2. Byungtae Lee, Ph.D. Dean 기술변천사를 통해 본 인류의 삶과 미래경영 Techno-Physio-Social Co-Evolution and Future Paradigm of Management

3. ©Copyrighted by Byungtae Lee, KAIST Who is Dean Byungtae Lee? Poor Professor Lee 2/2/68 영림원 CEO(2013.4.4)

4. ©Copyrighted by Byungtae Lee, KAIST Agenda 1.Technology and 4 Major Transformation of Human Life 2.New Management on The Smart Planet 3.Conclusion 3/3/68 영림원 CEO(2013.4.4) 3 1 2

5. ©Copyrighted by Byungtae Lee, KAIST Why Does Technology Matter? What is Innovation? Management on the Smarter Planet 1 4/4/68 영림원 CEO(2013.4.4)

6. ©Copyrighted by Byungtae Lee, KAIST Civilization’s biological prerequisites 5/5/68 영림원 CEO(2013.4.4) Two Hand Tools in 1.8 million years What is the difference?

7. ©Copyrighted by Byungtae Lee, KAIST What brought mice on our hands? Food Production of two people Exchanges (trades) Specialization by comparative advantages Exchange better offs all Specialization brings innovations Innovations brings more specialization Food GatheringCaveman ACaveman B Apple 3 hours5 hours Fish 4 hours Total work per day 7 hours9 hours Total work after trades 6 hours8 hours 6/6/68 영림원 CEO(2013.4.4)

8. ©Copyrighted by Byungtae Lee, KAIST Human Wealth System Evolutions Macro Human History 1.Hunter-gathering 2.Agriculture 3.Industrial Evolution 4.Information Age 7/7/68 영림원 CEO(2013.4.4)

9. ©Copyrighted by Byungtae Lee, KAIST Bipedal Good hands (dexterity) Good brain Benefits of Uprightness Regulation of temperature (more with hairless) See farther (Savanna monkey theory) Look bigger (especially in silhouettes) as the hunted Reach higher to pick up low hanging fruits breath higher (Agua monkey theory) Mating fidelity: genital display to attract females, females conceal ovulations Huge energy economies in locomotives (70 kg man/Per meter) or 75% savings 33 calories more in walking than standing 62 calories more in running than standing Quadrupedalism needs 48 calories more than bipedalism Human foragers walk 4 km per day while chimps walk only half km – larger brain? Free hands (carrying something) Easy twist to look behind More sex and kids More powerful down-blow fist fighting 8/8/68 영림원 CEO(2013.4.4) Humanization, Why are we only “economic animal”?

10. ©Copyrighted by Byungtae Lee, KAIST Narrowed Birth Canal of Modern Human with Bipedal Neanderthal versus Modern Human (Cro-Magnon’s) 9/9/68 영림원 CEO(2013.4.4) Narrow birth canal Slower maturation of babies

11. ©Copyrighted by Byungtae Lee, KAIST Generational dependences 1.8 million years old fossil Skull from Dmanisi (D3444/D3900) What does this imply? 10/ 77 영림원 CEO(2013.4.4) 68

12. ©Copyrighted by Byungtae Lee, KAIST Hunters and Gatherers – Gender Dependency Specialization between Sexes Non-violent communities of women Trading possibility with strangers 11/ 77 영림원 CEO(2013.4.4) 68

13. ©Copyrighted by Byungtae Lee, KAIST Fire, the first technology that ignited civilization 12/68 영림원 CEO(2013.4.4) Use of Technology – Fire! Broaden food bases dramatically – global presence Cooked food made omnivores & bigger brains (thinking animals)

14. ©Copyrighted by Byungtae Lee, KAIST Techno-Physio-Social Co-Evolution Three things together 1.Technology: Fire 2.Physiology (Body): Bigger brain 3.Social Systems: Global Presence (Economic System) From “Male and Female” to “Husband and Wife” 13/ 77 영림원 CEO(2013.4.4) 68

15. ©Copyrighted by Byungtae Lee, KAIST FARMERS & SHEPHERDS Wealth System Version 2 14/68 영림원 CEO(2013.4.4)

16. ©Copyrighted by Byungtae Lee, KAIST Farming, the product of the warm planet The Beginning of 1 st Agricultural Revolution 15/ 77 영림원 CEO(2013.4.4) 68

