Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Globalization and Co-Creation from the Market`s Perspective

207 views

Published on

Globalization and Co-Creation from the Markets Perspective.
Speaker:
Martin Schulz

Published in: Technology
  • Be the first to comment

  • Be the first to like this

Globalization and Co-Creation from the Market`s Perspective

  1. 1. Globalization and Co-Creation from the Market’s Perspective Fujitsu Research Institute Dr. Martin Schulz schulz@jp.fujitsu.com 2017.11.08
  2. 2. 1 Copyright 2017 FUJITSU Outline  Globalization and Digital Transformation Challenges  Economics of Co-Creation: Services, Productivity & Growth  Reviving Ageing Markets with Digital Co-Creation
  3. 3. 2 Copyright 2017 FUJITSU Digital Transformation - Challenges  Global Growth in trouble
  4. 4. 3 Copyright 2017 FUJITSU 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Emerging Markets Other Mature US World Potential Growth Rates (%) Labor Productivity Trends Japan Note: 10y moving averages. Source: IMF-WEO; OECD (2016). Note: Linear Trends. Source: Data from Conference Board (2016). “New Normal” of much lower growth:  Social ageing slows demand and innovation (Schulz)  New technologies are innovative, but not really revolutionary or efficient (Gordon) Growth and Productivity have been Falling Everywhere
  5. 5. 4 Copyright 2017 FUJITSU In Mature Economies, Income Growth has been Diverging 50 70 90 110 130 150 170 201520122009200620032000 50 70 90 110 130 150 170 201520122009200620032000 Services Manufacturing Japan -> Regulation 50 70 90 110 130 150 170 201520122009200620032000 Services Manufacturing 50 70 90 110 130 150 170 201520122009200620032000 Services Manufacturing Services Manufacturing Germany -> Globalization UK US Labor Compensation by Sector (2000=100) 70 90 110 130 150 170 190 2018 2015 2012 2009 2006 2003 2000 1997 1994 1991 1988 1985 1982 1979 1976 1973 1970 1967 1964 1961 US Income & Productivity Growth (1982=100) Source: CEIC, Ameco Database. Real Wage / Employee GDP / Capita TFP Employment High Schooler Income Median Family Income Capital Productivity Note: Based on billion euro units.
  6. 6. 5 Copyright 2017 FUJITSUSource: Ameco Database (2016), Saez (2016), Rosengard (2017). US - Trump: “Make America Great Again!” UK - UKIP: “Controlling our own borders, making our own laws, running our own country!” Source: Bloomberg Source: www.donaldtrump.com  US unemployment rate 4.7%, but 7.9% for below high school educated workers  US unemployment rate of involuntary part-time and marginally attached 9.3%, and 24.2% long-term  US 2009-2015: bottom 99% real income growth +7.6%, top 1% +37.4% People are Upset: Changes are Disruptive and Should Slow
  7. 7. 6 Copyright 2017 FUJITSU 90 95 100 105 110 60 70 80 90 100 110 120 130 140 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Demand Challenges: Shift to (Regulated) Services Source: Data from CEIC. Japan Household Expenditure (1996=100) Apparel Housing Household Demand (right scale) Transport, Communication Furniture etc. Medical Care Note: 5-quarter moving averages. Corrected by changing household size. Index Index
  8. 8. 7 Copyright 2017 FUJITSU 17 19 21 23 25 27 29 31 33 35 37 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Supply Challenges: Shift to New Levels of Efficiency Source: Data: World Bank (2015), CEIC 2015. Gross Investment Rates (% GDP)  Long investment deleveraging resulted in depression and deflation  Convergence of highly efficient investment in the “new normal” Note: Gross Fixed Capital Formation % of GDP. USA Japan’s Bubble Japan Germany
  9. 9. 8 Copyright 2017 FUJITSU 100 200 300 400 500 2000 2002 2004 2006 2008 2010 2012 2014 2016 Trade Challenges: Shift to Services in Global Trade World World Merchandise Trade Developing Countries Developed 100 110 120 130 140 2010 2011 2012 2013 2014 2015 2016 %% Service Trade Source: Unctad Stat (2017), BEA (2017). Professional Note: “Professional” Services are Unctad “Other” Services. Travel Goods Service Transport 90 110 130 150 170 2009 2010 2011 2012 2013 2014 Professional Service US MNE Subsidiary Overseas Employment Information Mfg  Services are increasingly delivered digitally  Digital platform provider and multinational companies in the lead  Globalization and specialization become key
  10. 10. 9 Copyright 2017 FUJITSU 50 70 90 110 130 150 170 190 210 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 World 1980-1993 World 1960-2015 China 1980-2015 Domestic Credit to the Private Sector (% GDP) Source: © Fujitsu Research Institute 2017. Data from World Bank 2017. Japan Thailand USA China Spain Financial Deepening World Credit Trend UK World Trend 1980-2000 Financial Challenges: Bubbles emerge when Growth Slows
  11. 11. 10 Copyright 2017 FUJITSU Growth Challenge: All Sources need to Improve Source: Data from EU-KLEMS 2017. -0,50 -0,30 -0,10 0,10 0,30 0,50 0,70 0,90 1,10 1,30 1,50 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Germany Contribution to VA Growth (%) Value Added Growth Sustainable 1.5% Growth? Total Factor Productivity (TFP) -> Co-Creation! Capital: Infrastructures? Labor: Immigration Skills: Learning! ICT -> Co-Creation!
