One Man Conglomerate, #03. As a result, the paradigm of the market will change significantly. [PART II]

The following is English version of Chapter 2 of ‘One Man Conglomerate’, published in August 2023 by Do-Jeon, Marcus, Jeong.

 

2nd Chat: How will our lives changes?

 

#03. As a result, the paradigm of the market will change significantly.

 

[05] As a result, it’s likely that existing large companies will disappear.

 

It is likely that many large organizations will not be able to adapt to the new ecosystem (or market paradigm) brought about by AI technologies, including ChatGPT, ❶ because, first of all, they will not be able to give up their current solid revenue model.

Most CEOs (mainly professional managers) will strive to maintain a business line with a high contribution to profits. This is because they can earn a lot of retirement funds if they hold out their term well. Therefore, it is unlikely that this sector and new businesses (i.e., future growth engines) that can generate carnivalization will see the light of day.

And ❷ This is because Korean companies have more parachute executives than executives recognized for their practical expertise. As a result, the entire organization and its subordinates often waste energy on shortsighted and inefficient shoveling.

In addition, ❸ decision-making is too slow. Larger organizations are slower to make decisions because they have more complex approval processes and more stakeholders. In particular, in the case of large companies, various pressures, regulations, and recommendations are frequently received from home and abroad. In other words, it cannot be free from pressure from the Korean government, other governments, international organizations, and various non-profit organizations (NPOs), and the media as well. Therefore, it is not easy to make a quick decision.

Of course, ❹ rigid organizational culture is also a problem. Eliminating position titles does not make the organization flexible. The current culture of Korean companies is not a culture in which people who are good at work and respect their colleagues can do important things or those can become leaders, but a culture in which parachutes are favored and internal politicians are favored based on ties.

And ❺ this is because companies can’t thrive with rigid labor laws that favor the unfaithful workers. Today workers in large companies are now more like civil servants. Compensation (including benefits) is rising while accountability is falling. This is because it is difficult to fire people for not working hard enough.

Finally, ❻ there are too many demands from government, politicians, etc. Nowadays, companies are the testing ground for government policies and the main stage for political parachutists. So there is too much waste of energy. Therefore, large corporations are quite likely to be less competitive than those with less organizational size, that is, less involvement by outsiders.

The days of scale being a competitive advantage are slowly coming to an end. And with the ubiquity of online (and specifically mobile), the layers between markets and consumers are also getting thinner. The weaponry between large and small businesses is becoming more similar. Of course, it can vary slightly depending on the situation, but this will likely allow more agile organizations to survive.

 

Image: developed by Midjourney

 

 

[06] Artificial intelligence marketing will drive the market.

 

In the coming years, there will be a flood of products (or services) and marketing activities centered on the concept of AI. In other words, ‘artificial intelligence’ will be the strategic keyword for every industries for a while. Of course, you may not use this term in product names. However, one of the minimum marketing points (or Selling Points) will include AI-related content.

Of course, companies may not use the term in their product names. But at the very least, one of your marketing points (or selling points) will have something to do with AI.

We will see this trend in almost every business sector we know, including finance, construction, education, tourism, real estate, hospitality, food, clothing, healthcare, energy, electronics, appliances, telecommunications, watches, and other manufacturing, because, as mentioned earlier, AI can be integrated with almost any business.

So, for example, in the financial sector, we will see AI-designed ❶ insurance (or investment, loan, card products, etc.), ❷ wealth management services (handled by banks, brokerages, insurers, etc.), as well as ❸ products that compensate for damage caused by AI (handled by insurers, banks, brokerages, etc.).

 

 

[07] Subscriptions to AI services will drive up the cost of living.

 

In recent years, the subscription economy has spread quite rapidly. And this trend will continue in the future. This is because most companies that have applied the subscription economy have shown remarkable growth.

That’s why most A.I. services use a subscription economic model. Of course, consumers can try a free version with some restrictions. However, in order to fully utilize any model (e.g., to remove watermarks, post on social media, or use commercially), consumers must use the paid version.

Of course, these subscriptions cost between $10 and $50 per month individually. However, in the current situation of using multiple AI models together, this subscription fee plan is obviously burdensome for consumers. Therefore, many users use the free version for now and then pay for a month if they need to.

The problem, however, is that these AI services will likely become daily necessities like water, gas, and telecommunications (including the Internet). Now, people are fully struggling with various subscription fees. Rent and utilities (water, gas, electricity, etc.) fees, mobile phones and the Internet, insurance premiums (close to compulsory insurance), OTT, software (MS Office, Photoshop, Premiere, etc.) And now the subscription fees for AI models will be added.

Of course, there will be various alternatives to this (integrated packaged products, various subsidies, etc.). However, in the end, if users do not generate revenue from the AI models they subscribe to, the cost of living will only increase.

 

 

[08] Energy consumption will decrease.

 

There are pros and cons to everything. And AI technology is no different. For example, as already mentioned earlier, a huge amount of energy (electricity and water, etc.) is used to develop and maintain AI chatbots such as ChatGPT.

However, if generative AI such as ChatGPT is used appropriately, it will be possible to save much more energy than is used and improve productivity. Of course, this will also have an environmental improvement effect.

For example, if a company uses ChatGPT, work will become significantly more efficient. This is because it will research, translate, analyze, summarize and organize data (for example, by recognizing PDFs, scanned documents, audio and video as text), and even create reports in an instant.

This will naturally greatly reduce unnecessary travel (external data research, offline seminars, commuting, etc.) and trial and error (aka shoveling). And energy (e.g. paper, materials, electricity, etc., and of course the energy of employees) will also be saved. So you will be able to complete the same work at less cost.

This change will spread to a wide range of roles (or functions), including sales as well as office work, because it will ultimately contribute significantly to the efficiency and productivity of entire organizations and industries.

So this phenomenon will continue to spread not only in the private sector, but also in the public sector, and in our country as well as in other countries. Unfortunately, however, human energy (jobs and roles) will also be reduced in this process.

 

[ Attention ]

The above article excludes footnotes and details, unlike the actual book.
Please read the following post for details of “#03”

위 글은 정도전 작가가 2023년 8월에 출간한 ‘1인 대기업(One Man Conglomerate)’의 챕터2 영문 버전입니다.