Connect the Dots: Breaches are Bad for Business

Posted: Thursday, February 19, 2015 12:00 pm

By Benjamin Akande

Early in February, Anthem, the nation’s second-largest health insurance provider, disclosed that hackers had compromised its cyber security system, possibly gaining access to the names, social security numbers, birthdays, addresses and employment data of as many as 80 million customers.

The Anthem announcement was yet another reminder of the global vulnerability of cyber security systems.

A few months earlier, retail giant Target reported that hackers had attacked its system. Target was just one of many companies battered by cyber attacks last year. The U.S. Secret Service reported that hackers hit the in-store cash register systems at several large companies, including Target, Supervalu and UPS Stores. The Department of Homeland Security followed up with an advisory warning that the attacks were particularly pervasive. The Department added that the hackers stole data of millions of credit and debit cards from U.S. consumers. The companies apparently were not aware of the thefts at the time.

Authorities say the hackers sell the payment information of millions of U.S. consumers overseas on the black market. In the majority of the instances, these companies — and the consumers — are not aware of these breaches.

Cyber attacks are not confined to corporate America. Several municipalities around the country, including Columbia, Missouri, as well as federal government agencies such as the Pentagon have been casualties of these attacks.

As for Anthem, many observers see the recent attack as a wake-up call for the health-care industry and for the corporate world.

But in this high-tech age, cyber security breaches are a potential Achilles heel for everyone—businesses, nonprofits and government agencies. In addition to posing a significant risk to the bottom line of businesses, they also present a huge global security risk. The problems with cybersecurity only are likely to get worse. Forbes predicts that 2015 will be a big year for cyber attacks — just like it was in 2014 and 2013.

Like many farsighted universities around the country, Webster University has been taking steps to make the world more secure from hackers.

In the past year, the Walker school has declared its intentions to be a leader in preparing the next generation of cyber warriors to prevent and engage via a new master’s degree in cybersecurity management. The degree prepares students for positions in the public and private sectors, and for running or protecting computer systems, information, networks, IT infrastructure and communication networks.

Like most of our degrees at the Walker school, the MS in cybersecurity management is market-relevant. It is designed to teach the students how to solve and prevent problems for their future employers. Students learn how to use their practical and theoretical knowledge of cybersecurity to analyze real-world problems.

Such skills are desperately needed in today’s world.

Vast multi-national criminal networks continue to make huge profits from information stolen from large corporations and their vendors. The world’s leading law enforcement agencies, such as the FBI, Scotland Yard, the U.S. Secret Service and Interpol, have taken great strides in trying to keep up with the criminals or stay ahead of them. But the criminals are becoming increasingly sophisticated and have invested considerable resources into staying ahead of law enforcement. Furthermore, they now have greater expertise and more access to purchasing tools online to subvert cybersecurity systems of large corporations.

The porousness of cybersecurity systems also poses a threat to national and global security. Hackers have targeted both sides of the Russia-Ukraine conflict and Israeli military operations in Gaza.

Helping find solutions to such critical challenges is critical to the mission of any university. It makes institutions of higher education relevant and enhances their credibility with the general public. In this new and increasingly uncertain century, universities that fail to seize these opportunities to demonstrate relevance are doomed to fail.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots: Ones to Watch

Posted: Thursday, January 22, 2015 12:00 pm

By Benjamin Akande

St. Louis increasingly is being recognized as a Mecca for enterprising and innovative business owners. In recent months, major news outlets, including The Wall Street JournalForbes, TechCrunch and MSNBC have all hailed the Gateway City as the destination for startups.

Indeed, the number of companies opening shop or raising capital to get off the ground has almost doubled in the last two years, according to the St. Louis Regional Chamber of Commerce. This is due, in large part, to a supportive environment that offers plenty of access to mentoring, networking, Arch grants and new venture funds.

The Ewing Marion Kaufmann Foundation reports that Arch grants played a key role in creating a community of entrepreneurs. These entrepreneurs received small grants and also were connected with local support organizations. As of July 2014, the report notes that 20 recipients of these grants had created 104 jobs, generated more than $2.8 million in revenue, and raised more than $17 million in investment.