  12. 12. 11 Copyright 2017 FUJITSU Digital Transformation Challenges  Investment shifts from production to services and digital efficiency  Digitalization reduces costs, but adds little value in businesses  Globalization splits low/high demand for labor and skills  Mature country incomes depend on technology
  13. 13. 12 Copyright 2017 FUJITSU Economics of Co-Creation  Mature economies require technology and efficiency gains to increase growth  Total Factor Productivity (TFP) springs from efficient/innovative factor combination (technology)  Increasingly complex production models require efficiency, add little new value  New services create new value chains (Service Systems/Science – Customer Co-creation)  Digital platforms support co-creation  Consumer participation, service integration, sharing economies unlock added value
  14. 14. 13 Copyright 2017 FUJITSU Co-Creation is Key to Growth in Mature Economies Productivity Input Reduction Volume Reduction Operation Efficiency Best Practice Adoption New Operations Development Output Increase Value Increase Volume Increase Structural Change New Products Development Innovation Growth Economy Efficiency Economy Product Orientation Service Orientation
  15. 15. 14 Copyright 2017 FUJITSU Co-Creation in Industry: Driven by IoT & “Consumerization” From Factory Automation to Cyber Physical Systems (CPS) Moxa Ethernet Switches (2009) L’Oreal - ABB Real TPI (2001), Moxa Virtual Machine - Pajic (2012) System: Controlled Automated Intelligent Technology: “Inside-Out” Integration “Outside-In” Standards: Networks Interfaces Semantics Solution: ERP, Humans Service PlatformsMES PLM Legacy Systems IoTS Technologies
  16. 16. 15 Copyright 2017 FUJITSU Co-Creation Smile Curve – Where is the Smart Value? Value Expansion Industry Platforms ValueAdded Operations Supply Assembly Distribution R&D Service Value Creation Digital Insourcing Digital Insourcing Smart Factory Smart Service Smart Products Smart Logistic Smart Grid Smart Buildings Smart Production Open InnovationCrowd Sourcing 1960, 2030 2000  Mfg value added delined since the 1960s (smile curve)  Virtualization and service integration allow a reversal  Business models can become very specialized or very complex Co-Creation Co-Creation Outsourcing
  17. 17. 16 Copyright 2017 FUJITSU -0,40 -0,30 -0,20 -0,10 0,00 0,10 0,20 0,30 0,40 -4,00 -3,00 -2,00 -1,00 0,00 1,00 2,00 3,00 4,00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LabQual TFP Capital Hours IT Growth Accounting: ICT now a ‘Normal Production Factor’ Source: Data from EU-KLEMS 2017. Strong Economy: TFP ‘Co-Creation’ & Innovation drives growth beyond the baseline ICT Contribution: ICT has become a ‘general technology’ that enables growth on all levels, but contributes little directly US Contribution to VA Growth (%)
  18. 18. 17 Copyright 2017 FUJITSU Output Contribution: Integrating ICT, Services & Work Source: Data from EU-KLEMS 2017. -0,50 -0,40 -0,30 -0,20 -0,10 0,00 0,10 0,20 0,30 0,40 0,50 -5,00 -4,00 -3,00 -2,00 -1,00 0,00 1,00 2,00 3,00 4,00 5,00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LabQual Energy TFP Capital Material Hours Services IT Co-Creation Potential: Improving the integration of ICT, services and labor Efficiency Frontier: Topping up labor quality Co-Creation and Innovation: TFP drives growth beyond the baseline US Contribution to Output Growth (%)
  19. 19. 18 Copyright 2017 FUJITSU Industry & Consumer Digitalization, Little Co-Creation Source: EuroStat (2017) – DESI, EuroStat (2017) – E-business integration. Note: Percent of companies. 0 20 40 60 80 Advertise User Tracking Big Data Use Social Media Cloud Cloud DB Cloud CRM Cloud Infra ERP Supply Chain e-Sales e-Sales Internatio… EU Digitalization Scoreboard Germany EU28 Spain Holland Industry Digitalization Consumer Digitalization
