July 12, 2016 Harold Tor

In Search of a Seoul: Is the Digital Transformation of Europe a Stairway to Heaven or a Highway to Hell?

South Korea will launch the world’s first 5G network in 2018, when it will be hosting the Winter Olympics.

To play catch-up not only with South Korea, but also Japan, the US and China, Europe has undertaken an ambitious plan to become a truly digital economy by the year 2020.


This vision was boldly declared by Günther Oettinger, the European Commissioner for the Digital Economy and Society:

“We cannot have high quality mobile internet for everything and for everyone everywhere unless we have modern infrastructure and modern rules. With this proposal we show that we can have both: a vibrant audiovisual sector as well as the spectrum we will need for 5G. The 700 MHz band will be ideal for new promising fields like connected driving and the Internet of Things. I want Europe to lead in 5G. That is why all Member States must act by 2020.”

Based on the levels of mobile connectivity and broadband access, for Europe to be on 5G two years after South Korea and merely four years from now sounds like an almost unrealistic goal. And the goal was not just to launch 5G in Europe, the plan was to bring about a Europe-wide digital transformation, so that Europe can finally produce its own digital heavyweights the likes of Google, Facebook and Apple.

Oettinger was, and is, adamant. He wants Europe to deploy its first 5G network at a similar event, such as the final of the EURO 2020 UEFA football championship, which will be played in London. But now that the UK is leaving the Union, it might perhaps buy Oettinger some time. Or he may even opt out.

This article is a result of a visit to South Korea earlier in May. What I’ve witnessed, and what I will underline in the following paragraphs, is a rumination of why South Korea has reached such an advanced stage of digital transformation. Perhaps European leaders like Oettinger have got it right in daring to make such bold plans. Or might they all be going in the wrong direction, if we were to emulate South Korea’s path of digital excellence?


Why is the South Korean society so digitally advanced?

I know several South Koreans, one of them works in the online gaming industry. It was through her, that I got to know why South Koreans eat and breathe technology.

Koreans are extremely well-versed in technology. One of the major contributing factors is that they consider video gaming, both mobile and otherwise, a social activity. Couples actually go on a date in a virtual reality game. South Korean economy developed vigorously through their online gaming industry, such that it is now the world leader in the sector, growing at an amazing 14.8% annually in sales since 2008.

An expert in digital transformation can tell you any transformation is highly dependant on customer behaviour. This is what differentiates South Korea from most European markets:

South Koreans embrace technologies, be it in education, work or any aspect of their lives. Unlike Europeans, South Koreans do not see new technologies as an invasion of their way of life, but rather an improvement of their lifestyle. New mobile features are welcomed and highly sought after. South Koreans look forward to purchasing new models of mobile devices and do not wait for their current one to reach its lifespan. Curiously, such a mentality is highly contradictory to both Confucian and Buddhist foundations of their society: spendings on technology is not seen as a sin against frugality, while buying a luxury car is.


Meet Naver, Google’s arch-enemy Europe has never heard of

When I touched down in Seoul, I expected Google to work. It almost came as a surprise that it didn’t. No, South Korea did not drive Google like China did. Google just cannot take off. Instead, there was Naver.

Most Europeans have never heard of Naver. Yet Naver is the one of the biggest things that have stood up to Google that European leaders like Oettinger would kill for.

Naver is Korea’s first web portal, launched in 1999. Offering services like search, news, communities, maps, books and music. It is owned by Naver corporation, which also owns Hangame, Korea’s largest online game portal.

In the beginning, Naver acted very much like a Korean version of Yahoo, which was also a sign of the times. Looking at its current interface, it very much still retains much of that legacy. But when mobile technology arrived, unlike Yahoo, Naver did not wait to transform its business.

Instead of using Google Maps, which failed to cater to my basic navigational needs in Korea, I downloaded the Naver Maps app. Naver Maps started in Korea long before Google did. Its interface may not be as clean as Google’s, but Naver clearly recognises the cultural preferences of its customers.

Koreans do not just embrace technology, they integrate it into their daily life. Without recognising that each society is different and understanding how each society uses technology differently, you cannot create a service or a business that works in any particular market.

