IQ | Insigniam Quarterly - Fall 2024: "Will Your Business Survive the Next Five Years?"
—Jennifer Paine Chief Quality Officer Johnson & Johnson
Over 30 years ago, Insigniam pioneered the field of organizational transformation. Today, executives in large, complex organizations use Insigniam’s consulting services to generate breakthroughs in their critical business results. Insigniam’s innovation consulting enables enterprises to identify and cross into new strategic frontiers to rapidly generate new income streams. Insigniam provides executives of the world’s largest companies with management consulting services and solutions that are unparalleled in their potency to quickly deliver on strategic imperatives and boost dramatic growth. Insigniam solutions include Enterprise Transformation, Strategy Innovation and Innovation Projects, Breakthrough Projects, Transformational Leadership and Managing Change. Offices are located in Philadelphia, Laguna Beach and Paris. For more information, please visit www.insigniam.com. It is no longer acceptable for leaders to solely bring their subject matter expertise to the table. They must understand the broader impact of their decisions and actions on the organization, and understand how to leverage their expertise to create opportunity—not just manage risk. This requires a deep understanding of how their functional area aligns with and contributes to the overall business strategy.
EDITOR-IN-CHIEF
Shideh Sedgh Bina sbina@insigniam.com
EXECUTIVE DIRECTOR
Jon Kleinman jkleinman@insigniam.com
CONTROLLER
Steve Niedzielski sniedzielski@insigniam.com
DIRECTOR OF MARKETING AND SALES OPERATIONS
Natalie Rahn nrahn@insigniam.com
DIRECTOR OF CONTENT
Jon Ball jball@insigniam.com
INSIGNIAM.COM
Mia Studenroth mstudenroth@insigniam.com
CONTRIBUTORS
Brandon Bichler, Marie-Caroline Chauvet, JW Dobbe, Rory Farquharson, Dan Garsin, Kitty Goff, Dieter Halfar, Anna Islamova, Matthew Johnson, Chris Jordan, Jon Kleinman, Katerin Le Folcalvez, Cathy Long, Barry Maloney, Sebastian Neuner, Harry Newberry, Will Parish, Guillaume Pajeot, Craig Rich, Eric Rich, Nathan Owen Rosenberg, Steve Steinberg, Ashley Tappan, Bonnie Wingate, June Zeringue, & Jennifer Zimmer
IQInsigniamQuarterly is a thought leadership publication committed to transforming the world of business by offering content relevant to the C-suite and their executive teams at large, complex global enterprises.
WILL YOUR BUSINESS SURVIVE THE NEXT FIVE YEARS? SPECIAL ISSUE | PART 1:
To say that businesses today face unprecedented challenges would be a vast understatement. Research from multiple sources suggests that industries around the globe are contending with internal and existential challenges the likes of which many executive leaders have not faced in the past. With the world shifting faster than ever, industries are being disrupted almost overnight by a combination of economic pressures, technological advancements, and shifting consumer demands. In light of this, one question looms large: Will your business survive the next five years?
In this special, two-part issue of IQ, we explore how forward-thinking leaders in the energy sector, financial services, healthcare and cybersecurity sectors can overcome the greatest disruptors—and capitalize on critical success factors—that will dramatically reshape and transform the global business landscape by the end of this decade. The second part of this issue—coming in November—will explore specific impacts to the insurance, medtech, biopharmaceutical, and consumer packaged good industries.
At the core of these discussions is the need for businesses to adapt, innovate, and invest in both technology and talent. Navigating this volatile environment requires more than just adopting the latest tools; it demands a strategic shift in how companies manage risk, build trust with stakeholders, and inspire their teams to thrive under pressure.
The next five years will reward those who can evolve, while businesses resistant to change may face tough realities.Together, let’s embrace the opportunities that a digitally enabled world presents and lead with vision, passion, and a healthy dose of human ingenuity. IQ
Shideh Sedgh Bina Founding Partner, Insigniam & Partner, Elixirr
Fall 2024 | Special Issue | Part I
“A key challenge for the global economy through 2030 will be balancing economic integration with geopolitical tensions. Countries will need to carefully manage their interdependencies to sustain economic growth amidst rising global challenges.”
—William Alan Reinsch Senior Adviser at the Center for Strategic and International Studies; writing in Key Trends in the Global Economy through 2030, CSIS
FEATURES
AI & BEING HUMAN BEYOND THE ALGORITHM
How executive leaders can embrace artificial intelligence without sacrificing their humanity.
By Guillaume Pajeot
SEMINAL FEATURE TRANSFORMATIONAL THINKING 101
Your ability to imagine a bold future is also your key to achieve it.
04 08 20 54 36
BY THE NUMBERS FUTURE FEARS
Research says that 45% of execs fear their companies could soon fail. What’s driving their anxiety?
By Marie-Caroline Chauvet By Insigniam
SPECIAL FEATURE WILL YOUR BUSINESS SURVIVE THE NEXT FIVE YEARS? Disruptors and critical success factors across key industries.
Edited by Jon Ball
ENERGY SECTOR POWER SHIFT
FINANCIAL SERVICES BREAKING THE BANK
Navigating cyber threats, geopolitical unrest and the clean tech boom.
By Eric Rich & Nathan Owen Rosenberg
How increasingly complex regulations and emerging tech will reinvent the sector.
By Dieter Halfar & Katerin LeFolcalvez
HEALTHCARE CRITICAL CONDITION
Reimagining a strained system to deliver higherquality care worldwide.
By Shideh Sedgh Bina & Jennifer Zimmer
CYBERSECURITY PHISHING FOR TROUBLE
Are you prepared to defend your corporate estate from next-gen threats?
By Joe Hubback
& BEING HUMAN
BEYOND THE ALGORITHM
How organizations can embrace AI without sacrificing their humanity.
By Guillaume Pajeot
Following the launch of OpenAI’s ChatGPT, artificial intelligence has gained tremendous attention, rapidly increasing the use of generative AI systems. These tools allow users to generate content such as art, websites, and even answers for homework assignments.
However, this rapid adoption has raised concerns about legal implications, intellectual property, and the spread of misinformation. Many users see AI as an advanced search engine, but this view underestimates its potential. To fully harness AI, there’s an urgent need for training on how to prompt, use, and integrate AI effectively.
Currently, AI can support users through five main functions: rational thought based on past knowledge, content creation, information synthesis, productivity automation, and emotional support. Yet, there is a growing fear of AI—mainly because people struggle to imagine how it can fit into their work without taking over their jobs. The key to success is repurposing time freed up by AI to focus on highervalue tasks rather than routine ones.
A More Optimistic Future: Redefining Work with AI
Much of the fear surrounding AI stems from a lack of imagination about the future of work.
AI’s ability to automate repetitive tasks can be compared to past technological innovations, like email replacing handwritten letters. While AI may free up 20 hours a week for some, the challenge lies in how workers will use that extra time. Historically, technology has reduced manual labor, giving humans more time and thus a new opportunity for creativity and innovation, when they could seize it.
The integration of AI into daily life is inevitable. Some fear that companies will use AI purely to outcompete rivals, disregarding natural resources, human labor, and quality of life. There’s also a risk of AI producing misleading data, leading to poor decision-making, mass plagiarism, and accelerated “idiotication” of the workforce—where people become less motivated to learn and acquire knowledge. Unemployment could rise if AI replaces many jobs, leading to social unrest and a sense of worthlessness in the workforce. However, the future does not have to be bleak. By preparing and educating ourselves, we can harness AI’s potential for good, while maintaining human control over its development.
If we embrace AI as an opportunity to reinvent work, we can create a future where AI supports human creativity and problem-solving. It’s crucial to rethink our definition of work and recognize that AI’s
Just like past disruptions, AI will enable people to focus on more strategic tasks, allowing humans to become more creative and innovative. It’s not a question of whether AI will take jobs but how humans can use AI to enhance their roles.
strengths lie in performing tasks that require data processing and analysis. AI is excellent at repetitive tasks, but humans excel in creative, strategic thinking, and decision- making.
Philosopher Emmanuel Levinas reminds us that human beings cannot be reduced to categories, and our ability to respond to situations is unique and unpredictable. AI, on the other hand, operates within pre-existing paradigms and is limited by its programming. This distinction highlights the importance of human intervention in AI-driven processes, as humans bring moral, ethical, and creative judgment that machines lack.
Creating Fit-for-AI Organizations
For organizations to thrive in the AI era, early training and development are essential. A key challenge is overcoming the mixed feelings of optimism and pessimism about AI. Many employees fear that AI will take over their jobs, leading to stress and tension in the workplace. However, retraining employees to leverage their uniquely human skills—such as critical thinking, creativity, adaptability, and social
competencies—can reduce these concerns and boost productivity.
Organizations need to implement a baseline of AI training, no matter employees’ experience levels. Those new to AI can start by experimenting with conversational AI, while more advanced organizations should focus on strategic management and customer experience improvements. Experienced companies can lead by example, publicly sharing their AI strategies to demonstrate the benefits of integrating AI.
The key skill needed in the AI era is critical thinking. Companies must shift training programs to develop employees’ ability to generate innovative ideas and make informed decisions alongside AI. If organizations fail to prepare their workforce, they risk decreased productivity and the potential for mass unemployment.
To successfully integrate AI into the workplace, employees must be involved in the process. Start small by automating routine tasks and gradually expand the use of AI. Show employees how AI can elevate, not replace, their roles by allowing them
GHOST IN THE MACHINE
By embracing AI as a tool to elevate—not replace—our roles, we can create a future where the best of being human is combined with the efficiency and capabilities of AI.
to focus on higher-level tasks like customer satisfaction and building relationships.
To normalize AI use, highlight its successes and demonstrate that AI is being monitored and controlled. Think of AI integration like teaching someone to ride a bike: start with small steps and eventually, resistance will transform into eagerness as employees become more and more comfortable with the technology.
Incentivize Critical Thinking Over Activity
As AI becomes more integrated into the workplace, organizations must rethink how they reward employees. Traditional metrics of productivity, such as effort and timeliness, will no longer be as relevant. Instead, companies should focus on rewarding critical thinking, creativity, and innovation.
Performance bonuses can be based on how well employees use AI to improve outcomes, and those who develop new AI-driven innovations should be recognized with leadership roles and potential financial incentives. Additionally, making AI training sessions paid will encourage more employees to participate, fostering a culture of continuous learning and innovation, including:
1Creating a Culture of Innovation
Developing a workplace culture that encourages critical thinking and innovation is key to successful AI integration. Companies like IKEA have already demonstrated how empowering employees to take on creative roles, while using AI to handle routine tasks, can boost revenue and improve workplace culture. By encouraging employees to pursue projects aligned with their interests, organizations can increase motivation, productivity, and employee engagement.
Responsible Use of AI
Responsibility is a human trait, and it’s up to us to ensure AI is used ethically. AI should
never be allowed to make decisions on its own, as it lacks the moral compass and situational intelligence that humans possess. We must guide AI to drive desired outcomes while ensuring that human values remain at the forefront.
3
Maintaining Accountability
As AI becomes more prevalent, organizations need clear guidelines on how to hold both humans and AI accountable for mistakes. If an AI-generated outcome is inaccurate, where does the responsibility lie? Companies must establish systems for monitoring AI use and ensuring that it’s applied responsibly. AI-generated information can sometimes be misleading, making it crucial for employees to understand the technology’s limitations and cross-check sources. Clear guidelines will help prevent misuse and ensure that AI remains a tool for good, rather than a source of harm.
A Call for Action
The rapid rise of AI presents both challenges and opportunities. As we move forward, it’s essential to reflect on what it means to “be human” in an AI-driven world. We must identify the traits that make us human—creativity, critical thinking, moral judgment—and ensure that these remain central to our work and interactions.
By embracing AI as a tool to enhance our work, we can create a future where the best of being human is combined with the efficiency and capabilities of AI. This will require thoughtful integration, continuous learning, and a commitment to using AI responsibly.
The success of AI in the workplace hinges on how well we prepare, train, and support employees in adapting to this new technology. By creating a culture of innovation, encouraging critical thinking, and maintaining accountability, we can harness the power of AI while preserving the best aspects of being human. IQ
CULTIVATING TRANSFORMATIONAL THINKING
Your ability to imagine a bold future for your enterprise is also the key to achieving it.
By Marie-Caroline Chauvet
S
hould you be asked to pinpoint where some of the most revolutionary, inspired thinking of the 20th century originated, it’s unlikely that the Soviet Union would be the first place that comes to mind. Yet, during one of the most turbulent periods in recent world history, the Iron Curtain became a surprising stage for transformative ideas. Under the leadership of former
president Mikhail Gorbachev, bold initiatives like glasnost (openness) and perestroika (restructuring) fundamentally redefined Soviet politics and economics.
These reforms were not just incremental changes—they were daring shifts in thinking that aimed to open up a rigid system to transparency, innovation, and a new global dialogue.
Gorbachev’s transformational thinking challenged decades of authoritarian control and led to one of the most significant geopolitical shifts of the century,
Transformational thinking can insulate a company from being overtaken by disruptors in times of market instability. In this way, uncertainty becomes a powerful driver of positive, systemic change.
marking the end of the Cold War and the dissolution of the Soviet Union itself.
For those of us who lead global enterprises, transformational thinking represents a radical mindset shift, and it can drive profound, systemic changes within an organization.
It starts when leaders design and articulate an ideal or intended future state and then “stand in the future” and look backward to the present to create the conditions and tactics that will allow them to realize their desired goals. Furthermore, it presents leaders with the flexibility to explore multiple options to rethink everything—from strategy to culture—in pursuit of breakthrough innovations and long-term success.
Another powerful component of transformational thinking is the practice of challenging assumptions. Senior leaders must question long-held beliefs and operational norms that once served the company but now stifle evolution. By breaking free from conventional thinking, executives unlock new possibilities and pathways for innovation, enabling their organizations to tackle emerging challenges with innovative, inventive solutions.
Rather than fine-tuning existing strategies, transformational thinking opens up uncharted opportunities that dramatically enhance business performance, delivering competitive advantages that drive industry-defining results. Additionally, unlike traditional change management, transformational thinking seeks systemic change. It doesn’t tweak individual elements but realigns the entire organization—its culture, systems, and processes. This holistic approach embeds lasting transformation, reshaping how the organization operates and competes.
Lastly, transformational thinking also fosters a culture of continuous learning and agility, helping organizations swiftly adapt to disruptions—especially during times of economic or geopolitical uncertainty and unrest. By leveraging disruptive technologies and new business models, leaders position their companies to stay ahead of the curve and remain competitive in a world where change is constant.
You Can’t Lead Through the RearView Mirror
The saying, “You can’t lead by looking in a rear-view mirror,” is a powerful metaphor for
the necessity of transformational thinking in an enterprise. It highlights the limitations of relying on past successes, outdated strategies, and established practices to guide a company through an uncertain future.
Breaking free from legacy mindsets affords executives and organizations the ability to explore new ways of operating in order to harness untapped potential, as well as breakthrough innovations that can redefine a business landscape. Whereas relying on the past can make leaders slow to adapt to fast-changing markets and technologies, transformational thinking encourages a more dynamic response, fostering a culture of experimentation, rapid iteration, and quick adaptation.
Transformational thinking can also insulate a company from being overtaken by disruptors in times of market instability. By priming leaders to seek radical innovations, adopt new business models, and embrace disruptive technologies, transformational thinking can catalyze growth and reinvention. In this way, uncertainty becomes a powerful driver of positive, systemic change.
Finally, transformational thinking demands continuous learning and evolution. When leaders focus on the past, they limit the organization’s ability to grow. By cultivating a mindset of curiosity and openness to new approaches, transformational leaders ensure their companies remain adaptable to the everchanging demands of the future.
How to Embed Transformational Thinking
The first step in embedding transformational thinking is to realize that it starts at the top Executive leaders must articulate a bold, compelling vision that inspires and challenges the entire organization to consider future opportunities and disruptions. For this reason, it is critical that senior executives work closely with key stakeholders to ensure this futurefocused vision aligns with the enterprise’s broader corporate strategy. Environments like leadership retreats and strategy sessions can serve as pivotal moments to unite teams around this goal.
Additionally, executives must model openness to new ideas, a willingness to embrace ambiguity, and the courage to take calculated risks. By embodying curiosity and resilience—traits that are crucial for navigating uncertainty—executives can
cultivate these behaviors within their leadership teams. In doing so, executive leadership teams can create a platform to break down silos, which is essential for promoting collaboration and is foundational for transformational thinking.
