Samsung is Committed to Open Innovation

I just read in Korea's Electronics Newspaper (etnews.co.kr) an article which proclaimed in its headline that "Samsung is Committed to Open Innovation."  Many of the actions taken by Samsung Electronics in recent years support that proposition, including its strong involvement in the Open Handset Alliance, and its vigorous support of basic research that will influence future electronics and telecommunications.
I have only one suggestion to add for Samsung Electronics---that it increase efforts to encourage open innovation in the Korean market.  True open innovation needs to display openness in the following ways:

• Linguistically--hardware, software and content need to be made available simultaneously in all of the world's major languages.
• Geographically--innovations should be introduced broadly and globally, in tune with the global nature of innovation and the information society.   E.g. Samsung's introduction of its Android phone only in Europe deprives Korean consumers and those in other countries of access to the innovation.
• Innovation in content--Google is the undisputed world leader in terms of organizing the world's information and making it accessible.  Why should Samsung not partner in a deep, long-term way with Google?

South Korea Ranks 3rd Among OECD Countries in "Readiness for Globalization"

Ready for Globalization?  Global Benchmark Report 2008 is the fourth in a series of reports giving the Danish Confederation of Industry's annual assessment of the development in the business environment and the performance of the individual OECD member countries.  I must admit that I was somewhat surprised that South Korea, overall, ranked third among the countries studied.  The report includes 84 international benchmarks and provides a picture of the strengths and weaknesses of the OECD countries in the global economy.   On balance it is quite a laudable accomplishment for The Republic of Korea and a closer look at the report is quite revealing.  The report compares the performances of 29 OECD countries and their business environments.

The comparison is based on 84 indicators divided into six main sections as indicated in the accompanying graphic (click to see a full-size version of the graphic).  Across all of the benchmarks, South Korea had more top-3 rankings than all other countries, except for Switzerland and Iceland.  This is shown in the second graphic to the left.  One can read through the entire report to get a sense of where Korea ranked high and where it was low.   It ranked high on measures of growth and development, but low, for example on labour productivity.  Korea came out number one among the 29 countries in the benchmark of knowledge and competence, based on average rankings using 23 separate indicators. This is shown in the third accompanying graphic.   As the report explains, The strengths of South Korea include a large share of youth completing a secondary degree, a large share of students in science and engineering and a high patent productivity.  One interesting measure shows that South Korea led all OECD countries in the share of 25-34 year olds with an upper secondary education as of 2005.  It ranked number three in the share of 25-34 year olds with a tertiary education.

And, it ranked second to the United States in terms of expenditure on educational institutions as a percentage of Gross Domestic Product.  Notably, South Korea ranked in the bottom five in terms of Labor Regulations as of 2007.  The assumption of the report being that a low degree of labor regulation helps business adapt to changes.  Not surprisingly, it ranked at or near the top in measures of broadband and internet use.  Finally, it is of interest to note that South Korea ranked last on the measure of "Cultural Openness" as shown in the final graphic below, and next-to-last on a measure of "Discrimination Towards Race, Gender, Etc." in 2007.   There is much more in the full report, which can be downloaded as a pdf file using the link at the start of this post.

