The Future of Security is Biometric
With nearly eight billion people on the planet — and more than half of them on internet — verifying who’s who is one of the great technological challenges of our time. To meet this challenge, Biometric security is rising to the occasion, buoyed by technological advancements and user-friendly experiences.
Modern biometrics can seem like science fiction, but the concept is far from new. Sir Francis Galton, cousin of the famous Charles Darwin, used an analysis of over 8,000 fingerprint samples to publish what would become the first fingerprint classification system in history.
Building on the work of Sir Francis Galton, the Metropolitan Police of London used shapes like whorls and loops identify individuals based on fingerprint patterns at the beginning of the 20th century. The resulting Henry Classification System is so effective, it’s still the foundation for the most common form of biometrics used around the world today – the Automated Fingerprint Identification System (AFIS).
Today’s infographic, from Computer Science Zone, covers biometric security from a number of angles, from current use cases to the ways people are outsmarting existing security measures.
Biometric Security 101
There are three possible ways of proving one’s identity:
- Using something you possess (e.g. keys, badge, documentation)
- Using something you know (e.g. password, code, security question)
- Using an intrinsic identifying feature (e.g. fingerprint, face)
Biometrics are an example of the third type, using biological measurements to identify individuals. Typically, these measurements are derived from physical characteristics, such as irises, fingerprints, facial features, or even a person’s voice.
When used in a security application, biometrics are theoretically more secure than traditional passwords since detailed physical characteristics are unique to each person.
By now, we’re all well aware that solely using text passwords leaves our information at risk. Even in 2019, the top passwords are still “123456” and “password”.
Passwords are still the default method of accessing accounts though, so a process called two-factor authentication was introduced to add a new layer of security. The most common type of two-factor authentication involves sending an email or text message to help ensure that only the rightful owner of an account can log in.
Increasingly though, biometric security measures are replacing one or both of those steps. Apple’s introduction of a fingerprint scanner in the iPhone 5S was a high-profile example of biometrics moving into widely available consumer products. Today, every new smartphone on the market has some sort of biometric feature.
The Internet of Faces
Today, the majority of consumers are now comfortable with using fingerprint recognition to access their device, but they’re still skeptical about facial recognition — only 14% of people prefer using that method to access their device.
Soon, however, they may not have a choice. Consumer technology is bullish on facial recognition, and government entities are happy to come along for the ride. Correctly and efficiently identifying citizens has always proved a struggle for law enforcement, border control, airport security, and other highly regulated systems, so facial recognition is a very appealing option to quickly and cheaply identify people at scale.
One real world example is the Schengen Entry-Exit System, which will use a mix of fingerprint and facial recognition to alleviate security bottlenecks at European airports.
In China, a new rule that went into effect across the country making the submission of facial recognition scans a prerequisite for registering a new SIM card — just one of the ways China is populating its biometric database.
Of course, the trade-off is a loss of privacy as that technology spills over from airport security into public spaces.
According to a recent study, facial recognition accuracy jumped 20x between 2013 and 2018. Just 0.2% of searches, in a database of of over 26 million photos, failed to match the correct image.
Peering into the Digital Reflection
Another aspect of biometric security looks beyond physical features, and instead relies on changes in behavioral patterns to detect fraud or unauthorized access.
Money laundering and fraud cost the global economy upwards of $2 trillion per year, so financial institutions in particular have a big incentive to invest in early fraud detection. To this end, behavioral biometrics is proving to be an effective way of detecting suspicious login attempts earlier and flagging transfers that deviate from expected patterns.
Biometric security in consumer products is still in its early stages, so the technology is far from bulletproof. There have been several examples of fooling systems, from fingerprint cloning to using masks to unlock devices. As with any security measure, there will continue to an arms race between companies and hackers looking to slip past defenses.
Another issue raised by increasing biometric use is in the realm of privacy. Critics of biometrics point out that iris scans and FaceID don’t enjoy the same protection from law enforcement as a traditional password. Because a defendant would have to say something, text passwords fall under the protection of the Fifth Amendment, while biometric locks do not. This is a debate that will continue to rage on as consumer products continue to implement biometrics.
In the meantime, our physical attributes will increasingly become our key to the digital world.
