integrate with new systems, have impacted the digital transformation activities for three quarters of brands, according to a survey by manufacturing services company Jabil. Fortunately, 99% are investing in new technology to replace outdated platforms that hinder their operations.9 China's rise as a digital power is the result of planning, investment and work — and both companies and countries can learn from their digital efforts and e-commerce successes. Sources: 1 China Academy of Information and Communications Technology (CAICT) under the Ministry of Industry and Information Technology (MIIT), Xinhua News, December 23, 2018,http://www.xinhuanet.com/english/2018-12/23/c_137693489.htm. 2 Heimburg, Fabian von, "Here are 3 lessons Europe can learn from China's flourishing start-ups," World Economic Forum, September 15, 2018,https://www.weforum.org/agenda/2018/09/3-lessons-europe-can-learn-from-china-flourishing-start-up-ecosystem/. 3 World Payments Report 2018," Capgemini and BNP Paribas Services, https://worldpaymentsreport.com/non-cash-payments-volume/. 4 State Council of China, "Made in China 2025," IoT One, July 7, 2015,http://www.cittadellascienza.it/cina/wp-content/uploads/2017/02/IoT-ONE-Made-in-China-2025.pdf. 5 The Made in China 2025 Initiative: Economic Implications for the United States," Congressional Research Service, August 29, 2018,The Made in China 2025 Initiative: Economic Implications for the United States," Congressional Research Service, August 29, 2018,https://fas.org/sgp/crs/row/IF10964.pdf. 6Gross domestic spending on R&D," Organization for Economic Co-operation and Development (OCED), accessed on April 1, 2019,https://data.oecd.org/rd/gross-domestic-spending-on-r-d.htm.https://data.oecd.org/rd/gross-domestic-spending-on-r-d.htm. 7CAICT under MIIT, "China's digital economy surges 18.9%, drives growth," China Daily, July 20, 2017,http://www.chinadaily.com.cn/business/2017-07/20/content_30179729.htm. 8Wenway, Winston Ma, "China's mobile economy, explained," World Economic Forum, June 26, 2017,https://www.weforum.org/agenda/2017/06/china-mobile-economy-explained. 9Digital Transformation Strategies: How are They Changing?" Jabil,https://www.jabil.com/insights/blog-main/how-are-digital-transformation-strategies-changing.html.

Editorial Staff | 23 Aug 2019

Blockchain has potential to make a huge impact. Learn about fascinating blockchain trends that are emerging in 2019 and beyond. Blockchain technology was invented to safeguard the cryptocurrency infrastructure (e.g. Bitcoin), enabling secure financial transactions without the need for a bank or a middleman. But blockchain’s ledger technology is now expanding beyond digital currency and financial services, offering great potential to improve upon many areas of our lives.  As blockchain matures and becomes more accessible, companies across various industries are finding compelling use cases for blockchain to make businesses processes more efficient. For example, banks can now reduce infrastructure cost by 30% throughblockchain solutions. This is achieved by encrypting millions of storage points, none of which contain a full name or an account number.  While blockchain is currently only being used by 0.5% of the global population, emerging trends are making it more scalable. It is anticipated that 80% of the population will be using blockchain technology in some capacity within 10 years.  Because the HR department is charged with managing so much sensitive data, blockchain technology will be integrated directly into the HR function through a multitude of possible use cases—adding transparency and trust to an organization’s operations. The evolution of blockchain will also mean companies need a workforce with new skills, so HR will be kept busy with recruitment and talent management.  The following blockchain trends are lifting ledger technology from the obscurity of cryptocurrency and making blockchain part of the mainstream conversation.   1.  More potential real-world uses on the horizon will raise the visibility of blockchain.  While cryptocurrency and financial institutions are the pioneers of blockchain, it is important to note that tokenization and securing payments are just precursors to many potential real-world uses for ledger technology.  Every transaction on the blockchain is on public record and its enhanced security makes it a virtually incorruptible platform. Because no central party will ever be in control of all of the record keeping, blockchain can be used to mitigate financial, political and institutional corruption in corporations and governments, alike.  Blockchain may also be able to improve the political sphere in terms of voting systems. Because records cannot be altered in any way, blockchain is ideal for voter registration, identification and vote tallying. Election corruption and voter fraud would be eliminated, ensuring a more accurate, fair electoral process.   The general public will also be drawn to blockchain’s ability to eliminate transactions fees. Owing to decentralization, sending and receiving money can be expedited and enhanced. This has implications for automated legal procedures, customs payments, ownership transfers and business transactions—allowing widespread disintermediation across industries and economies.  Another mainstream use could be in public records of ownership, citizenship and identity. Even in the thriving digital era, these records are stored in centralized databases for security. However, this exposes them to tampering because of the intermediaries it engages. Blockchain opens up the possibility of a decentralized, public, fixed and consensus-driven ledger of records that could nullify the need for intermediaries. A groundbreaking example of this is Estonia’s E-Citizenship Program, which stores citizens’ information on a blockchain.  