Industrial Espionage

Fundamentally, sabotage is the act of exploiting a weakness in a network and manipulating that weakness in such a way that devastates the entire network. This type of sabotage has been practiced in military applications throughout history and can be quite devastating.  But we’re now seeing evidence that the ancient art of the saboteur has evolved into the twenty first century through the use of computer worms – a subclass of a virus capable of autonomous replication (Wikipedia) − to disrupt the weapons manufacturing process. This evolution has made understanding the strengths and weakness of networks, animate and inanimate, more important than ever for nation states.

Stuxnet was the first of its kind in its sophistication and simplicity. Developed by the United States with alleged partners, stuxnet is a malware capable of causing physical damage to the machinery it targets. Stuxnet was written in such a way to render it harmless against anything but the Iranian uranium centrifuges it was designed to infect, and will delete itself after it becomes obsolete. This was proven when it was accidently leaked from the Natanz plant by an unwitting worker there.

Although stuxent has multiple ways to disrupt production, one interesting reason why stuxnet works is because the network it infiltrated relied on bridges without multiple fail safe connections. Once the worm identifies the bridge it sets up shop, waiting to play the classic misinformation game known as man in the middle. The program acts as an invisible node, Z, in between nodes A and B. Node B is the centrifuge and Node A is the control panel, or where the centrifuge’s signals went to elicit response. For instance, when the centrifuge reaches a dangerously high temperature it notifies Node A so that Node A can slow Node B down, or so that Node A can alert an engineer. Presumably there was some kind of failsafe in Node B’s mechanism should Node A defect, a fact which can be deduced by the sophistication of the worm. In any case, the invisible Node Z waited for Node B to alert Node A that it was overheating. Node Z intercepted the communication, and imitated Node A in a response ordering Node B to continue as before. Meanwhile, Node Z imitated Node B in communicating with Node A, which was told all was well. Because Node B had no reason to distrust Node A and vice versa, this sort of attack is extraordinarily difficult to defend against. It’s not as if there was some alien Node C establishing new edges with Nodes A and B that they could simply ignore. Node Z took advantage of an already established network. A key lesson from the stuxnet is to diversify all the parts of a process, because the corruption of a bridge can be devastating.

The elegance of the attack is simple and appealing. With only a seemingly small flaw in the uranium developing process, the developers of stuxnet have been able to disable 20% of Iran’s centrifuges. More importantly, there have been no human causalities, which is significant unto itself.

http://www.economist.com/node/17147818

http://www.webopedia.com/DidYouKnow/Internet/2004/virus.asp

http://www.nytimes.com/2012/06/01/world/middleeast/obama-ordered-wave-of-cyberattacks-against-iran.html?pagewanted=all&_r=0

http://www.techopedia.com/definition/15812/stuxnet   (All references accessed on January 31, 2013)

 

Open Source Networks

Open source software distribution has been revolutionary in the computing and mobile computing world. It allows the best possible product to reach the largest possible audience (like Mozilla Firefox). This causes across the board increases in productivity. Firms and individuals who produce open source software have incentives to do so for fame and future fortune. At the heart of free software distribution is the idea that a maximum distribution of the product is the optimum outcome for the distributor. This is not true of open source hardware. Whereas open source software destroys competition by eliminating the consumers incentive to pay for pricier alternatives, open source hardware fosters competition by revealing invaluable operations secrets, eliminating human capital advantages and by exacerbating research and development externalities.

Hardware configurations and supply chains are well guarded secrets in the tech world for good reason – they represent significant challenges to start-up firms. When Facebook made its plans open for use by competition, it reduced the amount of engineers Rackspace (a cloud service provider) needed. As a result, three engineers at Rackspace have been able to develop a comparable server layout and supply chain that took Facebook a team of 700 engineers to develop. Facebook engineers are responsible for a considerable amount of Rackspace’s accomplishment, yet aren’t going to see a dime for it. This will become unsustainable as Facebook continues to pay wages for more and more of the webs engineers, leading to eventual collapse.

Open source hardware also caused Facebook to waste a significant human capital advantage. Theoretically, competitive firms are insulated by their ability to buy the best talent, which allows them to innovate more and causes other companies – with less talented employees – to innovate less. Facebook is still buying the best talent, but it’s doling that insulation out with the righteousness of a public service. Furthermore, beneficiaries of Facebook’s err have the opportunity to secretly improve on the design. It will be extraordinarily difficult for Facebook to compete with a one-upping competitor in this type of game, as the players’ information is imperfect.

Open source hardware is an imitation of a successful use of massive networks, but falls short because Facebook is distributing the wrong information over the wrong network. Open source software initiates a cascade among a network of consumer, causing self-perpetuating market domination. Conversely, open source hardware initiates a cascade among a network of competitors, lending the enemy a helping hand.