Visualizing the Size of Amazon, the World’s Most Valuable Retailer
Amazon’s valuation has grown by 2,830% over the last decade, and the tech giant is now worth more than the other 9 largest U.S. retailers, combined.
Visualizing the Size of the World’s Most Valuable Retailer
As brick-and-mortar chains teeter in the face of the pandemic, Amazon continues to gain ground.
The retail juggernaut is valued at no less than $1.4 trillion—roughly four times what it was in late 2016 when its market cap hovered around $350 billion. Last year, the Jeff Bezos-led company shipped 2 billion packages around the world.
Today’s infographic shows how Amazon’s market cap alone is bigger than the nine biggest U.S. retailers put together, highlighting the palpable presence of the once modest online bookstore.
The New Normal
COVID-19’s sudden shift has rendered many retail outfits obsolete.
Neiman Marcus, JCPenney, and J.Crew have all filed for bankruptcy as consumer spending has migrated online. This, coupled with heavy debt loads across many retail chains, is only compounding the demise of brick-and-mortar. In fact, one estimate projects that at least 25,000 U.S. stores will fold over the next year.
Still, as safety and supply chain challenges mount—with COVID-19 related costs in the billions—Amazon remains at the top. It surpasses its next closest competitor, Walmart, by $1 trillion in market valuation.
How does Amazon compare to the largest retailers in the U.S.?
|10 Largest Public US Retailers*||Market Value July 1, 2020||Market Value July 1, 2010||Normalized % Change 2010-2020||Retail Revenue|
|The Kroger Co.||$26B||$13B||107%||$118Be|
|Walgreens Boots Alliance||$36B||$26B||38%||$111B|
|The Home Depot||$267B||$47B||466%||$108B|
|Combined value of retailers (without Amazon)||$1,071B|
Source: Deloitte, YCharts
*Largest public US retailers based on their retail revenue as of fiscal years ending through June 30, 2019, e=estimated
With nearly a 39% share of U.S. e-commerce retail sales, Amazon’s market cap has grown 2,830% over the last decade. Its business model, which aggressively pursues market dominance instead of focusing on short-term profits, is one factor behinds the rise.
By the same token, one recent estimate by The Economist pegged Amazon’s retail operating margins at -1% last year. Another analyst has suggested that the company purposefully sells retail goods at a loss.
How Amazon makes up for this operating shortfall is through its cash-generating cloud service, Amazon Web Services (AWS), and through a collection of diversified enterprise-focused services. AWS, with estimated operating margins of 26%, brought in $9.2 billion in profits in 2019—more than half of Amazon’s total.
Amazon’s Basket of Eggs
Unlike many of its retail competitors, Amazon has rapidly diversified its acquisitions since it originated in 1994.
Take the $1.2 billion acquisition of Zoox. Amazon plans to operate self-driving taxi fleets, all of which are designed without steering wheels. It is the company’s third largest since the $13.7 billion acquisition of organic grocer Whole Foods, followed by Zappos.
Accounting for the lion’s share of Amazon-owned physical stores, Whole Foods has 508 stores across the U.S., UK, and Canada. While Amazon doesn’t outline revenues across its physical retail segments—which include Amazon Books stores, Amazon Go stores, and others—physical store sales tipped over $17 billion in 2019.
Meanwhile, Amazon also owns gaming streaming platform Twitch, which it acquired for $970 million in 2017. Currently, Twitch makes up 73% of the streaming market and brought in an estimated $300 million in ad revenues in 2019.
Despite the flood of online orders due to quarantines and social distancing requirements, Amazon’s bottom line has suffered. In the second quarter of 2020 alone, it is expected to rack up $4 billion in pandemic-related costs.
Yet, at the same time, its customer-obsessed business model appears to thrive under current market conditions. As of July 1, its stock price has spiked over 51% year-to-date. On an annualized basis, that’s roughly 100% in returns.
As margins get squeezed and expenses grow, is Amazon’s growth sustainable in the long-term? Or, are the company’s strategic acquisitions and revenue streams providing the catalysts (and cash) for only more short-term success?
10 Types of Innovation: The Art of Discovering a Breakthrough Product
How do companies like Amazon and Apple consistently make game-changing products? Here are 10 types of innovation, and the tactics that lead to big breakthroughs.