The application of blockchain can also be extended to include organizational information for the HR department, where one day a company can maintain one identity stored in a master Blockchain. This could be safely accessed by all stakeholders including vendors, employees, customers and tax authorities. 2.  Blockchain as a Service (BaaS) will facilitate business adoption. A Blockchain-as-a-Service (BAAS) platform is a full-service cloud-based solution that connects developers, entrepreneurs and enterprises on one platform. On the BaaS, stakeholders can develop, test and deploy blockchain applications and smart contracts. Moreover, the BaaS platform provides all the necessary infrastructure and operational support, ensuring that the applications run efficiently.  BaaS providers include major companies like Microsoft, IBM, SAP, Amazon, Oracle, and Hewlett Packard. These providers are nurturing blockchain adoption among business because the platforms enable companies to engage blockchain projects without having to spend anywhere near as much money as they would developing customized blockchain solutions independently.  As more businesses look for convenient and cost-effective ways to implement blockchain technology, BaaS collections will most likely continue to expand. Keeping an eye on the emerging BaaS space can help an HR department choose the right provider for (future) company needs.  3.  Blockchain will be less associated with cryptocurrency & possibly rebranded.  Blockchain was born and bred to protect Bitcoin’s infrastructure— but now ledger technology is leaving the cryptocurrency nest to explore more business endeavors.  Blockchain’s association with the volatile cryptocurrency market has potentially diluted its reputation. There are still negative connotations with cryptocurrencies, including wild price swings and the perceived link to people buying illegal items from the dark web.  But mainstream industries, such as manufacturing and retail, are proving the power of blockchain to improve supply chain management and ownership tracking. To break out of the cryptocurrency pigeonhole, it is expected that the blockchain industry will make a concerted effort to establish an identity that’s separate from cryptocurrency—and better educate the business sphere on the advantages it offers, beyond financial transactions.  To take the rebrand a step further, research from Forrester suggests that it might be beneficial for the blockchain industry to drop the name blockchain and replace it with distributed ledger technology (DLT).  4.  Blockchain enabled Internet of Things (IoT) systems. Gartner predicts that the number of installed Internet of Thing (IoT) will exceed 20 billion by 2020. As HR departments integrate more IoT into companies, there is growing concern because these connected devices often open the door for hackers. The same vigilance applied to computers is sometimes overlooked when ensuring the security of the IoT infrastructure. As a company’s digital ecosystem expands to include more IoT devices, they can be left vulnerable to hacks. Blockchain offers strong protections against data tampering by locking access to IoT devices and shutting down compromised devices within the IoT infrastructure if a security event is suspected.  Blockchain serves to effectively decentralize data, which provides a safety net from hacks and fraud. In the digital age, data is fast becoming the most prized asset a company has. If you store all your jewelry, cash and other valuables in one location of your home, what happens if a burglar enters your home and is able to find this location? Because it spreads data across a large network of computer storage spaces, storing records on a blockchain network is like placing your most valuable digital assets across a multitude of places to mitigate your risk of being severely impacted or wiped out by a hacking event.  One of the first blockchain IoT-specific platforms is IOTA, which provides transaction settlements and data transfer layering for IoT devices. IOTA has launched its  Tangle platform, which developers describe as “going beyond blockchain.” This serves as a blockless, cryptographic, decentralized network, where, rather than outsourcing network verification to data miners, users verify transactions of other users. Such IoT platforms promote greater scalability while also eliminating the need to pay transaction fees to data miners. These are both essential factors in a practical IoT network, which could potentially require the processing of billions of micro-transactions between devices daily.  5.  Hybrid blockchains are promising the best of public & private networks.  As blockchain rapidly comes of age, there are generally two communities that have been established. On one side of the tracks, there is a large community supporting public blockchains and arguing for decentralization. On the other side, there is a more niche community—comprised mostly of businesses and their clients—pushing for private blockchains operated by a single entity that also grants permissions to users.   Traditional blockchains (e.g. Bitcoin and Ethereum) are public and completely open, meaning anyone can join the consensus protocol and participate in maintaining the shared ledger. Users often join public blockchains because, apart from operating in a decentralized system, they can offer incentives for mining or staking.   But public blockchain have limitations, including visibility. Data is completely transparent so anyone can access it, presenting a privacy concern for many uses. In some blockchain use cases, data would need to be restricted and a public blockchain cannot do this. Public blockchains also demand high computational power and consume large amounts of electricity. There are also scalability concerns for public blockchains because the consensus protocol places limits on speed and the number of transactions it can process.  