Facebook also seems to be implying that this practice is for the collective good. Consider this statement made by V.P of Supply Chains at Rackspace: “Everybody used to have to do it by themselves… You had to come up with your own work — and that was a lot of effort. But if you’re working in a community effort, a lot of that stuff is shared.” While it may be true that communal efforts generate efficiency, their burden is never shared equally. The question for Facebook will be whether they can sustain theirs and everyone else’s industrial engineering.

 

http://www.wired.com/wiredenterprise/2013/01/open-compute-rackspace/ (1/27/13)

 

From Theory to Practice- How the Game-Theory finds its application

Since we talked about the Game-Theory and the different behavior options of individuals participating in the game, it is interesting to investigate in which different fields of interest the theory finds its application. Consulting outfits are developing Game-Theory software’s based on mathematical stings  and probabilities which predict decisions that companies or individuals will take in order to achieve their greatest interest. These predictions are based on the assumption that decisions are rational and not emotionally biased, which can be challenging in political matter. According to the article: “Game theory in practice” (The Economist, Sept. 3rd 2011) the Game Theory and computer simulations are mainly used for law firms, companies and governments. Even though the Game-Theory is mostly used for economic purposes, there has been some application in the military field as well. In 2007, America’s military evaluated the impact of moving military bases closer to North Korea through the Game-Theory or it helped to solve the terrorists hideout of Osama bin Laden. We can see that the Game-Theory plays a significant role in negotiations and strategic decisions and helps to find optimal solutions for various parties.

In the future, software specialists plan to develop a software which can assist in negotiation and mediation. Complicated negotiations can be solved through a neutral mediator, a computer and not having human beings involved. Providing a catalog of well-chosen questions paying attention to personal evaluations and esteem could help to find optimal solutions based on the Game-Theory. Overall, there are many fields where the Game-Theory should be operated, helping to find the best solutions, to save money and to avoid wrong decisions in the long run.

The Economist, Sept. 3rd 2011 , http://www.economist.com/node/21527025

Anna-Marie Tunger

Reading Minds: Enhancing Consumer Insights and Communication Networks

In a business world where there is an emphasis on driving innovation (and profits) through increased strategic insights, connecting with consumers never seemed to be more important. For a very long time, we all know that this conversation has involved the usual – data solicited from surveys, focus groups and other online and offline feedback processes. Over the past decade, however, the dialogue has included many additional technological factors that, in some cases, already have and could further enhance businesses’ capacity to connect with consumers in a way that is unique to them and optimize communication networks.

RFID technology is one such factor. First introduced as a way for businesses to optimize their supply chains, this technology continues to improve as satellite systems capabilities continue to become more sophisticated and technology undergoes further miniaturization. RFID allows the most efficient of companies, such as Walmart, that utilize it to connect with their home office, distribution centers and stores in order to get a near-perfect understanding of inventory levels (i.e., which products are out of stock, when is the ideal time to order more inventory given current quantities, etc.). Nevertheless, some companies such as Future Store, Inc. – a grocery store in Rheinberg, Germany – have made it clear that it would like to take RFID to an entirely new level. To date, Future Stores has only placed RFID tags in three of the many products it sells to its consumers. It has indicated that it would like to increase the amount of products with the RFID tags. In the meantime, however, all of its shopping carts contain a computer which scans all purchases and memorizes the lists of items that each individual purchased in his/her previous trip. Connecting with their shoppers has never been more exclusive.

Imagine this smart technology coalesced with RFID. The computerized shopping cart at Future Stores already allows the store to connect with every consumer who makes a purchase by saving every individual’s specific purchases and identifying their purchasing patterns. Coupled with RFID, there is the possibility that when a consumer arrives in the store, the computer can (1) identify the shopper and their purchasing habits or pattern, (2) identify if their favorite items in the store are currently in-stock and (3) automatically order those favorite items that are out-of-stock from a local distribution center and then inform the customer of the exact time the item will be arriving that day. The technology could even predict when a habitual Sunday-evening shopper will arrive and ensure that there are enough of those particular items on the shelves.

The prospective impacts on local, state-wide, regional and global strategic insights could be wildly unprecedented. Companies that offer various products can use the information they obtain to discover buying habits based on network demographics and target specific geographical regions, communication networks and outlets both small and large. Additionally, the insights obtained may allow businesses to better implement targeted social networking platforms that seek to stimulate or change shopping habits.

Overall, the world contains millions of different people with different taste preferences by age, gender, household, locality, personal network, region and more. Making connections with consumers involves getting to know about them in a number of interactive ways, in ways that have never been done before. Ultimately, being able to have various types of insightful “conversations” with different consumers is a challenge made possible through technology. Companies like Future Stores and Walmart both have the ideas and wherewithal to drive further innovations in customer interactions; these pursuits are changing the way we think about identifying and reaching networks.

