December 31, 2022

Challenges, Opportunities and Trends to Watch in Seven Sectors in 2023

"The continuing pandemic, the war in Ukraine and high inflation have forced many companies to scale back their forecasts" in 2022, the Economist Intelligence Unit (EIU) notes. Will 2023 will be any better?

The 12th edition of the EIU's annual report forecasts growth and key risks in seven business sectors for 2023, as the war in Ukraine pushes up commodity prices and the cost of living. The report argues that the war has disrupted the recovery from the covid-19 pandemic, and businesses now face increased risks as economies slow or tip into recession, particularly in Europe.

The EIU's report also provides key global forecasts for each of the seven industries:
  • Global sales of new vehicles will be flat in 2023, but sales of electric vehicles will rise by 25% to 10.7m units.
  • In 2023 retail growth volumes will be respectable at 4.9% in US-dollar terms, which will mainly reflect high inflation. In real terms, global sales will slow or fall in most markets.
  • Global energy consumption will rise by just 1.3% as the global economy slows. The energy crisis will force some countries to increase their use of coal or rethink plans to phase out nuclear power.
  • Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers. Formerly fast-growing fintech companies will be hit by the capital-market crunch.
  • Global healthcare spending will rise by 4.9% year on year in US-dollar terms, which will mask falling investment in real terms, as countries struggle to cope with continued demand.
  • The metaverse will not become a mass-market in 2023, but this will not stop heavy investment into this technology. The drive to standardization and the battle with web3 will be at the forefront.
  • International tourism arrivals will rise by 30% as China slowly loosens its covid-19 restrictions. This will follow 60% growth in 2022, but will still leave total arrivals below 2019 levels.

The EIU also presents the following key forecasts for each industry:

Automotive outlook 2023: Bright spots amid stalling growth
  • The automotive industry will remain vulnerable to global headwinds in 2023 including the energy crisis, slower global demand and continued supply-chain problems.
  • Global new-vehicles sales will remain flat in 2023: new-car sales will rise by 0.9% and new commercial vehicle (CV) sales will fall by 1.3%.
  • Sales of electric vehicles (EVs) will be the only bright spot, growing by 25%, but governments will restructure their incentive schemes.
  • Governments' focus will turn to charging networks, which are inadequate to meet the expanding EV fleet.
  • Autonomous vehicles will take a leap forward, as UN regulators lift their speed limit.

Consumer goods and retail outlook 2023: Retailers respond to pricing pressures
  • Inflation will push up global retail sales by a robust 5% in US-dollar terms in 2023, but the lower volume of sales and surging costs will weaken retailers' profits.
  • The rollout of automation technologies will offer opportunities to limit wage growth, which means that retail employment is unlikely to return to 2019 levels.
  • Online sales growth will slow, but the online share of retail will edge up to about 14% of global retail sales.
  • Inflation-wary consumers will prefer to shop at discount stores, helping these retailers to increase their market shares.
  • The economic slowdown in China, caused in part by its zero-covid strategy, will mean fresh challenges for global luxury brands already affected by the loss of Chinese tourists.

Energy outlook 2023: Surviving the energy crisis
  • Global energy consumption will grow by only 1.3% in 2023 amid a slowing economy.
  • Despite decarbonization targets, coal consumption will grow marginally to compensate for gaps in gas supplies.
  • More extreme weather events will force many countries to fall back on fossil fuels, delaying the energy transition.
  • Renewable energy consumption will surge by about 11%, with Asia leading the way, but investment will weaken.
  • The energy crisis will prompt some governments to backtrack on efforts to phase out the use of nuclear power.

Finance outlook 2023: A new test for financial stability
  • Weakening economic output and rising interest rates will lead to more difficult conditions for banks, insurers and fund managers in 2023 than in the past two years.
  • The impact will be particularly acute in North America and Europe, where governments will offer support. The environment will be tough in Asia as well, although policy rates will rise by less.
  • Heavily indebted developing countries will find it harder to refinance foreign debt, driving some to default or require rescues to avoid it. However, the International Monetary Fund will continue its lenient treatment of economies requiring its financing programs.
  • The current capital-market crunch will hobble a wide variety of loss-making fintech challengers that sought to outflank incumbents in banking, payments and other activities.

Healthcare outlook 2023: The aftermath of the pandemic
  • Healthcare spending will fall in 2023 in real terms, given high inflation and slow economic growth, forcing difficult decisions on how to provide care.
  • Digitalization of the healthcare system will continue, but the use of health data will come under stricter regulation in the US, Europe and China.
  • Patent cliffs for key drugs and measures to control pharmaceutical pricing in the US, India and elsewhere will force some major pharma companies to spur growth through deals.
  • Supply-chain disruptions will continue to push up drugmakers' costs, despite investment in more localized pharmaceutical production.

Technology and telecoms outlook 2023: The battle for digital supremacy
  • The metaverse will not become mass-market in 2023, but this will not stop heavy investment in the technology. The drive to standardization and the battle with web3 will be at the forefront.
  • Artificial intelligence (AI) will continue to develop, after several breakthroughs in 2022, but will encounter challenges from new regulations in key jurisdictions.
  • Semiconductors will continue to be a geopolitical tool between the US and China, involving many other countries. Some companies producing the most advanced products and equipment will benefit.
  • Asian telecommunications companies will continue to look for consolidation in 2023. Mobile markets with four or more mobile network operators, such as Sri Lanka, Japan and India, are the most likely to secure deals.

Tourism outlook 2023: Turbulence in the travel industry
  • Global tourism arrivals will rise by 30% in 2023, following 60% growth in 2022, but they will still not return to pre-pandemic levels.
  • The economic downturn, sanctions on Russia and, above all, China’s zero-covid strategy will be among the factors weighing on the industry.
  • Hotels, restaurants and airports will struggle to cope with labor shortages, wage demands, and high food and energy prices.
  • Even so, international airlines are expected to return to profitability, benefiting from continued pent-up demand.
  • The impact of climate change on the industry will become more apparent, with high temperatures, water shortages and floods forcing tourism destinations to take action.

