March 24, 2024

GSMA's Annual Report on the State of the Global Mobile Industry Looks at How Operators Are Exploring the Potential of genAI

According to the GSMA's most recent annual report on the state of the global mobile economy, "Mobile connectivity remains pivotal in driving digital innovation. It empowers individuals and enterprises with a wide array of transformative technologies while also aiding governments in delivering positive societal impacts."

Produced by GSMA's in-house research team, GSMA Intelligence, these reports contain a range of technology, socio-economic and financial datasets, including forecasts out to 2030. This year's report points out that "The impact of mobile connectivity is evidenced by its contribution to the economy. In 2023, mobile technologies and services generated 5.4% of global GDP, a contribution that amounted to $5.7 trillion of economic value added, and supported around 35 million jobs."

The report's key findings include:
  • 5G will account for over half (51%) of total mobile connections by 2029 and reach 56% adoption by the end of the decade.
  • 58% of the world's population were using mobile internet at the end of 2023, representing 4.7 billion users and an increase of 2.1 billion since 2015.
  • Three billion people are still not using mobile internet despite living in an area covered by mobile broadband networks (the 'Usage Gap'), underscoring the urgency of addressing barriers to adoption highlighted in the GSMA's 'Breaking Barriers' campaign, such as handset affordability and literacy/digital skills.
  • 5G is expected to benefit the global economy by more than $930 billion in 2030, of which the primary beneficiaries are expected to be manufacturing (36%), public administration (15%) and the services (10%) industries.

Infographic: GSMA Intelligence

The are two items that I found of particular interest. One is how eSIM adoption continues to gather pace. "The number of eSIM consumer devices launched has grown significantly over the last five years and the number of commercial eSIM services is also on the rise. This has set the foundation for eSIM adoption to gather pace over the course of the decade," the reports notes. What is more, "GSMA Intelligence's baseline scenario predicts around 1 billion eSIM smartphone connections globally by the end of 2025, growing to 6.9 billion by 2030. This would account for around three quarters of the total number of smartphone connections by 2030." The GSMA claims that "North America will be the region with the fastest rate of eSIM adoption due to Apple's launch of eSIM-only smartphones in the US in September 2022."

On the topic of mobile operators exploring the potential of generative AI (genAI), "the range of genAI applications is broad," the GSMA notes. "Much of the early work has focused on using the technology to improve customer services and support sales and marketing activities. However, as genAI matures, there is potential for operators to not only support internal use cases but generate new revenues from AI investments." Examples of operators generating new revenues from investments in genAI include "SK Telecom's bold AI pyramid strategy ... as do recent product announcements from the likes of KT, NTT and SoftBank."

As for maximizing the AI opportunity, the report says "The speed of AI adoption in the mobile industry may depend on several factors. First, mobile operators often face difficulties in accessing the internal data needed for training AI models, hindered by the diversity and volume of data sources. Additionally, operators must ensure the accuracy of AI-generated insights, as reliance on inaccurate data may lead to flawed decision-making."

With respect to ethical concerns around AI that still need to be addressed, the report boldly asserts that "The mobile industry is committed to the ethical use of AI in its operations and customer interactions to protect customers and employees, remove any entrenched inequality and ensure that AI operates reliably and fairly for all stakeholders. The GSMA's AI Ethics Playbook serves as a practical tool to help organizations consider how to ethically design, develop and deploy AI systems."

What trends are you seeing that are shaping the global mobile ecosystem?

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.

March 21, 2024

Singapore, Denmark and the US Are Predicted to Have the Best Business Environment From 2024–28

The Economist Intelligence Unit's (EIU) business environment index measures the attractiveness of the business environment in 82 countries and territories, examining 91 indicators spread across 11 different categories. According to the latest business environment index, "Singapore, Denmark and the US will be the three geographies with the best business environment over the next five years." What is more, as reflected in the chart below, "Several west European economies, alongside Canada, Hong Kong and New Zealand, make up the remaining top ten best places in the world to do business. These are all advanced economies and long-standing strong performers in our index, so tend to be safe bets for investments. However, both headline and per capita GDP growth rates are likely to be fairly stable and slow."