  20. 20. 19 Copyright 2017 FUJITSU -2,00 -1,50 -1,00 -0,50 0,00 0,50 1,00 1,50 2,00 -20,00 -15,00 -10,00 -5,00 0,00 5,00 10,00 15,00 20,00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LabQual Energy TFP Capital Material Hours Services IT ICT Output Contribution: War for Talent but Little Co-Creation Source: Data from EU-KLEMS 2017. Co-Creation: TFP growth during restructuring War for Talent US ICT Contribution to Output Growth (%)
  21. 21. 20 Copyright 2017 FUJITSU Co-Creation in ICT: Cloud-Computing Service Integration Source: Data from EU-KLEMS 2017. 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 0 500000 1000000 1500000 2000000 2500000 3000000 3500000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015  ICT investment has been ‘outsourced’ into the ICT sector  Hardware investment, including buildings, increases in ICT sector 0 2000 4000 6000 8000 10000 12000 0 20000 40000 60000 80000 100000 120000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Software (left scale) Computer (left scale) Fixed Capital Investment (left scale) Software ICT Sector (right scale) Fixed Capital ICT Sector (right scale) Computer ICT Sector (right scale) Communication Eq. (left scale) Communication Eq. ICT Sector (right scale) Construction ICT Sector (right scale) US Investment ($Mill., 2010 Prices) US Investment ($Mill., 2010 Prices)
  22. 22. 21 Copyright 2017 FUJITSU 0% 20% 40% 60% 80% 100% 1979 1984 1989 1994 1999 2004 2009 2014 Own Account (ex. R&D) Custom Pre-Packaged ICT Co-Creation: Software Investment & Network Effects Source: Byrne (2016) - ICT Prices and ICT Services Source: Corrado (2014) - Communication Networks, ICT and Productivity Growth in Europe EU ICT Network Effects Contribution to Growth -1,5 -1 -0,5 0 0,5 1 1,5 2 2005 2007 2009 2011 ICT Capital ICT TFP Network Effects US Software Investment (% of Total)  ICT development & application becomes more balanced across sectors  Network effects increase leverage & volatility
  23. 23. 22 Copyright 2017 FUJITSU Digital Co-Creation in Human Capital Management Oracle Taleo (SAP SuccessFactors, WorkDay, …) Talent Management Fujitsu MetaArc Fujitsu Global HCM
  24. 24. 23 Copyright 2017 FUJITSU Co-Creation in Learning – Digital Talent Management Cloud-based HR Talent Management UniversitiesConsultantsPartners
  25. 25. 24 Copyright 2017 FUJITSU Fujitsu PACT Survey: Co-Creation Strategies Source: Data from EU-KLEMS 2017. 0% 20% 40% 60% 80% 100% New digital business model New partnership models Digital shadow projects for innovation Too much focus on tech. vs processes & skills Collaboration between age groups Up-skilling staff is key Germany US Japan 0% 10% 20% 30% 40% 50% 60% 70% New digital business models Employee training is key Training by external partners Company-wide skill sharing Reverse mentoring Open collaboration for innovation Germany US Japan Note: Percent of answers either ‘agree’ or ‘strongly agree’. Note: Percent of answers selected as relevant
  26. 26. 25 Copyright 2017 FUJITSU FRI Employee Survey: Strong Benefits of Top-ICT & Globalization Source: Data from FRI Survey of 1200 Japanese & German Employees 0 10 20 30 40 50 60 70 80 High personal ICT Skills High employee career support ICT improves workplace efficiency ICT imroves products and services ICT improves work life balance Mixed team innovation Strong HRM role in skill development Personalizati on of e- learning 0 10 20 30 40 50 60 70 80 High personal ICT Skills High employee career support ICT improves workplace efficiency ICT imroves products and services ICT improves work life balance Mixed team innovation Strong HRM role in skill development Personalizati on of e- learning Japan Germany Top-ICT Using Company International Company All  Strong career support at Japanese companies  Still low use of e-learningNote: Percent of answers either ‘agree’ or ‘strongly agree’.