Useful for companies developing their global business strategy for the coming year, the report presents the following macroeconomic key points:
  • The war in Ukraine, combined with lockdowns in China, has exacerbated supply-chain disruptions and pushed up global inflation, forcing EIU to downgrade its forecasts for economic growth in 2023.
  • Many governments, particularly in Europe, will be forced to scale back investment in public services, including healthcare, in order to protect households and businesses from the effects of higher prices.
  • While some businesses (particularly in commodities sectors) will benefit from high prices, many will be hit by weak demand and high input costs, particularly for energy.
  • Profitability will be squeezed, while corporate investment will slow amid rising interest rates.
  • However, some companies (notably in pharmaceuticals, technology and retailing) will take advantage of lower stock-market valuations, bankruptcies and government incentives to snap up strategic assets and position themselves for an eventual upturn.

"Amid all this gloom," the EIU encouragingly says "there will be areas of opportunity." Taking the EV market as an example, "online retail sales and tourism will continue to deliver strong growth, particularly in Asia and the Middle East," the report notes. "Innovations—from the metaverse to automated vehicles and data analytics (notably in healthcare)—will attract investment, with some companies also seizing on chances offered by volatile financial markets." I concur that "It will not be an easy year, but it could be a transformative one."

Lastly, The Economist produced a video that looks into which stories may be worth watching in the coming year.

What will you be watching in 2023?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 20, 2022

Risk Scenarios That Could Reshape the Global Economy in 2023

The Economist Intelligence Unit (EIU) produces an annual quantitative and qualitative assessment of economic, political and regulatory risks that help readers evaluate potential shifts in a country's operating environment. As this year's report explains, "In 2022 the global repercussions of Russia's invasion of Ukraine shifted global concerns away from coronavirus-related health issues and towards growing political, security and macroeconomic risks." The UK-based organization expects "that ripple effects from the war in Ukraine, global monetary tightening and an economic slowdown in China will weigh on the economy in 2023, with global growth slowing to only 1.6%." The EIU explains that its "white paper explores some of the risks that could lead to even slower growth, or even, trigger a global recession."

Below are ten risk scenarios that could reshape the global economy in 2023:
  1. Cold winter exacerbates Europe's energy crisis (high probability; very high impact)
  2. Extreme weather adds to commodity price spikes, fueling global food insecurity (high probability; high impact)
  3. Direct conflict erupts between China and Taiwan, forcing US to intervene (moderate probability; very high impact)
  4. High global inflation fuels social unrest (very high probability; moderate impact)
  5. New variant of coronavirus, or another infectious disease, sends global economy back into recession (moderate probability; very high impact)
  6. Inter-state cyberwar cripples state infrastructure in major economies (moderate probability; very high impact)
  7. Further deterioration in West-China ties forces full decoupling of global economy (moderate probability; high impact)
  8. Aggressive monetary tightening leads to global recession (moderate probability; moderate impact)
  9. China's zero-covid policy leads to severe recession (low probability; high impact)
  10. Russia-Ukraine conflict turns into global war (very low probability; very high impact)

While I agree with the high placing of cold winter exacerbating Europe's energy crisis, I am more concerned with the risk of extreme weather adding to commodity price spikes which will result in exasperating global food insecurity. "Climate change models point to an increased frequency of extreme weather events," explains the EIU. "So far these have been sporadic and in different parts of the world, but they could start to happen more synchronously and for prolonged periods." Moreover, "Severe droughts and heatwaves in Europe, China, India and the US in 2022 are contributing to rising prices of some foodstuffs. In addition, the war between Russia and Ukraine (two of the world’s largest agricultural exporters) has led to severe price spikes and risks creating global shortages of grains and fertilizers (which are crucial for harvests) in 2023." The report worryingly warns that "The world could face a prolonged period of crop shortages and skyrocketing prices, raising the risk of food insecurity (or even famine).

Just as high food prices was a contributing factor that a series of anti-government protests, uprisings and armed rebellions that spread across much of the Arab world in the early 2010s, global food prices are again high could lead to social unrest. As the report notes, "Persistent inflationary pressures, caused by supply-chain disruptions and Russia's invasion of Ukraine, are pushing up global inflation, which is at its highest level since the 1990s. If inflation rises much higher than wage increases, making it hard for poorer households to purchase basic staples, it could spark social unrest." The report adds that "In an extreme scenario, protests could push workers in major economies and employed by large manufacturers to coordinate large-scale strikes demanding higher salaries that match inflation. Such movements, similar to those that have affected critical services in the UK (ports, postal services, barristers and railways), could paralyze entire industries and spill over to other sectors or countries, weighing on global growth.

Finally, my colleagues and I are closely watching the further deterioration in West-China ties that may result in the full decoupling of the global economy. "Western democracies, notably the US and the EU, are concerned about China's support to Russia following the invasion of Ukraine," the report explains. "In parallel, China is concerned about US-Taiwan relations and efforts by the US to convince other democracies to pressure it using restrictions on trade, technology and finance." Moreover, "The EU has also taken an increasingly confrontational stance towards China's human rights abuses in Xinjiang, unequal treatment of EU and Chinese firms, and its subsidy-led industrial model." The report adds that "In an extreme scenario, China could initiate military maneuvers in the South China Sea (most likely in Taiwan), exacerbating tensions and pushing the West to unite in imposing sweeping trade and investment restrictions on China. This would force some markets (and companies) to choose sides." China could, in retaliation, "block exports of raw materials and goods that are crucial to Western economies, such as rare earths. This would have disastrous economic effects and force companies to operate two supply chains while fearing operational disruptions."

Which risk scenarios do you think will affect your business? What strategies are you implementing to make your company resilient to those risks?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 15, 2022

Report Provides Recommendations for Closing Mobile Internet's 'Usage Gap' and Getting More People Online

In the latest version of its annual report of the state of mobile internet connectivity, the GSM Association (GSMA) notes that "By the end of 2021, 4.3 billion people were using mobile internet, an increase of almost 300 million since the end of 2020. Growth in mobile internet adoption has almost entirely been driven by people living in low- and middle-income countries (LMICs). As a result, for the first time, half of the population in LMICs is using mobile internet."

Funded by the UK Foreign, Commonwealth and Development Office (FCDO) and the Swedish International Development Cooperation Agency (Sida) via the GSMA Mobile for Development Foundation, the UK-based organization, which represents the interests of mobile operators worldwide, explains that the findings of its "report are based on the GSMA Consumer Survey and the GSMA Mobile Connectivity Index (MCI), along with a range of other industry reports. The GSMA Consumer Survey has been carried out every year since 2017 to understand access and use of mobile and mobile internet in LMICs." What is more, "This report presents the latest updates on mobile internet connectivity globally and by region, with a focus on LMICs, where 94% of the unconnected population live. For the first time, it also presents the data on connectivity for adults only. The report then examines mobile broadband coverage and infrastructure."

