[FH Korea] 2023 New Year Newsletter

Generative AI is a recently popular AI tool that creates writings, drawings, music, video, and design through simple images and written commands, while also accompanying issues including copyright infringement and the dispersal of harmful contents.

Gartner’s recommendation is to put effort into AI model governance, reliability, fairness, robustness, efficiency, and privacy protection, and proposed the AI TRiSM (Trust, Risk, and Security Management) framework to avoid misuse or side effects of AI.

In April, an essay, “Why the Past 10 Years of American Life Have Been Uniquely Stupid,” in The Atlantic by Jonathan Haidt, professor of Social Psychology at New York University, has drawn huge attention. In particular, it addressed the urgent need for collaborative efforts on architecture that can reduce the confirmation bias of social media for children and teenagers — it could help find ways to reduce addiction, as well as the side effects of fake accounts and anonymity.

(Refer to link for a collection of resources on social media and democracy and teenage mental health.)

Tech companies should cooperate with stakeholders in the business ecosystem and experts from various fields to find ways to continuously reduce side effects and increase the benefits through in-depth discussions on the impact of AI technology on users and society.

The smallest unit of quantum computing is called ‘Qbit’ by adding the first letter of ‘Quantum.’ Qbit is capable of two data processing, which can quickly solve problems that were unable to be solved or took a long time with computing power beyond imagination. For example, it can be used for new drug development, urban maintenance, and financial product development. In terms of global companies IBM, Google, and Intel are leading the race. Meanwhile, China and France are focusing on developing quantum computing as major nationwide technology endeavors. In South Korea, there is active development of quantum cryptography led by telecommunication companies.

Those in the government, industry, and academia should closely monitor global initiatives, maintain security to enhance the stability of a quantum computing environment, and communicate consistently to develop plans for ecosystem expansion and promote collaboration.

The TGI Research Team at FleishmanHillard conducted a survey targeting 900 business leaders from nine countries (South Korea, China, India, United States, United Kingdom, Germany, France, Italy, Spain) to reflect on their positions regarding the response strategy to climate change amid both the global economic crisis and Europe’s energy cost crisis. Leaders expressed their concerns in order of inflation, tensions between the West and Russia, Europe’s energy crisis, the climate change, and U.S.-China relationship. Countries that are highly dependent on Russia’s oil and natural gas, including the UK and European countries, saw a reduction in investment for climate change as inevitable and expected the government’s energy transition policy to proceed smoothly, while 59% of the leaders responded that increasing investments in renewable energy was the best option. A majority of executives globally (72%), including nuclear-averse Germany (76%), believe consumers will become more accepting of nuclear power due to the energy crisis.

Despite the challenging economic and energy supply challenges today, business leaders generally agree that governments and industry should remain steadfast on climate and decarbonization efforts.

In the case of South Korea, the government, National Assembly, industry, and citizens should all take responsibility and ownership to participate in reasonable impact-oriented discussions, rather than political decisions, to bring about policy changes that reduce energy consumption, normalize electricity price, and promote strategic clean-tech investment.

“Unicorns are shows, dragons are money.” This is an expression often used by venture capitalists in the analogy that even with a spectacular drive shot in a golf game, they must succeed in putting to win the prize money. At university special guest lectures up until just a few years ago, I have met many students who want to become civil servants. Now, they are more interested in start-ups. In ‘Start-ups, Beautiful Success’ published in December by Hyo-sang Ryou, Head of the Unicorn Institute of Management and Economics, it was stressed that “start-ups, whether sold or listed, become zombies, go bankrupt, or are liquidated if they are not successful in their exit strategy.” It advised to “do business as if there is no tomorrow, and prepare to sell today.” When knowing how to draw the exit picture that customers and target companies want through constant pivoting and business model innovation, the possibility of becoming a valuable exit dragon that raises the overall return rate of the fund increases ‘slightly.’ It is important to become a necessary partner when companies pivot in line with social change. Consider time traveling 10 years from now and coming back – where are our unmet needs? Solutions for elderly care, preparing for dignified end-of-life, and reducing energy consumption and waste that you and your family want to meet in an era where lonely people, dementia, and solitary deaths are on the rise are a ‘known-knowns’ area that will never go wrong.

Just because interest rates are high does not mean investors do not have money. It is known that solid private equity funds, family offices, and large company CVCs possess a considerable amount of ‘dry powder’ that can be immediately used for investment. As companies seek a change in direction during times of economic downturn and uncertainty, various M&A opportunities are expected to increase, and start-ups will seek to exit at an early stage even if they are small. It is time for the South Korean government to pursue systematic improvements to invigorate start-up M&As.

There is a very important element besides legal, accounting, and compliance due diligence when proceeding with various M&A deals.  Cultural Due Diligence from the angle of reputation, ESG, and DE&I risks and strategic Deal Communication between stakeholders are becoming more important.

According to Macromill Embrain’s “Trend Monitor 2023” analysis, many people lack the belief and opportunity for ‘an individual to make a change in politics and society’ and believe that the only factor they can ‘bring change to’ is ‘themselves’ in an environment of uncertainty. For this reason, they are passionate about actively caring for their health, time, spending, and relationships. If someone feels that they are lacking in something in comparison to others, they will efficiently take a stab at it to feel the joy of achievement, albeit being a little overly immersed in finding and expressing themselves. As there is more meaning in doing something for the first time, new and personalized services are becoming more important than general, mass-produced services.

