Globalization 4.0: A scary new world with cold waves and hot winds raging at the same time

Chaotic 2016

It was predicted. We were warned. But fear has grown, for the pace of change is simply too fast. K.E.Y. PLATFORM 2013 forecast that the world’s economy would have to continue on its arduous march for the upcoming years in its “Global Scenario for 2018.” Over the following two years, K.E.Y. PLATFORM raised its voice in saying that we might not even be able to survive unless we can respond with agility.

For this reason, the participants sought and proposed together ways of becoming smart and convergent as well as streamlining processes and thus enhancing our power of execution.

Another year has since passed. Feeling uneasy about the rapidly changing market circumstances, we were going to contend that we should hurry and aim our arrows of growth at targets in every corner of the world and then start running on the path leading to growth. However, not only the global economy but also confidence among global economic players is collapsing much faster than expected. As the prospects of slow growth look set to continue, major economies are poised to play the “low interest rates” card despite its questionable effects, fueling uncertainty further.

However, the giant targets that we should take aim at are moving faster in more complicated ways. China and the United States have been transforming their economic structures quickly through an Online-to-Offline (O2O) service revolution. India, too, has been transforming itself from an outsourcer into a leading innovator on the strength of its powerful software capabilities. In Europe, traditional innovators such as Germany, the Netherlands, Denmark and Sweden are devoting all their energy to the combination and convergence of manufacturing industries and smart solutions. Industry 4.0 or the Fourth Industrial Revolution represents the interpretation of intermediate results of all such efforts.

Korea is now hemmed in by cold waves from the global sweep of economic recessions while exposed to hot winds from the world’s feverish pursuits of a smart economy. Where should we turn to find the path to growth?

Globalization 4.0: Identifying universal human problems and coding solutions

Inevitable chaos

We may close the doors because our house (economy and industrial structure) can still hold out against the cold waves and hot winds blowing wild outside. We may also close our eyes and hide from fear. But we all know what will become of us in the end.

During two of the three globalization eras, we either stayed on the periphery or closed our doors. For the duration of Globalization 1.0 (Age of Discovery), we were situated outside of the trade winds. During Globalization 2.0 (Imperialism), we kept our doors shut for 10 years, which ultimately put us through the ravages of colonial rule and the Korean War. On the other hand, at the dawn of the Globalization 3.0 era (Technological Revolution and Neoliberalism), we stood tall on the global stage. It proves a lesson learned from history that a peninsular country will thrive when it advances toward the oceans or continents.

A growth equation that does not work

Korea is now mired in a slow-growth trajectory that is stubbornly persistent. An economy grows when one or more of the following components increases: consumption (C) + investment (I) + government spending (G) + net exports (NX). It is not easy for consumer sentiment to rebound immediately after it has been depressed by slow growth, while there are limits to government spending unless tax revenues soar rapidly. To grow the economy under these circumstances, we need to increase either exports or corporate investments. However, surrounded by the sluggish Chinese economy, the global economic downturn and tight emerging markets in addition to the Fourth Industrial Revolution, the typical approaches to increase exports that have been tried before will not work anymore. This fear of the slowing economy is making businesses more reluctant to invest. Is there any solution to this?

Smart globalization

To resolve the problem, K.E.Y. PLATFORM 2016 first diagnosed the aspects that globalization took on and analyzed how a variety of businesses—ranging from giant platform operators to innovative enterprises on their way to dominating global markets—respond to them. We visited large Chinese and Indian companies including Baidu, Alibaba, Tencent, Reliance, Tata and Mahindra as well as companies thriving in the innovation ecosystems of the United States, the Netherlands, Denmark, Sweden, Israel and Germany, which created innovative ideas that have transformed global paradigms.

The answer that K.E.Y. PLATFORM found is to create a service that either benefits more people in global markets or solves a problem facing the greatest number of people, wherever possible. The starting point for this is a more in-depth understanding of human beings. To solve more complex problems based on new interpretations of human beings, we can integrate solutions from different fields, define algorithms to make them converge, and create digital codes based on them. The digitized codes are then connected to a variety of products or services. These are common patterns embodied in Industry 4.0.

Korea can start writing codes for solving problems by reusing its manufacturing capabilities that have been honed for a long time. This will help businesses make more efficient investments. Furthermore, the successful application of this process will lead to occupying a huge market. K.E.Y. PLATFORM 2016 aims to inspire Korean companies by making public how global innovation leaders read patterns.

C2S (Code to Solve globally) Process Canvas

The K.E.Y. PLATFORM team met with Global Strategy, Marketing and R&D executives as well as CEOs of 100 enterprises in the United States, China, India, the Netherlands, Sweden, Denmark, Germany and Israel that have been leading in core technologies for Industry 4.0 (Fourth Industrial Revolution), including artificial intelligence (AI), big data, Internet of Everything (IoE), robotics and online-to-offline (O2O) commerce. We have developed a process for tapping global markets based on the visions, strategies and operational processes that they shared with us.

To put it briefly, the process is to create functions that combine and solve complicated problems facing many people in the world and turn them into digital codes. Once the codes are completed, they are shared with external ecosystems (e.g., suppliers, academic circles and the government) and developed together with the people involved. As initial pilot codes are open to the public, more data can be collected from external users. The data is analyzed and refined further into what are called “algorithms.” The “engine” that tech companies would cherish as their secret is a collection of these “algorithms.”

It is impossible for experts from just a couple of fields to find and “solutionize” needs that have eluded discovery by trying to understand universal human beings. Rather, it takes data scientists, computing scientists, modeling experts and engineers as well as psychologists, brain scientists, consumer experts, sociologists, historians and artists. Innovative companies are bent on managing a network of collective intelligence, whether they have a full lineup of aforementioned experts in the house or they tap into an external pool. This has made them accustomed to working together with experts in various fields to identify areas of actionable opportunity.

Algorithms are expressed in digital languages. That is, algorithms are coded. They are then connected to a digitalized device or linked to a service, thus contributing to the construction of a virtuous cycle through which big data can be obtained.

C2S (Code to Solve globally) Process Algorithm

Enterprises can start operating in various technological and service areas depending on their own visions and expertise. However, none of the companies pursuing global strategies for Industry 4.0 can succeed without “solving globally” and “coding” the solutions. Only a powerful vision for solving a global challenge can move a network of experts in diverse fields into action, and such an initiative can grow into a project of commercially significant size only if it is connected with a variety of devices, infrastructure and services through coding.

This process does not apply only to technological businesses. It is also applicable to any traditional smokestack industries. Actually, entrepreneurs should apply it actively because, after all, the time will come when everything is connected digitally.

For example, let’s say that you have a business of making and delivering car seats. You can expand your business by applying this process. You can define algorithms for all your knowhow to make seats more comfortable and apply them to medical chairs and even to a healthcare management system connected to medical chairs. The sky would be the limit to how you can expand your business.

As described above, a new globalization strategy is to code algorithms that provide a one-stop solution to a universal global problem and build an ecosystem on them―very quickly at that.