The report's key findings include:
  • Mobile internet use has reached 55% of the world's population.
  • Mobile broadband coverage continues to slowly expand, with 95% of the world's population covered by a mobile broadband network.
  • At the end of 2021, there were 3.2 billion people living within the footprint of a mobile broadband network but not using mobile internet.
  • Connectivity varies significantly by different socioeconomic groups and by country income levels, with 94% of the 'unconnected' living in LMICs.
  • Across all regions, there are now more mobile connections using 3G or 4G/5G smartphones than basic or feature phones.
  • Data usage and network quality continue to increase – but with a persistent gap between high- and lower-income countries.
  • Across the surveyed countries, mobile internet users are using their mobile phones more frequently for a range of online activities.
  • Awareness of mobile internet continues to grow but has slowed significantly since 2019.
  • Affordability and skills remain the two greatest barriers to mobile internet adoption and use.
  • Across LMICs, affordability of data has continued to improve but affordability of entry-level internet-enabled handsets has remained relatively unchanged.

The report correctly notes that a collective effort is needed to bridge the digital divide. "Strong collective effort is needed to achieve meaningful connectivity, which allows users to have a safe,  satisfying, enriching and productive online experience that is affordable. It requires informed, targeted action by all stakeholders, including mobile operators, policymakers, international partners and the broader private sector." Crucially, "Such strategies should factor in the structural issues underpinning the disparities in adoption and use, such as differences in income and education levels, and restrictive social norms."

The GSMA concludes its report by presenting the following barriers that should be addressed to bridge the digital divide:
  • Knowledge and digital skills: Improving digital skills and literacy, as well as driving awareness and understanding of mobile internet and its benefits, is critical to increase digital inclusion. Digital skills initiatives should focus on the life needs and circumstances of users.
  • Affordability of handsets and data: Affordability of handsets and data remains a key challenge. Approaches to improve affordability should include efforts to lower the cost of internet-enabled handsets and data, innovative data pricing strategies and handset financing options, in addition to providing targeted subsidies and tax policies that promote the uptake of internet-enabled devices and data services.
  • Relevance: Local digital ecosystems in many LMICs remain underdeveloped and under-resourced. Investment in local digital ecosystems and an enabling policy environment can accelerate growth in local content, services and applications that meet the needs of people in their communities, in their own language.
  • Safety and security: Concerns about safety and security, including online harassment or cyberbullying, misinformation, disinformation and fraud, are keeping people from going online and having a positive internet experience. Stakeholders should provide users, especially women, with the tools to increase their knowledge and skills to mitigate online risks. Appropriate mechanisms and frameworks that recognize these online risks should be put in place to help build consumer trust.
  • Access: Using the internet depends on enablers such as electricity, formal identification, sales agents and accessibility features. Stakeholders can increase mobile internet adoption by focusing on, for example, facilitating inclusive and transparent registration processes for mobile, and making services, sales channels and training facilities accessible to underserved groups, such as women and persons with disabilities, alongside improving accessibility features.

I agree with the premise that ensuring people are able to use mobile internet, rather than focusing purely on network coverage, is the key to driving digital inclusion for 3.2 billion people worldwide. While this number impressively represents the equivalent of 40 percent of the world's population who are covered by a mobile broadband network, more must be done to reduce barriers that prevent them from getting online or what the industry calls the 'usage gap.'

What are your recommendations for eliminating the usage gap?

By the way, I recommend watching a webinar the GSMA produced that includes a discussion with the report's authors.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

December 1, 2022

GSMA Encourages Latin American Policy Makers to Enact Reforms to Promote Digital Skills and Education

In its latest annual report on the state of the mobile economy in Latin America, which is available in English and español, the GSM Association (GSMA) points out that "mobile connectivity remains the main form of internet connectivity, particularly as – for many – it is the only form of connectivity. At the end of 2021, the number of mobile internet users in Latin America exceeded 380 million, equating to 60% of the population. However, another 36% live in areas covered by mobile broadband networks but do not use mobile internet services (known as the usage gap)."

The GSMA, which is a UK-based organization that represents the interests of mobile operators worldwide, also notes that "Addressing the main barriers to mobile internet adoption, including affordability, safety and security, and knowledge and digital skills, will extend the benefits of the internet and digital technology to more people in society. This requires a concerted effort by the mobile industry and its partners."

What is more, "4G is Latin America's leading mobile technology, with more than 410 million connections at the end of 2021. Take-up has more than doubled over the past five years driven by network expansion and efforts by mobile operators to transition users away from legacy networks."

The GSMA also notes that "5G is currently at a nascent stage in Latin America. By the end of June 2022, seven countries in the region had launched commercial 5G services. The current adoption rate is around 1% of total connections; this is expected to grow to 11% by 2025."

The acceleration of 5G adoption will create new opportunities for companies developing mobile software as a service platforms optimized for the Latin American market. The report says "The Covid-19 pandemic highlighted the huge opportunity for digital technology to disrupt legacy business processes. This, in turn, is driving investments in the tech start-up ecosystem." Encouragingly, "In 2021, Latin American start-ups raised a record $19.5 billion in funding – more than three times the amount raised in 2019. This resulted in 18 start-ups in the region achieving 'unicorn' status (start-ups with a market value of $1 billion before going public). Fintech remains a significant driver, but several other sectors, including education and e-commerce, are seeing a growing share of investments."

The report also explains how "the metaverse, a parallel virtual world populated with avatars, has gained significant mindshare in Latin America. As such, the region is attracting the attention of global metaverse ecosystem players, such as Meta. In addition, a growing number of local ecosystem players, including government agencies, have announced activities across the metaverse value chain."

With respect to the mobile sector making a significant contribution to the economy and wider society, the GSMA says: "In 2021, mobile technologies and services generated 7.4% of GDP in Latin America – a contribution that amounted to more than $345 billion of economic value added." Moreover, "The mobile ecosystem also supported more than 1.6 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with almost $30 billion raised through taxes on the sector. Over the period to 2025, mobile's contribution will grow by around $20 billion, as countries in the region increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services."

The report's concluding chapter focuses on how policy decisions are key to accelerating Latin America's digital future. I support the GSMA's assertion that "Unlocking the potential of mobile connectivity requires policy measures to support network investments and improve the affordability of digital services for consumers. Policy priorities should be based on a country's local context and level of digital development, which requires granular and reliable data. There is also a need to promote digital skills and education across all parts of society."

