Technology Translator:Q&A with Digital Strategist Anastassia Lauterbach

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With advanced degrees in linguistics and psychology, Anastassia Lauterbach once planned to be a professor. Thanks to her aptitude for learning the language of machines, however, she became a top international technology strategist for companies including Qualcomm, Deutsche Telekom and DaimlerChrysler.

Raised in Russia and based in Germany, Lauterbach recently co-authored The Artificial Intelligence Imperative: A Practical Roadmap for Business (Praeger, 2018); The Law of Artificial Intelligence and Smart Machines (American Bar Association, 2019); and a German volume on China’s social, economic and political development. She serves on public company boards around the world, including easyJet plc and Wirecard AG, as well as several technology advisory boards. Lauterbach has not lost her passion for education, however. As founder and CEO of 1AU-Ventures, she now helps directors and executives come up to speed on pressing issues such as cybersecurity, artificial intelligence (AI) and the future of business. This October, she will also start teaching AI at the new Digital University in Potsdam.

Lauterbach recently spoke with RRA Journal about the need for increased digital literacy on boards in the face of rapidly changing business environments.

What has your journey with technology been like?

My first experience was when I was helping DaimlerChrysler’s financial services arm streamline operations in EMEA. Streamlining operations was actually about streamlining IT. The market-facing functions were very different in each country, but the backbone of operations—the credit risk processing groups—were more or less the same. This is how I started to look at technology as a tool to enable strategic advantages in terms of cost, efficiency and time to market.

From Daimler, I was hired into Deutsche Telekom to be the chief strategy officer for mobile operations. My school in Russia specialized in physics, so for me it was very easy to understand how radio technology works.

From Deutsche Telekom, I was hired into Qualcomm, in the semiconductor industry, to help them grow business in Eastern Europe. From my work in the mobile ecosystem, I knew all the operators and retailers in Europe who were selling end products like smartphones and tablets. Once you understand the technology in an ecosystem, you can help all the partners within it. For example, certain semiconductors enable you to be more energy efficient, saving battery life in your smartphone.

You work with boards all around the world in your current role as a director and technology advisor. In general, where do most board members stand when it comes to digital literacy, and does it vary by region?

Digital literacy is a global theme, and we absolutely need more of it everywhere. Everyone in a boardroom can read and understand the balance sheet. But when someone starts talking about open source, everyone is out of their comfort zone, and it should not be like that.

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Some people are uncomfortable because they think technology is something difficult. They forget that technology rarely exists for its own sake. Technology exists as a tool to enable certain things in your business. It’s like finance is an enabler to lock in your organic growth or execute a merger. It’s quite advantageous to be able to use this tool even if you do not have a computer science degree.

When it comes to cybersecurity, for example, it’s not about what type of code there is or what type of virus attack might next occur. For boards, it’s about structuring the problem: understanding the crown jewels in terms of data assets. It’s understanding the infrastructure where those crown jewels are sitting and the types of traps that might exist in connection with protecting those crown jewels.

How can boards improve this situation?

My first piece of advice would be to get yourself at least one board director with digital expertise. Data is becoming such a huge asset for companies, and it is influencing valuations and future cash flows. With all of this, you must have digital experts in your boardroom, and it’s even better to have two. I would recommend putting a digital director on the nomination committee as well, because that committee shapes the face of the board for the future.

Who is an ideal digital director, in your opinion? What types of experiences or skills do they bring?

There is no such thing as a single digital profile. If you are in retail, you need technologists who are skilled in understanding user experience and analytics; if you are in transportation, you might need people who understand census and data models. A board needs to understand what type of subject specialist is required to deliver the best strategic advice to management.

Going beyond basic digital literacy, what else do boards need to understand about technology?

It’s all about growth. Growth has to be on every board’s agenda. Growth quite often is connected with whether a company can make use of technology to grow outside of its physical footprint, to deliver services and products throughout platforms, to be in partnerships within the ecosystem and to deliver the best experiences to its customers. The other side of the coin is efficiency: So, can you use your data to reduce costs as an agile organization? If board members don’t have this mindset, they might not be able to add value.

Board directors should challenge their executive leadership teams to answer two questions. The first is, “How do you use technology to deliver a more agile and leaner cost base?” And then, “How do you leverage technology to deliver better revenue growth?” If you continuously ask those questions when discussing financial performance, you are on your way to becoming a more technology-literate organization.

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What about the human capital implications of increased technology? Do you see this as a board issue?

We are living in the age of nascent artificial intelligence, and we need people capable of training machines. So we need new programs and new ways of thinking about how to re-engage people who might not be needed in their former jobs and teach them how to train computer systems. From a board perspective, what is quite important is to shape very concrete partnerships where board members go into the communities and demonstrate leadership in terms of education or other programs. For my part, I teach artificial intelligence and data in a local school, about seven to 10 lectures per year. Those local communities are the constituency of the company, and they deliver employees to the company. This is how board members ultimately listen to prospective customers and prospective partners and future or present employees of the business.

Looking ahead, what are some of the big themes you see emerging over the next 10 to 15 years?

Our economies are currently growing thanks to the big-tech data monopolies like Alphabet, Facebook, Amazon, Microsoft and Chinese competitors like Tencent, Alibaba and Baidu. They have the infrastructure for machine learning, they have data, they have their own services and they optimize their own infrastructure, including semiconductors to deliver on better data models. And then they execute on end products and services powered by data.

In 10 to 15 years, I believe there will be regulations around those monopolies to limit their power. There is also a nascent movement in the tech community to build new, decentralized infrastructure. If this movement is successful, it will enable businesses to build their own data marketplaces on a decentralized platform. In this scenario, the blockchain infrastructure will be leveraged with new protocols, and certain cyber vulnerability issues will be mitigated, if not completely solved.

What I don’t see yet is a discussion on sustainability. People believe that environment doesn’t concern technology. And, of course, it does. Training a deep learning model for four hours requires as much energy as one person’s car will use for the whole year. I can only hope that investors will challenge boards and management to think differently about what they do.

For me, everything has to do with everything else. The best boards understand it, and they are capable of delivering on a vision and then implementing a practical program to participate actively in shaping new futures for the businesses they represent.

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State of Digital In our 2019 Digital Pulse survey, Russell Reynolds Associates asked more than 1,500 executives around the world about how technology is transforming their organizations. What we learned is that technology is a priority, but many gaps remain between aspiration and execution.

Source: Russell Reynolds Associates 2019 Digital Pulse Survey, n=1519

About half of today’s boards discuss technology on a frequent basis

38%“most meetings”

16%“every meeting”

41%“occasionalmeetings”

5% “Never”

Top technology topics on board agendas

70% IT Strategy

66% IT Infrastructure and operations

64% Data analytics

62% Cybersecurity

40% AI

Blockchain11%

Digital expertise on boards

About half (51%) say their organization’s board includes one or more digital or technology experts. However, 49% have none of the above.

? ? ? ?

CIO CTOData

AnalyticsLeader

CISO

32% 24% 11% 4%

Potential vs. reality

58% of executives believe the board of directors is critical to the success of digital initiatives and transformation.

Yet only 27% believe the board of directors is highly knowledgeable about digital/technology.

27%

58%

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