17. ©Copyrighted by Byungtae Lee, KAIST Why Aborigines are almost gone? Source: Guns, Germs, and Steel (Diamond, 2000) New Worlds Australia since 40,000 Years America since 11,000 years Still poor Africa Crash between Farmers and Hunter-Gathers 16/68 영림원 CEO(2013.4.4) Crops and Cattles

18. ©Copyrighted by Byungtae Lee, KAIST Guns, Germ, and Steel Three Things Go Together 1.High Techs: Crops and Cattles (Horses) 2.Body: Co-evolution with germs 3.Social System: Bigger Society and Writing Systems 17/68 영림원 CEO(2013.4.4)

19. ©Copyrighted by Byungtae Lee, KAIST Wealth System Version 3 - Industrial Revolution 18/68 영림원 CEO(2013.4.4) Nitrogen Fertilizer by Fritz Haber (1918) From 0.6 to 9 Billion People Source: Fogel, 1999

20. ©Copyrighted by Byungtae Lee, KAIST The greener and safer place from no more starvation 19/68 영림원 CEO(2013.4.4)

21. ©Copyrighted by Byungtae Lee, KAIST Another Unsung Hero who made 9/6 Work- John Harrison 1735, J. Harrison Marine Chronometer Global Navigation & Transportation Synchronization & Coordination of Human Activities Ultimate Booster of Labor Productivity 20/ 77 영림원 CEO(2013.4.4) 68

22. ©Copyrighted by Byungtae Lee, KAIST The Oldest “Blue Ocean” Case – Model T Ford’s Innovation with Conveyer Belt System 1.Process Standardization and Visualization 2.Role & Responsibility Assignment at Activity level 3.Forced Service Level Agreement 4.Job seeks worker than worker seeks a job (Zero- latent operation) Revolution in How We Work 21/ 77 영림원 CEO(2013.4.4) 68

23. ©Copyrighted by Byungtae Lee, KAIST Time Well Spent? 99.96% Discount (1915-1995) Source: FRB of Dallas (1997) 22/68 영림원 CEO(2013.4.4)

24. ©Copyrighted by Byungtae Lee, KAIST Techno-physio Evolution New species of Homo sapiens 50% increase in body size 100% increase in longevity Acceleration of Technological Changes Plow (4000 B.C to 200 AD) without design change Aircraft: a few hundreds flight in 1903, arrived at Moon in 1969 Color TV, 30 years Internet (WWW) took only 4 years Telecommunication and Information Technology even increase this acceleration Homogeneous Homo sapiens Who you are is what you eat and have. 23/68 영림원 CEO(2013.4.4)

25. ©Copyrighted by Byungtae Lee, KAIST Co-evolution in Industrial Era Three Things Go Together 1.High Techs: Chemical Fertilizers and Mechanical Watch 2.Body: Bigger Body and Live Longer 3.Social System: Specialized Society & Internationalization 24/68 영림원 CEO(2013.4.4)

26. ©Copyrighted by Byungtae Lee, KAIST IT= Intelligent Watch 737,681 Lifetimes 3 min per MIPS More Computer chips than grains of rice since 2007 Moore’s Law 25/ 77 영림원 CEO(2013.4.4) 68

27. ©Copyrighted by Byungtae Lee, KAIST IT Business Value Opportunities and Focus Value Orientation\ Scope Information Process E-Commerce Within Firm Over Value Chain To Customers ~ 70’s 80’- 90’s Y2K ~ 26/ 77 영림원 CEO(2013.4.4) 68

28. ©Copyrighted by Byungtae Lee, KAIST Amazon.com vs. Barnes and Noble Amazon no “brick and mortar” Revenue: 1996 $15.7 M 2002 $3.9 B 2003 $5.3 B 2004 $6.9 B 2005 $8.5 B $61k/person (256) $524k/person (7.5k) Barnes and Noble 1,000 bookstores & BN.com Revenue: 1996 $2.5 B 2002 $3.9 B 2003 $4.4 B 2004 $4.8 B 2005 $5.2 B Sales/Person: 1996 $102k/person (24k) 2002 $105k/person (50k) Amazon entered seemingly red ocean with drastic productivity innovation. 27/ 77 영림원 CEO(2013.4.4) 68