The Art of Discovering Breakthrough Products
As venture capitalist Peter Thiel once put it, “competition is for losers”.
It’s inevitable that every company must be out there battling for market share, but you don’t really want to be in a situation where the competition is so stiff that any potential upside is eroded away in the process—―a scenario known as perfect competition in economics.
To avoid perfect competition, companies must strive to build an economic moat that gives them a sustainable competitive advantage over time. While these protective moats can arise from a number of different sources, in today’s information economy they most often arise from the power of innovation.
But where does innovation come from, and is there a universal framework that can be applied to help consistently make big breakthroughs?
The 10 Types of Innovation
In today’s infographic, we showcase the culmination of years of in-depth research from Doblin, an innovation-focused firm now owned by Deloitte.
After examining over 2,000 business innovations throughout history, Doblin uncovered that most breakthroughs don’t necessarily stem from engineering inventions or rare discoveries.
Instead, they observed that innovations can be categorized within a range of 10 distinct dimensions—and anyone can use the resulting strategic framework to analyze the competition, to stress test for product weaknesses, or to find new opportunities for their products.
Here are the 10 types of innovation:
|1.||Profit Model||How you make money|
|2.||Network||Connections with others to create value|
|3.||Structure||Alignment of your talent and assets|
|4.||Process||Signature of superior methods for doing your work|
|5.||Product Performance||Distinguishing features and functionality|
|6.||Product System||Complementary products and services|
|7.||Service||Support and enhancements that surround your offerings|
|8.||Channel||How your offerings are delivered to customers and users|
|9.||Brand||Representation of your offerings and business|
|10.||Customer Engagement||Distinctive interactions you foster|
From Theory to Practice
What does innovation look like in practice?
Let’s see how well-known businesses have leveraged each of these 10 types of innovation in the past, while also diving into the tactics that modern businesses can use to consistently make new product breakthroughs:.
Innovation Types #1-4: “Configuration”
According to Doblin, the first four types of innovation center around the configuration of the company, and all the work that happens “behind the scenes”.
Although innovation types in this category are not directly customer-facing, as you can see in the examples below, they can still have an important impact on the customer experience. How your company and products are organized can have a crucial downstream effect, even enabling innovations in other categories.
Two of the most interesting examples here are Google and McDonald’s. Both companies made internal innovations that empowered their people to make important advancements further on downstream.
In the case of McDonald’s, the franchisee insight that led to the introduction of the Egg McMuffin spearheaded the company’s entire breakfast offering, which now accounts for 25% of revenues. Breakfast is also now the company’s most profitable segment.
Innovation Types #5-6: “Offering”
When most people think of innovation, it’s likely the offering category that comes to mind.
Making improvements to product performance is an obvious but difficult type of innovation, and unless it’s accompanied by a deeply ingrained company culture towards technical innovation, such advancements may only create a temporary advantage against the competition.
This is the part of the reason that Doblin recommends that companies focus on combining multiple areas of innovation together—it creates a much more stable economic moat.
Apple has a reputation for innovation, but the product ecosystem highlighted above is an underappreciated piece of the company’s strategy. By putting thought into the ecosystem of products—and ensuring they work together flawlessly—additional utility is created, while also making it harder for customers to switch away from Apple products.
Innovation Types #7-10: “Experience”
These types of innovation are the most customer-facing, but this also makes them the most subject to interpretation.
While other innovations tend to occur upstream, innovations in experience all get trialed in the hands of customers. For this reason, intense care is needed in rolling out these ideas.
In the early days of the internet, online shipping was precarious at best—but Amazon’s introduction of Amazon Prime and free expedited shipping for all members has been a game-changer for e-commerce.
Executing on such a promise was no small task, but today there are 150 million users of Prime worldwide, including some in metro areas who can get items in as little as two hours.
Making Innovations Happen in Your Organization
How can organizations approach the 10 types of innovation from a more tactical perspective?
One useful resource is Doblin’s free public list of over 100 tactics that correspond with the aforementioned framework.
The one-pager PDF provides a range of typical dimensions for approaching each type of innovation. In essence, these are all different ways you could consider when trying to differentiate your product or service—and at the very least, it provides a useful thought experiment for managers and marketers.
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