JULY/AUGUST 2015

Introducing the

2015 CEO OF THE YEAR

Smart Manufacturing

How CEOs can lead a manufacturing renaissance, p. 48

Derailing Disruption

How to defend your business from startups, p. 22

Economic Development

Which states are winning in the West, p. 42

Leveraging Servitization

Make the most of the technology you already have, p. 51

BOEING’S JIM McNERNEY

sive, are cyber attacks on individu-als. Furthermore, the two are often intertwined, Roderick Jones, CEO of Concentric Advisors, pointed out to CEOs participating in a roundtable discussion held in partnership with PURE Insurance.

“Individuals sitting in their homes are an enormous vulnerability for cor-porations,” he noted. “If someone gets control of a router in a home network, it won’t matter how advanced your corporate VPN is or what security you have in place. There are signs that ex-ecutives sitting in their homes will be the next frontier for infiltrating orga-nizations.” At a time when executives (and their children) are trolling the Internet from smartphones and tab-

UNDERSTANDING AND THWARTING CYBER THREATS

IT’S AN IRONY OF modern life that the very technology that adds convenience and efficiency to our everyday lives also puts us at risk. We now expect to be able to check our email while waiting online for coffee, tap into our company network from a hotel in Beijing and text our colleagues from virtually anywhere, anytime. Ev-ery day, however, brings new evidence that this kind of seamless electronic connectivity comes at a cost.

We’ve all seen the headlines about companies and public institutions—from Target and Sony Pictures to the U.S. government—being victimized by hackers looking to damage, destroy or obtain confidential information. Less widely covered, yet just as perva-

CEO ROUNDTABLE

Frontier Communications’ Maggie Wilderotter urged CEOs to vet their suppliers’ cyber vulnerability

54 / CHIEFEXECUTIVE.NET / SEPTEMBER/OCTOBER 2015

With great connectivity comes great risk—and an imperative to protect critical data and safeguard systems from attack // by Jennifer Pellet

CEO OF THE YEAR

lets in cars, on planes. in local coffee shops and anywhere WiFi is available, that vulnerability also goes far beyond your home PC.

With attacks coming fast and furious and so many points of vul-nerability, the old models of cyberse-curity are no longer enough. “Building walls and expecting them not to get breached doesn’t work anymore,” explained Jones. “Frankly, this is medieval warfare and somebody just invented the cannon.” While strong system security—firewalls, encrypting data, effective anti-virus software and data backup and recovery—remains the first line of defense, it’s no longer enough.

Today, companies and executives must layer additional security strate-gies together to minimize the risk of an attack and/or mitigate the damage should one occur. Here are four points of protection shared by CEOs during the discussion:

Detect and DestroyMany companies take steps to guard against attacks but are ill-equipped to detect those that make it through their defenses. “We have attacks every day,” noted Maggie Wilderotter, executive chairman of Frontier Communications and chair of the U.S.’s National Tele-communications Security Advisory Board. “One of the big changes we’re

“There are cost-effective tools that will continually monitor activity and alert you if suppliers that you welcome into your network take out data they shouldn’t.”

—ROSS BUCHMUELLER CEO, PURE INSURANCE

seeing and that we put in place at our company has been a lot more forensics and detection so that we’re not just waiting for a big event [to come to light]; we’re looking for it all the time.”

People ProtectionEmployees are often a company’s weakest link from a cyber-threat per-spective—and one of the hardest areas to address. Today’s workers expect to be able to check their personal email and use their own devices in the work-place, as well as to bring work home on laptops or transmit it through file-sharing services like Dropbox.

Plus, rules restricting such prac-tices could well stifle the culture of creativity and collaboration a compa-ny hopes to foster. “This notion of con-stant vigilance is hard,” noted Brian Fetherstonhaugh, CEO of the digital marketing company OgilvyOne. “Our culture is very much about freedom of expression, a safe place where you can say anything.”

Still, employees must be educated about cyber vulnerability and incent-ed to prevent it, agreed CEOs. “The

last line of the defense is making sure your employees are thinking about this on a 24/7 basis, says Tom Siering, CEO of Two Harbors Investment. “So when our people thwart a threat, we make a big deal out of it—giving out little notes and calling them heroes.”

“When I was a small company with five people, it was easy to simply keep computers with sensitive information offline,” noted Anil Diwan, founder of NanoViricides, which develops appli-cations for nanomedicine technology. “Now we set up VPNs and do employ-ee training to make sure they don’t put technical matter into emails, but it’s a continual battle.”

More than half of roundtable participants said their companies train and test employees—including senior staff—on detecting “phishing” emails designed to lure recipients into opening their cyber gates for intruders. “We publish the results if you fail,” said Wilderotter. “We found that makes people take it seriously.” At some companies, the bonuses of employees who fail a phishing test are docked by as much as 5 percent.