A willingness to challenge conventional thinking is also central to this approach. As leaders, we must encourage employees at all levels to question traditional methods and think critically about how the organization can innovate and stay ahead. Hosting
workshops or “challenge sessions” where employees can present bold ideas and disrupt existing business models can shift mindsets toward breakthrough thinking.
Yet, to sustain this mindset, transformational thinking must be integrated into the company’s strategy and decision-making processes. Scenario planning and agile methodologies ensure that transformation is not a “one-off” initiative but an ongoing element of an enterprise’s DNA. Regular
THINKING AHEAD
To embed transformational thinking, executives must model openness to new ideas, a willingness to embrace ambiguity, and the courage to take calculated risks.
communication, empowerment programs, and leadership development initiatives can further engage employees at every level, fostering ownership and accountability throughout the organization.
Finally, monitoring progress and celebrating wins are essential for maintaining momentum. Using performance metrics to track success—along with learning from failures—will enable leaders to adjust strategies and maintain the drive for continuous reinvention. Creating a formal governance structure can also ensure that transformational thinking remains a top priority long after the initial momentum fades, allowing your organization to thrive on change and continually adapt to future challenges.
If we view transformational thinking as a seed and enterprise transformation as a mature tree, how does one get from point A to point B, especially when breakthrough results are the intended outcome? For illustration, let’s use Netflix as a real-world example of how transformational thinking can result in a transformative outcome.
The company, which began as a DVD rental-by-mail company, exhibited transformational thinking by anticipating the future of entertainment and consumer preferences. Instead of merely refining its initial business model, Netflix embraced
the disruptive potential of streaming technology—standing in the future state of where they believed the market was headed. The company shifted its entire business toward on-demand streaming and, later, content creation, transforming from a distributor to a producer of original shows and movies.
Yet, it’s important not to discount the enormous risk Netflix faced when contemplating shifting its business model. When the company made its foray into streaming in 2007, the company only had 1,000 movies available to stream, compared to 70,000 available on DVD. That same year, the company’s annual earnings of $1.2B (USD) had finally put them within (distant) striking distance of their largest competitor, Blockbuster Video, who still dominated the market with $5.54B in revenue. Had their gamble been unsuccessful, Netflix could have easily cratered based on a failed corporate strategy, relegating itself to the annals of history.
In hindsight, we know that was not the case. Just four years later, in 2010, Netflix had a market cap of $9.27B, having secured deals with the entertainment industry giants, such as Disney, Lionsgate, MGM, Paramount, and Sony. The company thereby established itself as the dominant player in the market. That same year, Blockbuster filed for bankruptcy. Fast forward to 2023, and Netflix annual earnings now exceeded $33B; a highlysuccessful transformation, by most accounts.
By envisioning a radical future—and then working backward to achieve it—Netflix was able to pivot quickly in response to technological advances and changing consumer behaviors. This bold move not only disrupted the traditional television and movie industry but also speaks volumes about the company’s commitment to agility, innovation, and risk-taking, which continues to drive its growth, making it a model of transformational outcomes fueled by visionary leadership.
Imagine Your Future
The future isn’t just about innovation— it’s about uncovering untapped growth avenues and diversifying revenue streams. Transformational thinking challenges assumptions and explores uncharted markets, revealing opportunities often missed by conventional strategies. As a result, companies better align with evolving customer needs, delivering exceptional value, driving loyalty, and increasing market share.
Infusing transformational thinking into an organization can fuel breakthrough innovation, driving disruptive products, services, and business models that accelerate growth. By embracing a futurefocused mindset, companies cultivate agility and adaptability, allowing them to pivot swiftly in response to market shifts and technological disruption. This mindset reshapes not just operations but the
culture itself— empowering employees to challenge the status quo and boosting engagement, retention, and crossfunctional collaboration.
Leaders who adopt transformational thinking make bold, long-term decisions, fostering a proactive leadership culture that seizes emerging opportunities and embraces calculated risks. This forward-thinking approach not only preserves competitive advantage but propels companies ahead of industry trends. Meanwhile, rethinking processes and structures enhance operational efficiency, resulting in streamlined operations and improved financial performance.
Moreover, transformational thinking instills a sense of ownership across all levels, empowering employees to take initiative and drive meaningful change. The result is not just innovation—it’s systemic, sustainable change woven into the very fabric of the organization. By embracing risk as a strategic asset, companies become bolder and more confident in seizing new opportunities.
Ultimately, transformational thinking drives long-term value creation, benefiting employees, stakeholders, and perhaps even society. It fosters deeper engagement, stronger partnerships, and a future-oriented approach that ensures companies don’t just survive in uncertainty—they thrive. IQ
CAUSE FOR ALARM?
With a staggering 85% of senior executives expressing concern that current geostrategic risks could jeopardize the future of their businesses, one might wonder what’s driving those concerns. As it turns out, the causes are as varied and diverse as the businesses facing future headwinds. Research shows CEO confidence is lagging and once vaulted indices like the S&P500 and Fortune 500 aren’t quite a stable as they once were. Perhaps most tellingly, year-over-year growth, on aggregate, have not been as robust in recent years as many executives would prefer. If any of these variables cause you concern, rest assured, you’re not alone.
CEO CONCERNS
25%
} } }
of CEOs said conditions in their industries were worse than six months ago.
27% of CEOs expect conditions to worsen in the next six months. 31%
of CEOs expect conditions to worsen in the next six months.
FIFTY-TWO
Percent of companies on the Fortune 500 list have disappeared over the past 20 years. of the original FTSE 100 companies from 1984 have also disappeared.
72%
of companies fall away during the first 10 years of existence.
Average lifespan of a US S&P 500 company 80 years ago.
THE WRITING IS ON THE WALL
Average lifespan of a US S&P 500 company as of 2024. }
65% 15 15% BIG PROFITS, LIMITED GROWTH 0.1% The year-over-year growth rate for Fortune 500 companies in 2023.
Annual decline in revenue for Fortune 500 firms since 2022.
Increased disruption and structural changes to the economy are compounding risks, requiring CEOs to move forward with long-term growth strategies while remaining agile to respond to unforeseen challenges.
-Paul Knopp, U.S. Chair & CEO, KPMG via KPMG 2024 U.S. CEO Outlook
Aggregate revenue of Fortune 500 companies in 2023. } } } T $ Walmart remains No. 1 for the 11th consecutive year. #1
Risky Business
EDITED BY JON BALL
RESEARCH BY JW DOBBE, RORY FARQUHARSON, KITTY GOFF, ANNA ISLAMOVA, MATTHEW JOHNSON, CATHY LONG, BARRY MALONEY, SEBASTIAN NEUNER, HARRY NEWBERRY, WILL PARISH & ASHLEY TAPPAN
DISRUPTIVE FORCES & CRITICAL SUCCESS FACTORS | SPECIAL ISSUE | PART 1
Eexistential threats are mounting, and global executives are feeling the pressure. A recent study found that 85% of senior executives fear geostrategic risks could jeopardize their business’s future, and alarmingly, 45% believe their companies might not survive the next decade. In this era of constant disruption, staying ahead of the curve isn’t just an advantage—it’s essential for survival.
Ignoring the escalating threats--ranging from global market volatility and geopolitical tensions to climate change and rapidly shifting consumer preferences-- is like hitting snooze on a ticking time bomb, intensifying risks across industries. It’s no surprise that anxiety is spreading throughout boardrooms and C-suites worldwide.
Concerns are as varied as they are urgent. From the complexities of decarbonizing supply chains to shortages in manufacturing labor, executives are grappling with major challenges. For instance, The National Institute of Manufacturers predicts the U.S. labor gap could leave 2.1 million manufacturing jobs unfilled by 2030. Even more striking, 54% of C-suite executives believe their businesses won’t survive beyond 2030 if they fail to scale AI, as reported by Fortune. In nearly every sector or vertical, there are metrics that would stop even the most seasoned CXO in their tracks.
Understanding these disruptions means seeing opportunities where others see risks and moving decisively when others hesitate.
Leaders must focus on critical success factors unique to their sectors—these provide the roadmap to overcoming challenges before they claim industries.
As A.C. Boynton and R.W. Zmud wrote in their 1984 article, “An Assessment of Critical Success Factors,” “Critical success factors are those few things that must go well to ensure success… and therefore, they represent areas that must be given special and continual attention to bring about high performance.”
Coming in November: Part II
In this issue of IQ, we’ll explore the greatest disruptive forces and success factors in energy, financial services, healthcare, and cybersecurity, offering executive insights and tools you need to tackle these risks head-on.
Our Winter 2024 issue—coming in November—will dive into the insurance, medtech, pharmaceutical, and consumer packaged goods sectors, revealing the most pressing challenges and offering strategies for growth and resilience.
The future of your business depends on navigating unprecedented risks and seizing transformative opportunities. Are you ready to lead where others falter? Time is running out. The big question is: will your business survive the next five years? IQ
With stakes this high, how can leaders effectively navigate threats that evolve faster than they can assess and address?
DISRUPTIVE FORCES & CRITICAL SUCCESS FACTORS | ENERGY
Navigating Cyber Threats, Geopolitical Unrest and the Clean Tech Boom. Power Shift
BY ERIC RICH & NATHAN OWEN ROSENBERG
SUPPORTING RESEARCH
BY SEBASTIAN NEUNER, MATTHEW JOHNSON & WILL PARISH
According to projections from the International Energy Agency, the global energy revolution is kicking into overdrive, and by 2030, the landscape could look dramatically different.
Imagine a world where ten times as many EVs are zipping around than today—and where solar power, not just a niche player, is generating more electricity than the entire U.S. grid currently does.
Clean energy will be unstoppable, with renewables set to power nearly half of the world’s electricity. This isn’t just about solar and wind—massive investments in offshore wind are set to blow past those in fossil fuels, reshaping the global energy economy.
Yet, countries must first meet their energy and climate commitments in order to accelerate the industry further. Despite thrilling projections, stronger measures are still needed to keep global warming below 1.5°C.
Over the next five years, executive leaders will navigate decarbonization and decentralized energy production trends, as well as the rise of cyber threats and geopolitical turbulence. At the same time, new opportunities are emerging in areas like smart grids, artificial intelligence, and consumer engagement. Capitalizing on these challenges and opportunities necessitates that industry leaders identify key disruptive forces that will shape the future of their sectors.
DISRUPTIVE FORCES & SUCCESS FACTORS FOR ENERGY
Based on research and insights from global executives across the energy industry, the top five disruptive forces are:
1
Decarbonization as a Reaction to Climate Change
With many countries and companies pledging to reach carbon neutrality by 2050, the demand for fossil fuels is projected to decline significantly, especially in oil and gas.
This shift toward decarbonization will require a complete overhaul of the current energy system, emphasizing the adoption of alternative energy sources such as green electricity, biofuels, and hydrogen.
One key factor driving this transformation is the relatively low barriers to entry for renewable energy generation compared to traditional fossil-fuel-based power plants.
The development of renewable energy technologies, combined with evolving regulations, is attracting new players to the market. Not only are smaller companies entering the space, but larger tech and telecommunications firms are also making strides to become key providers of home energy services.
Additionally, oil and gas giants are leveraging their financial strength to diversify their portfolios, despite the long-term decline of fossil fuels. These companies can continue profiting from their fossil fuel businesses while funding investments in renewable energy and other sectors.
New digital technologies, such as cloud computing, artificial intelligence, and robotic process automation, are playing a crucial role in accelerating decarbonization. These tools streamline operations, reduce emissions, and enhance efficiency across the energy sector. As a result, the transition to cleaner energy sources is expected to intensify, with competition heating up among both established energy companies and new market entrants.
2
Decentralization of Energy Production
Traditionally, energy grids have been centralized, operated by large monopolistic providers. However, a significant shift is underway toward distributed energy production, where individuals and businesses generate their own electricity through renewable energy sources and localized microgrids.
This rise of “prosumers”—households or businesses that both produce and consume energy—is largely driven by technologies like rooftop solar panels and electric vehicles. These distributed energy resources are enabling consumers to meet their own energy needs, blurring the lines between power generation and consumption. As more people become energy producers, the traditional utility model is being challenged.
The adoption of decentralized energy systems is made possible by advancements in connected technologies and the increasing integration of renewable energy, such as solar and wind, into the grid. These systems are more flexible and resilient, allowing for local energy generation and storage, which can help reduce reliance on large power plants and centralized grids.However, this shift presents new challenges for energy executives, as they must manage the transition from a centralized grid to a more complex, distributed energy landscape.
The growing number of prosumers requires a grid that can handle bidirectional energy flows, as well as the integration of new digital tools to manage these dynamic systems. This trend also increases competition as new entrants—both small and large players— tap into the decentralized energy market, further pressuring traditional energy providers to innovate.
3
Cyber Threats Are on the Rise
As energy infrastructure becomes increasingly digital, it is also more vulnerable to cyberattacks. This growing threat requires companies to significantly strengthen their cybersecurity measures to protect against emerging risks, especially as attacks on energy systems become more frequent and sophisticated. Energy executives are well aware that their industry is a prime target for cyber attackers, including nation-state actors seeking to disrupt essential services.
While many companies have made strides in digitizing their back-office functions like finance and accounting, their operational technologies—such as supervisory control and data acquisition systems (SCADA)— remain outdated and highly susceptible to attacks. These legacy systems, which are integral to managing industrial operations, were not designed with modern
cybersecurity threats in mind, making them a significant liability. Moreover, the adoption of new technologies to increase connectivity between the field and centralized operations introduces additional risks. Yet, as companies integrate more connected devices and sensors into their infrastructure, the potential for cyberattacks grows and creates more vulnerabilities, while also making security more complex.
4
A Lack of (Nuclear) Energy Independence
The U.S. nuclear power industry relies heavily on foreign sources for its uranium supply, raising significant risks to energy security and stability. In 2022, U.S. civilian nuclear reactors purchased approximately 40.5 million pounds of uranium—U3O8e equivalent—from both domestic and international suppliers, with the majority coming from foreign countries.
The amount China invested in its solar industry in 2023, controlling more than 80% of the global supply chain for polysilicon, wafers, cells, and modules. Similarly, China holds over 80% of the world’s battery manufacturing capacity, though efforts in the U.S. and Europe aim to reduce this dominance by 2030.
Figure 1: Key Progress Indicator: Renewables Capacity by 2030
The International Energy Agency suggests both solar and wind production will experience exponential growth over the next five years. Source: IEA (2024), Key progress indicator: renewables capacity, IEA, Paris. Licence: CC BY 4.0
DISRUPTIVE FORCES & SUCCESS FACTORS FOR ENERGY
The breakdown of uranium supply sources highlights the U.S.’s dependence on external partners. Canada accounted for 27% of the uranium purchased, followed by Kazakhstan with 25%, Russia with 12%, and Uzbekistan with 11%. Smaller shares came from Australia (9%) and six other countries, contributing a combined 16%. This reliance on a diverse set of international suppliers exposes the U.S. nuclear energy sector to geopolitical risks and potential supply chain disruptions.
This dependence on foreign uranium suppliers is particularly concerning given the current global geopolitical tensions, especially with Russia. As one of the leading uranium providers, Russia’s involvement poses strategic risks, making it critical for U.S. energy leaders to reassess their supply chains. Additionally, uranium supply from other key players, such as Kazakhstan and Uzbekistan, may be affected by regional instability or shifts in their own energy strategies.
Geopolitical Turbulence Continues
Geopolitical turbulence remains one of the most critical challenges for energy industry leaders over the next five years, as international conflicts and political instability disrupt access to vital resources like oil, gas, and raw materials for energy production. These disruptions pose serious threats to the global energy supply chain, impacting not only traditional energy sources but also key industries like battery and solar panel production.
One key example is the conflict surrounding Nord Stream 2, a pipeline that once accounted for 35% of Europe’s natural gas supply from Russia. Escalating tensions between Russia and Europe drastically reduced the flow of gas, resulting in a sharp increase in gas prices across Europe. After leaks in the Nord Stream pipeline, gas prices surged by 19%, underscoring the volatility caused by geopolitical issues.
The closing of the Suez Canal due to conflicts in the Red Sea has also forced shipping companies to reroute, disrupting trade between Western nations and leading to a shift in economic power towards China and Russia. The Bab el-Mandeb Strait, a critical chokepoint for 12% of the world’s oil and 8% of liquefied natural gas trade, further complicates global energy logistics.