’til next post,

Gavin R. Grant
Temple University

Resources:
http://www.sptimes.com/2004/01/13/Business/A_grocery_store_that_.shtml
http://www.future-store.org/fsi-internet/html/en/1779/index.html

Ancient Social Networking

If I asked you to think of a social network, Facebook or Twitter would come to mind. Behavioral economists however are looking to expand this definition past the high-tech, globalized world by citing these new findings (source: latimes.com):

“A team of researchers has mapped out the relationships among a remote group of 205 hunter-gatherers in Tanzania who live as humans did about 10,000 years ago and found that their social networks are very much like ours, even in the absence of the complicating factors of megacities, cellphones and the Internet.”

Judging by these findings, our ancestors 10,000 years ago also preferred people who liked the same things. Cooperators, (think of your pious nun), like cooperators and dislike free-riders (think Bernie Madoff). Yes, this seems like a no brainer, but it’s actually monumental for behavioral economics. Behavioral economics is the study of economics through the lens of psychology and social behavior. Where classical economics employes methodological individualism and believes that humans are consistently rational, behavioral economics diverges claiming that humans are often selfless and highly influenced by others.

In research, behavioral economists have been confined to using undergrads in social experiments. If these findings are correct that humans naturally align themselves in similar social network patterns, then behavioral economists can use networks to model and predict macro-economic behavior. The macroeconomy has displayed frequent fragility to human irrational behavior, such as the creation of bubbles in the stock market, or consumer preferences that are manipulated by advertisements. If networks can shed some light onto this activity, it can drastically change the way we perceive economics and human behavior.

Venues for Bonds Fight for Traders: A New Network Platform for Debt Traders

How amazing could it be when we get to hear about something new or unique that comes to exist in the market? Trade network has been there for centuries in our world – not only to deal with the physical commodities but also with the money markets.  The presence of so called “mutual fund” in the market is there for centuries where billions of dollars gets traded among each other. A group of people in a network manages to pull capital that gets invested to achieve certain objectives. Well, now to make this system work even efficient and competitive, new platforms are going to get created. Reading an article from Wall Street Journal titled “Venues for Bonds Fight for Trader” got me to think about how this new approach could make few companies to stand out from the rest. The mutual fund investors are seeking for a reliable market, a network of people, who are interested to trade debts. Unlike Nasdaq and other stock exchanges, the debt market is not as efficient. Also, it seems quite conspicuous that Wall Street while acting as a middleman always gets to make huge profit (they call “fees”) from these trading. The new approach of creating new platforms is expected to form new network of investors, who can trade efficiently and can mean a lot in term of bringing vital economic changes.

You may want to check this out:

Social Networking: Just Social?

So I am a little nervous posting this blog. We haven’t really gone over anything super concrete in class, so I thought it would be fun to incorporate a bit of what I’m going through in my life right now in relation to networks in general.

I ran across this article “Effects of Social Media on Job Prospects” by Lucy Sherriff (which can be found on the Huffington Post website or through this link: http://www.huffingtonpost.co.uk/2013/01/25/social-media-job-prospects-impact-should-we-be-scared_n_2550921.html).

As a senior in undergrad, I am constantly badgered by my parents to prepare for life after graduation – specifically to get a job. This article scared me, as it showed me that what I post on social networking sites like Facebook, Twitter, Instagram, etc., can actually effect my career and my professional network. Although this article focuses really on the digital footprint one leaves behind when posting on social networking sites (I think that the article’s use of social media can be interpreted to be the same as social networking), I found that it raises some interesting questions about networks and how we, as a community and as individuals, perceive them. We categorize Facebook and Twitter as social media, social networking, etc., yet they are still connected to other aspects of our lives. Even LinkedIn, a popular networking site for careers and professions, is extremely similar to Facebook as a means to connect, communicate, and network with people.

Even though the article seems to be more of a warning on what you post on social networking sites (maybe inappropriate jokes, unflattering pictures, excessive drinking, etc.), there was a quote that raised questions on how individuals can control networks:

“By allowing users to select who specifically can and cannot see a particular tweet, power remains with them. This greater control enables greater use of social media. You can post and tweet confidently, knowing your potential employer won’t see messages meant for friends, and permanent records of what you say online won’t come back to haunt you in the future.”

It is interesting to me that, a) social networking does not just only affect your social network (but your professional life as well), and b) you have the ability to control your networks through these sites (as they offer privacy settings and who you want to share your posts with), as well as how these networks interact. For instance, I could post another blog that only my close friends would be able to see, thus cutting my professional network off from that particular post. As networking pervades modern life, understanding how networks work and function seems that much more essential.

So that’s pretty much what was on my mind in relation to networks today. ‘Til next week.

– Sarah K.