Private blockchains operate similarly to public blockchains with an important exception: they are not open to everyone and require an invitation to join. These blockchains are also permissioned networks and can be customized to interact with certain users differently than the general users. Unlike in the public blockchain, provisions can be outlined to determine who is allowed to participate in the network and what specific transactions they are authorized to conduct. While private blockchains address some data security concerns, the main drawback is that they are not as decentralized as the public blockchains.   To build a bridge, hybrid blockchains are being developed to offer decentralized platforms that can restrict visibility of some information on the network. In particular, this model is appealing to regulated markets because it offers the benefits of public and private blockchains in one network.   Through a hybrid blockchain solution, a company can conduct transactions from certain short-term partners and vendors on the public blockchain side. Since the transaction timeline of these partners is shorter, public blockchain is an ideal solution. It would not require the level of trust needed with a private blockchain. The private side of a hybrid blockchain solution can be used to conduct transactions with long term partners. It would operate with a classic permissioned setup, where authorized parties can view, transact and make changes based on permissions they are given. This private network is fast, scalable and secure. However, adding more parties and establishing their trust takes longer than on a public blockchain so it would only be reserved for transactions with designated users.   6.  Sidechains are improving scalability. For all their power and complexity, blockchains face challenges in scalability and speed. These limit some applications of the relatively new technology. One solution that seeks to improve blockchain efficiency and scalability is the sidechain. As its name indicates, a sidechain is a type of blockchain that accompanies a master chain. In the relationship, the master chain is the parent chain and the sidechain is the child chain.   In order to trade assets from the master chain for assets from the sidechain, the user would first need to send their assets on the master chain to a certain location. This would effectively place a lock on the assets for the time being. After the transaction completes, the sidechain would receive a confirmation and release a designated amount of the sidechain to the user—equivalent to the amount of assets locked up by the main chain times the exchange rate. This also works in reverse to trade assets from the sidechain to the master chain.   As sidechains store data and process transactions, they help to uphold the integrity of the master blockchain while making it smaller and more agile. When implemented correctly, sidechains relieve the master chain of some of the work, helping to solve the inherent scaling problem associated with blockchain solutions. Sidechains have practical applications for stock exchanges.   7.  Artificial intelligence (AI) & blockchain are teaming up.   While both AI and blockchain involve high levels of distinct technical complexity, there is potential for these two technologies to team up and score major technological victories in the next five to ten years.   The first change win might be in optimizing data management. Blockchain currently relies on hashing algorithms for data mining and these operate in a brute force style, meaning the algorithm inputs all possible sequences of characters until it finds the one that matches with the verification process. This demands extra steps, lags and effort. AI can step in to offer an intelligent data mining system that streamlines the entire process and cuts down total costs exponentially. This streamlining also has implications for improved energy consumption for blockchains.   AI can infuse natural language processing, image recognition and multi-dimensional real-time data transformation capabilities into a blockchain’s peer-to-peer linking. This allows data miners to turn a large-scale system into a series of micro-economic environments. In turn, this can optimize data transactions in a secure and effective manner. Most importantly, machine learning intelligence adds flexibility to the process.   On the flipside, blockchain’s data decentralization technology can help AI step up its game in creating better machine learning models. Introducing secure data sharing across systems, which have traditionally stored and operated data in an isolated manner, introduces higher quality data. Richer data means better models, better predictions and better insights.   Data decentralization will offer companies of all sizes access to analytics and insights they could not possibly generate from an individual data source. When AI’s deep learning algorithms gain access to multiple data points from multiple data pools that have been standardized by blockchain, the competitive advantage of an AI technology will no longer be about finding the data itself. Nor will it be about having the resources and funds to gather the most data. Instead the focus will be on writing the most innovative algorithms. This evolution ushers in a new era of scalability for deep learning where AI finds itself in new marketplaces, opens doors for smaller players and gains trust with the public at large.   The future looks bright for blockchain and it will likely innovate business processes in many industries, including human resources. However, its widespread adoption and full potential have yet to be seen. The next phase of development for blockchain will be in addressing scalability and accessibility challenges, which will pave the way for more applications and varied use cases across more industries.   Amid the rapidly evolving digital landscape, one thing is clear: blockchain is in a state of metamorphosis with many disruptive trends on the horizon. For HR professionals, it is important to keep an eye out on how this nascent technology is impacting various industries and making its way to the world of work.  