The EIU also explains, through the image below, "geographies that see the biggest improvements in score in our index in the next five years (2024-28) compared with the past five years (2019-23). These are not the same economies that will see the fastest real GDP growth in 2024-28—although Qatar and India will grow very strongly—rather, they are places where we expect the most significant policy improvements, infrastructure investment or growth in market opportunities." The UK-based organization adds that its "model suggests that their improvement in our business environment index may subsequently result in an uptick in per-head growth in real GDP, investment spending and FDI."

Regarding those countries already in the EIU's index that scored strongly, the report points out that "Qatar has implemented a US$220bn investment program over the past decade, mainly focused on infrastructure. Its business environment has benefited from the expansion of Hamad International Airport, the road network and tourism infrastructure." Furthermore, Lithuania has long been open to trade and investment, but a major tax reform will soon make it more attractive by extending corporate tax relief and shifting the tax burden away from labor. Greece sees the biggest improvement in the business environment in our index over this period. This reflects the impact of a pro-business government, led by the New Democracy party, now in its second term, that has undertaken reforms, cut taxes and boosted business confidence."

With respect to the world's most populous nation, the EIU says "India is the only single-country market that offers a potential scale comparable to that of China." The South Asia country's "youthful demographic profile promises both strong demand and good labor availability. Alongside solid economic fundamentals, digital infrastructure and favorable demographics, more policy support is being introduced to attract manufacturing investment."

Other geographies further down the EIU's ranking where they expect a strong improvement include Serbia, which "has seen a virtuous circle from its openness to FDI in the past, which has driven growth and attracted further investment, including in higher-value-added sectors. A recent strengthening of macroeconomic policy and institutions supports market stability."

Moreover, "Argentina's sharp improvement in score largely reflects the free-market reforms that we believe the administration of the president, Javier Milei, will introduce—in particular, policies to boost private enterprise and competition and attract foreign investment. In the Dominican Republic, the current Abinader administration, which we expect to be re-elected in May, will continue its business friendly policies. It is encouraging investment into the tourism sector (for example with port upgrades for cruise ships), and improving logistics infrastructure to become a regional transport and distribution hub.

Places with weak business environments but potential for improvement include Kenya, Angola, and Venezuela. As the EIU explains:
Kenya passed a Privatization Act in 2023, which will help to trim the state’s excessively large economic footprint while boosting the private sector. Angola, while close to the bottom of our rankings, is arguably a better place to do business than five years ago, with the Lourenço administration using its improved ties with the US to revamp key legislation, bringing the country's financial sector into line with international standards and reducing the tax burden on the non-oil sector. In contrast, Venezuela is the worst ranked in our index, and will remain so despite a slight improvement after its painful economic collapse.
As I have stated previously on this forum, Southeast Asia has one of the world's most attractive business environment. Among the ten members of the Association of South‑East Asian Nations (ASEAN), the EIU highlights Thailand as a market that "saw a notable improvement in our business environment index in 2021-22, followed by an acceleration in growth in real GDP per head in 2022-23." The report says Thailand was among the first movers in ASEAN "to give special incentives to invest in electric vehicles and green industries. At the same time, many infrastructure projects were being finished—notably the mass transit expansion in the capital, Bangkok—or under way, including as part of the country's Eastern Economic Corridor megadevelopment project." The report adds that "Thailand has benefited from—and encouraged, with preferential policies—the China+1 trend as investors seek to diversify away from China, often towards India and ASEAN."

Do you find this report helpful in determining which countries to invest in or avoid?

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.

March 8, 2024

Report Provides Recommendations on How to Achieve Enduring Board Effectiveness

While drafting a post on this forum about a report published by EY that provides recommendations on how boards of American companies can confront crisis and embrace opportunity, I found another report produced by the consultancy that provides "a comprehensive approach and framework for understanding and enhancing board effectiveness."