This is just a taste of many, many wonderful things to come this year and in the coming years in the commercial life of the St. Louis metropolitan area.

The following is a handful of budding companies that exemplify the prosperous years ahead for the St. Louis region and ought to be watched closely in 2015:

• This promises to be an exciting year for BacterioScan, a locally based company that offers microbiology diagnostic systems for rapidly detecting infection and antibiotic susceptibility and resistance. The company plans to roll out its first clinical application of rapid screening of urine specimens for bacterial urinary tract infection (UTI) during the second quarter of this year. This clinical, global market segment is booming, and is projected to exceed $10 billion by 2017.

Adoption of this new technology will reduce costs and delay in diagnosis, and is expected to reduce the unwarranted use of antibiotics in treatment of UTI. Leading research organizations such as the U.S. Centers for Disease Control, St. Jude’s Children’s Research Hospital, UCLA Medical School, and the U.S. Army Medical Institute have begun trials to use the company’s platform for rapid measurement of antimicrobial resistance and susceptibility. It is expected that this will provide valuable guidance in diagnosing bacterial infections and other related diseases. It also will help address the growing challenge of drug-resistant pathogens.

• Total Hockey & Lacrosse, a one-stop store and online retailer specializing in hockey and lacrosse sports markets, is raising capital in the private markets to propel its next round of rapid growth. In recent years, the St. Louis-based company has expanded to 24 stores in seven key markets, including Detroit, Chicago, Philadelphia, Washington, D.C., and Minneapolis. Annual revenues currently hover at about $60 million. With its new infusion of capital, Total Hockey plans to establish 85 stores in 20 key U.S. markets by the year 2020.

Like BacterioScan, Total Hockey & Lacrosse has been smart about developing its playbook for strategic growth. The future looks bright for this specialty retailer. Participation in lacrosse has risen steadily in recent years: Almost 750,000 young people played organized lacrosse in 2013, according to U.S. Lacrosse. And USA Hockey reports that a record number of people now play hockey across the country, increasing by 16 percent over a 10-year period.

• Last fall, CIC@4240, a company that provides flexible working space for startups and emerging businesses, opened its first location outside Massachusetts in St. Louis’ innovation district. CIC@4240 was attracted to the Gateway City for St. Louis' reputation as a destination for entrepreneurs. It appears the company’s instincts were spot on. Just weeks after the company opened its 32,000-square-foot building on Duncan Avenue, it had already had 20 tenants, including Washington University, Boeing Ventures Group and Husch Blackwell. Company officials are confident that all 70 spaces will be occupied within 12 to 18 months of opening.

• T-REX is another critical player in the St. Louis ecosystem. The co-working space and technology incubator, which provides startup entrepreneurs with affordable space and offers the community useful programming, now occupies five floors of The Lammert Building on Washington Avenue. T-REX currently has more than 100 tenants, a number that continues to rise steadily.

• Cultivation Capital is another critical element in the region providing significant funding support to financial services and technology startups. Building on a $20-million investment fund initiated in 2012, it plans to double that through a newly created fund targeting 20 additional startup companies. One of the most active seed venture capital firms in the Midwest, Cultivation Capital provides a significant resource in keeping St. Louis vibrant as the destination for startups.

The future looks bright for all of these companies –and for our region.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots: The Year that Was

Posted: Friday, December 26, 2014 12:00 pm | Updated: 9:39 am, Mon Dec 29, 2014.

By Benjamin Akande

From weeks of unrest in Ferguson and the acquisition of a St. Louis-based life sciences and high technology company by a German pharmaceutical giant, to the economic impact of the Cardinals’ fabulous post-season run and the launch of two major business incubators providing start-up support, 2014 was a big news year for the St. Louis region.

Many of the stories had a significant economic bearing – for better or worse. Here is my ranking of the year’s biggest stories in the region.

1. Ferguson

This is probably No. 1 on the list of most St. Louisans. Not since the Rodney King verdict in 1992 has there been such outrage over perceived police brutality. In the weeks following Michael Brown’s fatal shooting, rioters attacked and looted businesses in Ferguson as well as in nearby communities. A second wave of rioting followed Thanksgiving week when the prosecutor announced the grand jury’s decision. The riots battered the region’s image and have sparked protests, even boycotts and heated discussions nationally about race, and the antagonism between law enforcement officials and African-Americans.