More from Voice on Growth

Didintle Kwape | 14 Nov 2019

Africa's youth employees are a valuable, ample talent source that multinational companies can tap as they expand their operations throughout the continent. Record numbers of teenagers and young adults in Africa are either unemployed or underemployed but are willing to work if given the chance. In South Africa alone, where the unemployment rate is expected to grow beyond 30% this year, two-thirds of the jobless are between 15 and 24 years of age.1 Realizing the Untapped Talent Pool   "We are very much alive to the fact that youth unemployment is indeed a national crisis," stated South African President Cyril Ramaphosa in June 2019.2 Governments across the continent are now rewriting labor laws and breaking down bureaucratic hurdles to make hiring youth less cumbersome for both multinational corporations and local small businesses. They are also teaming up with nonprofit organizations to nurture young talent and teach necessary workforce skills. Alliances are being forged to aid these efforts, such as the International Labour Organization's (ILO) partnership with the African Development Bank, the African Union Commission and the United Nations Economic Commission for Africa (UNECA). Together, they hope to address youth employment at regional and national levels. To better prepare youth for work, the ILO provides employment services, skills development and labor market training — with a focus on technical and vocational education, apprenticeship and job placement services for disadvantaged youth.3 In June, Kenyan President Uhuru Kenyatta launched the Young Africa Works program, a public-private partnership for youth employees between the Mastercard Foundation, the Kenyan government and the private sector. Within the next five years, the program aims to groom and place five million young Kenyans in "dignified and fulfilling work." 4 The MasterCard Foundation, along with two Kenyan banks — Equity Bank and Kenya Commercial Bank, as well as their respective foundations — will provide about $1 billion in capital, business development services and market linkages for the program. The aim is to create these jobs for youth employees, which will also help over 200,000 micro-, small- and medium-scale enterprises strengthen their productivity, sustainability and creation growth.4 The international hotel industry is one sector that's nurturing the development of the continent's youth, as hoteliers expand into Africa's emerging markets, according to Jan Van Der Putten, Hilton's VP of Operations for Africa and Indian Ocean.5 Hilton now has 46 hotels open across Africa, including sites in Morocco, Kenya, Zambia and Botswana, with plans to more than double that amount in the next five years. Expansions in tourism and hospitality will not only boost socioeconomic growth, but it will also provide meaningful employment opportunities. As such, it's paramount to foster an environment to help African youth workers succeed. Training the Youth of Today   In addition to basic workforce skills, the emerging digital economy also requires youth employees to learn the skills of digital fluency, creative thinking, problem-solving, collaboration, empathy and adaptability.6 Simbarashe Moyo, a Mandela Rhodes Scholar at the University of the Witwatersrand, notes, "Although countries like Rwanda and Kenya are already making considerable progress in preparing their youth for the digital economy and the future of work, more African countries are yet to take meaningful action to address the yawning skills-gap and digital infrastructure inadequacies bedeviling the continent."7 Moyo advises that African nations need to equip youth for the future of work. First, they must create responsive education systems that will equip the youth with the proper skills and a sense of responsibility. They also need to develop a