What opportunities are you seeing in the further digitalization of the Latin American mobile economy?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 23, 2022

5G-Related Activities Are Picking Up in Sub-Saharan Africa

"As countries in Sub-Saharan Africa, and the rest of the world, transition into a post-pandemic economic recovery phase, mobile connectivity is set to play a crucial role in defining the 'new normal,' according to the GSMA. In its latest annual report on the state of region's mobile economy, the UK-based organization that represents the interests of mobile operators worldwide adds that "Authorities see an opportunity to leverage digital technology and services to build economies that are more resilient to future shocks, enhance productivity and efficiency in service delivery, and ensure more inclusive socioeconomic development."

What is more, "In Sub-Saharan Africa, 40% of the adult population are now connected to mobile internet services. However, another 44% live in areas covered by mobile broadband networks but do not yet use mobile internet services (the usage gap)." The report importantly notes that "Addressing the main barriers to mobile internet adoption for these people, including affordability and digital skills, should be a priority for stakeholders in order to realize the potential of mobile connectivity to drive economic growth and development in a post-pandemic world."

Other key findings from the report include:
  • In 2021, the mobile ecosystem supported more than 3.2 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with $16 billion raised through taxes on the sector.
  • By 2025, mobile's contribution to the GDP of Sub-Sahara Africa will grow by $65 billion (to almost $155 billion), as the countries in the region increasingly benefit from increased take-up of mobile services.
  • By 2025, 4G will account for a third of mobile connections in the region, compared to under a fifth of connections in 2021.

The report encouragingly explains that "5G-related activities are beginning to pick up across the region. These include 5G spectrum auctions, 5G pilots and commercial trials, and efforts to develop locally relevant 5G use cases." Moreover, "While the general consensus remains that a widespread 5G rollout is more of a long-term prospect in Sub-Saharan Africa, there is a strong case to utilize the technology in some scenarios to serve certain connectivity requirements for individuals and enterprises."

With respect presence in the metaverse in Sub-Saharan Africa, the GSMA says that while "The metaverse (which continues to lack a universally agreed-upon definition) is still nascent. ... significant levels of investment in metaverse initiatives and market-size estimates reflect the opportunities possible from the rapid advancement of the metaverse over the coming years."

The report adds that "The metaverse ecosystem is growing around the world, including in Sub-Saharan Africa. Indeed, the region presents significant growth prospects for the metaverse, given its young tech-savvy population and thriving tech startup ecosystem. This is beginning to attract the attention of global metaverse ecosystem players."

The GSMA correctly asserts that policymakers can help spur inclusive development. "Mobile connectivity has the potential to accelerate Sub-Saharan Africa's digital transformation and drive socioeconomic advancement in areas such as healthcare, education, digital commerce, industrial automation and smart city infrastructure. Realizing this potential requires policy measures to support network investments and improve the affordability of digital services for consumers. Governments and regulators in the region should therefore adopt forward-looking spectrum management and fiscal policies:, which includes:
  • "creating a spectrum roadmap to ensure there is enough spectrum to meet surging demand for mobile services in both the short and long term
  • "ensuring access to mid-band spectrum, in particular 3.5 GHz, given its importance to the future of 5G
  • "accelerating access to sub-1 GHz spectrum to provide widespread rural mobile broadband services
  • "applying best-practice principles of taxation as recommended by international organizations such as the World Bank and the IMF."

Infographic: GSMA

How do you see mobile connectivity driving the acceleration of Sub-Saharan Africa's digital transformation and driving socioeconomic advancement?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 19, 2022

KOTRA Silicon Valley Forum Presents Benefits and Risks of the Metaverse

Under the theme of "The Metaverse is Yours," the Korea Trade-Investment Promotion Agency (KOTRA) in Silicon Valley, a non-profit agency operated by the South Korean government that serves as one of the 127 overseas KOTRA branches worldwide, held its annual convention, K-Global @ Silicon Valley 2022, from Nov. 7th-8th in Santa Clara, Calif. The event started with an information and communications technology (ICT) forum focused on innovation which included discussions about the metaverse and its four key aspects of content, platforms, networks, and devices. After welcoming remarks from Korean dignitaries, the event featured the following keynote speakers:
  • Shilpa Kolhatkar, who serves as Global Head of AI Nations Business Development at NVIDIA, talked about how the metaverse is the next evolution of the internet, the home to connected virtual worlds and digital twins, and a place for real work as well as play. She said NVIDIA's platforms provide enterprises the ability to develop physically accurate, artificial intelligence (AI)-enabled, virtual simulations that are synchronized with the real world. Ms. Kolhatkar also noted that digital twins are transforming industries and scientific discovery, as well as enabling developers, researchers, and enterprises who use them to design, simulate, and optimize products, equipment, and processes in real-time, before ever going to production.
  • Heesuk "Ricky" Kang, Head of Business at Naver Z, discussed how his company's ZEPETO Studio platform features 68 million Studio items sales created by over 2.3 million creators to 300 million users worldwide. Mr. Kang said ZEPETO, which is the fastest growing avatar platform in Asia, is popular among Gen Zs who express themselves while meeting, collaborating, and creating with others.
  • Jason Mayes, Head of Business, Lead Web ML & AL Developer Advocate at Google, focused his presentation on TensorFlow.js, a library for machine learning (ML) in JavaScript. He explained how TensorFlow makes it easy for beginners and experts to create machine learning models for desktop, mobile, web, and cloud. Mr. Mayes added that data can be the most important factor in the success of a user's ML endeavors and TensorFlow offers multiple data tools to help consolidate, clean and preprocess data at scale. I appreciate his assertion that TensorFlow empowers "machine learning for everyone."

The next segment of the ICT Forum focused on a panel discussion. Shawn Flynn, Principal of Global Capital Markets and host of "The Silicon Valley Podcast," moderated an insightful discussion featuring Pouneh Kaufman, Group Project Manager at Microsoft, Ray Wu, Managing Partner at Alumni Ventures, and Sean Jun, Product Manager at XL8. Key points from the moderated session included:
  • The metaverse is an evolution, not a revolution. And it is one that businesses should not ignore.
  • The metaverse may profoundly change how businesses and consumers interact with products, services and each other (i.e., enriching the customer experience and introducing virtual products).
  • The metaverse will help support sustainability efforts by saving both time and resources used to travel to attend meetings, lectures, and social gatherings (I expect the use of the metaverse will help companies achieve their environment, social, and governance goals).
  • The metaverse allows the ability to collect new data on customers.
  • The metaverse will have profound benefits in various sectors including education, healthcare, and e-commerce.