29. ©Copyrighted by Byungtae Lee, KAIST Market Value – New E-conomy? US Firm’s future value surged since early 90’s. Economy with the new paradigm of “Meta Capitalism”. Korea follows the same path. 28/ 77 영림원 CEO(2013.4.4) 68

30. ©Copyrighted by Byungtae Lee, KAIST Old Business Model New Business Model BRAND CAPITAL HUMAN CAPITAL WORKING CAPITAL “Push” Focus “Pull” Focus Production Focus Customer Focus High Low High Low PHYSICAL CAPITAL (Outsourced Network) MetaCapitalism Meta Capital is based on “intangible asset” When we can claim “business process” as “working capital” or “asset”? What is the asset? 29/ 77 영림원 CEO(2013.4.4) 68

31. ©Copyrighted by Byungtae Lee, KAIST Innovation Hot spots TimePlaceInnovations 50000 years agoWest AsiaOven, bows and arrows 10000 years agoFertile CrescentFarming, Pottery 5000 years agoMesopotamiaMetals, Cities 2000 years agoIndiaTextiles, Zero 1000 years agoChinaPorcelain, Printing 500 years agoItalyDouble-entry book keeping, Leonardo 400 years agoLow CountriesAmsterdam Exchange Banks 300 years agoFranceCanal du Midi 200 years agoEnglandSteam 100 years agoGermanyFertilizer 50 years agoCaliforniaCredit Card 25 years agoJapanWalkman CurrentSilicon Valley and others Internet based services 30/ 77 영림원 CEO(2013.4.4) 68

32. ©Copyrighted by Byungtae Lee, KAIST Current Hot beds of innovation Israel Nordics India China South Korea Silicon Valley Route 128 (Boston) 31/ 77 영림원 CEO(2013.4.4) 68

33. ©Copyrighted by Byungtae Lee, KAIST What is the smart technology? Zero Latency Computing (Always on and No Waiting) No Booting and App-based (not Web-based) Ubiquitous Computing – Internet on mobile devices Human friendly interfaces Real-time Social Technology 32/ 77 영림원 CEO(2013.4.4) 68

34. ©Copyrighted by Byungtae Lee, KAIST Why iPhone? – Zero Waiting Desktop iPhone > Walk to your PC Touch this app > PC-Booting > Start a Browser > Go Naver.com > Search Weather > Type your city 33/68 영림원 CEO(2013.4.4)

35. ©Copyrighted by Byungtae Lee, KAIST More Natural Information Processing (Out of key boards) 34/68 영림원 CEO(2013.4.4) Human has 5 senses for information processing but so do smart devices 1.Skin for touch 2.Eyes for seeing 3.Ears for sound information 4.Cochlea for motion detection 5.New fifth sense of GPS No nose or Taste buds

36. ©Copyrighted by Byungtae Lee, KAIST Listen and Knows Everything with Digital Ear- Soundhound Shazam: BM with partners Contents are baits for ad audience 35/68 영림원 CEO(2013.4.4)

37. ©Copyrighted by Byungtae Lee, KAIST See smarter than you – IneedCoffee via Augumented Reality 36/68 영림원 CEO(2013.4.4)

38. ©Copyrighted by Byungtae Lee, KAIST Co-evolution in Industrial Era High Techs: Information Technology Body: Work and Walk Faster, iBrain Social System: Globalization & Free Information 37/ 77 영림원 CEO(2013.4.4) 68

39. ©Copyrighted by Byungtae Lee, KAIST New Management on the Smart Planet Management on the Smarter Planet 2 38/ 77 영림원 CEO(2013.4.4) 68

40. ©Copyrighted by Byungtae Lee, KAIST Implications of Smart Technology to Management CXO’s Challenges of Smart Management ① Strategy and Business Model Innovations ② HR Management & Product Design ③ Marketing & CRM ④ Public Relations 39/68 영림원 CEO(2013.4.4)

41. ©Copyrighted by Byungtae Lee, KAIST True/Real-Time Global Network Trading possibility is the key to technological innovation and economic development. The recent global warming lead to farming to larger population to the larger trading possibility. 40/ 77 영림원 CEO(2013.4.4) 68