Authored by Kris Pederson, EY Americas Center for Board Matters Leader, this report presents a framework comprised of "a series of elements that must be intact for board performance to flourish. Two of these are foundational 'effectiveness' pillars that guide the work to be done by the board. These flow through five 'systemic' layering elements that embody the board's operating environment." She adds that "With a strong mission and engagement model supported by effective information practices, boards have a solid foundation for effective performance. The systemic board governance elements encompass the operating model and principles of an effective board."

According to Ms. Pederson, the first pillar of board effectiveness, board mission and engagement model, "The board's fundamental mandate is to provide insight, foresight and oversight on mission-critical issues that drive the company's governance as it advances its strategy, operations, financial performance, and stakeholder engagement to drive long-term corporate value. Guiding this mission are the board's own values.

Evidence of an effective board mission and engagement model includes:
  • The board's corporate governance guidelines articulate the board's purpose, values and core engagement strategy and practices.
  • Every board member can consistently state the board's mission and the company’s purpose, strategy and long‑term value proposition.
  • Board members and management are in clear agreement about the mission‑critical company issues that demand board oversight. Each board member individually embodies core traditional leadership values and skills, including ethics and integrity, diligence and conscientiousness, executive‑level communication skills, and a commitment to progress.
  • There is clarity as to the company's core policies, strategies and risk management approaches, and when and how the board engages to oversee them.

Regarding the second pillar of board effectiveness, information infrastructure, Ms. Pederson explains that "Effective boards are rooted in the diligent design and maintenance of reliable and efficient information practices that provide timely access to the highest-quality information and people (e.g., advisors, stakeholders, customers) needed to identify, illuminate and address evolving mission-critical issues." Moreover, "Boards should be specific with management about their information needs so that management is not overburdened with immaterial questions and potentially driven to expand board materials to include tangential information or excessive detail."

Evidence of effective board information infrastructures include:
  • Board meeting materials include a cover memorandum that succinctly describes in a clear narrative form all items on the board agenda.
  • Technical documents, such as financial reporting, equity compensation plans, merger agreements or other material contracts, are fronted with a one- or two-page (max) executive summary of material terms.
  • All board materials are presented with draft resolutions clearly specifying the matters the board or its committees are being asked to act on.
  • Boards and management are diligent about how they engage with each other to share information, respecting established communications channels and security issues.
  • Neither the board nor management feels unduly overburdened with information overload or requests for information, respectively.
  • The board regularly hears perspectives from third parties on critical issues and complex matters.

With respect to "Board composition, structure and leadership," the report notes that "Making effective determinations about the competencies, backgrounds and experiences needed on the board is key to building a strong board, keeping in mind that diversity across multiple dimensions is essential to board effectiveness."

Moreover, "Based on an understanding of the companies' strategies and emerging mission-critical issues, key stakeholder demands, and increasing regulatory scrutiny of board effectiveness, boards
should develop and maintain, in collaboration with senior management, a competency map (or board skills matrix) that identifies and scopes the skills and type of experience needed on the board. This analysis, which should have a forward-looking orientation, enables a more accurate and objective determination of effective board composition, size and committee structure."

Evidence of effective board composition, structure and leadership include:
  • The board maintains, in collaboration with management, a detailed board skills matrix in assessing board size and composition.
  • The board's corporate governance guidelines and committee charters clearly allocate roles and responsibilities between the board and its committees, including mission-critical issues such as strategy, risk, culture, compliance, technology, cybersecurity, and climate change.
  • Board members periodically move across different committees, and committee structure and composition are reasonably fluid based on the company's needs.
  • Committee chairs regularly collaborate on the most effective ways to govern overarching board responsibilities relating to strategy, risk and long-term value.
  • Board and committee oversight responsibilities are periodically revisited as business environments and priorities shift.
  • Committee chairs report to the board when they need additional resources, refreshed competencies or workload reallocation.