  27. 27. 26 Copyright 2017 FUJITSU Digital Co-Creation Cases  Cases: Automobile, Finance, and Media
  28. 28. 27 Copyright 2017 FUJITSU From Network to Learning Economies Source: Fujitsu Journal (2016.1).  Learning Economy  Industry 4.0  Platforms  Network Economy
  29. 29. 28 Copyright 2017 FUJITSU Digital Strategy - Transformation at 3 Levels Fujitsu Technology and Service Vision (2016) Source: Fujitsu Technology & Service Vision (2016).
  30. 30. 29 Copyright 2017 FUJITSU -4 -2 0 2 4 6 8 -0,2 -0,1 0,0 0,1 0,2 0,3 0,4 Other… Postalandcourier… Basicmetalsand… Education Healthandsocial… AGRICULTURE,… REALESTATE… CONSTRUCTION Otherservice… COMMUNITY… Woodandpaper… Machineryand… Public… ARTS,… ELECTRICITY,GAS… Chemicalsand… Textiles,wearing… Arts,… Foodproducts,… TOTAL… Retailtrade,… MININGAND… Rubberand… Electricaland… TRANSPORTATION… Transportand… TOTALINDUSTRIES PROFESSIONAL,… WHOLESALEAND… Cokeandrefined… MARKETECONOMY FINANCIALAND… Transport… Wholesaletrade,… Publishing,… INFORMATION… ITandother… Sector ICT Growth Contribution vs Digitalization Perception Source: Data: EU-KLEMS (2017); McKinsey (2017) US Sector ICT Contribution, VA Growth (2013-15) Note: Sorted by ICT VA contribution to growth; 20013- 15 averages. ICT VA Growth Contribution (left scale) VA Growth (right scale) % % Industry Digital Penetration Perception (% Sector Respondents) 10% No change 40% Minor secondary change 60% Some core change 84% Reaching Mainstream Mostly Digitized Automotive Consumer Goods Finance Prof. Service Telecom Travel Transp. HiTech Retail Media  Some correlation between ICT contribution & VA growth  Little correlation between ICT investment & actual digitalization
  31. 31. 30 Copyright 2017 FUJITSU Digital Co-Creation Cases  Cases: Automobile
  32. 32. 31 Copyright 2017 FUJITSU -2,00 -1,50 -1,00 -0,50 0,00 0,50 1,00 1,50 2,00 -20,00 -15,00 -10,00 -5,00 0,00 5,00 10,00 15,00 20,00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LabQual TFP Capital Hours IT ICT Contribution: Growing role of ICT Value Added Contribution: Automobiles driven by Co-Creation Source: Data from EU-KLEMS 2017. Co-Creation: TFP drives growth beyond the baseline
  33. 33. 32 Copyright 2017 FUJITSU Digital Transformation: From Engines to Mobility Toyota Hybrid Engine Toyota Hydrogen Car Toyota Home Energy Management System Fujitsu SPATIOWL Mobility Platforms Efficiency, Service, Sustainability Source: www.consulab.com; www.toyota-global.com; www.jp.fujitsu.com
  34. 34. 33 Copyright 2017 FUJITSU Digital Co-Creation Cases  Cases: Finance
  35. 35. 34 Copyright 2017 FUJITSUSource: McKinsey (2017); Commerzbank (2017) US Top-10 Public Companies (Market Cap.) Platform-Business Companies (50%) Japan UK US Euro Z. China Consumer Finance 25 14 14 10 8 Payment 24 24 17 18 9 Asset Management 22 22 17 17 4 Deposits 5 5 4 4 1 Corporate 1 1 1 1 1 Digital Revolution Impact in Finance Margin Reduction (%) Digital Transformation: From Monopoly to Private Finance Digitize… …but it costs you! Commerzbank 4.0 (until 2020): -7,300 Fulltime Jobs (-9,600 + 2,300)
  36. 36. 35 Copyright 2017 FUJITSU Agricultural MarketNo wallet living A Beggar on the Street ! Source: eMarketer; FRI – Jin, Jianmin (2017). Digital Banking Transformation: Fintech in Asia !