42. ©Copyrighted by Byungtae Lee, KAIST Globally Connected World Emerging a true global real-tim e network The GLOBAL metaphysical (Idea & Finance) network will induce globalization of the lower layers (Goods, Services and Labor networks) More Complex System (Lot more players and nodes) Some players are black customers and anti-societal people Unpredictable World Strategy Paradigm from “Aim Ready Fire” to “Ready Fire Aim” Idea/Knowledge Network Financial Network Trade Network (WTO, FTA etc) Political Network 41/ 77 영림원 CEO(2013.4.4) 68

43. ©Copyrighted by Byungtae Lee, KAIST CEO/CSO’s Challenges Dynamic and Uncertain World More frequent challenges to your business model Tension between short-tem and long-term strategies and capability Platform Competition The top priority: building “global organization” What Japan did fail when they sold “global products” 42/68 영림원 CEO(2013.4.4)

44. ©Copyrighted by Byungtae Lee, KAIST Globalization and Global Organization “Raising capital where it is cheapest, producing where it is most cost effective, and selling where it is most cost effective, and selling it is most profitable” (N.R. Murthy) Japanese failure in developing global organizations when they developed global products 43/ 77 영림원 CEO(2013.4.4) 68

45. ©Copyrighted by Byungtae Lee, KAIST More innovations at the speed of Light- Car Rental, Zipcar 44/68 영림원 CEO(2013.4.4)

46. ©Copyrighted by Byungtae Lee, KAIST Strategic Agility – Read your customers Strategy Paradigm from “Aim Ready Fire” to “Ready Fire Aim” iPod Touch From Web (mobile portal) based to App based architecture because of “Jail breakers” The contradictions in Strategy Strategic Clarity and Consistency, vs. Operational Agility and Resilience 45/68 영림원 CEO(2013.4.4)

47. ©Copyrighted by Byungtae Lee, KAIST Ever-greening of IP 68 영림원 CEO(2013.4.4) 46/ IP

48. ©Copyrighted by Byungtae Lee, KAIST Service Platform: What makes Samsung Executives worried? “Made-by-China” Smartphones What if Apple/Google made them for free? Lessons Services (Contents) integrated platform Software, Software, Software Design, IP battles Beyond Manufacturing - Creativity 47/68 영림원 CEO(2013.4.4)

49. ©Copyrighted by Byungtae Lee, KAIST Implications of Smart Technology to Management CXO’s Challenges of Smart Management ① Strategy and Business Model Innovations ② HR Management & Product Design ③ Marketing & CRM ④ Public Relations 48/68 영림원 CEO(2013.4.4)

50. ©Copyrighted by Byungtae Lee, KAIST GoldCorp, Inc 의 Crowdsourcing 예 Rob McEwen, CEO Toronto-based gold mining company in trouble with strikes Challenge” for $575,000, published all information on 55,000 acre property on the web More than 1000 contestants from over 50 countries identified 110 new target spots 50% of them never considered by the company. 80% of them yielded substantial amount of gold 49/68 영림원 CEO(2013.4.4)

51. ©Copyrighted by Byungtae Lee, KAIST Is Landscape of Value Creation Shifting? 50/68 영림원 CEO(2013.4.4) from Safe Haven to Middle Kingdoms or Youniverse Is your organization ready to sustain in these new ecologies?

52. ©Copyrighted by Byungtae Lee, KAIST Grown up in Virtual Worlds- New Leadership Lab Leadership in online game offers a sneak preview of tomorrow’s business world. Leadership demands speed Risk taking is encouraged Leadership roles are often temporary 51/68 영림원 CEO(2013.4.4)

53. ©Copyrighted by Byungtae Lee, KAIST Challenges and Opportunities for CHRO Open Innovations and Redefine Firm’s boundary Safe Haven or Middle Kingdom or Youniverse Instant and Disposable Global Talent Sourcing Global HR Management – Lot harder than said (See Japanese Case) More Aligned HR Management with CSO, CTO, and CEO New HR management to work with X-generation. 52/68 영림원 CEO(2013.4.4)

54. ©Copyrighted by Byungtae Lee, KAIST Implications of Smart Technology to Management CXO’s Challenges of Smart Management ① Strategy and Business Model Innovations ② HR Management & Product Design ③ Marketing & CRM ④ Public Relations 53/68 영림원 CEO(2013.4.4)