nationwide digital infrastructure to improve interconnectivity between nations. In addition, to keep stakeholders in check within the expanding digital economy, they need to formulate proper regulatory policies. Lastly, they need to optimize public-private cooperation to support digital training initiatives on a larger scale. "Collaboration between governments, multinational development banks and the private sector will create room for innovative financial models which promote upskilling among Africa's youth," Moyo writes. "This will also reduce inequalities caused by duplication of efforts, especially when establishing digital infrastructure in African nations. Public-private cooperation will therefore enable more young Africans to access training programs and digital infrastructure." Empowering the New Workforce   Employers can also take advantage of the rising use of mobile phones among Africa's youth by providing training and development programs via mobile apps. Workers in South Africa echo the sentiments of those in other countries who rate opportunities to learn new skills and technologies as the number one way they can thrive at work, according to Mercer's Global Talent Trends 2019 report. The survey also shows that workers like to learn independently, and they want their employers to provide platforms enabled with access to curated knowledge and expert sources. A combination of both employer- and employee-driven training can give people more control over what and how they learn while tying their development directly to organizational goals. Mercer's research also reports that 99% of companies are taking action to prepare for the future of work, and they're doing so by identifying gaps between current and required skills supply, developing future-focused people strategies and adapting skill requirements to new technologies and business objectives. For multinational organizations interested in expanding in Africa, these steps will prove critical to upskilling, enabling and empowering the youth workforce. By taking the time to understand what Africa's youth employees need and developing integrated people-centric strategies for them, multinationals can be at the forefront of developing the continent's workforce. This will allow them to meet stakeholders' needs today, while also building a bigger, better and smarter workforce for tomorrow. The long-term benefits will result in a completely reinvented Africa — with engaged workers as far as the eye can see. Sources: 1. "Africa's Youth Unemployment Rate to Exceed 30% in 2019: ILO," 7Dnews, 4 Apr. 2019, https://7dnews.com/news/africa-s-youth-unemployment-rate-to-exceed-30-in-2019-ilo. 2. D, Sourav. "Youth unemployment a 'national crisis' in South Africa, says Ramaphosa," Financial World, 18 Jun. 2019, https://www.financial-world.org/news/news/economy/2276/youth-unemployment-a-national-crisis-in-south-africa-says-ramaphosa/. 3. "Youth Employment in Africa." International Labour Organization, https://www.ilo.org/africa/areas-of-work/youth-employment/lang--en/index.htm. 4. Mbewa, David O. "President Kenyatta launches program to tackle Kenya's youth unemployment," CGTN, 20 Jun. 2019, https://africa.cgtn.com/2019/06/20/president-kenyatta-launches-program-to-tackle-kenyas-youth-unemployment/. 5. "Exclusive: An interview with Hilton's Jan van der Putten on expansion in Africa," Africa Outlook Magazine,7 Apr. 2019, https://www.africaoutlookmag.com/news/exclusive-an-interview-with-hiltons-jan-van-der-putten-on-expansion-in-africa. 6. "World Development Report 2019: The Changing Nature of Work," The World Bank Group, 2019, https://www.worldbank.org/en/publication/wdr2019. 7. Moyo, Simbarashe. "4 ways Africa can prepare its youth for the digital economy," World Economic Forum, 29 May 2019, https://www.weforum.org/agenda/2019/05/4-ways-africa-can-prepare-its-young-people-for-the-digital-economy/.