Another area of concern is China’s dominance in battery and solar panel production. In 2023, China invested over $130 billion in its solar industry, controlling more than 80% of the global supply chain for polysilicon, wafers, cells, and modules. Similarly, China holds over 80% of the world’s battery manufacturing capacity, though efforts in the U.S. and Europe aim to reduce this dominance by 2030. Despite these efforts, Chinese-made solar modules and batteries remain significantly cheaper than those produced elsewhere, making it difficult for other regions to compete.
Critical Success Factors
In a 1984 Sloan Management Review article titled, “An Assessment of Critical Success Factors,” A.C. Boynlon and R.W. Zmud wrote:
“Critical success factors [CSFs] are those few things that must go well to ensure success for a manager or an organization, and therefore, they represent those managerial or enterprise areas that must be given special and continual attention to bring about high performance. CSFs include issues vital to an organization’s current operating activities and to its future success.”
For energy executives and enterprises to survive—and thrive—over the next five years, capitalizing on the following critical success factors will be key:
Get Smart
The adoption of smart grids and digital technologies could be a crucial success factor for energy industry leaders over
Emerging
technologies are revolutionizing operations, from enhancing cybersecurity to optimizing grid management and improving customer service.
the next five years. These technologies significantly enhance grid reliability, lower operational costs, and improve customer service. Smart meters, AI-driven grid management, and IoT devices are revolutionizing the sector by enabling more efficient energy distribution and demand response systems. These innovations create opportunities for a more resilient and responsive energy grid, allowing utilities to better manage supply and demand fluctuations.
One emerging trend is offering energy solutions as a service (EaaS). This model provides energy management services, distributed energy resources (DERs), and microgrid solutions to commercial and industrial customers. EaaS helps customers reduce costs, improve sustainability, and increase energy resilience, making it an attractive option for businesses looking to optimize energy usage while minimizing environmental impact.
Additionally, Carbon Capture and Storage (CCS) technologies are becoming increasingly important in reducing emissions from fossil fuel-based power generation. By capturing and storing CO2 emissions, companies can continue using existing infrastructure while meeting stringent climate goals.
Embrace Artificial Intelligence and Machine Learning
Emerging technologies are revolutionizing operations, from enhancing cybersecurity to optimizing grid management and improving customer service. AI and ML can help predict maintenance needs for grid infrastructure, significantly boosting efficiency, resilience, and reliability in energy delivery.
Advancements in AI and ML are also expected to enhance renewable energy technologies and energy storage solutions. These improvements are vital for meeting growing electricity demand and will play a key role in expanding electric vehicle (EV)
adoption by driving energy efficiency.
SOLAR’S BRIGHT FUTURE
Solar generation is expected to account for 14% of global electric generation by 2030. Within the U.S., the solar industry is expected to reach 30% of generation by 2030, offsetting nearly 700 million metric tons of CO2 annually.
As renewable energy becomes more cost-effective, it could enable EVs to reach price parity with traditional gasoline and diesel vehicles, further accelerating the shift toward greener transportation.
Executives are already investing in AI-driven solutions by securing financial incentives such as grants and tax credits that support the transition to renewable energy. They are also modernizing their technological infrastructure, with a focus on cloud computing, data analytics, and cybersecurity to future-proof their operations. Moreover, non-traditional players like Google and Amazon are entering the energy space, offering smart grid technologies and new ways for consumers to interact with energy data, such as through smart homes.
However, AI’s growing presence also raises concerns. A single AI query uses significantly more energy than a standard search, and the International Energy Agency (IEA) predicts that the energy demand of data centers powering AI will double by 2026, potentially reaching over 1,000 TWh—equivalent to Japan’s total
electricity consumption. This rapid increase in energy use highlights the need for careful planning to prevent AI’s growing energy demands from straining the grid.
Face Regulatory Challenges Head-On
With increasing scrutiny on environmental, social, and governance (ESG) issues, particularly around greenhouse gas emissions reporting, energy companies must navigate a growing landscape of complex regulations. These regulations demand greater transparency, accountability, and adaptability from industry players.
The energy sector’s reliance on complex global supply chains makes it especially vulnerable to regulatory shifts. To comply with new mandates, companies need to improve supply chain transparency and resilience, often through advanced technologies like data analytics and cloud solutions. These tools enhance visibility and allow companies to better predict and respond to regulatory changes, ensuring smoother operations amid tightening requirements.
Executives are taking a proactive
approach to stay ahead of these regulatory challenges. By engaging with regulators and forming alliances with tech firms and research institutions, they can co-create flexible yet robust compliance frameworks. Additionally, emerging technologies like AI and machine learning are being employed to offer deeper insights and foster more proactive compliance strategies.
The ongoing shift toward decarbonization is also reshaping financial incentives such as tax credits and government grants. Energy companies that have long invested in infrastructure now face the challenge of managing the costs of potentially obsolete machinery if the renewable energy transition succeeds. Leaders will need to find innovative financial strategies to relieve the burden of unproductive assets while aligning with sustainability goals.
Prioritize Talent
Companies are redefining their employee value propositions to attract and retain top talent, particularly as younger generations seek more meaningful work, strong values, and opportunities for career development.
With a significant portion of the energy workforce nearing retirement and the rapid advancement of required skill sets, companies are investing heavily in reskilling and upskilling initiatives. This investment is crucial as the industry continues its transformation towards more digitized and automated processes.
In addition to training, digital platforms are being leveraged to enhance recruitment, engagement, and career development processes. Companies are increasingly utilizing AI to identify skill gaps, personalize employee learning, and streamline talent management. Data analytics also plays a key role in understanding and addressing employee needs, ultimately improving retention strategies.
Don’t Lose Sight of the Consumer
Increasing demand for renewable energy will likely push utility and energy companies to invest more in sustainable energy projects and adopt environmentally responsible business practices. To meet this
demand, companies are expanding their offerings by acquiring renewable energy firms or creating new products that align with sustainability goals.
Today’s consumers are increasingly focused on transparency regarding their energy consumption, costs, and sources. As a result, energy companies are responding by offering detailed consumption reports, transparent billing systems, and educational resources on renewable energy. These efforts aim to build trust and empower consumers by providing them with a clearer understanding of how their energy is produced and consumed.
Furthermore, user-friendly interfaces and self-service tools are giving consumers greater control over their energy usage. In many cases, consumers are also becoming energy producers, or “prosumers,” by using technologies like solar panels. This shift allows individuals to not only generate energy for their own needs but also sell excess energy back to the grid. These partnerships between utilities, energy distributors, and consumers have redefined the energy landscape, granting consumers more influence over the energy creation and transaction process.
Take Five
As the global energy landscape undergoes a dramatic transformation, the next five years will test the agility and resilience of energy leaders like never before. The race is on to stay ahead of the curve, as fossil fuel demand peaks and geopolitical turbulence reshapes supply chains. Leaders must prioritize cybersecurity, foster talent with cutting-edge skills, and engage consumers who are more empowered and environmentally conscious than ever before. In this high-stakes environment, those who fail to adapt risk falling behind.
The companies that embrace bold strategies, invest in the right technologies, and remain committed to sustainability will define the future of energy. The clock is ticking—how will you lead your company through this energy revolution? IQ
According to the IEA’s Net Zero Pathway, annual progress needs to double from a baseline of 2% per year to an average of more than 4% per year between now and 2030.
DISRUPTIVE FORCES & SUCCESS FACTORS FOR ENERGY
EXECUTIVE PERSPECTIVE: RENEWABLES & ETHANOL
To better understand what will be required of energy leaders over the next five years, IQ spoke with Chuck Woodside, CEO of KAAPA Ethanol Holdings, llc. Founded in 2001, farmer-owned KAAPA Ethanol serves agricultural operations across the United States, where the company produces 315 million gallons of renewable fuel annually. Prior to leading KAAPA for the past 22 years, Mr. Woodside was Chief Financial Officer at Gopher State Ethanol, and has held senior roles at MBC Holding Company and Koch Industries.
CHUCK WOODSIDE
Chief Executive Officer KAAPA Ethanol LLC
IQ : What are the top challenges in the renewable energy sector that executives will face over the next five years?
Mr. Woodside: The first challenge is uncertainty, particularly with the everchanging signals coming from Washington D.C. Political commitments and policies often shift, making it difficult for companies to predict how current investments will be impacted by future administrations. On top of that, Washington often fails to meet deadlines
for rulemaking, which delays the clarity needed for companies to move forward with confidence.
Supply chain issues are another challenge, especially when it comes to responding to new policies that involve construction or technology deployment. These processes take time, and delays in the supply chain can hinder progress.
Workforce development is also a major concern. It’s not just about finding and retaining talent, but also ensuring employees are well-trained and equipped to
grow into leadership roles. Although hiring has slightly improved recently, population trends suggest that staffing challenges will persist over the next few years.
Lastly, shifting weather and climate patterns pose risks to energy supply, pricing, and reliability. This leads to concerns about infrastructure resilience, especially in areas like Nebraska, where large power users like Google and Meta are worried about securing sufficient renewable energy while also transitioning to green feedstocks. The resilience of the electrical grid will be a major issue moving forward.
IQ : How do you adapt to anticipate some of these challenges? Is there a way to mitigate the geopolitical impact you mentioned?
Mr. Woodside: It’s not just about Washington’s regulations. For example, KAAPA supplies about 11% of the ethanol used in California, which has its own low carbon fuel standard. Oregon and Washington have similar, but slightly different, regulations. This creates a complex landscape as more states develop their own low carbon fuel strategies. Canada has also been proactive in this space, creating additional markets for ethanol producers with low carbon scores. So, it’s crucial to understand the regulatory environment across multiple regions and identify opportunities accordingly.
In response, we’ve emphasized reinvesting in our employees and strengthening company culture. This has had a positive impact, with employees feeling more connected and excited about our direction. We’ve also increased resources for our internal processes, ensuring our organizational structure is equipped for the future.
Over the past few years, it was difficult to find good talent, with job openings sometimes reaching 7-8% of our workforce. As hiring becomes easier, we’re now focusing on building depth and bringing in the right skillsets not just to
maintain operations, but to grow. This shift presents a lot of opportunity for us moving forward.
IQ : Where do you see the most promising growth opportunities for the renewable energy sector in the next few years?
Mr. Woodside: The great thing about ethanol is that it saves money at the pump, is environmentally friendly, and creates American jobs. One growth opportunity lies in expanding the uses of ethanol beyond just fuel. Ethanol is increasingly being looked at as a feedstock for chemicals like ethylene, and there’s a major push for green methanol. Sustainable aviation fuel (SAF) is also gaining traction, with the U.S. targeting 35 billion gallons by 2050, up from zero today. Globally, airlines are being mandated to adopt SAF, creating a significant market. Ethanol can play a big role here, especially in exports to
Liquid Gold
According to the U.S. Department of Energy, in 2022, the United States produced 15.4 billion gallons of ethanol, making it the world’s largest producer. This was nearly double the amount produced by Brazil, and ten times the amount produced by the European Union.
countries with green agendas aiming to reduce greenhouse gas emissions. Our product can lower greenhouse gas emissions by 44-50%, which makes it attractive in this context.
In the U.S., increasing ethanol blend rates from 10% to 15% (E15) offers a 50% increase in market share, especially with flex-fuel vehicles using E85, which is 85% ethanol. In California, E85 saves consumers over $2 per gallon compared to E10 blends, driving more interest in renewables.
Decarbonization efforts are another major opportunity. The ethanol industry aims for net-zero carbon by 2050, and I believe we can be halfway there in just a few years through practices like carbon sequestration. This involves capturing CO2 from fermentation processes and injecting it into geological formations, which is more cost-effective than direct air capture.
New uses for CO2 are also being explored, and companies are developing technologies around this. In addition, I see artificial intelligence (AI) and machine learning having a dramatic impact on our business, whether in product development, optimizing inputs, or improving production processes.
Lastly, the voluntary carbon market, driven by companies like Microsoft, offers
opportunities for low-carbon producers like us. Overall, despite ethanol being seen as a mature market, innovation and development continue to create significant growth opportunities.
IQ : With all the opportunities in the ethanol and renewable energy space, what qualities and insights will be required of leadership to seize these opportunities in the coming years?
Mr. Woodside: Leaders will need to respond quickly to changes, which are happening at a fast pace. This applies not just to me but to the entire team. I’m fortunate to have a board that works closely with management to set direction and help us adapt to shifts in the market. While we’re not typically the first to adopt new technologies, identifying and choosing the right technology early is crucial. The companies that succeed are those that pick the right technological path.
Another key quality for executives is being proactive in shaping future policy. This requires staying ahead of developments and actively participating in policy discussions. It’s time-consuming but essential for positioning the company for success.
Managing risk, particularly with decarbonization projects, is also critical. The capital costs of these projects are significant, so it’s important to plan carefully and understand the financial risks involved.
Leaders also need strong partners and coaches. I’ve benefited from coaching in the past, but recently, our work with Insigniam has taken this to a deeper level, positively impacting those involved. Having someone you can have candid conversations with is invaluable.
Lastly, inspiring employees is key. Our company has grown through acquisitions, resulting in five different cultures. To continue growing successfully, we’ve realized the importance of uniting under a single culture.
IQ : It seems like having a unified culture that drives momentum forward is critical to your success, especially when employees identify with a higher purpose.
Mr. Woodside: Absolutely. Today’s employees want to connect with the company’s values and principles. If you don’t clearly lay those out, it’s hard for them to buy in. What’s been really great
about our efforts is how many people have gotten involved. We’re a relatively small company with 180 employees, but a large percentage have had the chance to contribute to developing our principles and values. I underestimated how much our employees wanted this—it’s been a great reinforcement of our decision to focus on company culture.
We’re somewhat unique in that we’re owned by about 600 stockholders, mostly local farmers, who started the company to add value to their products. Our employees love hearing the stockholders’ pride in the company’s success, and they feel connected to that bigger purpose.
Our customers also recognize that we make an environmentally safe product that saves them money. So, it’s not just about producing ethanol—it’s about creating a product that’s environmentally friendly, saves American consumers money, and creates jobs. Our employees connect with that purpose, and it drives their engagement and commitment. IQ
“Overall, despite ethanol being seen as a mature market, innovation and development continue to create significant growth opportunities.”
Chuck Woodside CEO, KAAPA Holdings LLC
DISRUPTIVE FORCES & SUCCESS FACTORS FOR ENERGY
EXECUTIVE PERSPECTIVE: ENERGY UTILITIES
Charles Bayless is a utility executive and energy policy expert who currently serves on the boards of TS Conductor, E Source, and West Virginia American Water Company. Previously, Mr. Bayless served as president and provost of West Virginia University Institute of Technology as well as chairman, president and CEO of Tucson Electric Power. He was also chair, CEO, and president of Illinova, the parent of Illinois Power. He has been recognized with “CEO of the Year” honors from both Financial World and the Wall Street Transcript
CHARLES BAYLESS
TS Conductor & E Source
IQ : From your perspective, what are the top challenges that executives and enterprises within the electric utility sector industry will face over the next five years?
Mr. Bayless: A major challenge is the intersection of electrification with artificial intelligence and computerization. As more aspects of the economy rely on electricity—like electric vehicles (EVs) and home heating—the load on the grid will grow substantially. I’ve seen estimates predicting load growth of up
to 300% in the next 10 to 15 years. At the same time, the increasing use of AI and computers will further strain the system. As we transition from coal and oil to renewable energy sources like wind and solar, and electrify many sectors, we face significant infrastructure challenges. Building transmission lines and gas pipelines is becoming increasingly difficult due to public opposition and externalities like environmental impact. For example, it’s nearly impossible to construct electric power transmission lines across Texas or
BOARD MEMBER
gas pipelines through certain areas due to local resistance.
Natural gas is also playing a crucial role in this transition. The U.S. has become the largest natural gas exporter, largely due to fracking. However, challenges remain in getting gas to regions that lack infrastructure, such as New Hampshire, which has no gas pipelines and relies on heating oil.
Another critical issue is aging infrastructure. Much of the energy sector’s assets are decades old, and replacing or upgrading these systems is costly and timeconsuming. The challenge is compounded by the technical obsolescence of renewable technologies like solar, where advancements in efficiency mean that older installations need frequent updates.
The top challenges include managing load growth, building new infrastructure, transitioning to renewables, and addressing aging infrastructure. These issues will require innovative solutions from energy executives to ensure reliable and sustainable energy for the future.