Regarding board dynamics, Ms. Pederson explains that "A positive board dynamic is one of the most critical elements in achieving board effectiveness. Many also believe that consistently maintaining a positive board dynamic can be challenging. For this reason, all board members, especially board leadership, need to work to nurture and consistently demonstrate respect and trust for each other." She adds that "Without a culture of respect and trust, boards cannot engage in constructive debate and instead devolve quickly into dysfunction. In their discussions and deliberations with each other, at meetings and informally, all board members should show evidence of their commitment to the board's mission, values and engagement model through active, informed and productive engagement."

Evidence of effective board dynamics include:
  • Director participation at meetings is balanced: No single director or group of directors dominates agenda formulation, discussions or deliberations, and no single director or group of directors is passive or disengaged.
  • If interviewed, each director would state that he or she felt included, heard and respected, and that all members demonstrate respect and trust.
  • There are no "camps" or "factions" among board members or among board members and management.
  • Directors say something when they see something, and the board takes appropriate action.
  • The board engages in informal ways between meetings to enhance trust and build personal connections.
On the topic of board decision-making, the report says "Boards should be highly conscientious and intentional about when and how they make decisions. Leading boards develop a process to support effective decision-making, based on applicable state and relevant laws and the board's mission and engagement model.

Ms. Pederson adds that "For every matter before them, boards should question and assess how well the decisions they may make align with the company's purpose, culture, strategy, risk tolerance profile, and sustainability goals. Boards need to spend the time, access appropriate resources and consider alternative scenarios and outcomes before making final decisions."

Evidence of effective board decision-making include:
  • The board and management maintain a delegated authority matrix, specifying corporate business matters that require board decisions.
  • The board maintains a checklist of approval requirements in its organizational documents and under relevant law.
  • The board chair establishes appropriate transparency around director voting by discouraging informal decision-making discussions and overseeing that the board's books and records are in order.
  • The board does not make decisions without sufficient considerations about the quality of the information, timing, and risks and rewards.

As for the final element on systemic board governance, "Board outcomes and evaluation," Ms. Pederson points out "The ultimate outcome of a high-performing board is reflected in the success and prosperity of the business itself. A board should see the evidence of its efforts manifest in company financial performance, including growth through the innovation it fosters and cost reduction from the risks it helps the company avoid."

She importantly adds that "Indeed, investors, regulators and other stakeholders are seeking greater board effectiveness and are increasingly interested in board evaluation processes and results. The final component in the pyramid," according to Ms. Pederson, "includes a board evaluation process that not only results in a more effective board, but also leads to investor trust."

Evidence of effective board outcomes and evaluation include:
  • The board, its committees and each director conducts a self-evaluation annually, enhanced by third-party facilitation when needed.
  • The evaluation process results in the identification of concrete actions the board agrees to take within a specified period to enhance effectiveness through the achievement of specific milestones.
  • The board's collective competencies map to the company's strategic and technical needs.
  • The company's disclosures around the board evaluation process enhance trust in the board.

Ms. Pederson's report concludes with the following:
A highly effective board of directors is a great asset to a management team and a critical component of company success. Our experience finds that boards must deliberately manage the board effectiveness pillars to be certain they are working on mission-critical elements of the business and procuring the right information to drive decisions. Also, high-performing boards carefully address each element of the systemic governance framework to establish the use of an optimized approach that directly drives board value.

