[The Editors' Verdict] Prepare for the Convergence Competition

At CES 2022, the world's largest information and communication technology and consumer electronics exhibition held recently, a notable trend was the entry of home appliance companies into the mobility business and the expansion of mobility companies into the robotics sector. As uncertainty in the business environment grows, it is expected that companies will more actively pursue improvements in their existing technologies and explore entry into related industries. These movements by companies are part of efforts since the mid-2010s, during periods of stagnation or Goldilocks economic conditions, to secure competitiveness by introducing disruptive innovative products or services through the convergence of technologies and industries.

The term "convergence" has been frequently mentioned in domestic industrial policies and strategies since the early 2000s. In Korea, early convergence was mainly government-led growth models and convergence centered on device manufacturers through inducing investments by operators. Subsequently, under the leadership of telecommunications operators, service convergence such as mobile banking and DMB emerged, followed by infrastructure convergence responding to diversified content format demands due to the advancement of digital technology and broadband networks, leading to the introduction of IPTV. However, despite these advances, why is convergence reemerging as if it were a new topic?

To answer this, it is necessary to first define what convergence is. Convergence can be broadly categorized into the emergence of recombinant value, changes in technological paradigms, and changes in industrial paradigms. The emergence of recombinant value refers to new products appearing through the convergence of technologies or products; changes in technological paradigms mainly mean the emergence of new technologies through convergence; changes in industrial paradigms refer to the collapse of boundaries between industries and the resulting transformation of new business models and competitive structures. According to this classification, convergence so far has focused on the emergence of recombinant value. This form of convergence has the advantage of enabling the creation of various added values through creative recombination of existing technologies and proven ideas. However, in markets that have matured and reached growth limits, the effects of this type of convergence cannot be continuously enjoyed. To create new markets, increase profits, and acquire and strengthen new competitiveness, it is necessary to develop convergence strategies and policies focusing on changes in technological and industrial paradigms rather than recombinant convergence.

What should we prepare for convergence focusing on changes in technological and industrial paradigms? Paradigm shifts mean new innovations. However, merely attempting new innovations does not bring about substantial change. The key point to note is appropriate management of the innovation process, that is, the process of change. According to innovation competition theory, many industrial policies pursue economic growth and social integration simultaneously, but innovation intentions do not result in desired outcomes due to risks of functional defects and political risks. Primarily, to respond to political risks that hinder innovation, regulatory reforms and improvements in public organizational culture are necessary. Secondarily, to address harmful functional defect risks, companies should be enabled to build demand-oriented business platforms. Furthermore, to sustain the effects of efforts to reduce these policy and functional risks, it is necessary to restructure the industrial ecosystem to reduce risks from the market structure perspective and promote industrial innovation. In March, there will be a presidential election that will significantly impact Korea's future competitiveness. It is hoped that the next government will establish innovative ideas and policies capable of responding to the new convergence competition.

Shin Minsu, Professor, Department of Business Administration, Hanyang University