2. The Cardinals and the Post-Season

Who says sports don't matter? According to the St. Louis Regional Chamber of Commerce, more than 3.4 million people trooped to Busch Stadium to watch the Cardinals during the 2014 season, and approximately 6 million people visited Ballpark Village. The Cardinals had a fantastic run, winning 90 games, tying for fifth-most wins in the majors, and making it all the way to the National League Championship Series before being eliminated by the San Francisco Giants. The winning streak was apparently good for business. It's estimated the Cardinals had an economic impact of $338 million on the region.

3. Two New Major Business Incubators

T-Rex, the joint effort between city, state and county business development resources, (Downtown CID, SLDC, St. Louis Economic Development Partnership, the St. Louis Regional Chamber and the Technology Entrepreneurship Center) partnered to acquire and staff the former Lammert building. This collaboration advances the region’s capacity to incubate and support high-growth, technology-focused businesses. This facility current supports the efforts of 101 different technology companies in a single building.

CIC Cambridge selected St. Louis Cortex as home for its second location after extensive global search for innovation communities. The CIC believes start-ups make the world much better. CIC helps them by setting up and managing their office so the start-up can focus on their business. The first center in Cambridge, Massachusetts, has helped more than 1,400 companies. These companies have attracted more than $1.8 billion of venture capital. CIC’s choice to open its second location in the Cortex development creates another home for entrepreneurs in St. Louis. It includes more than 40 start-ups, as well as the innovation centers for Boeing and Nestle Purina.

As the result of these openings and other community resources, no other community in the country can offer more resources to early stage companies.

4. Sigma-Aldrich Joins the Merck Family

Merck, the German giant pharmaceutical and chemical company, acquired St. Louis-based Sigma-Aldrich, one of the area’s largest and most prominent corporations, for $17 billion in cash last September. The deal is expected to expand the reach of Merck’s chemical unit, EMD Millipore, and improve its earning power.

5. The Region’s Most Powerful Woman

For the eighth year in a row, Pam Nicholson made Fortune’s list of Most Powerful Women in Business. Nicholson, the first non-family member to serve as CEO of Enterprise, was No. 22 on the list. Her success at a high-profile family business has inspired many women to pursue professional careers in the St. Louis area.

It's obvious that 2014 was a year of action milestones and activism. Let's ensure that 2015 is a year of transformation, especially as we celebrate the 50th anniversary of the Gateway Arch. Onward, forward!

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots: Give Small Business Big Gains

Posted: Thursday, November 20, 2014 12:00 pm | Updated: 12:30 pm, Thu Nov 20, 2014.

By Dr. Benjamin Akande

For The Alpine Shop, a retail establishment that specializes in backpacking and camping gear, Small Business Saturday, or the Saturday after Thanksgiving, has become the official kick-off day for holiday shopping. To entice customers, The Alpine Shop, which has stores in Kirkwood, Chesterfield and O’Fallon, Illinois, works with suppliers to drop prices on popular brands by as much as 30 percent.

Traditionally, many big suppliers wait until the week before Christmas to drop prices, but The Alpine Shop’s strategy has paid off handsomely. In recent years, the chain has doubled its sales and attracted twice as many customers during Small Business Days as on Black Fridays.

Millions of small businesses around the country are discovering that Small Business Saturday is a great way to kick-off the holiday shopping season. It also is a wonderful way for customers to support local small business and help boost their city’s economy.

In 2012, consumers spent $5.5 billion at local small businesses and restaurants on Small Business Saturday, according to a survey conducted by American Express and the National Federation of Independent business, a Washington, D.C., trade association.

When you shop at a small business, there’s a good chance you’re supporting a neighbor, friend, church member or old schoolmate. There’s also a good chance you’re helping create job opportunities in your community. In effect, by spending with a local business, you are more likely to have an immediate and meaningful impact on your local community than if you spend with a big-box, multi-national retailer that’s susceptible to the whims of Wall Street.