Image Credit: KOTRA Silicon Valley
The panel, however, presented a number of risks associated with the metaverse which will require new strategies and methods to build trust. What is more, as with Web 2.0 (the current internet), users of Web 3.0 will need to contend with cyberbullying and harassment issues, as well as identity theft, unauthorized data collection by corporations, and cybersecurity threats from malicious actors.

Lastly, the event featured an expo featuring metaverse and AI-related small- and medium-sized enterprises from Korea that showcased their products, services, and technology. While you can view a listing containing all of the exhibiting companies here, below are a few that I found of particular interest: 

  • Corevalue Ltd. is developing a service that can help everyone manage their health conveniently and easily. Accordingly, a smart camera and telehealth app were developed and the Dr. Clobo brand was launched in August 2020. Its healthcare camera can take detailed pictures of the mouth, ears and nose, and based on this, non-face-to-face medical consultation and health management.
  • Grebt developed a bloodless-based diabetes measurement sensor and diabetes measurement device that eliminates the fear of blood sampling and the pain of blood collection. Its urine glucose meter measures the concentration of glucose in urine and reacts blood glucose in urine. It consists of a strip, a disposable consumable that generates an electrochemical signal.
  • NdotLight is the developer of NdotCAD, a 3D/AR/VR content design tool which allows any users including non-professionals to express and share their imagination in 3D with ease. The company has lowered the hurdle for 3D content creation by making intricate 3D design process easy with increased usability while maximizing output quality by applying advanced technologies. With their 3D engine, they serve enterprise clients also by providing customizable solution to meet any B2B needs.

As we transition into the post-pandemic era, the K-Global @ Silicon Valley event provided a good opportunity to explore the future of the metaverse, AI, and other ICTs. What benefits and risks do you think the metaverse will bring to consumers and businesses alike?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 7, 2022

GSMA Report Presents Recommendations for Policymakers to Help Realize Europe's Digital Agenda

In its latest annual report on the state of Europe's mobile economy, the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, says "Mobile networks are vital to economic recovery and realizing green and digital transformation across Europe. Two years into the EU's Digital Decade, the connectivity target of 'Gigabit for everyone, 5G everywhere' has never felt more urgent." The report also notes that "The Digital Europe Program, the Connecting Europe Facility and the recovery funds provided to EU Member States offer an opportunity for operators to partner with governments to improve connectivity across society and drive post-pandemic economic recovery across the region."

While the adoption of 5G is accelerating in Europe, 4G remains remains "the dominant technology across the region, accounting for just over half of total connections by 2025," the report explains However, "4G adoption in Europe will peak in 2022 and then decline." Moreover, "The pace of 5G coverage expansion across Europe will be a key factor in the transition from 4G to 5G. Although 5G network coverage in Europe will rise to 70% in 2025 (from 47% in 2021), nearly a third of the population will remain without 5G coverage. This compares to 2% or less in South Korea and the US."

As for the mobile industry's contribution to Europe's economy and social well-being, the GSMA notes that "In 2021, mobile technologies and services generated 4.5% of GDP in Europe – a contribution that amounted to approximately €760 billion of economic value added." Furthermore, "The mobile ecosystem also supported approximately 2.6 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with €109 billion raised through taxation. Over the period to 2030, 5G technologies will drive further contributions to the region’s economy, impacting key industries such as manufacturing and public administration."

"As the first industry to have fully committed to the UN Sustainable Development Goals (SDGs)," the report notes that "the mobile industry continues to have substantial positive effects on lives and livelihoods. In 2021, the mobile industry increased its impact on all SDGs, with the average year-on-year increase accelerating compared to 2020. The average SDG impact score across the 17 SDGs reached 53, up from 49 in 2020 and 32 in 2015, meaning the mobile industry is achieving 53% of what it could potentially contribute to the SDGs."

With respect to how European policymakers can help realize the digital agenda, the GSMA points out that "As economies and societies around the world digitalize, the acceleration of 5G in Europe is necessary to ensure that traditional industrial and manufacturing strengths are not dragged down by weaknesses in the ICT sector. With the limitations of existing networks becoming more apparent amid an increasingly distributed workforce, there is also a need to ensure fair and even access for all."

To achieve this, the GSMA says "it is vital to create the right conditions for private infrastructure investment, network modernization and digital innovation. A financially sustainable mobile sector is key to the delivery of innovative services and the deployment of new networks. Policymakers should collaborate with the private sector to stimulate investment in next-generation networks that will form the backbone for Europe's economic recovery by enabling employment, entrepreneurship and innovation while helping achieve essential climate-related goals."

Practical steps that authorities in Europe can take include the following:
  • Rethink competition policy and enforcement in terms of harmonized conditions for investment and doing business.
  • Fairly allocate the costs of network traffic to the largest drivers, to deliver an economic incentive to use network capacity more efficiently.
  • Foster supply-chain diversity and competition, to improve network security and resilience through disaggregation and greater interoperability.
  • Adjust the regulatory framework to enable the data economy to thrive in Europe, by ensuring a level playing field in digital markets, services and taxation.
  • Implement fair spectrum licensing conditions and avoid excessive charges and limited durations of licenses, which can undermine investment.
  • Implement cost-reduction measures and simplification for network deployment to achieve Europe’s Digital Decade connectivity targets.

Infographic: GSMA

While I appreciate how the economic contribution of mobile industry continues to expand in Europe, it is discouraging that market dynamics are impeding European 5G progress. As GSMA's press release puts it directly: "Europe’s ambitious Digital Decade goals remain threatened by slower 5G rollout compared to competitor markets" and "tough market conditions are leaving Europe trailing its global peers." On a more positive tone, European operators are "at the forefront of cutting-edge, energy-efficient technologies and the use of renewables, with many already reaching 100% renewable electricity use across their footprints, powering their network infrastructure, data centers and other sites."

What are your recommendations for how policymakers can help realize Europe's digital agenda?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 4, 2022

Indonesia's Opportunity to Leverage Digital Assets and Wireless Technology Infrastructure to Address the Climate Emergency

If there is any chance of meeting the goal set forth in the Paris Climate Accords, an international treaty on climate change that was signed in 2015 that aims to keep the rise in mean global temperature to well below 2 °C (3.6 °F) above pre-industrial levels, various industries will need to make efforts to employ climate technology help achieve this ambitious goal to substantially reduce the effects of climate change. Having both extensive experience working in Indonesia and within the mobile industry worldwide, a report by the GSMA caught my attention that explores the potential for mobile-enabled technology solutions to enhance Indonesia's climate mitigation and adaptation efforts.