IQ: Do you have a sense of how executives in the utility space are dealing with some of these issues or trying to anticipate?
Mr. Bayless: Many are moving toward renewables, but these sources present unique problems that traditional coal, oil, or gas plants don’t have. The biggest issue with renewables like solar and wind is that they don’t operate consistently. Solar panels don’t generate power at night, and wind turbines don’t run when there’s no wind. To ensure reliability, backup systems like batteries are necessary, but even they have limitations. For instance, places like Ontario, which has abundant snow, can’t rely on solar energy alone.
To manage this, the strategy for many companies is diversification and expanding the grid. A robust grid allows for energy transfer between regions with different peak load times. For example, British Columbia and other areas can send power to places
like Southern California, where demand is higher. At any given time, there could be 10,000 to 15,000 megawatts of power flowing into Southern California. Expanding the grid’s capacity improves the reliability and efficiency of renewable energy, allowing regions to swap power when needed and store surplus energy with batteries.
In the U.S., Texas is a clear example of the risks of a disconnected grid. In 2021, Texas experienced a three-day blackout in freezing temperatures because it had no connections with neighboring states. Unlike Texas, regions like Tucson, which is connected to a larger grid with 300,000 megawatts of reserves, can manage energy shortages more effectively. Increasing transmission capabilities nationwide is crucial, allowing energy to flow from cheaper or more abundant sources, ensuring reliability. This applies to both electricity and natural gas, where a network of gas pipelines allows for supply flexibility, helping regions like Chicago access gas from multiple sources when demand spikes.
WINDS OF CHANGE
In 2023, global wind capacity reached 1,021 GW, a 12% increase from the previous year. Within the U.S., wind turbines generated about 10.3% of the total electricity generated by domestic utilities. Yet, China is the world’s leader in wind installations, accounting for almost half of the world’s cumulative wind power installations.
IQ: When you think about existential challenges, rising geopolitical tensions, conflicts in Ukraine and Russia, are any of those threats top of mind for executives in utility space?
Mr. Bayless: Geopolitical tensions are a concern, but less so than in the past. Decades ago, events like the Arab oil embargo crippled the U.S., causing gas shortages and price hikes. Today, we are much more self-sufficient. The U.S. is now one of the largest oil producers globally, and we export oil rather than relying heavily on imports. If an embargo occurred now, we’d actually benefit from higher oil prices, selling at increased rates.
While we still import certain types of oil, such as Nigerian Bonny Light, the impact of an embargo wouldn’t be as severe. We have plenty of electricity and natural gas, and the only electricity we trade is with Canada, which is part of our grid. We’re not as dependent on foreign energy sources as we used to be.
That said, Europe is more vulnerable, as they rely on imports and haven’t embraced fracking. Countries like Russia and Saudi Arabia have large oil reserves, but the U.S. is well-positioned with its
own substantial reserves. Companies with more international exposure, like Exxon and Chevron, would be more affected by geopolitical events, but for the U.S. overall, rising prices could actually benefit our major oil companies.
IQ: Despite the challenges, what do you see as the greatest or most promising growth opportunities for the utility sector in the next five years?
Mr. Bayless: The most promising opportunities lie in renewables and infrastructure expansion. To keep up with growing energy demands, especially from electrification, we’ll need significant upgrades to power transmission. For example, if a city’s energy use triples, the existing grid and transmission lines won’t be enough. Massive investments will be required to expand transmission capacity.
The biggest opportunity, and challenge, is constructing new facilities to meet the rising demand for electricity and renewables. This includes not only electric infrastructure but also natural gas and battery storage. While coal is on its way out, there are still vast opportunities in natural gas, renewable energy, and related technologies.
IQ: What qualities or attributes will executives need to ensure their organizations succeed in the evolving energy landscape?
Mr. Bayless: First and foremost is leadership. Even if an executive has the right vision, it won’t matter if they can’t inspire people to follow them and take action. Leadership is essential to motivating teams to execute a plan. Additionally, executives need broad knowledge of the entire energy sector. Today’s industry is interconnected— electricity relies on gas, oil, nuclear, and renewables—so leaders need a strong understanding of how different energy sources and systems work together.
A good view of the future is also crucial. While no one can predict the future with complete accuracy, successful executives must be about 90% right. They need to anticipate industry trends and prepare their companies for what’s ahead, recognizing the interdependence of various energy sectors.
Beyond vision, the ability to take action is key. It’s one thing to see where the industry is headed, but it’s another to actually lead the charge. Executives need the drive to move forward, even in the face of challenges or uncertainty.
Lastly, working with regulators and effectively communicating with the public
is essential. Public resistance is a major obstacle, especially when it comes to infrastructure projects. Executives must be able to explain the importance of projects and gain public support, even when facing local opposition.
IQ: What parting thoughts would you share with colleagues in the industry?
Mr. Bayless: Buckle up. One key lesson I’ve learned in this industry is that whatever you believe now will likely change within three years. Flexibility is crucial. The ability to adapt quickly is one of the most important skills you can have in this field. For example, we were once pushing nuclear energy, then it fell out of favor, and now it’s gaining support again because it helps reduce carbon emissions. The energy landscape constantly shifts, so being able to “wing it” is essential.
Another important factor is building a strong team. As a CEO, you need to hire people who are smarter than you, give them the freedom to do their jobs, and encourage open debate. Groupthink can be a problem, so it’s important to have team members who play devil’s advocate and challenge ideas. This helps prevent everyone from blindly agreeing on a project that might ultimately fail. IQ
“The biggest opportunity, and challenge, is constructing new facilities to meet the rising demand for electricity and renewables.”
—Charles Bayless, Board Member, TS Conductor & E Source
DISRUPTIVE FORCES & SUCCESS FACTORS FOR FINANCIAL SERVICES
Breakin g
The Ban k
Will complex regulations and emerging technologies help re-invent the sector?
BY KATERIN LE FOLCALVEZ & DIETER HALFAR
SUPPORTING
RESEARCH BY
HARRY NEWBERRY
rom an ever-expanding web of regulations to the rapid rise of new FinTech competitors, the global financial services industry is facing unprecedented disruption, with new challenges emerging on multiple fronts. As compliance costs surge and data management becomes more complex, the need for bold leadership and innovative solutions has never been greater.
To thrive over the next five years, companies must prioritize clarity in business objectives, integrate cutting-edge technology, and foster a culture of compliance and accountability. The ability to balance risk management with innovation will define the winners in this rapidly evolving market.
Based on industry research and insights from global executives across the financial services industry, the top five disruptive forces are:
1
Increasing Regulatory Complexity
As new risks emerge, regulatory bodies are introducing an ever-growing array of rules and standards. Financial institutions must now manage a complex web of local, national, and international regulations, each with unique compliance requirements. This growing burden diverts significant resources away from core business activities, forcing firms to focus heavily on ensuring they remain compliant rather than on innovation or growth.
The pace of regulatory change has also intensified, with frequent updates in areas such as data privacy, anti-money laundering, and cybersecurity. Institutions must invest heavily in monitoring and implementing these changes, which often requires new technology and specialized compliance teams. This ongoing adaptation places additional financial strain on organizations, particularly smaller firms that may lack the resources of their larger counterparts.
The complexity of regulations also presents challenges in terms of operational efficiency. Many institutions operate across multiple jurisdictions, which further complicates compliance efforts. Each region may have its own nuanced rules, and navigating these can become a full-time endeavor. Failure to comply can result in hefty fines, reputational damage, and legal consequences, making it critical for firms to stay ahead of regulatory demands. The need to manage these layers of complexity is reshaping how financial institutions approach
their operations, pushing them to invest in more sophisticated compliance systems and solutions to streamline the process.
2
Surging Compliance Costs
As regulations grow more complex, institutions are under pressure to increase their spending on technology, specialized staff, and processes to remain compliant. This surge in regulatory requirements has led to the adoption of RegTech solutions, which leverage technology to streamline processes such as data reporting and fraud detection. However, the initial investment required to implement these technologies can be substantial, placing financial strain on institutions, particularly smaller ones. For context, compliance costs for financial institutions have skyrocketed, with some firms reporting an increase of over 60% in spending on regulatory compliance since the financial crisis. A recent global survey also noted that nearly 23% of financial institutions spend more than 5% of their net income on compliance, a number that has risen dramatically over the past few years.
3
Operational Risks and Data Management
Financial services executives are increasingly focused on ensuring the quality of their AI data as they face growing challenges over the next five years. One of the most significant issues is the complexity of their existing data architectures. Many large institutions, having grown through mergers and acquisitions, now have fragmented and outdated systems that hinder efficient data management. This “spaghetti junction” of systems makes it difficult to implement updates or ensure the accuracy of the data, which is crucial for both regulatory compliance and effective decision-making. Firms are also prioritizing data management beyond just compliance. Non-regulatory spending on data strategies is becoming more common as companies realize that poor data quality undermines even the best technology.
Executives also recognize that investing in better data infrastructure is essential to leveraging new technologies like AI and turning their data into a strategic asset. Industry reports suggest that AI can achieve up to a 70% cost reduction in data management by adopting modern data
infrastructures, such as data lakes. These improvements are crucial for compliance with increasing regulatory demands, especially in areas like data privacy and cybersecurity.
Lastly, the importance of robust data management extends beyond internal operations. Environmental, social, and governance—or ESG—reporting, for example, has introduced new challenges for data collection, requiring firms to capture and process large amounts of often nebulous data. As regulatory bodies demand more transparency and data from financial institutions, the need for accurate, wellorganized data becomes even more critical.
4
Rising Existential Threats
50 %
Emerging markets are projected to account for over 50% of global GDP by 2030, emphasizing the growing economic influence of interconnected emerging economies. This shift will likely increase global market interdependencies.
One of the most pressing concerns is the increasing sophistication of fraud and scams, particularly through the misuse of emerging technologies like artificial intelligence. While phishing attempts used to be easy to spot, modern scams have become far more convincing, posing a serious risk even to tech-savvy individuals. The evolution of these scams makes it harder for financial institutions to protect their customers.
In 2023, the IBM Cost of a Data Breach Report indicated that financial institutions lost around $5.9 million (USD) per cyberincident, which is higher than the average across all industries. Additionally, the U.S. Federal Bureau of Investigation’s Internet Crime Report says that financial losses from cybercrime reached a new high of $12.5 billion in 2023, driven by investment fraud and business email compromise schemes. Finally, according to Grandview Research, the global cyber security market size is projected to grow at a compound annual growth rate of 12.3% from 2023 to 2030.
Beyond cyber threats, broader risk management challenges are emerging, as evidenced by the recent failure of Silicon Valley Bank. The bank’s collapse was partly due to its failure to account for rising interest rates, which should have been a fundamental consideration in its risk models. This highlights a broader issue within financial services: some institutions are slow to react to changing market conditions, often due to outdated internal systems and processes.
DISRUPTIVE FORCES & SUCCESS FACTORS FOR FINANCIAL SERVICES
Inadequate internal infrastructure also presents a significant risk, as many financial institutions rely on outdated architecture. This can lead to delays in recognizing and responding to risks, leaving firms vulnerable to market shifts or operational failures.
Disruptive Competitors and Technologies
Traditional financial services firms are increasingly facing challenges from new, often smaller and more agile companies with cutting-edge technology, which present a real threat to entrenched players. Many established organizations respond in one of two ways: they either dismiss the competition until it grows larger or, alternatively, they seek to acquire the new entrants rather than compete directly.
Acquiring these firms allows traditional players to integrate the disruptors’ innovative technology into their own portfolios, avoiding the challenges of developing similar solutions from scratch. However, even acquisitions come with difficulties.
When an established company integrates a smaller, innovative firm, it often carries over legacy challenges, particularly with outdated infrastructure and systems. This creates complications that disruptors, who don’t have these burdens, can avoid.
Moreover, the financial market itself remains volatile and unpredictable. Events such as geopolitical tensions can create instability, making it difficult for investment banks and financial firms to maintain consistent growth. In response to this volatility, firms often focus on controlling internal costs and managing capital reserves more effectively.
One strategy to address these challenges involves optimizing capital and liquidity ratios. Many firms are now investing in improving their data accuracy to better manage their capital buffers, ensuring compliance with regulatory requirements while freeing up capital for business growth.
Critical Success Factors
In a 1984 Sloan Management Review article titled, “An Assessment of Critical Success Factors,” A.C. Boynlon and R.W. Zmud wrote:
“Critical success factors [CSFs] are those few things that must go well to ensure success for a manager or an organization, and therefore, they represent those managerial or enterprise areas that must be given special and continual attention to bring about high performance. CSFs include issues vital to an organization’s current operating activities and to its future success.”
For financial services executives and enterprises to survive—and thrive—over the next five years, capitalizing on the following critical success factors will be key:
Clarity and Alignment on Business Objectives
As market conditions continue to shift due to technological advancements, regulatory changes, and economic uncertainties, organizations must ensure that their goals remain relevant and focused. Regularly reviewing and updating objectives is critical in this environment, as it helps companies stay agile and responsive to emerging trends. Firms that fail to adapt their goals risk falling behind competitors who are more in tune with current market needs.
As business goals cascade from leadership to various departments, the connection between individual tasks and larger organizational goals can become blurred. This lack of alignment can result in significant inefficiencies, with employees often working on projects that don’t directly support the company’s strategic vision. To avoid this, companies must foster a culture of communication where all employees understand how their work contributes to the company’s broader objectives.
Moreover, ensuring alignment across the organization is not just about communicating goals—it’s about reinforcing the importance of those goals
regularly. Financial services firms that actively maintain alignment between leadership’s vision and the day-to-day tasks of employees report higher levels of engagement and better decision-making throughout the organization. By embedding clear objectives into the organizational culture, companies create an environment where employees feel accountable and motivated to contribute meaningfully.
Integrate Compliance Programs & Foster a Culture of Compliance
As regulatory environments become more complex, institutions must develop comprehensive compliance frameworks that are deeply integrated with their overall risk management systems. This integration ensures that compliance is not treated as a standalone function but is woven into the fabric of the institution’s operations, legal, IT, and risk departments. Research has shown that companies with wellintegrated compliance and risk management
frameworks are more resilient and better positioned to respond to regulatory changes, reducing the likelihood of costly violations or fines. This also underscores the need to move to a data driven model for managing risk, something already adopted for credit and market risk, but operational risk remains subjective. Systems have become highly complex and a new approach for operational risk—with an analytical method—is needed to leverage data to identify all possible failure modes and effects.
In addition to building strong compliance systems, creating a culture of compliance throughout the organization is essential. Compliance cannot be siloed within one department; it must be embraced by employees at all levels. This requires regular training and awareness programs that help employees understand the importance of compliance and their specific roles in maintaining it. Organizations with a strong culture of compliance tend to experience fewer regulatory issues, as employees are
GLOBAL GROWTH CONSTRAINTS
The World Bank projects a decline in the global economic growth rate to a three-decade low of 2.2% annually by 2030, partially due to the complexities introduced by increasingly interconnected and fragile global supply chains
NEXT-GEN CONNECTIVITY
The IMF believes that technology advancements such as AI, big data, and automation are expected to reshape financial services, leading to greater interdependence across sectors and countries. However, this also raises systemic risks, especially related to cybersecurity and digital vulnerabilities. Effective management of these risks will require holistic strategies that transcend national borders.
more vigilant in identifying and addressing potential risks before they become major problems. Leadership plays a critical role in fostering this culture of compliance. Executives must prioritize ethical behavior and accountability, setting a clear example for the rest of the organization. Additionally, maintaining open communication with regulatory bodies allows institutions to stay informed of upcoming regulatory changes and adapt accordingly. This proactive engagement enables firms to align their strategies with evolving regulations, ensuring they remain compliant and avoid disruptions.
Leverage Technology & Enhance Data Management Practices
As the regulatory environment grows increasingly complex, adopting technologies like AI, machine learning, and blockchain will help institutions streamline their compliance processes and manage risk more effectively. RegTech solutions can automate routine compliance tasks, improving efficiency and reducing the manual labor involved in data collection and reporting.
Research has shown that automating compliance tasks with AI can reduce costs by up to 50%, while also improving the accuracy and timeliness of reporting. In an industry where compliance errors can lead to significant penalties, this level of automation will be critical to success.
Beyond automation, these technologies will also help financial institutions detect
anomalies and potential compliance breaches more effectively. Machine learning algorithms can analyze vast amounts of data in real time, identifying suspicious activities and flagging them for further investigation. For example, AI-powered systems can identify patterns in transactions that may indicate money laundering or fraud, allowing institutions to address potential risks before they escalate. In this way, leveraging advanced technology not only enhances compliance but also strengthens overall risk management efforts.