  37. 37. 36 Copyright 2017 FUJITSU Digital Banking Transformation: Fintech in Asia China‘s Financial Markets  Cyclical expansion and tough regulation of public banks  Shadow banking grows with e-Commerce (47% world market share), 40% of users have shadow/fintech accounts https://i0.wp.com/www.aseantoday.com/wp-content/uploads/2017/02/图片1-1.png?w=1145 Expansion to Asia: Banking the (mobile) Unbanked  SEAsia platforms: Alibaba buys Lazada (2014, 2016), Ant Financial buys helloPay (2016) and Moneygram (2017)  AliPay in Singapore, Malaysia, Indonesia, Thailand and the Philippines (2017) 0 200 400 600 800 1000 2013 2014 2015 2016 Alipay vs. WeChat (monthly Users; Mill.) Alipay WeChat Pay WeChat Alibaba: E-Commerce and Fintech  China‘s largest online platform with 450 million AliPay financial platform users (Ant Financial)  $17.5 bill. AliPay settlements on November 11, 2016  68% payments are covered by safe escrow services  ZhongAn Insurance versichert Transaktionen, Insuretech boomt  260 mill. users of asset management, $90 bill. Under management
  38. 38. 37 Copyright 2017 FUJITSU Digital Co-Creation Cases  Cases: Media
  39. 39. 38 Copyright 2017 FUJITSU -0,50 0,00 0,50 1,00 1,50 -5,00 0,00 5,00 10,00 15,00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Energy LabQual TFP Capital Material Hours Services IT Media Output Contribution: ICT-based Service Integration Source: Data from EU-KLEMS 2017. Co-Creation: Link between TFP and services during good and bad times Strong role for ICT
  40. 40. 39 Copyright 2017 FUJITSU 50 100 150 200 250 300 350 400 450 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Bloomberg (2017); PWC (2013); Oliver (2017) US Media Stock Indices Digital Revolution of Music Production Digital Transformation: Media Co-Creation Creation Marketing / Discovery Creation Consumption / Participation Marketing / Discovery Production Distribution Consumption / Participation Prod. Distrib. Consumption / Participation Creation Marketing / Discovery 0 200 400 600 800 2011 2015 0 100 200 300 400 500 2011 2015 GDP (Art, Rest. & Entertainment) SP500 SP500 Movie & Entertainment 40% -> 73% of Sales Price 46% -> 13% Business Model Change: Small Movie Big UK Movie Starts Foreign Language Documentary
  41. 41. 40 Copyright 2017 FUJITSU Digital Transformation Challenges  Transformation Economies  ‘Digital Twin’ produces additional costs with little immediate gain  Digitalization success requires fully analog optimized processes (garbage in / garbage out)  Production changes and systems integration require work/skill/partnership changes  Network Economies  Platform business supports ‘winner takes all’ business models (monopoly rents)  Competition drives profits from automation gains to zero (consumer rents)  Knowledge economy drives War for Talent, specialization and globalization become key
  42. 42. 41 Copyright 2017 FUJITSU Co-Creation Economics  Co-Creation Economy  Value creation works as a service (value proposed by producer, realized by customer)  Production/Service platforms enable employees, interface with customers  Process and resource integration become key (instead of product and market optimization)  Learning Economy  Skills are continuously developed in production & along systems (lifelong learning)  Skills of machines, producers and customers need to mix & match (skill co-creation)  Skills need to be developed in context with internal systems, ecosystems & social environment
  43. 43. 42 Copyright 2017 FUJITSU Reviving Ageing Markets with Digital Co-Creation  Ageing economies face a “new normal” of low growth  Digitalization adds efficiency to production, services, globalization  Increasingly complex business models search for value added  Digital platforms support co-creation and new services  Learning economy moves beyond knowledge economy  Platforms support learning internally, interface partners externally
  44. 44. 43 Copyright 2017 FUJITSU

×