SEPTEMBER/OCTOBER 2015 / CHIEFEXECUTIVE.NET / 55

■ ROSS BUCHMUELLERCEO, PURE Group of Insurance Companies■ MARSHALL COOPERCEO, Chief Executive Group ■ WAYNE COOPERExecutive Chairman, Chief Executive Group■ CRAIG COYCEO, Command Security ■ ANIL DIWANChairman, NanoViricides

CEO Roundtable Participants

■ TOM FARLEYPresident, New York Stock Exchange■ BRIAN FETHERSTONHAUGHCEO, OgilvyOne Worldwide■ RODERICK JONESCEO, Concentric Advisors■ DAVID LORINGChairman, GTL Solutions for America ■ MIKE MACDONALD CEO, Medifast

■ DR. RANDELL MILLSCEO, BlackLight Power■ THOMAS SIERINGCEO, Two Harbors Investment■ LEONARD TANNENBAUMCEO, Fifth Street Asset Management■ MAGGIE WILDEROTTERExecutive Chairman, Frontier Communications

Safeguard Your Supply ChainAll the companies you share informa-tion with to boost efficiency are now points of vulnerability—and there’s a decent chance that not all of them are practicing good cybersecurity hygiene. One way to vet suppliers is to look for National Information Security Technology (NIST) certification, which indicates that a given company has met the data management security standards required for certification.

“There are also cost-effective tools that will continually monitor activity and alert you if suppliers that you wel-

come into your network take out data they shouldn’t,” explained Ross Bu-chmueller, CEO of PURE Insurance. “The earlier you detect incidents the more difficult it will be for [hackers] to accomplish their goal.”

It’s PersonalAs you put protection in place, don’t neglect the homefront. The approach to security at home is similar to that

used in an office environment, noted Jones, who urged CEOs to make sure they have guest networks for visitors and educate family members on use of social media and public WiFi. “We typically run an intrusion-detection system on home networks, so we can detect and shut down attacks. We also look at social media settings, which can be very complicated.”

Finally—and perhaps most im-

portantly—business leaders and their companies must strive to stay current as cyber crime evolves. The bad guys are always changing the playbook,” noted Siering. “What they’re trying to-day will be different from what they’ll do six months from now. Protection needs to be an ongoing process.”

“The bad guys are always

changing the playbook...

what they’re trying today

will be different from

what they’ll do six months

from now.”—TOM SIERING

CEO, TWO HARBORS INVESTMENT

56 / CHIEFEXECUTIVE.NET / SEPTEMBER/OCTOBER 2015

CEO OF THE YEAR

From left: Fifth Street Asset Management’s Len Tannenbaum and Concentric Advisors’ Roderick Jones

CEO PASSIONS

HE HAS A PH.D. IN STATISTICS, calls himself a “science and math” person and is usually taciturn and private. Asked about his minerals collection, however, SAS CEO Jim Goodnight becomes passionate. Minerals, he says, are the “first art—art that can’t be repli-cated by man.”

Goodnight shows his more than 400 specimens in his office and elsewhere in his business analytics software company’s headquarters in Cary, North Carolina. Each piece is displayed on a Plexiglas pedestal, with its name and provenance etched into its base, as in a museum.

The collection’s minerals come from 40 countries, from Afghanistan to Zaire. “You have to be amazed at all the colors and formations out there,” Goodnight says. He owns a pure white quartz piece from India that looks like icy snowballs; copper-touched malachite from the Republic of Congo, intensely green; glowing purple fluorite from Tennessee; arrowheads from the site of SAS’s headquarters that date back to the Archaic Period, c. 8000 B.C. to c. 1000 B.C.; and a recent acquisition, crystallized gold from Kalgoorlie, West Australia, rare because unlike most gold it hasn’t been smoothed by water.

Goodnight’s passion dates back to his childhood. As a boy living at the

Collecting Earthly TreasuresPresented in

partnership with PURE Insurance, our sixth column

on CEOs who are notable collectors

features SAS’s Jim Goodnight.

By George Nicholas

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62 / CHIEFEXECUTIVE.NET / SEPTEMBER/OCTOBER 2015

edge of town in Greensboro, he would venture out looking for arrowheads and quartz crystals. These days he buys some 10 or 12 minerals specimens a year. His collection includes a me-teorite, a cross-section of a fossilized di-nosaur egg from the Gobi Desert and a 70-million-year-old fossilized nautilus shell from Oklahoma.

Among his favorite pieces is a large chunk of colored quartz from Brazil known as the “merchant’s stone” because it’s associated with business success, generosity and sharing. He is an active philanthropist and an advo-cate for education.

Goodnight founded his company in 1976, together with other faculty members at North Carolina State Uni-versity. Goodnight, whose net worth is estimated by Forbes at $7.8 billion, urges businesses to care better for their “creative capital,” employees whose ideas generate valuable products and services. In an industry where yearly turnover of 20 percent is norm, his company has only four percent.

He is also known as a patron of visual arts. Together with his wife and partners he founded an independent prep school, Cary Academy. He also owns Cary’s Prestonwood Country Club and the Umstead Hotel and Spa at the edge of SAS’s campus.

Clockwise from left: A hunk of amethyst from Brazil; Jim Goodnight with his collection; malachite from the Congo and a Cretaceous-period Goodhallites fossil found in Oklahoma