In addition to adopting new technologies, institutions must prioritize robust data management practices. Ensuring data accuracy and security is essential for meeting regulatory requirements and protecting against growing cyber threats.
Don’t Put Innovation on the Back Burner
In a rapidly evolving industry, companies that prioritize innovation while balancing compliance will be better positioned to adapt and thrive. The key challenge is ensuring that innovation does not take a backseat to regulatory requirements. A risk-based approach to compliance can help institutions allocate resources efficiently, allowing them to meet regulatory demands while still investing in transformative technologies and processes.
Financial services firms can foster innovation by leveraging sandbox environments, which provide a controlled
space to test new technologies and business models. Sandboxes enable institutions to experiment with innovative solutions like blockchain, AI, and digital currencies without the risk of violating regulations. This approach allows firms to refine their products and services in a compliant setting before full-scale implementation.
In addition to creating innovation processes and environments, it’s critical that financial services leaders recalibrate their mindset—and capabilities— required to make innovation successful. These often include changes to governance, funding models, and the engagement model between innovation teams and the business line, which ensure successful integration and collaboration. Industry data suggests that companies that actively engage in controlled innovation initiatives report a 15% increase in the successful adoption of new technologies, compared to those that don’t invest in similar programs.
Furthermore, striking a balance between compliance and innovation will be crucial in staying competitive in an increasingly digital landscape. By integrating innovation into their core strategies, financial institutions can develop new products and services that meet changing consumer expectations, while also staying ahead of emerging competitors like fintech startups. Ultimately, innovation must be seen as a critical part of future growth, not as an afterthought.
Bold, Decisive Leadership—And a Culture That Supports It
Leaders must make tough, long-term decisions, even if they cause short-term challenges. A lean and focused organization is better equipped to adapt to future market shifts and challenges. Instead of being reactive, companies need to invest in being proactive and future-ready by building a strong foundation, especially in areas like risk management and value creation.
While having a clear and bold vision is essential, a common challenge is that executives often don’t stay long enough to see their strategies through. Organizational success requires more than strong leadership—it needs a culture where longterm goals are embraced by the entire team. This ensures stability and steady progress, regardless of leadership changes.
Naturally, this includes reexamining incentive structures, especially if firms seek to incentivize bold leadership. An entrepreneur understands the risk/reward model perfectly—if the financial services industry can follow-suit, it may be better positioned to achieve their visions by retaining those who are fueling that growth.
Every team member should understand how their role contributes to the bigger picture. Even small individual decisions can significantly impact the overall outcome. Organizations must create a culture where every employee feels responsible for the company’s success and understands the importance of their role in achieving the collective vision. This sense of shared purpose enables the business to adapt to changes and remain competitive.
Take Five
The financial services industry is at a critical crossroads, where navigating increasing regulatory complexity, rising compliance costs, and intensifying cybersecurity threats will define the next generation of industry leaders. To survive—and thrive—over the next five years, executives must embrace a proactive approach, integrating technology to streamline compliance, leveraging data to drive decision-making, and fostering a culture of innovation and accountability.
The seize the future, the speed at which strategic planning is done needs to be faster— with more frequent cycles—due to rapid changes in market. Organizations must move the decision making processes closer to the front end of the firm, nearer to the customer, where insights are more organic. Top-down planning is for major milestones and market ambitions, but short-term planning horizons are executed by the front end.
Companies that balance risk management with bold leadership and a clear strategic vision will be best positioned to capture new opportunities, while those that fail to adapt risk falling behind. The future of financial services is not just about meeting today’s challenges but anticipating tomorrow’s disruptions. Success will favor the bold—the companies that not only keep pace with change but actively shape it. IQ
EXECUTIVE PERSPECTIVE: FINTECH
Benjamin Lucas is the chief executive officer at Amundi Technology—which provides scalable, end-to-end financial management and data tools that empower asset managers, banks, and wealth managers to enhance their capabilities— and an ExCo member at Amundi. Prior to this role, Mr. Lucas served as a Partner at KPMG UK, where he held various leadership positions within the asset management and consulting divisions. Mr. Lucas also worked at EY as a Partner and Director, Alpha Financial Markets Consulting as a Practice Lead, and Ernst & Young as a Management Consultant. Mr. Lucas began his career as a Graduate at Zurich Financial Services after completing a BSc. Hons in Economics and Finance from the University of York.
BENJAMIN LUCAS
Chief Executive Officer Amundi Technology
IQ : From your purview, what are the primary challenges facing financial services executives and enterprises over the next five years?
Mr. Lucas: A major challenge, which isn’t easily controlled but must be managed and has impacts on technology and data, is the new geopolitical backdrop. We’re seeing the fragmentation of what was once a truly global model, with the rise of regionalization and potential for new conflicts. This shift
has serious effects on political policies, which may then influence regulatory frameworks.
These changes affect the business environment we all operate in. Companies might have to exit markets or adapt to data policies in different countries where political pressures dictate what data is stored locally or offshore.
These geopolitical and regulatory shifts have some impacts on the financial industry, especially for large global
banks, insurance companies, and asset management firms. Balancing these challenges will be one of the toughest tasks for leaders over the next five to ten years.
IQ : As global market instability affects companies worldwide, how do you see this impacting the financial services sector?
Mr. Lucas: There are many ways this plays out, but two key issues stand out. First, data localization. Where data is stored, who can access it, and how it’s managed are becoming critical concerns. Over the past decade, there’s been a shift toward cloud computing, especially public cloud, where many trusted large tech firms to handle their data.
However, this is changing because in some countries regulations require data to be stored locally and controlled onshore. This forces companies to build local infrastructure, which significantly impacts
global operating models.
The biggest challenge for financial services executives now is that they’re no longer just running financial institutions— they’re also running technology businesses. We live in a world with more computing power in our pockets than previous generations had in their entire lives. We’re hyper-connected, cloud-first, and increasingly digital-native. Ignoring this transformation is no longer an option. It is therefore incredibly important to stay connected and to listen. I have been leading conversations with senior leaders for much of the last decade and what was really striking this time was that GenAI came up in almost every conversation over the last year. In previous conversations, CEOs had highlighted cloud, data and talent, but rarely mentioned AI.
IQ : Do you think the financial services industry is ready to respond and capitalize on major shifts over the next five years?
MARKET OF THE FUTURE
Industry estimates project that the global market for FinTech will reach $1.5 trillion (USD) in revenue by 2030—growth of roughly five times from today. B2B2X and B2B markets are projected to drive the most growth, with embedded finance and financial infrastructure as primary levers for expansion.
Mr. Lucas: When I speak to financial services leaders, many of them are critical of their own readiness. They feel they weren’t innovative enough or moved too slowly. However, when I speak to tech leaders, they have a different view. They see financial services as ahead of many other sectors in several key areas. Why? Because financial services has already done much of the foundational work necessary for success in this new era—it’s an information-based industry and has been operating in the digital space for years.
One challenge is, of course, the speed of change. Tech companies think in terms of months, while financial services still operates on longer timelines—three, five, or ten years. The rapid advancements in AI are driving this gap in speed.
That said, financial services is better positioned than people realize because it’s already heavily regulated, familiar with modern cloud and DevOps processes, and is used to working in a digital environment.
IQ : What do you believe are some of the most promising growth opportunities in the financial services industry over the next five years? How could they be transformational?
Mr. Lucas : For me, there are two clear paths forward. First, there’s a massive opportunity for efficiency. Many financial services firms are stuck in outdated practices—like signing papers by hand and dealing with endless paperwork—while also hearing about the rapid advancements in AI and quantum computing. The contrast is stark. Right now, most use cases presented to boards focus on improving efficiency: doing things faster, better, and cheaper through automation. Every board would welcome ways to lower costs and improve processes. This kind of business case, centered on return on investment through efficiency, is easy to get approved.
However, reimagining the entire landscape is more challenging. For example, proposing a radical change to the savings and investment market—replacing traditional methods with AI engines and tokenized assets—likely wouldn’t get immediate or easy approval. Firms might experiment with such ideas, but full-scale adoption is unlikely in the near term.
That said, there’s enormous potential for efficiency improvements. Addressing these inefficiencies is a clear opportunity, and AI can help achieve this without overhauling the entire system. On the
other hand, the real transformation—the outsized returns—will come from adapting to this fast-changing world. AI offers the chance to rethink financial services.
Right now, much of the focus is on improving user interfaces or supporting human advisors. But in the next five years, we might see digital twins—AIpowered systems that understand all your preferences. Instead of clicking through websites, you may simply tell your device how to invest your money, and it would execute based on your preferences. The real exponential gains will come from focusing on effectiveness, not just efficiency, and adapting to such rapid change. But for immediate benefits, focusing on efficiency is the quickest way to generate value.
IQ: Is there a unique challenge in financial services for executives who want to be bold while operating in such a heavily regulated industry? How do you balance being bold and addressing investor concerns?
Mr. Lucas: That’s a great question, and I think there’s a clear answer. There’s a misconception that being bold means
ignoring or bypassing regulations. That’s not true. Boldness doesn’t mean defying the rules—it means finding ways to work within them. If you engage regulators early, involve them in the process, and bring them along on the journey, you can still innovate.
Some of the best developments in the financial space are coming from places where regulators are actively involved, where they’re working on proof of concepts and sandbox models. Regulators are there to protect investors and the market. Being bold means working with them.
IQ : When embracing technology to create a competitive advantage, is there concern about the impact on humans in the industry? How do we leverage emerging tech without losing our humanity?
Mr. Lucas: One key point is that technology, not humans, will become commoditized. We’re all using the same tech infrastructure. But there’s an opportunity with this tech to leapfrog others. For instance, India skipped traditional Web 2.0 development and went
“One challenge is the speed of change. Tech companies think in terms of months, while financial services still operates on longer timelines— three, five, or ten years.”
Benjamin Lucas CEO, Amundi Technology
BANKING ON HUMANS
As technology becomes commoditized, Mr. Lucas says, the real competitive edge lies in your people.
“Everyone may use the same ‘tech plumbing’ but true differentiation comes from your own intellectual property (IP), domain expertise, and the skills of your workforce.
straight to digital and mobile-first, creating a hyper-connected population that can do banking and payments through messaging platforms. They didn’t have the legacy architecture holding them back.
AI offers a similar chance to leap ahead. People often say “garbage in, garbage out,” dismissing AI because it relies on data. But AI’s strength is turning fragmented, random data into actionable insights. You don’t need a five-year data transformation or a new
operating model. By working with AI tools, firms can extract insights from unstructured data, potentially leapfrogging those stuck in traditional data restructuring.
That said, success in this approach is rare. Most firms that have tried have struggled and eventually returned to cleaning up their data. But with recent AI advancements, it’s not impossible that models could soon handle this more effectively.
As technology becomes commoditized, the real competitive edge lies in your people. Everyone may use the same tech “plumbing,” but true differentiation comes from your own intellectual property (IP), domain expertise, and the skills of your workforce. Unlocking that IP, and leveraging your team’s knowledge, will be how you stay ahead.
IQ : Is there a downside to everyone using the same tech infrastructure? For example, if the “pipes” break, like with the recent CloudStrike error, could it cause widespread disruptions?
Mr. Lucas: That’s absolutely a valid concern, but it’s not unique to AI. The CloudStrike issue is a perfect example. How many people realized that a small piece of software, developed by one person, was supporting 80% of computers worldwide? The real issue isn’t AI—it’s the broader supply chain risk in our technology ecosystem.
IQ : How can senior executives adapt and embrace technology to become the type of leaders you’re describing, especially in light of the changes ahead?
Mr. Lucas: I I see two key questions here: first, how to be more bold, and second, what kind of leadership will be successful in the future.
Starting with boldness—I’ve asked many leaders if they really want to be bold. My conclusion? Most don’t. Being bold means taking significant risks. But when you’re running a large business with big potential downsides, do you really want to take risks that are too significant? Most people prefer being a fast follower.
The challenge is that in an AI-driven world, the first mover advantage is enormous. If you’re not bold or if you don’t dare enough, you may find there’s nothing left to go after.
Now, if you’ve decided to be bold and embrace this journey, there’s a common misconception that AI will replace everything. I don’t believe that. Instead, AI, especially generative AI, will automate many tasks but ultimately amplify the impact of human decisions. Every choice a leader makes will have far-reaching consequences, accelerated and magnified by AI.
AI is a force multiplier, but it also increases the stakes. People will need more training, support, and governance to ensure their decisions are sound. When it comes to AI, every human decision will have a much greater impact than is currently the case. You can have a massive impact, but only if you’re making the right decisions in the right way.
IQ : Lastly, what does successful, impactful leadership in financial services look like over the next five years?
Mr. Lucas: Successful leadership, to me, is about openness—openness to collaboration and learning from other industries. Financial services do some things well and they can keep improving by learning from other sectors.
It’s also crucial to be smart about what you handle internally and what you delegate to partners. For example, you’re not going to reinvent large language models or build entirely new data pipelines from scratch. Instead, you need to leverage your tech partners and work within an ecosystem. No one is navigating these changes alone. IQ
“Companies investing heavily in redesigning these platforms are focusing on the present, not the future. The real exponential gains will come from focusing on effectiveness, not just efficiency, and reimagining how financial services can evolve.”
Healthcare is at a crossroads, facing unprecedented challenges that demand immediate attention and innovative solutions. A deep dive into industry trends reveals several disruptive forces reshaping the healthcare delivery landscape. From a staggering shortage of physicians to the skyrocketing costs burdening consumers, these forces are transforming the way care is delivered and experienced. With the U.S. grappling with a projected shortage of up to 124,000 doctors by 2034 and rising healthcare costs pushing patients to delay essential treatments, the need for actionable strategies has never been more urgent.
As the sector contends with financial pressures and regulatory hurdles, healthcare leaders must navigate these turbulent waters to sustain growth and enhance patient care. The path forward involves embracing technological innovations and refining strategic approaches to meet these escalating demands.
Based on research and insights from global executives across the healthcare industry, the top five disruptive forces are:
Healthcare’s Numbers Problem
According to the World Health Organization, the world could face a shortfall of around 10 million healthcare workers by 2030, with the greatest challenges in low-and middleincome countries. This shortage is driven by burnout, underinvestment, and the growing healthcare demands exacerbated by an aging population and the COVID-19 pandemic.
The International Council of Nurses has even declared the global nursing shortage a
“health emergency,” calling for immediate investment to stabilize the nursing workforce, which has been severely affected by the pandemic and ongoing stress.
In the U.S., the estimated 30,000 physicians entering the workforce annually will be insufficient to meet the rising demand for healthcare services, according to research by Becker’s Hospital Review. This shortage is compounded by the number of doctors retiring, reducing their clinical hours, or leaving the profession each year. Between 2021 and 2022 alone, approximately 71,309 physicians exited the workforce.
These disruptions in supply come at a time when the populations are both growing and aging, placing immense pressure on an already stretched healthcare workforce. As the demand for healthcare services increases, so does the need for healthcare providers, including advanced practice providers (APPs).
However, the pool of available doctors, APPs, nurses, therapists, and technicians remains limited. Consequently, the U.S. alone is projected to face a shortage of between 37,800 and 124,000 primary care and specialist physicians by 2034.
An aging population has significantly increased the demand for healthcare services, further straining the system. This increased demand is likely to impact the quality of care, as the shortage of healthcare professionals may lead to the hiring of individuals who lack adequate training or experience, potentially resulting in poorer patient outcomes.
A recent study by Robert Half found that 89% of healthcare managers are struggling to recruit new talent, exacerbating the existing workforce shortages. A poll conducted by the Kaiser Family Foundation and
A New Reality
The global augmented and virtual reality market in healthcare are expected to reach $11.3B (USD) by 2030, at a projected CAGR of 16.8% from 2024 to 2030, according to a report by Grand View Research.
The Washington Post revealed that about 30% of healthcare workers have contemplated leaving the profession, with 60% citing pandemic-related stress as a factor affecting their mental health. This widespread burnout, compounded by ongoing COVID-19 surges, has led to severe staffing shortages in hospitals across the country.
The emotional health and well-being of staff remain major challenges, as noted by the American Hospital Association’s American Organization for Nursing Leadership survey. Moreover, staffing shortages have led to rising wages, forcing hospitals to invest heavily in recruiting and retaining staff. This financial strain is pushing many hospitals to operate at a loss, further complicating the challenges posed by the shortage of healthcare professionals.