Funded by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the report notes, "Indonesia faces a unique set of climate change challenges, from extreme flooding to extended drought, changes in rainfall patterns and temperature and sea level rise." Moreover, "These risks are intensified by a dense population of 270 million people living in hazard-prone areas, and approximately 60 percent living in low-lying coastal cities. Indonesia is the world's eighth biggest emitter of greenhouse gases (GHGs). Forestry and other land use practices, energy and waste are key contributors."

The GSMA, a UK-based organization that represents the interests of mobile operators worldwide, explains that its report "presents an overview of the main climate challenges facing the country and examines the potential role of mobile-enabled technology in unlocking novel and innovative responses to climate change. All this centers around three focus areas for climate action in Indonesia: energy, waste and natural resource management."

What is more, "To create a clear picture of the distribution of climate technology in Indonesia, including where investment is primarily focused, the Mobile Innovation Hub Indonesia team reviewed publicly available literature and compiled a list of 48 examples of technology-enabled climate solutions currently deployed, piloted or in the proof-of-concept stage in Indonesia’s energy, waste and natural resource management sectors." The report also points out that "The highest concentration of climate technology was found in the energy and waste sectors, with just under half of climate solutions relating to waste. Technologies for sorting and recycling in the waste sector, as well as energy management and natural resource management are some of the most prevalent solutions."

"Interviews with stakeholders, including MNOs, mobile infrastructure organizations, government officials and ministries, revealed technical, political and behavioral barriers that are limiting the uptake of mobile-enabled solutions for climate mitigation and adaptation."

Three key barriers that is slowing uptake of mobile-enabled solutions in Indonesia include:

Technical barriers: The availability of mobile and digital infrastructure and access to affordable and connected devices. Although robust government approaches are making strong headway, there are still regional and remote island locations without sufficient connectivity. When it comes to implementing climate technologies these are important considerations.

Political barriers: The political, social and ecological decisions and actions affecting climate change decision-making or uptake of mobile-enabled technologies.
  • Collaborative environment: Limited collaboration between governments, the private sector and communities
  • Data sharing and management: Lack of data integration and reliance on manual data collection processes
  • Policy and regulation: Lack of policy incentives and weak regulations that hinder industry
  • Investor appetite: Investments in Indonesia focus on technology in general rather than climate technology specifically
  • Access to capital: Weak appetite for investment has left innovators with low access to capital
  • Talent: Limited access to talent to develop, roll out and monitor mobile-enabled technology solutions
Behavioral barriers: The individual and collective assumptions, beliefs, values and worldviews on climate change responses:
  • Unclear value propositions: Inability to demonstrate the value proposition to end users, coupled with cultural barriers
  • Digital literacy: A barrier for end users that lead to suboptimal use or the need to embed manual back-up methods when rolling out solutions

To address these barriers, the GSMA recommends an ecosystem approach in which mobile-enabled solutions would provide a clear path to achieve Indonesia's climate goals. This would include:
  1. Investing in mobile-enabled connectivity and digital and climate literacy to reach the most rural areas and offer innovative climate technologies.
  2. Building trust between stakeholders operating in the same ecosystem, creating forums to share lessons, building on successful innovations and developing science-based narratives to strengthen coordination.
  3. Building the capacity of the public sector and communities to implement or use mobile-enabled climate technology to increase uptake.
  4. Using a human-centered design (HCD) approach to ensure climate technology is relevant and the value proposition is clear to end users.

I appreciate how this report explores the potential for mobile-enabled technology solutions to enhance climate mitigation and adaptation efforts in Indonesia. It also presents a useful overview of the main climate challenges facing Indonesia and examines the potential role of mobile-enabled technology in unlocking novel and innovative responses to climate change.

What are you recommendations for how emerging markets like Indonesia can leverage their digital assets and wireless technology infrastructure to address the climate emergency?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 2, 2022

Southeast Asia's Digital Economy Could Reach $1T GMV by 2030

Southeast Asia's (SEA) top digital economies grew faster than expected in 2022 and are set to reach $200 billion in total value of transactions made this year, according to a report by Google, Temasek and Bain & Company. And in the face of economic headwinds, the future looks bright for SEA as the report says investors remain confident in SEA's long-term prospects and the opportunities they bring in up-and-coming countries and sectors.