Questions for the board to consider:
  • How does the board evaluate whether management is "living" the company's purpose and values as described in the company's code of business conduct and ethics?
  • How does the board engage with management in rigorous ongoing analyses of material and mission-critical growth drivers, risks and opportunities?
  • How can board materials evolve to include narrative stories that explain matters being presented to the board as well as practical dashboards, graphics, data, and key performance indicators?
  • On mission-critical issues, how does the board diversify its information sources beyond management by engaging with independent advisors to broaden its perspective?
  • Do the board's corporate governance guidelines provide clear standards for director qualifications, continued service, tenure, and removal?
  • Has the board discussed using additional committees to address expanding board or committee roles and oversight responsibilities, particularly around risk, technology, cybersecurity, climate change, human capital management, and material ESG matters?
  • Does the board calendar make sufficient time for board engagement with management, key investors and other stakeholders, and independent advisors?
  • Is every director consistently prepared for board and committee meetings, as demonstrated by his or her engagement and contribution? And if not, how is that feedback provided?
  • Is the board effectively managing and leveraging diversity in backgrounds and perspectives? Is there sufficient diversity in views to promote progress in the board's mission?

What are your recommendations for how to achieve enduring board effectiveness?

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.

March 1, 2024

How Technology Can Drive the Transition to a Superior Future

According to a report produced by Force for Good, a project of the F4G Foundation, a non-profit limited liability company incorporated under the laws of England and Wales, "technology can provide the means to create a sustainable, secure, and superior world. It can help us finish the job of liberating the remaining populations across the world, providing inclusion for all in finance, education, healthcare, housing, dignified work, and a technology enabled world."

The report, entitled Technology Driving the Transition to a Superior Future, includes a letter authored by Ketan Patel, chair of Force for Good's advisory council. Mr. Patel points out that the 2023 "report identified 19 technologies that the largest 100 tech companies were pursuing in a bid to lead the world into a new era. We found that these companies had universally embraced ESG, were actively making their operations across the globe sustainable, and the leaders among them were making a positive impact on society at large." Mr. Patel also notes the "19 technologies identified continue to underpin the efforts of the largest and most resourceful companies. Importantly, what is clear is that a small sub-set of these technologies are the most powerful arbiters of the future, and these are AI, quantum computing, nanotech, genetics, and fusion." 

The 19 technologies include artificial intelligence, big data analytics, quantum computing, internet of things (IoT), robotics, drones, autonomous vehicles, smart grid, renewables, energy storage, next generation nuclear (fusion), eMobility, virtualization (VR, ER, AR, XR, MR), blockchain, material science, 3D printing, nanotechnology, and space technology.

Below are the report's key messages:
  • Existing technologies enabled by AI can close nearly 50% of the SDG gap, if scaled and deployed globally, and can help position the world for the transition to the Information Age; this can bridge the otherwise unsurmountable capital of US$175 trillion needed for the SDGs, and a shortfall of US$137 trillion.
  • The tech industry is the critical player required to take the lead given its expertise, products, influence and ability to access capital, rolling out technology at scale across the world and driving the world into the next era; three of the ten initiatives identified - universal connectivity, leveraging generative AI across the SDGs, and mass financial inclusion - together contribute to nearly 30% of the SDGs and lay the foundations for levelling up the world.
  • 19 core technologies have been identified as the focus of the top 100 tech companies in competing for the future and are also the focus of geopolitical competition between countries and power blocs, and their control is increasingly seen as a key strategic asset for nation states.
  • While the US has the clear lead from a macro and technology perspective, China has drawn level with the EU on key macro fronts and built a strong position in many of the core technologies, the EU has the biggest market which positions it as a rule setter for others, and India is now rising to take a position among these power blocs; US internal political divisions and politicization of the transition among other issues represent noteworthy risks to its leadership position and ability to lead the world into the next era.
  • The risks of a dangerous transition including global climate, migration and socio-political-economic disasters are heightened unless the two-thirds of the world that were not material beneficiaries of the Industrial Age, predominantly in the Global South and also left behind in advanced nations are included; a post transition world, built on a more inclusive platform, can be powered by the identified core technologies, and a suite of others currently under development including fusion, gene-editing and nano-tech, creating a more secure, sustainable and superior future.