Skyrocketing Costs for Consumers
Rising healthcare costs will continue to be one of the most pressing challenges facing the industry over the next five years. In 2023, global healthcare expenditures grew by nearly 6%, up from 5.2% in 2022, driven by
aging populations, increased prevalence of chronic diseases, and the demand for new treatments and technologies. This financial burden is not limited to one country but is a growing concern across regions such as Europe and Asia-Pacific.
In the U.S., research from The Peterson Center on Healthcare indicates that healthcare expenses for households have consistently increased each year since 2000. These rising costs have significant consequences for individuals and the broader economy, particularly in the form of financial strain on consumers.
Financial strain on consumers is one of the most direct consequences of skyrocketing healthcare costs. Surging medical bills can leave individuals in difficult financial situations, causing them to struggle to cover essential expenses like rent, utilities, and groceries. This financial burden often leads to financial instability and stress, which can negatively impact a person’s overall well-being.
The high cost of healthcare also forces many people to make tough choices about their health. Delayed medical treatment is
In the U.S. alone, the estimated 30,000 physicians entering the workforce annually will be insufficient to meet the rising demand for healthcare services.
a common result, as individuals frequently postpone or forgo necessary care due to concerns about affordability. A recent survey found that 9% of adults in the U.S. delayed or did not receive essential medical treatment because of cost concerns. This can cause health problems to worsen over time, leading to more expensive treatments and even higher healthcare costs down the road.
3
Financial Challenges Plague Providers
Over the next five years, healthcare providers around the world are expected to face significant financial challenges that could hinder their ability to deliver high-quality care. These challenges stem from rising operational costs, complex reimbursement systems, and evolving regulations that place added pressure on healthcare systems.
One of the primary issues is the financial strain on providers, who are dealing with increasing costs and declining revenues. According to Fitch Ratings, nonprofit hospitals are likely to continue experiencing labor shortages and margin pressures. This financial strain limits providers’ ability to invest in necessary equipment, upgrade facilities, or hire sufficient staff, all of which can negatively affect the quality of care they provide.
In the U.S., recent policy changes by the Centers for Medicare & Medicaid Services (CMS) have added to this burden. CMS introduced final rules for the 2024 Medicare Physician Fee Schedule, which includes a 1.25% reduction in payment rates. While some changes, such as the introduction of a new add-on code for complex care in primary settings, aim to improve care delivery, they also have financial repercussions for healthcare providers already struggling with tight margins.
Globally, many healthcare systems are also focusing on addressing health equity. CMS is leading efforts in the U.S. by expanding access to services like mental health care, substance use disorder treatment, and dental care for cancer patients. These changes aim to improve care quality and ensure that vulnerable populations receive the support they need. However, the financial strain can sometimes limit providers’ ability to fully implement these programs.
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Increased Demand for Personalized Care
The healthcare industry is seeing a rising demand for personalized care, largely driven by the increasing consumerism in healthcare. Patients today are more informed and empowered, using readily available online medical information to actively seek healthcare solutions tailored to their individual needs and preferences. This shift has significantly changed patient behavior and expectations, leading to a focus on more individualized approaches to treatment.
However, providing personalized care comes with its own set of challenges. One major issue is the complexity of treatment. Personalized care often requires a more detailed approach to diagnosis and treatment, as healthcare providers must dedicate additional time and resources to understanding each patient’s unique health profile. This can include genetic testing, lifestyle assessments, and other factors that influence individual treatment plans, making the process more intricate compared to traditional care.
In addition, the need for personalized care places a heavy emphasis on data management. Providers must securely manage large volumes of patient data to tailor treatments effectively. Ensuring the proper storage, privacy, and security of this sensitive information, while also complying with regulations like HIPAA, is essential to protect patient privacy and maintain trust in the healthcare system.
The growing demand for personalized care also brings challenges in resource allocation. With more patients seeking customized treatment options, healthcare providers may face a strain on resources such as medical staff, diagnostic tools, and specialized treatments. This can lead to difficulties in effectively distributing these resources to meet the needs of all patients.
Lastly, costs and affordability present a significant concern. While personalized care can lead to better patient outcomes, it can be expensive, raising questions about how to make these treatments accessible to all patients. Ensuring that everyone, regardless of their financial situation, can benefit from personalized care is a crucial challenge that healthcare providers and policymakers must address moving forward.
The regulatory landscape in healthcare is continuously evolving worldwide, and the next few years will present significant challenges for providers across various regions. Healthcare systems around the globe are grappling with increasingly complex compliance requirements, demanding substantial financial and administrative resources. As new laws and regulations emerge, providers face the challenge of adapting to these changes, which can have a profound impact on their operations and financial stability.
One of the major challenges is the increasing compliance burden. Healthcare providers must adapt to new regulations while ensuring they remain in line with existing ones. This can be time-consuming and costly, requiring a significant investment in administrative staff and resources. The complexity of these requirements places a strain on healthcare systems, making it harder to focus on patient care.
Balancing the demands of compliance, financial stability, and operational efficiency will be essential for practitioners committed to delivering high-quality patient care.
Critical Success Factors
In a 1984 Sloan Management Review article titled, “An Assessment of Critical Success Factors,” A.C. Boynlon and R.W. Zmud wrote:
“Critical success factors [CSFs] are those few things that must go well to ensure success for a manager or an organization, and therefore, they represent those managerial or enterprise areas that must be given special and continual attention to bring about high performance. CSFs include issues vital to an organization’s current operating activities and to its future success.”
For healthcare executives and enterprises to survive—and thrive—over the next five years, capitalizing on the following critical success factors will be key:
Prioritize Flexibility
6.5%
In Europe, per capita healthcare expenditures are expected to increase significantly. On average, EU countries will increase spending by 6.5% per year until 2030. AI will play an important role in trying to keep the increase in expenditures as low as possible
Another pressing issue is data privacy and security. With the global increase in healthcare digitization, regulators are introducing stricter requirements to protect patient data. From the GDPR in Europe to new data security laws in Asia, healthcare providers are required to invest heavily in cybersecurity infrastructure. Additionally, evolving legislation and reforms aimed at improving healthcare transparency and reducing costs are being introduced in many regions. For instance, countries such as Japan and Germany have implemented new regulations focused on pricing transparency and cost containment. However, the long-term impact of these reforms on healthcare compliance remains uncertain. In many emerging markets, ongoing reforms are compounded by infrastructure gaps, making it difficult for providers to meet both national and international regulatory standards.
To overcome the global healthcare industry’s critical worker shortage, healthcare organizations should consider adopting various strategies to address these workforce issues and ensure long-term sustainability. One critical success factor is enhancing working conditions and benefits. Healthcare providers can improve the retention of current professionals and attract new talent by offering better work environments.
This includes increasing salaries, providing flexible work arrangements, and creating opportunities for career growth. By making the field more appealing, these improvements encourage healthcare professionals to stay in their roles and reduce turnover. For example, countries like Canada have implemented higher wages and more flexible scheduling to retain healthcare workers, which has shown positive results in reducing burnout and improving job satisfaction.
Another important factor is adopting flexible staffing models. To widen the candidate pool, healthcare organizations are introducing more adaptable staffing options. These can include part-time, temporary, or shared positions, which are especially beneficial for individuals unable to commit to fulltime roles. Offering these flexible options helps tap into a more diverse workforce, including parents, students, and semiretired professionals. By adjusting staffing structures, healthcare organizations can reduce the impact of worker shortages while maintaining the quality of care.
Additionally, integrating technology plays a crucial role in addressing the healthcare workforce shortage. Automation of routine tasks, electronic health record systems, and telemedicine can help reduce the workload of healthcare professionals. By streamlining administrative processes, technology allows doctors and nurses to dedicate more time to patient care, improving efficiency. For example, telemedicine has grown in popularity worldwide, enabling providers to reach more patients without requiring additional staff.
Together, these strategies—improving working conditions, adopting flexible staffing models, and integrating technology—are essential for tackling the global healthcare worker shortage and ensuring that healthcare systems can continue to meet the needs of patients.
Relieving Pain in Consumers Pockets
As discussed, skyrocketing healthcare costs have become a significant burden for consumers, but advancements in healthcare technology offer promising solutions.
These innovations not only improve patient outcomes but also help reduce the financial strain by minimizing the need for costly medical interventions and optimizing healthcare delivery.
One key strategy is the implementation of Health Information Technology (HIT), specifically the use of Electronic Health Records (EHRs). EHRs have been proven to reduce outpatient care costs.
A study led by Julia Adler-Milstein, published in the Annals of Internal Medicine, found that EHRs can decrease outpatient care costs by approximately 3%
The World Health Organization estimates that there is a global shortage of 4.3 million health professionals, resulting in lower-quality care, constrained doctor-patient interactions, increased consultation costs, and overworked providers.
after analyzing data over four years across nine communities. By improving access to patient histories and streamlining data, EHRs make healthcare delivery more efficient. This reduces unnecessary tests, lowers the risk of medical errors, and ultimately cuts down on overall healthcare expenses. Another effective solution is the use of patient management platforms, which integrate seamlessly with EHRs, allowing healthcare providers to synchronize patient data with scheduling and telemedicine features. This streamlined approach enables healthcare teams to deliver more efficient care by reducing administrative burdens and improving coordination between services. By using these platforms, healthcare providers can improve resource allocation, reduce wait times for patients, and prevent costly delays in care. Additionally, these platforms help mitigate burnout among healthcare professionals by automating routine tasks and improving workflow efficiency. Together, these technological innovations—EHRs and patient management platforms—represent critical success factors in addressing the rising costs of healthcare. By adopting these strategies, healthcare providers can offer more affordable care while ensuring patients receive timely, high-quality treatments.
An RX for Lower Operating Costs
hospitals and ambulatory surgical centers that meet quality reporting requirements are set to receive a 3.1% increase in payment rates in 2024, providing some financial relief. This underscores how technology can directly impact cost savings while improving operational efficiency.
3.46
The annual percentage the U.S. healthcare market is expected to grow from 2024 to 2029, resulting in a market volume of $1.79 trillion.
Another effective strategy is the use of cloud storage solutions. HIPAA-compliant cloud storage has revolutionized the way healthcare providers store and access data. By moving from costly inhouse storage to secure, efficient cloud solutions, organizations can reduce maintenance expenses while ensuring data remains easily accessible across the organization. Online patient management platforms are another critical tool for cutting costs. These platforms simplify the collection of previsit information through HIPAA-compliant digital intake forms, reducing paper waste and clutter. Medical staff can securely access patient information from any device, which improves workflow efficiency and reduces the time spent on manual tasks. Additionally, healthcare automation tools are enhancing efficiency by automating tasks like appointment scheduling, check-ins, and payment reminders. These tools not only reduce errors but also save time, freeing up staff to focus on more complex tasks. Automated patient self-scheduling and reminders have proven particularly effective in reducing administrative burdens and lowering costs.
Several technology-driven solutions could help reduce expenses on global healthcare providers and streamline operations. As mentioned, electronic health record systems can simplify administrative tasks by reducing redundant data entry and eliminating the need for paper records, which saves both time and money. Additionally, healthcare providers like
Finally, the rise of telemedicine offers significant cost savings. By allowing doctors to consult with patients remotely, telemedicine reduces the need for physical office space, utilities, and administrative staffing, making it a powerful tool for lowering operational costs without sacrificing care quality.
Embrace AI and Data Analytics
To meet the growing demand for personalized care in the global healthcare industry, providers should consider leveraging technology to offer tailored care while improving overall patient outcomes.
One of the most significant advancements is the use of remote patient monitoring. This technology allows healthcare providers to track patients’ vital health data outside of traditional clinical settings, enabling continuous care. Devices like wearable sensors monitor factors such as heart rate, blood pressure, and glucose levels in real time, allowing healthcare teams to intervene promptly when needed. It is estimated that around 75% of healthcare facilities in the U.S. will have adopted remote patient monitoring by the end of 2024, and its global use is expected to expand as demand for personalized care rises.
Another effective tool for delivering personalized care is the growing use of mobile apps. These applications empower patients to take control of their health by tracking their progress, receiving real-time feedback, and accessing customized health advice. Whether managing chronic conditions or focusing on wellness, mobile apps enable patients to actively participate in their care, which is crucial for personalized treatment plans.
Data analytics and AI are also transforming personalized healthcare. By analyzing large volumes of patient data, AI helps healthcare providers develop individualized treatment plans, predict health outcomes, and tailor interventions to each patient’s unique needs. This data-driven approach allows for more accurate diagnoses and treatments, improving overall patient care.
Compliance as a Competitive Advantage
As regulatory challenges continue to grow, healthcare providers around the world are adopting strategies to address these regulatory headwinds and ensure they remain compliant with evolving laws and policies. To navigate these complexities, providers are taking several key steps to maintain operational stability and avoid costly penalties.
One critical tactic is the formation of compliance committees or task forces. These groups are responsible for monitoring regulatory changes, assessing their impact on the organization, and developing strategies to ensure compliance. By promoting communication across departments, compliance committees help organizations stay agile, allowing them to respond quickly and effectively to new rules and regulations.
Additionally, many healthcare organizations are implementing regular compliance audits and monitoring. These proactive steps help identify potential regulatory issues before they escalate, allowing providers to address them early on. Internal audits not only prevent legal consequences but also safeguard corporate reputation by demonstrating a commitment to ethical practices and patient safety.
Take Five
As healthcare faces a future marked by unprecedented challenges, the next five years will demand bold, innovative strategies from industry leaders. To thrive in this evolving landscape, healthcare providers must prioritize flexibility, embrace technology, and enhance their operational efficiency. Critical success factors such as improving working conditions, adopting flexible staffing models, leveraging AI, and utilizing advanced health information systems are key to overcoming these obstacles. Meanwhile, solutions like telemedicine, cloud storage, and patient management platforms offer ways to streamline care and reduce costs without compromising quality.
By capitalizing on these innovations and remaining adaptable to regulatory changes, healthcare providers can turn disruption into growth opportunities. The ability to respond proactively to these forces will determine which organizations lead the charge in reshaping global healthcare. The road ahead is challenging, but with the right strategies in place, the industry can not only survive but thrive, delivering higher quality care to patients worldwide. IQ
HIPAAcompliant cloud storage has revolutionized the way healthcare providers store and access data. By moving from costly inhouse storage to secure, efficient cloud solutions, organizations can reduce maintenance expenses while ensuring data remains easily accessible across the organization.
As an accomplished global quality and regulatory executive with over 20 years of healthcare industry experience, Jennifer Paine is known for her ability to accelerate regulatory approval and provide options to business partners to achieve their business goals—while maintaining compliance with required regulations. As chief quality officer at Johnson & Johnson, she is responsible for leading the company’s worldwide quality and compliance (Q&C) function. Ms. Paine has received numerous awards and recognitions throughout her career, and was named board president in 2018 for the Central New Jersey chapter of the Healthcare Businesswomen’s Association. In 2017, she was named to the prestigious “Women to Watch in MedTech” list published by Becker’s Hospital Review. She holds a Regulatory Affairs Certification from the U.S. Regulatory Affairs Professional Society and a Regulatory Affairs Dual Certificate in Medical Devices and Pharmaceuticals.
JENNIFER
PAINE
Chief Quality Officer
Johnson & Johnson
IQ: What are the top challenges in healthcare that pharmaceutical and medical technology enterprises—particularly those who are addressing the toughest health challenges by developing innovative medicines and solutions, such as Johnson & Johnson—must contend with over the next five years, and why?
Ms. Paine: Over the next five years, companies like Johnson & Johnson will be facing some big challenges and exciting opportunities as the healthcare industry continues to evolve. The ones that first come to mind for me include digital
transformation, geopolitical complexity, and the changing nature of the healthcare solutions themselves.
Starting with digital transformation, although the transition to digital isn’t new, the pace of the transition and its pervasiveness in all our ways of working continues to drive change at unprecedented levels. Our digitally interconnected world demands that we adapt swiftly, which can be a challenge in a heavily regulated industry that serves patients globally. The relentless progress in technology and innovation
necessitates commitment to invest in robust systems, efficient processes, and people with the digital and change management skills needed to keep up. It is crucial that we continually invest in our workforce, equipping them with the necessary skills and expertise to harness these technologies effectively and foster groundbreaking advancements in patient care. But it’s not just about embracing new tools and techniques; regulations are also evolving as technology advances. While we must ensure our compliance with these increasingly complex regulations, especially in areas like cybersecurity, artificial intelligence and data privacy, we also want to embrace the opportunity to partner with regulators to help shape those regulations to help them achieve the intended outcomes without stifling innovation.