Among the ten countries that are members of the Association of Southeast Asian Nations (ASEAN), which serves as a political and economic union of member states promoting intergovernmental cooperation and facilitates economic, political, security, military, educational, and sociocultural integration between its members and countries in the Asia-Pacific, the report focuses on ASEAN's six largest members: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. The report's key findings include:
  • Navigating macroeconomic headwinds: Just as countries in SEA embarked on a return to pre-pandemic normality, global headwinds started to blow, threatening to derail a full economic recovery. Rising interest rates and high inflationary pressure have also been impacting consumer demand, particularly the discretionary sectors that sit at the core of the digital economy.
  • Approaching $200B in rough seas: Despite these macroeconomic headwinds, SEA's digital economy remains on course to reach ~$200B in gross merchandise value (GMV) in 2022. In fact, it is reaching this threshold three years earlier than expected in the e-Conomy SEA 2016 report. Digital adoption continues to rise even today, albeit at a slower pace than the steep acceleration seen at the height of the pandemic.
  • Urban consumers still drive the economy: Across urban areas, affluent consumers and their young digital native counterparts continue to represent the largest portion of the digital economy. For these two segments, the opportunity for growth lies in deeper engagement, including more frequent and valuable orders, subscriptions, or cross-selling services such as consumer lending. Meanwhile, adoption and spend by urban consumers 'on a budget' and suburban consumers remain lower, leaving digital players to figure out more economically sustainable ways to serve them.
  • Sectors encounter different growth trends: SEA's digital economy sectors are following three distinct trendlines. E-commerce follows an S-shaped growth curve, in which it continues on its growth trajectory, but from a higher starting point after the steep acceleration during the pandemic. Others, such as food delivery and online media, are returning to their trendlines after a two-year spike. And lastly, travel and transport are moving along a U-shaped recovery, with pre-pandemic levels still some miles away.
  • Favorable conditions uplift financial services. The adoption and usage of digital financial services (DFS) have flourished across the board, propelled by a shift from offline to online and the positive financial market conditions of the last few years. With rising interest rates and a riskier lending environment, however, fintech players, platforms, and newly launched digibanks will see their business models stress-tested. Meanwhile, banks and insurance companies are rapidly digitalizing their services and maintaining a stronghold on affluent consumers.
  • Prudence clouds tech investments. Tech investments in SEA remain robust this year. However, the funding landscape tells a tale of two ends: early-stage deals are continuing with strong momentum, while late-stage deals are seeing more pronounced dips and a pause in IPOs. Meanwhile, DFS has overtaken e-commerce in investment volume. Investors will be cautious in the short-term as most do not expect a return to 2021 deal activity and valuation peaks in the next couple of years. Nonetheless, most investors remain bullish in SEA's medium- to long-term potential, and have $15B dry powder on hand. The report notes that increasing interest in emerging markets, like the Philippines and Vietnam, and in nascent sectors, like SaaS and Web3.
  • Towards a sustainable digital economy. The SEA digital economy is expected to produce 20MT of emissions by 2030—significant, albeit an order of magnitude lower than other environmental impact-intensive sectors. Digital players have been rolling out reducing and recycling initiatives, but more can be done to further lower impact by up to 30-40% over time. In the meantime, platforms can play a positive role in raising awareness among SEA consumers, and move towards closing the prevailing ‘say-do’ gap.
  • Economic contribution meets social concerns. On the social front, the digital economy has created 160K high-skilled jobs and indirectly supports nearly 30M jobs, while platforms have enabled over 20M merchants and 6M restaurants to grow their businesses online. Concerns exist, nonetheless, around the welfare of worker-partners, necessitating dialogue between institutions and platforms.
  • Charting the course for the digital decade. SEA's 'digital decade' has just begun. The course to exceed $300B by 2025 depends on the shape of recovery amid today's uncertainties, while the path to a $600B-1T digital economy in 2030 remains geared on SEA's economic fundamentals. A growing emphasis on sustainable growth means profits may become as relevant as GMV when it comes to measuring progress.
Existing enablers like payments and logistics have come into place, but the talent challenge is now shifting from quantity to quality. New enablers, like digital inclusion of consumers ‘on a budget’ and suburbanites, are key to unlocking SEA's full potential. Progress has been limited, however, with institutional support potentially the missing link to bridging the divide. All in all, SEA's digital economy is grounded on strong social and economic fundamentals, and offline to online trends, which provides much to be optimistic about especially as the region settles into its digital decade.'

Over the past 20 years, I have observed Southeast Asia's impressive economic rise. When my clients supporting the digital economy ask which global markets should they consider for corporate expansion, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam are almost always at the top of my list. Despite economic headwinds, I remain optimistic about the sustainable development of the region's digital economy which could reach $1 trillion GMV by 2033 provided such growth is pursued in a sustainable way.

What are your thoughts about SEA's future economic outlook?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 29, 2022

The Value of Bosses Walking in their Employees' Shoes

While dining at a restaurant, my father always expressed his appreciation when the owner walked around the dining establishment. Not only does "walking the floor" provide owners with the opportunity to connect with customers, doing so allowed them to understand what their employees were experiencing in real time. But an owner who delivered food from the kitchen, refilled water glasses or helped clean the table for the next customer truly impressed my father. An article by The Economist focuses on how bosses can understand what life is like for the staff. "Walking in employees' shoes is a way for bosses to understand what impedes productivity, what saps morale and what makes workers feel valued," the article notes.

One way of obtaining the employees' views on what is life is like working at the company is through surveys. However, as the article points out, "Even if a boss genuinely wants to hear the unvarnished truth, employees may not be comfortable delivering it. Anonymous surveys can help encourage honesty, as can exit interviews, but even in these settings, workers may temper their views." What is more, "Reviews on sites like Glassdoor can be brutal, but the motives of the people posting them are not always transparent. Corporate-messaging apps like Slack can provide a partial window into how some teams are getting on, but surveillance is not a form of empathy. And none of this is the same as knowing what it is actually like to be an employee."

I agree that "it is good for managers to spend time doing the same work as their" employees. The article also explains that "Airlines and retailers have run schemes that involve executives working in front-line roles in airports and on shop floors. DoorDash, a delivery app, has a program called WeDash that requires salaried employees to make regular drop-offs. And bosses can do things for themselves that people without assistants must navigate alone. Filling out expense forms is a chore: everyone should have to do their own, at least occasionally. By default bosses should fly in the same airline class as their colleagues do. And so on."

But, the article importantly concludes that it is equally important for employees to understand what a manger experiences: "If managers can learn a few things by walking in employees' shoes, there is also value in workers thinking about what life is like as a boss. It is not all business-class travel and people agreeing with you. Imagine getting in a lift and conversation around you always dying. Imagine being grumbled about all the time, or knowing that your absence causes a general lightening of the mood. Imagine not being able to kick a difficult decision upstairs. The boss wears much nicer shoes but they can still pinch."

What are your recommendations for how managers can gain the employees' perspective, which in turn could improve morale and improve productivity?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 27, 2022

Korean Companies Demonstrate Their Innovative Tech Solutions at TechCrunch Disrupt 2022

TechCrunch Disrupt resumed its in-person event in San Francisco from Oct. 18th-20th, 2022. The conference's purpose is to bring together the global startup community to discover insights, collaborate, and celebrate achievements that have defined each founder's journey and for those yet to come in the future. At the invitation of the Korea Trade-Investment Promotion Agency (KOTRA), a state-funded trade and investment promotion agency operated by the South Korean government, I had the opportunity to visit the conference's Korea Pavilion and meet with startup founders and their colleagues. Among the 20 great companies that demonstrated their innovative products and services at the pavilion, which was co-hosted by the Korea International Trade Research Institute (KITRI), there are a few are worth mentioning based on my professional and personal interests (the program book containing a description of all 20 companies may be viewed here).

Cochl created an artificial intelligence (AI) platform specializing in ambient sound recognition. Use cases include public safety (faster response to shooting incidents, vandalism detection for buildings, and violence prevention by scream/yell monitoring), traffic monitoring (automatic car accident report and illegal car honking noise monitoring), and autonomous driving (ambulance and police car siren detection for giving right-of-way action and car window break monitoring). Another valuable use case is in the defense sector by using smart glasses with gunshot analysis, submarine and torpedo type analysis, and surrounding environment monitoring with unmanned ground vehicles.