During my 10 days in Korea, I got to learn a few things about how South Koreans use technology:

  1. South Koreans are huge drama fans. K-dramas, as they are called, are not only popular in Korea but also throughout East Asia. Video streaming services are thus a thriving business, and in order to achieve that, connectivity throughout Seoul and indeed the whole country is nothing less than optimal. The demand and the need drove the innovation and ultimately paid for the infrastructure.

  2. As mentioned before, Koreans are all avid gamers. Which is why I shouldn’t have been surprised to see everyone carrying giant phablets in the metro. Apart from watching drama while commuting, Koreans engage in mobile gaming – ONLINE mobile gaming – which is only possible with good infrastructure. In this case, we can see why Samsung’s home market has been fuelling its constant drive for better and more powerful devices.

  3. Unlike how Americans use the Google Map app, Koreans use the Naver Map app to explore for businesses and services (I will talk more about this later with some screenshots).

Because of the way Koreans use technology, we see technology businesses that revolve around those behaviours. In short, technology is not only dependant on the behaviour of technology users in a society, you cannot just transplant a technology from one country to another. This leads us to the second point: what is Naver able to do that Google is unable to in South Korea?

 


Local Knowledge is the Driver for Digital Excellence

The short answer to the question asked is: Naver has the deep knowledge that a local company has of its customer base that a foreign company does not have.

Google’s strategy has always been that of transplanting what the products that have worked in its home market in a foreign market. For a market without a contender, Google sometimes does not work, or sometimes work to varying degree. In Western Europe, Google is the dominant search engine, because Europe has not been able to produce a native search engine that gives users what Google cannot. Also, different European markets have not embraced technology in its own ways to successfully reject what Google has to offer.

In China, Baidu is the default search engine, not only because the Chinese government forced Google out of the market, but also because Baidu understands how the Chinese sees search: a quest for answers. Hence, Baidu opens a service called Baidu Baike, an encyclopaedic service, and ranks answers high in its search results. In the English-speaking world, Google depends on crowd-sourced Wikipedia to fulfil such search behaviour. But in non-English speaking parts of Europe, the Wikipedia entries are not as complete as in English and Google search results might not turn up as fulfilling. This is a classic example of why Google has failed to localise, and thus failed in many European markets.

Conversely, in Korea, Naver knew exactly how Koreans use technology.

First of all, Koreans cities are laid out in such a way that they always kind of know where things are.

Seoul itself is organised in a very illogical way, inherited from its medieval East Asian layout. City areas are organised into ‘dong‘, and then broken down into districts called ‘gu‘. You have the main roads that are called ‘daero‘, the arteries that branch out from the main roads are ‘ro‘ and the alleys are called ‘gil‘. If you are Korean, just by knowing which of these are allow you to navigate effortlessly around the city, while it is mind-boggling for an outsider.

Because of this cultual heritage, navigation is quite secondary. The Naver Maps app, is used less for navigation and more for business location. Turning on Naver Maps, you can put on layers of different businesses you are looking for. Turning on the restaurant layer will show you the different restaurants in the area. That’s not the end of it: if you choose a restaurant, you will not only see the huge number of reviews and photos left by customers like in TripAdvisor, but you will also see information like the menu and promotional deals!

In a shop like the one you see below, you will find QR codes at the store front or on the menu, so that users can be led directly its online presence, a piece of technology that did not take off in the US or Europe. In Korea, due to avid review and consultation culture of the users, this is very much alive.

Not only that, Naver Maps is closely tied up with the different transport companies such as the taxi, busses and metro system, because people were searching not so much for ways to get to a business, but for a particular transport option.

Naver Maps really struck me as Uber, a public transport app, Foursquare, Tripadvisor, Instagram and Google Maps all rolled into one. But bear in mind it wasn’t the features that made the app, it was the user culture that defined it.


What now, Europe?

Apart from the ambitious 5G goal in 2020, the European Commission has earnestly undertaken various plans to transform the European economy, such as:

  1. A Digital Scoreboard that pits EU member states against one another in terms of connectivity, human capital, use of internet, integration of digital technology and digital public services.
  2. A Europe 2020 Strategy is a vision that sees EU as a single digital market with a single set of standards. In this vision, there is the ultra fast internet access for all, investment in research and innovation through public-private partnerships, as well as empowering EU citizens with digital skills.
  3. Europionneers Awards are given to great startup ideas in Europe. There are several startups that come from Europe and have seen immense international growth, like Prezi, Swiftkey and Transferwise.