Next, I think that companies, especially large multinational companies like Johnson & Johnson, must navigate the complexities of operating in a globally interconnected world. The geopolitical landscape is always changing and has been extremely dynamic in recent years. That poses unique challenges for pharmaceutical and medical technology companies like us. Tensions between markets we serve can result in policies that change our operating models and process and can threaten to disrupt product supply.
Our strategies must adapt, in a compliant manner, so we can continue to bring our life-saving products to patients all around the world, even through challenging situations. Anticipating and responding to geopolitical uncertainty isn’t an easy task, but it’s one we’re fully committed to.
The complexity of care delivery is another challenge we’re tackling head-on. The very nature of the healthcare solutions being developed is changing as we see the convergence of pharmaceuticals, biologics, and medical technology. In the development and delivery of solutions to patients, we are seeing more use of advanced technology, more use of advanced therapeutics, all of which come with new sets of requirements and challenges to navigate. From complex supply chains to regulatory compliance and data integrity, there’s a lot to consider. We’re working hard to make it simpler for healthcare providers and patients to access
and safely use these innovative products and solutions. It’s all about delivering the best care in the simplest way possible.
And maybe one additional challenge that underlies all of this is ensuring we continually recruit, develop and retain the right talent. It’s crucial to our success. We find ourselves competing with tech companies as well as healthcare companies for the same people, especially as it relates to highly specific scientific areas. As healthcare continues to evolve and transform, we need leaders and a workforce that can drive innovation and adapt to these changes.
We’re focused on preparing our people for the rapid pace of change, ensuring they have the skills and knowledge to embrace new opportunities as they arise, and for the resilience to manage through the complexity and challenges that stand between us and our ability to transform health for humanity.
Companies that invest in their people, adapt their strategies, simplify care delivery, and nurture talent, will not only survive but thrive in the ever-evolving healthcare industry.
IQ: Since transitioning to the chief quality officer role in 2023, what has been your strategy for leading Johnson & Johnson’s Q&C function in order to ensure high-quality products reach customers and patients worldwide?
Ms. Paine: My strategy for leading our quality and compliance function is centered around several key principles. Before being named chief quality officer, I was the head of global regulatory affairs for Johnson & Johnson MedTech. As I stepped into my enterprise role—responsible for quality and compliance for both Johnson & Johnson MedTech and Johnson & Johnson Innovative Medicine—I was very deliberate about listening to and understanding the capabilities of the organization so I could identify opportunities for improvement and build on our existing strengths. I think this is important for any leader transitioning into a new role.
An important step is helping the team envision an ideal future state, something we can create together, so I’ve been working with my leadership to strategically align our efforts in support of achieving our company’s commitment to profoundly impact health
for humanity. This involves being honest about opportunities where improvement is needed and also empowering teams (and individuals) to develop solutions to create that future state. I place a strong emphasis on fostering a culture of continuous learning and development as well as on building a diverse talent pipeline, identifying future leaders within the organization, ensuring their growth and success in alignment with our long-term objectives.
I also challenge the organization to find ways to streamline our processes and make work easier without compromising the quality of our products and services. That includes taking a simplified approach, removing barriers and unnecessary complexities so our teams can deliver highquality products and services without being hindered by unnecessary burdens.
IQ: As a follow-up, is Johnson & Johnson adapting or evolving any facets of its corporate strategy to better anticipate, manage, or mitigate any growing existential risks on the horizon over the next five years?
Ms. Paine: We are definitely looking at our approach to risk management very differently than in the past. The interplay of risks across sectors, business, and regions requires a more cross-functional approach that embraces more coordinated approaches to risk identification and management.
We are enhancing our enterprise risk management capabilities to build muscle beyond functional areas or geographies, ensuring that risks are identified and managed holistically. As I just mentioned, the complexities of operating in a globally interconnected world presents many risks to our ability to deliver products to patients, no matter where they are in the world.
We are also working to simplify and streamline the way we manage risk, using
AI and machine learning where appropriate. By adopting a more proactive stance, and automating where it makes sense, we aim to stay ahead of issues and develop pragmatic solutions that address potential risks before they escalate. In the past two years, we have made significant progress in improving visibility into risks across the enterprise. We have leveraged enterprise risk management to identify risks earlier in the product lifecycle, enabling us to take timely actions to mitigate their impact. By constantly evolving our risk management practices, we aim to build robust systems, processes and most importantly, culture, that allows us to anticipate, manage, and mitigate risks effectively.
IQ: From your vantagepoint, what are the most promising, game-changing opportunities for enterprise growth within the greater healthcare industry over the next five years—including both within the U.S. and internationally?
Ms. Paine: To me, what’s most exciting is the amazing scientific advancements that are opening up new ways of treating diseases. AI and data science, robotics, gene therapy and leveraging genetic information to create personalized pathways for treatment, including the possibility of intercepting disease is now within our reach.
This scientific progress has the potential to revolutionize healthcare by delivering personalized and targeted therapies. As research and development continue to progress, more fruitful solutions are being discovered, and options for treatment are expanding. The potential to cure previously untreatable diseases is becoming more advanced, offering new hope for patients.
The integration of technology into healthcare also has the potential to improve patient outcomes, enhance operational
efficiencies, and ultimately expand access and efficiencies. Embracing technology and leveraging it effectively will be essential for healthcare enterprises to seize this opportunity for growth.
IQ : From a leadership perspective, what attributes will be required of healthcare executives in the pharmaceutical, biotechnology, and medical technology space to ensure their organizations survive and thrive over the next five years?
Ms. Paine: The first, and most important attribute, that I emphasize to my leaders, is that we are ALL business leaders - regardless of whether we sit in a functional area such as quality and compliance. I strongly believe that every leader in the company—regulatory, compliance, legal, supply chain etc—must become differentiators to our business, enabling AND driving compliant growth. It is no longer acceptable for a leader to solely bring their subject matter expertise to the table. They must show up as a business leader who understands the broader impact of their decisions and actions on the organization, and who understands how to leverage their expertise to create opportunity, not just manage risk. This requires a deep understanding of how their functional area aligns with and contributes to the overall business strategy.
Leaders also need to learn how to adapt to engaging people in a more geographically diverse and virtual environment than in the past. Building connections, fostering a culture of collaboration, and finding innovative approaches to effectively communicate is harder in an organization where most people are not in the same building, time zone, or geography. New skills will be needed to maintain a shared understanding of the priorities you are driving within the organization.
This ability to identify and prioritize the most impactful work is also a critical leadership skill. With the rapidly changing healthcare landscape and an abundance of competing demands, leaders must focus their teams on the largest value-added priorities, bringing a strategic mindset and
the capability to make informed decisions that align with the organization’s overall goals and objectives. This includes blocking out distractions and allocating resources to initiatives that will have the greatest positive impact on the organization’s success.
Finally, leaders need to define the future state and ensure the right people are in place to execute the organization’s vision. They must provide a clear and compelling vision of where the organization is heading and inspire their teams to work towards that vision.
IQ: What other recommendations or insights would you offer global healthcare leaders in order to ensure their success over the next five years?
Ms. Paine: Avoiding burnout is essential, especially given the challenges we face as leaders. I thought it might be useful to share what I intentionally do to make my work and personal lives coexist. Some may think of this as work-life balance but I’m not sure you can always balance work and life, but you have to intentionally manage them because it doesn’t happen on its own.
Most importantly, you must set clear boundaries. Work has a way of filling up all available space, so it’s important to establish limits. I’ve learned that if I don’t set boundaries, work creeps into every aspect of my life before I even realize what’s happening. That’s why I’m intentional about mapping out my vacation days, holidays, and trips for the following year each December. By doing this, I make sure to prioritize time to relax and recharge.
But this isn’t just about long vacations— it’s also about finding small moments of recovery every day, week, month, and year. While vacations provide much-needed rest, they don’t fuel me for an entire year. Personally, I enjoy doing puzzles with my mom on Saturdays, baking cakes for my kids, and even attempting gardening (even though I’m not very good at it!). These fun activities give me something to look forward to and provide the fuel I need to perform at my best in both my professional and personal life. IQ
“It is no longer acceptable for a leader to solely bring their subject matter expertise to the table. They must show up as a business leader who understands the broader impact of their decisions and actions on the organization, and who understands how to leverage their expertise to create opportunity, not just manage risk.”
Jennifer Paine SVP & Chief Quality Officer, Johnson & Johnson
Bradley C. Leibovich, M.D., serves as medical director of the Center for Digital Health at Mayo Clinic in Rochester, Minnesota. He joined the staff of Mayo Clinic in 2001 and is the David C. Utz, M.D., Professor of Urology. Dr. Leibovich’s clinical areas of interest include renal cancer, upper tract urothelial carcinoma, and testicular cancer and has authored over 300 peer-reviewed journal articles. His awards and honors include the Andrew C. Novick Award through the Kidney Cancer Association, in recognition of significant contributions in urology for the treatment of renal cell carcinoma. At Mayo Clinic, Dr. Leibovich has been recognized with multiple awards for service in education and clinical activities including the Distinguished Mayo Clinician Award. He is engaged in many educational activities, including teaching at oncology conferences, developing curriculum for the Department of Urology at Mayo Clinic, and providing mentorship for Mayo Clinic residents and fellows.
DR. BRADLEY LEIBOVICH
David C. Utz, M.D., Professor of Urology & Medical Director, Center for Digital Health Mayo Clinic
IQ: From your perspective, what are the biggest challenges you anticipate facing in the next five years?
Dr. Leibovich: One major challenge is workforce shortages across various medical domains—from physicians to technicians operating machines. Burnout is a significant factor contributing to this shortage, creating a vicious cycle where fewer people join the industry, further exacerbating the problem. Another challenge is the growing volume of information that medical professionals
need to process, coupled with increasing regulatory burdens. The systems designed to help manage this information have not kept pace with these demands. Additionally, the fragmentation of the healthcare system and the continued reduction in reimbursement rates make it difficult to maintain quality care, putting further pressure on both providers and patients.
IQ: Given these challenges, how are organizations adapting to support their teams and maintain quality care?
Dr. Leibovich: Organizations are focusing on reducing stress and burnout by providing support to ease the clerical workload and minimize long hours. Some are offering better benefits, like improved paid time off and parental leave, and adopting flexible work arrangements, including remote work options. The goal is to align people with the mission of healthcare—to care for others—beyond just financial incentives. Encouraging a return to the altruistic reasons for entering the field and improving overall quality of life for staff can help address the challenges.
IQ: What existential threats are most concerning in the healthcare space, such as aging populations or insurance challenges?
Dr. Leibovich: The most pressing existential threat is our reliance on reactive care for chronic and acute conditions. As the population ages and healthcare costs rise, the burden of expensive treatments and technologies becomes unsustainable. We need to shift focus from reactive, costly treatments to proactive, preventive care. Investing in early intervention and population health could alleviate long-term costs and improve outcomes. However, the transition will be challenging and requires significant changes in how we approach healthcare.
IQ: What will it take to shift from a reactive to a proactive healthcare model?
Dr. Leibovich: Shifting to a proactive model requires a multi-faceted approach, including better education, eliminating incentives for unhealthy behaviors, and improving access to healthy options. Addressing issues like food accessibility, pollution, and inadequate insurance coverage for preventive measures is crucial. This shift will involve economic, social, and educational reforms, as well as creating incentives for positive health behaviors while removing those that encourage unhealthy ones.
IQ: What growth opportunities exist for the healthcare industry to improve quality of care and practitioner satisfaction?
Dr. Leibovich: Growth should focus on enhancing efficiency and effectiveness without increasing the volume of interventions. Leveraging technology to make routine healthcare management easier and more integrated can improve patient outcomes and reduce the strain on practitioners. For serious conditions, personalized care and advanced technology can minimize the burden on patients and the healthcare system. Embracing tech innovations similar to those in other industries could simplify and improve healthcare delivery.
IQ: Is the healthcare industry already on this trajectory of leveraging technology for proactive care?
Dr. Leibovich: Yes, the industry is moving in this direction. Many medical centers and tech companies are working on integrating technology to enhance care delivery. Nontraditional healthcare providers like Amazon, Walmart, and startups are entering the field, offering new models for care that could reduce overall costs and improve accessibility.
IQ: What qualities will future healthcare leaders need to drive these changes?
Dr. Leibovich: Future leaders must be innovative, willing to invest in new approaches, and able to learn from other industries. They need to understand their organization’s core competencies and how to leverage them effectively. Leaders must also be prepared for the possibility of multiple failures as they experiment with new solutions. Emphasizing innovation, targeted investment, and a broad perspective on best practices from other sectors will be key to making meaningful improvements in healthcare. IQ
“The fragmentation of the healthcare system and the continued reduction in reimbursement rates make it difficult to maintain quality care, putting further pressure on both providers and patients.”
Dr. Bradley Leibovich
David C. Utz, M.D., Professor of Urology & Medical Director, Center for Digital Health, Mayo Clinic
The global cybersecurity industry has expanded to an immense scale, driven by the escalating frequency and severity of cyber threats. In 2024, the average cost of an enterprise data breach reached a record $4.88 million (USD), reflecting the increasingly expensive impact of cyberattacks on businesses. Human error plays a significant role, contributing to 88% of cybersecurity breaches, which take an average of 194 days to be identified—and 292 days to contain.
Making matters worse, cyber fatigue— where companies become apathetic to proactively defending against attacks—is rising, further exacerbating vulnerability to threats. Cisco reports that 42% of companies surveyed are currently experiencing some form of cyber fatigue. Yet, according to Check Point, this comes at a time when there is a 30% year-over-year increase in cyber attacks globally, reaching 1,636 attacks per organization per week. Latin America, Africa, and Europe showed the largest increases in cyber attacks in Q2 2024, at 53%, 37%, and 35% increases, year over-year, respectively. Enterprises notwithstanding, consumers are also at significant risk. In 2022, over 1.1 million reports of identity theft were filed with the U.S. Federal Trade Commission, yet a staggering 64% of Americans have never checked if they were impacted by a data breach. Recently, in June 2024, over 560 million Ticketmaster customers had their information stolen in a data breach. And in 2023, an AT&T breach exposed approximately 9 million customers’ personal details.
industry over the next five years, influencing their ability to mitigate risks and protect their digital estates.
Based on research and insights from the cybersecurity industry, the top five disruptive forces impacting executives’ and enterprises ability to respond to—and mitigate—digital threats include:
Supply Chain Vulnerabilities
One of the most significant disruptors in the cybersecurity landscape, statistics regarding supply chain vulnerabilities indicate that 91% of organizations faced a software supply chain attack last year. High-profile attacks such as the SolarWinds breach, which affected over 18,000 systems worldwide, cost companies an average of 11% of their annual revenue. The attack exposed how deeply interconnected businesses are with their technology providers, and how ripple effects can impact numerous organizations globally.
In the case of SolarWinds, hackers inserted malicious code into a routine software update, enabling them to infiltrate the systems of countless businesses and government agencies. This event served as a wake-up call for executives to recognize that no company is an island in today’s digital ecosystem.
High-profile attacks such as the SolarWinds breach, which affected over 18,000 systems worldwide, cost companies an average of 11% of their annual revenue. The attack exposed how deeply interconnected businesses are with their technology providers, and how ripple effects can impact numerous organizations globally.
Compounding the problem further, the International Information Systems Security Certification Consortium reports that 70% of cybersecurity professionals say their organizations are understaffed, hampering their ability to be proactive. Additionally, the likelihood of prosecuting cybercriminals remains astonishingly low, estimated at just 0.05% by the World Economic Forum. To navigate growing challenges, businesses must understand and address the key disruptive forces shaping the cybersecurity
The challenge for executives is understanding that their cyber risk extends beyond their own internal defenses. Every vendor, partner, or third-party provider they rely on represents a potential entry point for cyber attackers. Many companies have limited visibility into their extended supply chain, which makes it difficult to assess the cybersecurity posture of every partner. This blind spot can level organizations.
An Evolving Threat Landscape
According to various sources, there are around 2,200 cyber attacks per day, or one attack every 39 seconds. Not only are the attacks more frequent, but they are also more sophisticated in nature.