Dabeeo provides global geospatial information based on AI/ML (machine learning) technology by reading and interpreting the earth to help customers build or modify digital maps. Its STUDIO for maps is a SaaS platform that makes creating, editing, and managing map data convenient and intuitive to use. This website provides several examples of how retailers, showrooms, factories, stadiums, and exhibition centers are using the cloud-based platform.

TheWaveTalk developed a technology that uses laser multi-scattering and deep learning to measure foreign substances in water with great precision. Through the technology, they developed a home water quality meter called the WaTalk, which scatters light inside the water using a laser and analyzes small signals of fine particles such as bacteria, virus, organic pollutants, and microplastics to determine the degree of contamination. The company says its product is 20-50 times cheaper than professional measuring equipment.

Image: Willog
 is simplifying the complex cold chain industry. (A cold chain is a low temperature-controlled supply chain network.) The company's patent-based monitoring device collects various data during the entire logistics process, and displays it on a QR code. Willog's data monitoring device, the One Time QR (OTQ), which can be placed on vehicles, shipping containers or pallets, allows instant confirmation of temperature records by scanning the QR code with a smartphone camera and does not require other training or equipment. Effective field operation response is possible without extra time or procedures spent between the driver and the personnel to check the temperature. Where the device cannot be physically retrieved, Willog's OTQ-N uses near-field communication (NFC) to facilitate logistics monitoring within a flexible environment.

While KOTRA provides a useful service in the promotion of trade and investment with 128 Korea Business Centers located in 84 countries, the agency also facilitates global people-to-people exchange and technological exchange. I appreciate having the opportunity to meet with ambitious startup leaders who are building companies that improve the way we live, work, and play.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

October 17, 2022

A Framework for Improving ESG Reporting in the Mobile Industry

In my previous post about a report published by GSMA on how the mobile industry is impacting the United Nations' Sustainable Development Goals (SDGs), I referenced a framework, ESG Metrics for Mobile, developed by GSMA alongside EY, a consultancy, and the Yale Center for Business and the Environment. Several readers sent comments asking for additional information about the framework, which is a first-of-its-kind mobile sector ESG reporting framework featuring ten industry-specific key performance indicators (KPIs). Featuring ten industry-specific KPIs, the framework covers a range of key material topics for the sector, from energy consumption and waste reduction to digital inclusion and data protection. The common metrics are designed to simplify and harmonize environmental, social, and governance (ESG) disclosures and complement universal reporting, by adding a crucial industry-specific lens.

A white paper authored by representatives from EY explains, "There is a critical need for more effective and consistent approaches to measuring and communicating ESG performance." Moreover, "Sustainability is one of the defining issues of our generation. Consumers, employees and regulators are increasingly vocal regarding their expectations for companies to act responsibly and to demonstrate how they create value to society."

The report also notes that "EY research has found that 90 percent of investors attach greater importance to companies' ESG performance when it comes to their investment strategy and decision making than they did before the global pandemic. Mobile operators recognize that, by placing greater focus on their ESG performance, they can build stronger relationships with stakeholders and create financial value."

The report's key findings include:
  • Mobile operators currently report on most of the industry's key topics, but not always in a consistent way
  • EY's proposed industry KPIs are designed to enhance consistency and impact
  • The mobile industry can use the proposed KPIs to measure and improve ESG performance
  • Attitudes towards ESG are shifting
  • Mobile operators are uniquely placed to accelerate progress on a range of ESG issues
  • Measuring and communicating ESG performance is critical

During the consultation process, five criteria were used to define the minimum requirements that a sector KPI should meet.
  1. Meaningful for stakeholders: The KPI will influence the assessments and decisions of external stakeholders, including investors.
  2. Decision-useful: The KPI will influence internal decision making and convey information to the mobile operator that can substantively enhance the company's ability to create value.
  3. Comparable: The KPI will enable meaningful peer-to-peer comparisons across geographies, and the definitions and calculation methods are transferable to most companies.
  4. Feasible: The KPI can be implemented by the company. It is simple and short, aligns to existing standards where possible, and uses standardized measurements. The underlying methods and approaches are robust and follow accepted approaches.
  5. Best indicator: For the given topic, the KPI represents the best indicator of the company's ability to create value in the short, medium and long term.

In reference to the image on the right presenting the mobile industry's framework, the report explains: "Taken together, the universal and industry-specific KPIs will help create less burdensome and more meaningful data collection and reporting processes, and provide greater consistency in the information disclosed about operators' ESG performance." What is more, "This will enable operators to take a proactive position in providing relevant material disclosures, and supply the tools and setting for data preparers and data users to have a more enhanced and constructive dialogue on ESG performance."

In addressing the next steps for mobile operators and other stakeholders, the report presents "three critical steps that mobile operators and their stakeholders can take to ensure that the industry ESG framework accelerates performance across the mobile industry and beyond":
  1. Align company's leadership behind the ESG KPIs. "ESG reporting should be owned by the Board, CEO and CFO — with relevant inputs from functional teams. There should be clarity around what ESG-related transformation means for corporate strategy, how investments in sustainability contribute to financial performance, and how the KPIs can help organizations measure success."
  2. Raise awareness of the framework with the investment community and other external stakeholders. "Open and ongoing conversations between operators and investors will also be a critical step to refining and validating the KPIs. Operators can help investors understand which ESG issues are most material to their organization and be able to frame ESG discussions in the context of financial performance. These dialogues should also ensure that the KPIs provide the information that investors need to make assessments of the company’s long-term value. At the same time, socializing the KPIs with policymakers, partners or customers in other industry verticals can also pave the way for better alignment on cross-sector enablement metrics in years to come."
  3. Adopt the metrics in future reporting, measure your performance and deliver improvements. "Operators can begin to test their ability to report against the KPIs and incorporating them into their ESG reporting cycles. This will generate the evidence, insights and experience needed to further refine the KPIs and draw better, more compelling links between ESG scores, stakeholder value and financial performance. At all stages, operators should ensure they take action where needed — whether that relates to improving KPIs themselves, or reorienting systems and processes to deliver more relevant and timely information that avoids duplication. Measuring sustainability performance is the critical step operators should take to move from ambition and strategy towards successful execution."

As operators adopt this new ESG framework, the metrics will provide stakeholders with a deeper understanding of the industry, and where its most material impacts and value are generated.

Do you support the proposed framework for improving ESG reporting in the mobile industry? Are there aspects of the framework that can be applied to other industries?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.