Small businesses, defined by the U.S. Small Business Administration (SBA) as enterprises with fewer than 500 employees, are the engine of our nation’s economy. They are the biggest job-creators and account for half of the private sector GDP. According to the SBA, in 2011, there were 28.2 million small businesses in the U.S. Small businesses accounted for 63 percent of net new jobs created between 1993 and 2013, and 60 percent of new jobs created after the recession, according to the SBA.

This year, several business districts in the Greater St. Louis region are hosting an array of events to promote small businesses in their communities prior to Small Business Days and throughout the holiday season. On Nov. 29, the City of St. Louis will host a St. Louis Holiday Magic festival, an event that will feature a variety of entertainment and shopping. Several exhibitors will be in attendance, including vendors who will offer gift ideas.

Maplewood and Brentwood have posted Small Business Saturday events on their websites. At many of these events, the downtown boutiques and restaurants of these cities will offer gifts, drawings, treats and discounts.

But supporting local businesses shouldn’t just be confined to festive time, even though most businesses make the bulk of their revenues during that period; it ought to be a year-round endeavor.

For this forthcoming Small Business Day, local small businesses should endeavor to draw customers in with head-turning decorations and aggressive online media promotion. Once inside, they should cultivate them by offering great products and service, coupons, refreshments and opportunities to win gifts. They also should strive to engage customers year-round.

This way, the customer, small business and the community win.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots: Ebola & Economic Uncertainty

Posted: Thursday, October 23, 2014 12:00 pm

By Benjamin Akande, Ph.D.

To date, the Ebola virus has infected approximately 9,000 people and killed at least 4,500 in several West African countries. The numbers continue to rise exponentially. The Centers for Disease Control says in a worst-case scenario, the infected numbers could balloon to 1.4 million by mid-January.

The limited spread of the outbreak to Dallas—where a Liberian man died and two nurses have been infected by the virus—and to Spain offer a glimpse of the potential of this epidemic to cause grave health risks and economic uncertainty to the entire globe.

In the countries directly impacted by this outbreak–Liberia, Sierra Leone, Guinea and, to a much lesser extent, Nigeria–fear of the disease has interrupted the daily routine of millions of people, truncated the school year, and kept many from church and the local markets.

The second-biggest casualty of this epidemic has been the economic impact. In recent years, many African countries have experienced unprecedented economic growth. Indeed, eight of the world’s 15 fastest-growing economies are in Africa. They include Nigeria, which is the world’s third fastest-growing economy. Many other African countries, including Liberia and Sierra Leone, have made significant economic progress in recent years and attracted considerable overseas investment only to see all of the gains wiped out by the Ebola epidemic.

The agricultural sector, which accounts for 40 percent of the economic output in Liberia and Sierra Leone, and 25 percent of Guinea’s, has been hit particularly hard. The drop in production has been triggered, in large part, by the Ebola-related deaths of many farmers, which has effectively led to the loss of the planting season.

These events could ultimately hit closer to home in the St. Louis region. Ivory Coast, the world’s largest producer of cocoa, has shut its borders to Liberia and Guinea, countries that are home to a large percentage of the migrant workers who pick cocoa. This labor shortage could delay cocoa exports and lead to a spike in cocoa prices, including the price of products made by local company ConAgra, formerly Ralcorp. Monsanto, which is engaged in limited trading of seeds and crop protection products in West Africa, also is paying close attention to developments in the sub-region.

Nigeria, one of the leading suppliers of oil to the United States, is a key reason why gas prices in the U.S. have remained relatively low over the years. In the face of the Ebola crisis, the government took swift actions in monitoring potential cases and has since been praised for its efforts in holding down the outbreak. The country also has experienced a rise in e-commerce as companies do their part to stock and deliver hygiene products, which help prevent the spread of Ebola.

In the early stages, the epidemic was largely portrayed as an African crisis; but as the struggle to contain what is potentially the biggest health crisis in modern times continues, one thing is increasingly clear: We all have a stake in this fight. Ebola is a global catastrophe that requires all of us to pay attention and do what is necessary to stop the spread.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.