Human relationships also tend to be categorized and organized as if they were indexed since it has become possible to meet and communicate according to various personal tastes and purpose-oriented ways on social media.

It is important for companies and brands to provide solutions (pricing policies, personalized experiences, etc.) that help customers practice self-care and self-discovery, while communicating with consumers so that they enjoy the feeling of having made a smart purchase.

Non-consumption was selected as a megatrend in “Life Trends 2023.” Having gone through revenge spending, people in their 20’s and 30’s are participating in the idea that a consumerism diet is needed in consideration of the unstable economic situation and the response to the climate crisis. Yet, it is analyzed that the urge to be ‘hip’ leads to conspicuous consumption, and at the end of this trend is conspicuous non-consumption. Since people’s lifestyles are easily shown through social media, they would rather show off their non-consumption lifestyle in a grand way.

‘Temaedori’ was included as this year’s buzzword selected by the Japanese publishing company, Liberal Citizen. This is a campaign targeted at changing consumer perceptions on reducing food waste to minimize unnecessary energy from being used in environmental pollution and food disposal. The Japanese Ministry of Agriculture, Forestry, and Fisheries (MAFF) in collaboration with the Franchise Chain Association, the Consumer Agency, and the Ministry of Environment promoted to actively select products that are near the sell-by date. According to the MAFF, food loss in 2020 was 9% lower than the previous year. It has been managing its targets since 2012 and is also running a ‘Tabekiri’ campaign to not leave food waste during the year-end and New Year holidays.

Even with the same goals, the motivation behind a communication campaign can be more effective when the strong individual identities of Koreans and the collective thinking of the Japanese are both taken into account.

With the anticipated global economic recession, many companies are on red alert and forced to cut expenses by reducing human labor. There has already been a series of news reports abroad regarding layoffs by big tech companies and startups disclosing their difficult company circumstances, some of which have even notified dismissals through e-mails and zoom calls. Unlike companies overseas, South Korean companies tend to be more self-conscious and have no choice but to resort to quiet layoffs due to the rigid labor market and intertwined political interests.

Since the pandemic, companies are showing slightly different styles of work, yet the common trend is that they provide a degree of flexibility in consideration of the nature of work and productivity. Workcation is a combination of the terms work and vacation, referring to working remotely while resting at a tourist site or holiday destination. Holiday resorts and regional cities like Bali are using this as an opportunity to revitalize tourism and the economy by attracting the workcation population.

It is nearly impossible to establish a system that can satisfy all employees. When layoffs occur, the remaining employees may also rethink their own relationship with the company. It is particularly important to embrace the employees’ emotions and deliver careful communication to prevent discomfort, just as we would respectfully hold a graduation ceremony when a long-serving colleague resigns. It is also important to communicate about the company constantly and transparently to find the best setup by collecting employee opinions.

The most distinguishing trait of traditional media, such as TV or newspapers, was to set key agendas and influence public opinion. Then, a small group of people selected by these media would act as celebrities or opinion leaders and influence the general public. With the development of digital technology, however, we have fully evolved into an era in which anyone can become a creator or a citizen journalist. And as anyone can use new media and platforms to tell their stories and share information or insights, various perspectives that had never been covered by traditional media have begun to emerge.

Audiences are no longer forced to wait for the morning paper or tune into the 9 o’clock news. Rather, they can choose the type of media or platform they prefer the most and become active users who engage in conversations via comments, as opposed to having no choice but to accept information fed by the media. Moreover, content segmentation has helped to strengthen audience loyalty, making it possible for creators to earn income on top of influence through content.

Platforms that produce, distribute, and allow consumption of news are using AI to personalize content and the user experience, while at the same time promoting DE&I values and fostering creators with diverse perspectives. This change in media consumption trends is expected to further accelerate, which is why it is critical for leaders to identify stakeholder interests and tendencies in advance. Mapping which channels can be used effectively to communicate with stakeholders and which influencers can become potential collaboration partners is also an important step to stay ahead.

Short-form refers to short video content between 15-60 seconds, and it has become all the rage among the MZ generation who prefer images or videos (the shorter the better) over text. More recently, this short-form craze has spread to journalism and led news media to also debut on TikTok. TikTok, which has been at the center of attention as an entertainment channel that serves short-form videos for pleasure, is now rising as a news media platform on which major media outlets are actively producing short-form video news to target Gen MZ. Although TikTok is encountering limitations in certain markets, it is expected to grow as a news media because of its ability to induce the intended flow of thinking and make information stick by conducting storytelling using catchy images and videos in a short period of time. Facebook is also following suit with new short-form options that are attracting quick uptake.

It is time for our leaders to think about how short-form content is being used to communicate with the younger generation and how to effectively use Reels/Shorts as new forms of communication. Of course, we must also consider the need to overcome risks such as fake news, omitted context, and aggressively provocative visuals, as well as reflect DE&I and social sensitivities at all costs.

With the term ‘universe’, you may think of astronomical images like stars, galaxies, and outer space, or perhaps imagine a philosophical orderly universe as in Cosmos written by Carl Sagan. For the MZ generation, however, ‘universe’ is used to describe their worldview. They build and expand their own universe by subscribing to and consuming content tailored to their identity. They actively reveal their taste on reviews and comments, while also referring to other people’s content to gain perspective and experience.

To ‘lock-in’ subscribers, they must be offered benefits that allow them to feel as though they are getting a more unique, special experience. Stronger community loyalty and bonds must be created through steady instigation of cultures which can be enjoyed by those who share a connected worldview together.