Michael Braun | 14 Nov 2019

We outlined six challenges in connection with international project assignments in part 1 of this article. To extend the overview of issues to be considered when administering international project assignments, let's dive deeper into another obligation for companies and their global mobility managers: the duty of care. Challenge 7: Duty of Care   Companies are obliged to ensure the employees' safety, health and well-being abroad. Appropriate location information, safety briefings, security trainings and health insurance need to be provided when transferring project assignees internationally, especially if they are transferred to hardship locations. Mobility managers should consider synergies when setting up such health and safety programs. Travel insurance, for example, can be offered to both business travelers and international assignees staying abroad for less than a certain amount of days (usually 90 days). Furthermore, a group insurance for the remaining assignees ensures a cost-efficient funding. You also profit from security and assistance programs offered by many health insurers, in addition to their core insurance service. And did you know that security providers usually extend their service beyond the medical service? They often provide information about the security situation in a given location and make tracking solutions, as well as security updates, available. Some providers even offer practical assistance in case of an evacuation. Employee Protection   The mobility of employees in global business life has become "borderless" in many respects. In order to take this development into account, the forms of insurance are constantly changing and expanding. The increasing number of projects, for example, which occur with a different frequency depending on the industry, represents a special challenge insurance-wise. The assignment period, the home country and the desired scope of coverage play a major role in the choice of an insurance solution. In the following, we will examine health, disability and death cover options available for international project assignments and other types of international assignments. Medical Cover   To minimize complexity, we focus on business travel assistance and international private medical insurance/expat health insurance for long-term assignees. Business Travel Assistance   International insurers offering business travel assistance use their existing global networks to master the challenges of global coverage. Compared to traditional travel health insurance, business travel assistance offers a number of advantages. Employers can, for example, extend the number of covered travel days to up to 1 year and significantly increase the number of potential benefits to include, such as the following: ·  Flat amounts are paid in the case of an accident and for surviving dependents. They are regarded as immediate aid for direct costs incurring and are intended to pre-empt the company accident insurance which offers higher benefits but also requires longer examination processes. ·  Liability insurance is necessary in certain countries as an obligatory requirement for obtaining a visa. ·  Compensation for loss of luggage and/or travel delays is an additional goodie for travelers. If these aspects are covered by insurance, any claims will be addressed directly to the insurance company — reducing the administration effort in your company. These additional benefits are tailored to the specific needs of business travelers and international project assignees. However, the main part of business travel assistance and its risk premium remains the medical emergency including some assistance services. Existing assistance agreements have to be harmonized with business travel assistance and transparently communicated. Processes, reimbursement practices, cost management and the collection of recourse claims have to be clearly defined to effectively reduce administration. The payment of benefits within business travel assistance is linked to so-called "unforeseeable" events. This excludes any pre-existing condition or the reimbursement of regular medication. Individual registration is not required for such a group plan. Though unusual in international project assignments, accompanying family members can also be covered by business travel assistance. Medical Solution for Long-term Project Assignments   If an international project assignments is planned for a longer period of time or improved coverage is required for individual reasons, we recommend using an existing expat health plan or obtaining an individual solution. Precautions for safety, health and integrity are the hallmarks of a company, especially when working on projects in hardship countries. A number of globally active and specialized international providers are available. The benefits of a robust expat health plan are comparable to those of a comprehensive global private health insurance plan. Use the criteria described in this article to choose the most appropriate insurance solution and a provider offering the period of coverage as needed. Ideally, the level of coverage provided for an international assignment or an international project assignment is outlined in the company's policy guidelines. Disability and Death Cover   Though medical insurance is of major importance for international assignees in most companies, disability and death cover should also be considered. For employees who are no longer covered by their home-country's social security system, there is a risk of gaps in the benefits coverage regarding disability or death — that is, securing an adequate long-term income for assignees in case of permanent disability and for their families in case of death. The potential gap is even bigger if supplemental home country plans are simultaneously discontinued. Even if employees join the host country's social security system, you should note that these systems often include waiting periods for death and disability coverage. If such waiting periods do not exist, for example, due to European agreements, be aware that the benefit levels can still significantly differ to what has already been accrued in the home country. Employers need to identify and close gaps, either through local coverage or supplemental global risk coverage plans. Gaps also exist for so-called "global nomads," those assignees going on numerous consecutive assignments. Global nomads are facing benefits fragmentation at its worst, especially gaps in state and supplemental pension benefits due to not being enrolled in local plans or not reaching local vesting conditions. In addition, those employees typically do not have access to suitable long-term financing vehicles that allow for building up adequate private retirement savings with the flexibility to contribute from multiple locations. Companies with a larger global nomad population can use offshore International Pension Plan arrangements to close this gap. As the market has developed significantly over the last decade, streamlined products are available today also for smaller groups of assignees and with limited required administration. Conclusion   These are demanding and challenging times for mobility experts. The number of international project assignments is increasing and calls for special arrangements. However, these are also great times to demonstrate your expertise. To make things easier, look at what you already have: Some solutions are already available for internationally mobile employees in your company and can be used for international project assignments, as well. In the long run, mobility managers should focus on finding and implementing appropriate international project assignment solutions to ease the initial pain mainly caused by the additional workload. As is often true in global mobility, there is no-one-size-fits-all approach, but many options to tailor your (almost) perfect one. If you'd like to learn more, click here to get in touch with a Mercer consultant.  