Korea Part of a "Marked Shift in Innovation Hubs" Worldwide

Increased patent filings in North East Asian countries (mainly China and the Republic of Korea (ROK)) and the United States of America (USA) drove growth in worldwide filing of patent applications, which topped 1.76 million in 2006, representing a 4.9% increase over 2005, according to the 2008 edition of the World Patent Report of the World Intellectual Property Organization (WIPO). The Director General of WIPO, Dr. Kamil Idris, observed “A major increase in innovative activity in China, the Republic of Korea and the United States has driven the overall growth of patent filings in 2006. This reflects a consolidation of earlier trends which demonstrate a marked shift in innovation hubs around the world.” He further added “While use of the patent system remains highly concentrated among a group of countries, statistics show an increasing level of patent activity in emerging countries. This is an encouraging trend,” he added. While statistics from the World Patent Report reveal patterns of concentration in patent activity, they also point to a growing tendency for applicants to file their applications in multiple countries. This trend towards increasing internationalization of patent activity is demonstrated by the growth in international filings through the Patent Cooperation Treaty (PCT) and in non-resident patent filings. The period 2000-2006, saw a significant increase in the number of filings originating from Australia, China, India and the ROK. The average annual growth rate in patent filings for these countries was far above that of all reported countries in Europe and North America. Japan, the United Kingdom and Sweden experienced modest growth in patent filings (less than 1% a year). In 2005 (the latest year for which technology data are available), the most intense patenting activity is evident in the following sectors: computer technology (144,594), telecommunications (116,770), and electrical machinery (121,350) technologies. Between 2001 and 2005, patent filings in computer technology, optics, and semiconductors grew by 5.3%, 5.0% and 4.9%, a year, respectively. There was a modest increase in pharmaceuticals filings (1.7%) and a decrease in biotechnology filings (-2.7%).

A Call for Greater Integration of IT and Conventional Industries

Reinforcing a point I made in earlier posts, the inaugural meeting of the IT Innovation Forum in Seoul called on Korea to bolster its national competitiveness through greater integration of its information technology sector and conventional industries.  As noted in the Joongang Ilbo, policy makers from the Ministry of Knowledge Economy, the Federation of Korean Industries and academia said that Korea has not taken full advantage of its world-class IT infrastructure.   Participants in the innovation forum noted that efforts must be made in the coming years to push for a paperless business environment that can benefit a wide range of businesses, including logistics, and establish software as a service  into everyday work. "Software as a service,"  is a term for online use of software for a fee, rather than purchase of software products.

The Government's Role in ICT Development

Hello Readers! I just returned from a one week visit to the United States and am enjoying connecting to the internet at a reasonably fast speed. The motels in which we stayed for most of the past week offered wireless internet, but at speeds around 11 Mbps. That obviously placed some limits on my internet activity. Even checking e-mail was a painfully show process.

One of the first things I found upon my return was an excellent short article by Dr. Lim Young Mo of the Samsung Research Institute entitled "Six Promising Technologies Awaiting Government-Led Development." The title of this article underscores a point that I will explore in some detail in this blog. South Korea's telecommunications revolution of the 1980s was built upon key technology-development projects such as the TDX electronic switching system and the 4 Mb DRAM semiconductor. These projects, while involving the private sector, were government led, as were the decisions to initiate color television broadcasting and to privatize telecommunications services. As show in the chart from his article, government R&D investment led the way in Korea until about the turn of the century. Indeed, it is no exaggeration to say that Korea's lively ICT sector and information society today owes its very existence to government-led technology development. The opening paragraph of Dr. Lim's article states that "A nation’s wealth has largely depended on its ability to develop innovative technologies, rather than on capital and labor. Therefore, many governments around the world have spearheaded technological development. The trend will likely intensify rather than ease as the connection between the national wealth and its technological development ability becomes stronger into the future; while R&D may be more effective if the private sector takes the lead in areas in which it excels, the government will need to continue to play a major role." The article goes on to discuss the process of selecting promising technologies and nominates six for government support in Korea. They are: Intelligent Infrastructure, Biopharmacy, Clean Energy, Unmanned Military, Nanomaterial and Cognitive Science. While the role of the private sector and venture capital in R&D is clearly increasing, the United States serves as a shining example that deregulation and the private sector alone cannot build a comprehensive nationwide broadband infrastructure. I commend Dr. Lim's article, but I would carry it one step further and suggest that the revolution in information technology underlies all six of the technology fields he nominates for government support. In other words, it is a basic or fundamental source of innovation. One final thought: government-led development does not necessarily mean government-dictated development. The Korean model deserves more attention for the sort of government-industry-academia cooperation that underly its telecommunications revolution.