The report also presents AI's impact on each SDG:

SDG #1: No Poverty
  • Predictive analytics to identify regions at risk of poverty.
  • AI-driven agricultural technologies to increase crop yields for small farmers.
  • Automating and improving the efficiency of aid distribution.
SDG #2: Zero Hunger
  • Precision agriculture for optimizing food production and reducing waste.
  • AI in supply chain management to reduce food spoilage.
  • Development of AI-based nutritional planning tools.
SDG #3: Good Health and Well-Being
  • AI in diagnostics to improve disease detection and treatment.
  • Personalized medicine for tailored healthcare solutions.
  • AI-driven research in drug discovery and epidemic tracking.
SDG #4: Quality Education
  • Adaptive learning platforms for personalized education.
  • AI tools for language translation to overcome education barriers.
  • Analyzing educational data to improve teaching methods.
SDG #5: Gender Equality
  • AI algorithms to identify and reduce gender biases in hiring.
  • AI-driven platforms to support women entrepreneurs.
  • Analyzing data to better understand and address gender disparities.
SDG #6: Clean Water and Sanitation
  • AI for monitoring and predicting water quality issues.
  • Optimization of water distribution systems in urban areas.
  • AI in wastewater treatment processes for better efficiency.
SDG #7: Affordable and Clean Energy
  • AI in optimizing renewable energy sources.
  • Predictive maintenance for energy infrastructure.
  • Enhancing energy efficiency in buildings and industries.
SDG #8: Decent Work and Economic Growth
  • AI-driven job market analytics for skill development.
  • Automation to increase productivity and create new job opportunities.
  • AI tools for small businesses to access markets and finance.
SDG #9: Industry, Innovation and Infrastructure
  • AI in predictive maintenance for industrial machinery.
  • Facilitating research and development through AI-driven insights.
  • Enhancing logistics and supply chain efficiencies.
SDG #10: Reduced Inequalities
  • AI in financial services to provide credit access to the underserved.
  • AI-driven educational tools for marginalized communities.
  • Enhancing accessibility technologies for people with disabilities.
SDG #11: Sustainable Cities and Communities
  • AI in urban planning for sustainable and efficient cities.
  • AI-driven traffic management and public transport optimization.
  • Enhancing public safety through smart surveillance systems.
SDG #12: Responsible Consumption and Production
  • AI in supply chains to promote ethical sourcing and reduce waste.
  • AI tools for lifecycle assessment of products.
  • Automation in recycling processes.
SDG #13: Climate Action
  • AI in climate modeling and forecasting.
  • AI-driven solutions for carbon footprint reduction.
  • Enhancing the efficiency of climate change mitigation strategies.
SDG #14: Life Below Water
  • AI for monitoring and protecting ocean biodiversity.
  • Predictive analytics for sustainable fishing practices.
  • AI in studying and mitigating the effects of ocean acidification.
SDG #15: Life On Land
  • AI in wildlife tracking and habitat protection.
  • Predictive tools for forest fire prevention.
  • AI-driven land-use planning for sustainable development.
SDG #16: Peace, Justice and Strong Institutions
  • AI in crime prediction and prevention.
  • Enhancing legal research and access to justice through AI tools.
  • AI-driven systems for monitoring and preventing corruption.
SDG #17: Partnerships For the Goals
  • AI to analyze and optimize international aid.
  • Facilitating cross-border collaboration through AI-driven platforms.
  • Enhancing global data sharing and analysis for informed decision-making.

In its conclusion, the report asserts that "Technology is the catalyst for a civilizational shift in the world. As such, competition for technology leadership has become a matter of national security. However, in the absence of raising the Global South, the continued progress of the rich nations of the Global North is at risk." Moreover, "The SDGs can be solved with existing solutions and deliver a more equitable platform from which technology can build a far superior future. In the transition to a new civilization built on information and a new generation of technologies, the world is about to enter a whole new era that has the potential to deliver peace, prosperity, and freedom to all. The tech industry has a critical role to play in building this superior future."

What are you recommendations on how technology can drive to a superior future?

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.