Juliane Gruethner | 31 Oct 2019

International project assignments are one of the current hot topics in global mobility management. A quick poll in conjunction with our Expatriate Management Conference in 2018 showed that, in an increasing number of organizations, the mobility function is responsible for the administration of international project assignments. Nearly 90% of the responding mobility managers confirmed that their organizations have international project assignments, and 80% of respondents are responsible for their administration. With this trend, new challenges are emerging. Let's take a look. Challenge 1: Common Understanding of Terminology   There does not seem to be a common definition of an international project assignment. Mercer's poll showed that about 40% of the responding businesses define an international project assignment as simply an international assignment to a project, regardless of its duration, while 60% specified a period of time. Some organizations also differentiate between project assignments for an external client and internal projects. Apart from the lack of clear definitions, most businesses (73%) do not have any formal policy or regulations for their international project assignments. If they exist, they often overlap with those for traditional long- or short-term assignments. No matter how you approach international project assignments, make sure that your company has a precise definition and corresponding guidelines in place that allow for consistent handling and fair treatment of all internationally mobile employees. For this discussion, we define international project assignments as assignments to client projects abroad, whereas assignments to projects abroad within one organization are called international assignments. Challenge 2: Fair and Equal Treatment   Determining an individual compensation package for an international project assignment differs from traditional forms of international assignment compensation. Some employees may have been hired especially or exclusively for project work. Others are assigned to work on international projects based on short- or long-term assignments or commuter packages. Those differences can lead to inconsistencies in compensation between the assignees — depending on where they come from and how their project assignment is defined in the home country. Clear internal regulations differentiating target groups and assignment types increase the transparency of the mobility program and ultimately increase its acceptance among employees. Challenge 3: Determining the Return on Investment   In Mercer's 2017 Worldwide Survey of International Assignment Policies and Practices, the majority of respondents stated that a business case is required for an international assignment (62%) and that they prepare corresponding cost estimates (96%). However, only 43% track the actual costs against budgeted costs, and only 2% have defined how the return on investment (ROI) of an international assignment is quantified. It is often linked to a mid- to long-term perspective and not easily expressed in pure economic figures. That said, it is possible to track success by means of faster promotions or higher retention rates of expatriates. The ROI of international project assignments, in contrast, is easier to measure. Actual costs can be compared to the original estimate and the price paid by the client. This transparency leads to higher cost pressure, which calls for a greater flexibility with respect to the applicability of existing internal rules and regulations to be able to offer projects at a competitive price. In conclusion, the short-term business value (winning and conducting the project in a profitable manner) and the mid- to long-term value of international assignments (for example, filling a skills gap in the host location or employee development) have to be balanced diligently, which can be achieved by a thoroughly segmented international assignment policy. Challenge 4: Management of Large Numbers of International Project Assignments   Depending on the industry sector, the number of international project assignments in an organization can be extremely high. One of the respondents in the conference poll indicated that they handle about 23,000 international project assignments per year. Therefore, the resources needed in the mobility function will have to be increased or resources reallocated once mobility takes over the responsibility for international project assignments. You should also review the service delivery model, as well as individual procedures, and if necessary, adapt them to enhance the efficiency and effectiveness of the international project assignment administration. Using the right technology can also help streamline processes and make a large number of international project assignments manageable. Challenge 5: Deployment to Unknown Places   International project assignments take place not only in the company's regular assignment destinations but also in new locations at client sites. The company, therefore, may not have any resources in or knowledge about the location. Client resources or external vendors can be used to obtain necessary information or perform necessary services, such as immigration or payroll. In addition, if employees perform services in hardship locations, their safety and security need to be considered. Challenge 6: A Matter of Compliance   When it comes to international project assignments, mobility is regularly asked to deliver results even faster than for traditional international assignments, because requirements tend to come up or change at short notice. However, compliance is as complex as for any other international assignments and needs to be evaluated individually. This is true for external as well as internal compliance issues. Although compliance is regarded as one of the most important aspects by many mobility managers, we have seen that compliance is just the tip of the iceberg, and the list of challenges presented in this first part of the article is not exhaustive. We continue our considerations with the companies' duty of care and possible solutions in part 2  of this article. If you'd like to learn more, click here to get in touch with a Mercer consultant.

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