No longer limited to simple hacking attempts, today’s attackers range from opportunistic criminals seeking financial gain to highly sophisticated nation-state actors with strategic political motives.
This diversity in threat actors makes it increasingly difficult for organizations to predict where attacks might come from and what assets may be at risk.
For executives, the challenge lies in understanding who might target their organization—and for what purpose. Cybercriminals may be after sensitive customer data, intellectual property, or financial information, while nation-state actors may seek to disrupt operations
for geopolitical reasons. Understanding the motivation behind these attacks is crucial for developing a robust defense strategy, wherein executives can prioritize their cybersecurity efforts and allocate resources effectively.
Moreover, the rapid advancement of technology also amplifies the risks associated with the evolving threat landscape, including the proliferation of AI-powered cyber threats. As companies implement AI systems, attackers will increasingly use AI to craft more sophisticated attacks, such as AI-generated phishing and autonomous malware.
Malware, Everywhere In 2022, over 1.1 million reports of identity theft were filed with the U.S. Federal Trade Commission, yet a staggering 64% of Americans have never checked if they were impacted by a data breach.
Detection Perfection Experts say cybersecurity systems and protocols must evolve continuously to address the shifting threat landscape, from new malware strains to increasingly sophisticated phishing tactics.
3
Balancing Integration and Independence
While it’s essential for business units to be well-integrated and understand their cyber risks, it’s equally important for companies to avoid becoming overly reliant on a single provider. This reliance can create vulnerabilities that could be catastrophic if that provider suffers a failure or a cyber attack.
The recent CrowdStrike incident in July 2024 is a prime example of how the compromise of one vendor can affect an entire ecosystem, disrupting operations for thousands of businesses across various industries, when a faulty update to CrowdStrike Falcon Sensor software caused widespread disruptions across organizations globally. The update, which was intended for Windows systems, led to severe outages, affecting approximately 8.5 million devices worldwide. Key sectors such as healthcare, banking, and airlines were particularly impacted. Customers experienced business interruptions, with some facing extended downtime while systems were manually restored. The issue underscored the critical risk of over-
reliance on a single provider and the cascading effects of such disruptions across interconnected industries.
Building external independence involves leveraging multiple vendors and implementing backup systems that can quickly take over in case of an emergency. This could include having various providers for key services, such as cybersecurity tools or cloud platforms, and using varied infrastructure across different regions. Additionally, a hybrid approach that mixes in-house solutions with external providers can help companies maintain more control over their critical systems while still benefiting from the innovation of third-party vendors.
4
A Lack of Cyber Resiliency
Many organizations mistakenly view cybersecurity as a one-time project, treating it like a task with a clear start and finish. The idea of a “set it and forget it” approach is outdated and dangerous, leaving companies vulnerable to breaches.
Cybersecurity systems and protocols must evolve continuously to address the shifting threat landscape, from new malware strains to increasingly sophisticated phishing tactics. Businesses that fail to embed cybersecurity into their daily operations face higher risks of attacks. Resilience is not just about prevention, but about recovery. In the event of an attack, businesses need robust systems to mitigate damage and bounce back quickly. This involves having clear incident response plans and ensuring all stakeholders know their role in protecting the company.
Evolving Regulatory Landscape and Compliance Risks
As digital transformation accelerates, governments and regulatory bodies worldwide are enacting stricter data privacy and security laws. Laws such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the U.S. are setting new standards for how companies must handle and protect sensitive data.
The regulatory tsunami is not just a factor in the US and EU, but also on six different continents and in seventy-six countries, which sits on top of existing AI laws in 127 countries that are already in place, having been enacted since 2016. From a regulatory perspective, board directors and corporate governors could be held personally accountable if their company’s AI-enabled platforms go awry, placing them squarely in regulators’ cross-hairs as legislation becomes codified.
Non-compliance with these regulations can have severe financial consequences. For instance, companies found violating GDPR can face fines of up to 4% of their global annual revenue, a penalty that has already been imposed on major corporations like Meta. Similarly, in the U.S., the California Attorney General has been aggressively enforcing CCPA, which can result in significant fines for data breaches or failures to properly notify consumers.
Failure to meet these regulatory expectations not only risks hefty fines but also operational disruptions, as regulators may impose restrictions on business activities.
Critical Success Factors
In a 1984 Sloan Management Review article titled, “An Assessment of Critical Success Factors,” A.C. Boynlon and R.W. Zmud wrote:
“Critical success factors [CSFs] are those few things that must go well to ensure success for a manager or an organization, and therefore, they represent those managerial or enterprise areas that must be given special and continual attention to bring about high performance. CSFs include issues vital to an organization’s current operating activities and to its future success.”
For global executives and enterprises to survive—and thrive—amid increasingly sophisticated cyberthreats over the next five years, the following critical success factors will be key:
Focus on Risk Transparency
To ensure cybersecurity risk transparency in large-scale global enterprises, executives must follow a structured approach that addresses both current threats and the evolving risk landscape.
The first step is to conduct a thorough risk assessment, which involves identifying and categorizing potential cyber risks specific to the business, such as operational disruptions due to cyber attacks or confidential data loss due to cyber theft. Each type of threat poses different challenges, and understanding the motives behind them is essential for crafting tailored defenses. Companies should start by identifying and prioritizing critical assets and then considering the potential threats against them that, together, constitute their priority risks.
The next step is implementing risk monitoring tools that provide continuous visibility into potential vulnerabilities. Furthermore, real-time monitoring is essential to maintaining transparency and allowing for a rapid response to emerging threats. With these tools in place, executives can quickly detect anomalies or breaches and act before they escalate. Generating actionable insights from the collected data is crucial for informed decision-making. These insights help companies allocate resources effectively, ensuring the most significant risks are addressed first. Strategic resource allocation allows organizations to focus on high-risk areas while avoiding unnecessary spending in less critical sectors.
The recent CrowdStrike incident in July 2024 is a prime example of how the compromise of one vendor can affect an entire ecosystem, disrupting operations for thousands of businesses across various industries.
Finally, cybersecurity strategies must be reviewed and adapted continuously. Regular audits and reassessments ensure that the organization’s defenses evolve alongside emerging threats, as the dynamic nature of cyber risks.
Build Resilience Across the Enterprise
Building cybersecurity resilience in large-scale global enterprises requires a strategic and methodical approach, and the first step is to ensure internal integration across all business units. Each department must align and coordinate its cybersecurity efforts, developing clear communication channels that facilitate a rapid response to any threats. Organizations with strong internal coordination are better equipped to manage crises, as they can leverage collective resources and expertise to mitigate risks across various departments.
External resilience is equally important, and executives must avoid over-reliance on a single provider, as illustrated in the CrowdStrike example. To engrain enterprise resilience, companies should implement decentralized backup systems.
This is why maintaining cloud-based and offline backups is essential for ensuring continuity during an attack or system failure, and these backups allow for quicker restoration of operations, minimizing downtime and the impact on business functions. Fail-safe systems should be regularly tested to ensure they work when needed, which includes conducting regular simulations and drills to identify any weaknesses in the recovery process.
Finally, resilience is not static, and companies must continuously adapt their cybersecurity strategies. Emerging threats require constant reassessment and updates to internal processes and technologies.
Don’t Neglect Continuous Iteration & Adaptation
To create a system of continuous iteration and adaptation for cybersecurity in large-
scale global enterprises, the first step is to establish a dynamic cybersecurity framework that can adapt to new threats and technological advancements.
Cyber threats are constantly evolving, so organizations must have flexible frameworks that allow for quick iterations and the integration of new tools and policies as needed. This adaptability is essential for maintaining an effective defense in an increasingly complex threat landscape.
Next, routine processes should be enacted across all platforms and devices, which are critical to maintaining security (i.e., patching and system updates are classic issues that still cause problems). Automated systems can help ensure that updates are applied consistently, keeping the organization’s digital infrastructure secure and up to date. This proactive approach closes security gaps that could otherwise be exploited.
Additionally, continuous security testing is essential for identifying weaknesses early. Regular penetration testing, vulnerability scans, and security audits allow businesses to pinpoint and address potential vulnerabilities before they are exploited.
Finally, real-time monitoring systems, enhanced by AI and data analytics, allow organizations to detect potential risks and predict future attack patterns, which enables faster response times and reduces the potential impact of cyberattacks.
Infuse Cyber Awareness Across the Organization
To build cyber awareness across the enterprise, leaders must establish a comprehensive cybersecurity policy that clearly outlines security protocols and expectations. This policy, or “north star,” should be accessible to everyone in the company, ensuring that cybersecurity is recognized as a shared responsibility.
Cybersecurity training should also be embedded in the onboarding process for new employees. This ensures that from day one, employees are equipped with the knowledge
to protect against threats like phishing, identity theft, and data breaches.
Additionally, regular, ongoing training is equally critical, as cyber threats are continuously evolving. Employees should be kept up to date on the latest threats and defenses through interactive workshops or online modules, ensuring they remain vigilant and prepared for new risks.
Lastly, executives should foster a culture of cyber awareness by integrating security into daily operations and communications. Using regular team meetings, internal newsletters, and leadership messages can encourage open conversations about cyber risks. Continuous evaluation of the program ensures that it evolves alongside emerging threats, maintaining its effectiveness over time.
Get Serious About Cybersecurity Budgeting
Finally, by regularly evaluating the effectiveness of their cybersecurity tools and policies, companies can ensure that their spending is delivering ROI. Regular reviews and adjustments to the budget can also ensure that the cybersecurity strategy evolves to meet new challenges, creating a flexible and effective financial plan for cybersecurity.
Take Five
4%
In the face of mounting cyber threats and challenges, it is not just the technology, but the strategy that sets apart those who thrive from those who falter. Companies that weave resilience into their very DNA through risk transparency, continuous adaptation, diversified vendor strategies, and rigorous budgeting—are best positioned to overcome the looming threats.
Percentage of their annual revenue that companies can be fined for violating GDPR regulations, already imposed can on major corporations like Meta.
Creating an effective cybersecurity budget requires executives to assess the unique cybersecurity needs across their organization and identify specific threats and vulnerabilities each department or business unit faces—from protecting intellectual property to safeguarding customer data.
A one-size-fits-all approach to cybersecurity budgeting is inefficient; by understanding the distinct risks faced by different areas of the organization, executives can ensure that the budget is distributed appropriately.
Another key step is adopting a riskbased budgeting approach. Cybersecurity investments should be proportionate to the financial and operational risks the organization faces. Critical assets, such as customer data or high-value intellectual property, should receive a larger share of the budget to ensure they are adequately protected. This strategy helps avoid overspending on low-risk areas while ensuring that the most vulnerable parts of the organization are fully secured.
Simply put, it’s not enough to simply build walls—businesses must craft networks of trust, transparency, and readiness across their entire ecosystem. By making cybersecurity a collective effort that spans departments, supply chains, and even regulatory frameworks, they can stay ahead of the attackers. Yet, it requires continuous attention, and that’s where many fall short. Executives who view cybersecurity as a onetime checkbox will be left scrambling in the wake of the next breach. Those who adapt, iterate, and invest in long-term resilience will not only weather the storm they’ll set the standard for how to do business in the digital age. The clock is ticking, and the future belongs to the prepared. IQ
Information security is a foundational concern that should be baked into the DNA of every enterprise around the globe—but what will be required of those working in cyber security over the next five years? To better anticipate those needs and challenges, IQ spoke with Bo Falk, regional head of information security (APAC) at ISS A/S, a leading facility management services company founded in Copenhagen, Denmark. Prior to his current role, Mr. Falk served as global head of business information security and business information security officer at ISS A/S. Additionally, Mr. Falk holds a cybersecurity certification from the University of Cambridge’s Judge Business School.
BO FALK
Regional Head of Information Security ISS A/S
IQ: What are the top challenges executives and enterprises within the cybersecurity industry must contend with over the next five years, and why?
Mr. Falk: The biggest challenge is the sheer pace of change. One day everything seems stable, and the next day, new technologies like quantum computing and AI are introduced, fundamentally altering the landscape. As a business, we need to be able to adapt quickly to these shifts and remain flexible in our approach
to meet market demands. With this rapid change comes the challenge of keeping up. For example, when AI was first introduced, a flood of so-called experts emerged overnight, providing sometimes conflicting information or advice. This highlights how critical it is to quickly and accurately build an understanding of these technologies within our organizations, and how they will impact or change your risk landscape.
The pace of change is pushing businesses to innovate, but we must ensure we have the necessary infrastructure and security
controls in place. The business side is eager to implement the latest and greatest, so we need the agility to support these initiatives securely. A “plug and play” architecture and security model is becoming essential, allowing us to swiftly adapt to the businesses demands without compromising safety and security.
A big part of my role is helping the business understand that security is more than just technology—it’s a strategic component of business. Information security must align with business requirements, not hinder them. It’s about showing how security supports the business as an enabler of business success.
IQ: Do you have a sense of how companies and leaders in the cybersecurity space are currently adapting their strategies to manage and mitigate these risks?
Mr. Falk: There’s definitely a shift in mentality. Historically, information security was often an afterthought, primarily driven by compliance. But we’re seeing businesses that adopt security early on realizing that they can lower costs in the long run. I’m now being included much earlier in the process— right from the ideation phase—which allows me to shape security from the outset.
Think of it like building a house: if you wait until the walls and floors are up before planning the electrical wiring or plumbing, it becomes much more difficult, complicated, and expensive to retrofit everything. The same applies to cybersecurity. When security is integrated early, it’s more efficient, cost effective, and less disruptive. We can’t afford to implement security last minute or rush the process. It needs to be embedded from the start to be truly effective and cost effective.
IQ: Despite the challenges, what are the most promising opportunities for growth within the cybersecurity sector over the next five years? Is there a potential game-changer?
Mr. Falk: One of the biggest opportunities lies in the alignment between business and
security. Fifteen years ago, we were often seen as the “no” department, the ones who slowed things down. But today, there is a shift to that perception, bringing forward our value proposition as trusted, secure partners for our clients. Our reputation is increasingly tied to how well we handle security and resilience, and that’s a powerful differentiator. By investing in information security, we can actually help businesses grow their capabilities while safeguarding their operations.
Building and maintaining trust and a brands reputation through security. The real game-changer here is leveraging security as a core value proposition, making it a business enabler rather than just a cost center. The World Economic Forum has noted that many executives now see information security as a competitive advantage, not just a necessary expense.
For clients, trust and reputation are everything. If we can demonstrate that security is one of our strengths, it becomes a feather in our cap—something we can actively sell and build on in the market.
IQ : What attributes will be required of leaders and executives in cybersecurity to ensure their organizations survive and thrive over the next five years?
Mr. Falk: The most impactful attribute for leaders is the ability to champion information security. Executives need to understand cybersecurity at a strategic level—its objectives and the long-term benefits it brings to the organization. They must communicate the importance of security, as people naturally follow the example set by their leaders. If executives aren’t comfortable discussing cybersecurity, they won’t inspire confidence in their teams or within the organization.
Leaders need a foundation of knowledge, enabling them to lead effectively and share their vision with others. Passion is infectious, so we need to be able to speak about information security with confidence and passion.
Leaders must bridge that gap, translating technical cybersecurity concepts into clear, actionable insights for broader strategic decisions. This not only improves internal understanding but ensures cybersecurity becomes embedded in the organization’s overall growth strategy.
IQ: Lastly, how critical is maintaining trust in the cybersecurity industry, and what proactive steps should executives take to ensure they protect their brand’s reputation and financial stability?
Bo Falk: One of the most important aspects of information security is trust. We build, hold, and maintain trust in our business, and that trust is fragile. An incident can easily tarnish a brand, whether you’re in B2B or B2C. Once people lose trust in your brand, it’s incredibly difficult to regain. No executive wants to be at the helm when things go wrong—it’s always easier to invest in prevention than recovery.
If trust is lost due to a cybersecurity failure, not only will it impact the company’s reputation, but it could also have serious financial consequences, like a drop in share price. Businesses have suffered 10% to 20% drops in share prices overnight, due to poor information security response and practices.
My advice is to not wait for something to go wrong before taking action. Instead, put in the work now, invest in proactive security measures, and safeguard that trust. Doing so will save you from greater losses down the line, both in reputation and in finances. IQ
“When security is integrated early, it’s more efficient, cost effective, and less disruptive. We can’t afford to implement security last minute or rush the process. It needs to be embedded from the start to be truly effective and cost effective.”
—Bo Falk Regional Head of Information Security, ISS A/S
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