More thoughts on growth engines: Military Technology

An article appeared in the English Chosun Ilbo today with the headline "Soldiers to get High Tech Combat Uniforms." If ever there was need for a reminder that the mainstream media around the globe have mis-placed their emphasis, this is it. The mainstream media would have us believe that North Korea's nuclear development and the associates Six-Party Talks are the major problem here. All the while, these same media report only in passing that South Korea has now become a technology and innovation driven, advanced economy, with military technology that far exceeds any capabilities in the North.

The article includes the following passage: "Soldiers of the future operating in winter will wear cold-weather clothing equipped with temperature-adjusting mechanisms. Their color-shifting uniforms will use digital camouflage patterns that mimic their surroundings, be it rocks or trees. Their bulletproof helmets will be outfitted with global positioning systems (GPS), image-transmitting devices and long-distance communications equipment. Previously imaginable only in sci-fi movies, this kind of high-tech gear will be supplied to South Korea's servicemen by 2020. "

Given South Korea's track record in high technology, this is a reasonable goal and will probably be realized. Contrast that with the state of nuclear weapons technology in the North.

The very thought of military technology as an export growth engine makes me think of my father, who was a great fan of President Dwight Eisenhower. In the 1952 U.S. presidential campaign, Eisenhower campaigned by saying "I will go to Korea," to end an unpopular war here. Near the end of his two-term presidency, he gave a now-famous speech warning against the unchecked growth of the "military-industrial" complex. President Eisenhower said:

"This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist. "

Today, the pressing issue in Korea is the digital divide, which can also be characterized as a technology gap. This needs to be addressed and solved so that the country, so tragically divided after World War II, can be reunited and move ahead. Technologically and economically speaking, there are many growth engines other than military technology and one might hope that the two Koreas will agree on future emphases other than the military one.

Some Thoughts on Growth Engines: Telecommunications and Shipbuilding

One of my Google alerts produced an item from the Electronic Times Newspaper 전자신문 that caught my eye. The headline was "Add IT to Shipbuilding." This prompts me to expand on a thought that has been recurring lately, as commentators note the need for Korea to find new growth engines to support future expansion of the economy. I would argue that electronics and information technology is THE fundamental growth engine, not only for South Korea but for all modern economies. In a broader sense, as Wilbur Schramm, a founding father of the field of communication research as a social science, once noted, "communication is the fundamental social process." On the technology side of communications, as a recent op-ed piece in the New York Times put it, "If innovation has a heart, it’s probably a semiconductor, beating to the pace of Moore’s Law." That article goes on to describe how, using nanotechnology, IBM has developed self-assembly techniques that may prolong the life of Moore's law (the prediction that the number of transistors that can be placed on a single chip approximately doubles every 18 months--see graph, courtesy of The Economist). The telecommunications revolution in South Korea, which began in the 1980s, will likely continue for the foreseeable future, driven primarily by developments in information technology. These IT developments will, in turn, provide the basis for advancements in many fields, including nanotechnology, biotechnology, space research, construction, transportation and yes, shipbuilding. The recent report on shipbuilding notes that Korea's world-leading status is threatened because it is sandwiched between China,competitive in price, and European shipbuilders, who lead in the construction of high-value added ships. The solution? Shin Jung-hoon, CEO of Cadwin System, a shipbuilding architecture software developer, said, “Although it is a hefty industry, the shipbuilding industry takes a while to adopt new software. (Korea) is even slower than China, Japan and even Vietnam in introducing new software.” The same article noted that the Electronics and Telecommunications Research Institute (ETRI) had signed an MOU with the Ulsan city government, the Ulsan University and Hyundai Heavy Industry to cooperate in the IT based development of shipbuilding business. In November of 2007, the inter-Korean prime ministers' meeting agreed to begin construction of a shipbuilding factory in Anbyeon in the first half of 2008 and to modernize a ship repair factory in Nampo as soon as possible. Not surprisingly, telecommunications was one of the three main agenda items that North and South Korea discussed to further these joint efforts. And so, the telecommunications revolution in Korea continues to unfold.