While I applaud all of the lofty aspirations of European leaders like Oettinger, looking at the case of South Korea, we can only recognise that all kinds of digital transformation really depend on one single point of departure: the native user culture.

Once we’ve understood how users in a particular society use technology, we can then embark on the 3 processes that compose a digital transformation, taking the lesson from the digital transformation of businesses: vision by the leadership, complete overhaul of the operational processes, full engagements with the end users using digital technologies.

Sadly, I do not see a vision based on a true understanding of how our societies use technology. I see hollow plans stemmed from envy and fear.
European leaders are awed by the likes of Uber and AirBnB. Companies feel threatened by the sneaky ‘disruptive’ American startups that enter Europe under the guise of ‘collaborative economy’. Creators feel ‘platforms’ like Netflix are eating into their profit and enlarging the ‘value gap’. Everyone is not acting. They are reacting, as if caught by surprise. The EU plans sound almost like a knee-jerk reaction.

The point is not about creating the next European superstar like Spotify or another European legacy that would last longer than Nokia’s. Making every European child know how to code is certainly a good initiative but that is still not the point.

The point is Europeans need to adopt technology and use it in their own way. Once they are comfortable using technology, homegrown companies will sprout, because they will see a gap that foreign companies simply do not have the cultural heritage to fulfil. Instead of spending resources on trying to develop 5G, coming up with rules for the collaborative economy, governments should spend money on:

  1. Incorporating technology into education. Kids should use technology at a young age, so that they feel natural with it and will find innovative ways to deploy technology later on in life whether for pleasure or for work. Right now, education spending is either insufficient or made on the other priorities.

  2. Infrastructure building. There is no point talking about 5G when the 4G is still a half baked potato across Europe. Find out what the obstacles to mobile connectivity are and fix them as soon as possible. Broadband connectivity is likewise a shame. While the most connected cities in the world are using fibreglass, European ones are still using cables. This has led to the traffic congestion and speed bottle necks, so much that there’s really no point talking about the development of cloud computing in some major European capitals.

  3. Be business-friendly. While there are some startup help that has been initiated, some European countries remain hostile to businesses. For example in Belgium, one has to start paying taxes once you start a company not when you start making profit, and business owners do not have equal access to the health insurance system unlike employees.

  4. Last but not least, governments should take the lead in any cross societal digital transformation. E-government initiatives are indeed abound, such as Gov.UK. But apart from that, hardly any other European country has achieved any digital transformation in citizen relationship at the national level. I understand that this is one of the pillars of Oettinger’s Europe 2020 plans, but with only less than 4 years away from the deadline, I don’t see much progress made.


 

What do you think about what Europe should do to bring about its continental digital transformation? Do European leaders have the necessary vision? How many countries have embarked on an operational change? Is the next generation receiving enough integration of technology into their education?


Image 1: Naver search looks like a Yahoo portal

screenshot-www.naver.com 2016-07-11 21-25-49

 

 

Image 2: Unlike Google Maps, Naver Maps users primarily use it as a business and service location app

screenshot-map.naver.com 2016-07-11 21-24-53

 

Image 3: By switching on the layers, you can find the different services available on a map. The coverage is extremely extensive.
Naver Map Layers

Image 4: Once you’ve located a business, you can access all information about it directly from the app. In this example of a restaurant, you can even see the images of its menu, apart from customer reviews and photos!
screenshot-map.naver.com 2016-07-11 21-32-50

Image 5: QR codes are very much alive in South Korea. A clear indication that technology is dependant on user culture and behaviour

IMAG9136

Image 6 and 7: The Naver Maps app is also entirely integrated into the public transport services. You can hail a taxi directly from the app and know the arrival times of specific bus lines

screenshot-play.google.com 2016-07-11 21-31-15
screenshot-play.google.com 2016-07-11 21-31-41

 

 

 

 

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