55. ©Copyrighted by Byungtae Lee, KAIST Free Global AD Will it Blend? PSY’s “Gangnam Style” 6854/ 영림원 CEO(2013.4.4)

56. ©Copyrighted by Byungtae Lee, KAIST Fashism, Instant feedback mechanism 55/68 영림원 CEO(2013.4.4)

57. ©Copyrighted by Byungtae Lee, KAIST Power of LBS Price of a cup of coke Grocery PET container (10 Cents) Vending Machine (.5$) Burger King($1.0) Hotel in Seoul ($10.0) How Much Do You Pay for A Cup of Coke? 56/68 영림원 CEO(2013.4.4)

58. ©Copyrighted by Byungtae Lee, KAIST Is Real-Time the ultimate goal of our IS? Customer is billed retrospectively every month driving record 25-50% savings in premiums (Progressive Insurance) 57/ 영림원 CEO(2013.4.4) 68

59. ©Copyrighted by Byungtae Lee, KAIST Challenges and Opportunities for CMO Social Commerce and Marketing Instant Feedback from Social Networks Free Advertising Time and Space Shifting of Contents (Ad) Consumption Slicing Your Customers by Real-time Situation Unfulfilled Promise of Big Data Analysis Working with “Data Scientists” 58/68 영림원 CEO(2013.4.4)

60. ©Copyrighted by Byungtae Lee, KAIST Implications of Smart Technology to Management CXO’s Challenges of Smart Management ① Strategy and Business Model Innovations ② HR Management & Product Design ③ Marketing & CRM ④ Public Relations 59/68 영림원 CEO(2013.4.4)

61. ©Copyrighted by Byungtae Lee, KAIST Empowered “Black” Customers? United Break My Guitar Dave Carroll: Lessons from "United Breaks Guitars” (Columbia Business School ) Dave Carroll: Lessons from "United Breaks Guitars” CNN coverage 60/68 영림원 CEO(2013.4.4)

62. ©Copyrighted by Byungtae Lee, KAIST A New Word: dooced Heather Armstrong Complained about her company and her boss at dooce.com in 2002 Fired due to her blogging ‘dooced’ : to lose one's job because of one's website : to lose one's job because of one's website‘dooced’ 6861/ 영림원 CEO(2013.4.4)

63. ©Copyrighted by Byungtae Lee, KAIST You are googled. Ellen Simonetti Delta Crew Member Posted her picture on her blog Fired for violation of Delta’s dress code 6862/ 영림원 CEO(2013.4.4)

64. ©Copyrighted by Byungtae Lee, KAIST 트위터 현대자동차 연구원 이야기 사건 개요 @bookhunter72 현대자동자 고가정책 비난 모 현대자동차 연구원 발끈, 비아냥 @bookhunter72 화면 캡쳐 후 공개 트위터 이용자들 신나게 RT 참고 http://twitpic.com/29vtv4http://twitpic.com/29vtv4 6863/ 영림원 CEO(2013.4.4)

65. ©Copyrighted by Byungtae Lee, KAIST Age of Un-forgetting and instant info 64/68 영림원 CEO(2013.4.4)

66. ©Copyrighted by Byungtae Lee, KAIST Opportunities and Challenges of CPRO Empowered “black” Customers Laws and Old Practice do not protect your company from them Teach your SNS savvy employees and kids Age of Un-forgeting (SNS Space is not your property) Generation of Partial Attentions HR Managers google you when hire 65/68 영림원 CEO(2013.4.4)

67. ©Copyrighted by Byungtae Lee, KAIST Conclusion Management on the Smarter Planet 66/68 영림원 CEO(2013.4.4) 3

68. ©Copyrighted by Byungtae Lee, KAIST Thank You and Wish Your Big Future J. C. R. Licklider, 1965 “Grandfather of the Internet” “People tend to overestimate what can be done in one year and to underestimate what can be done in five to ten years.” 67/ 77 영림원 CEO(2013.4.4) 68

69. ©Copyrighted by Byungtae Lee, KAIST Your Last App Thank You! Any questions ? btlee@kaist.ac. kr 010-2983-6000 Japanese grave with QR identification 68/68 영림원 CEO(2013.4.4)