Kearney boss Sekinada Shikeru weighs in on the shift away from traditional manufacturing
As the era of physical manufacturing gives way to a new focus on digital integration, the global business landscape is undergoing a major transformation. Shigeru Sekinada, the Asia-Pacific leader for global strategy consultancy Kearney, recently met with business leaders in Seoul to discuss these changes.
Shigeru Sekinada suggests that the traditional focus on manufacturing perfection, which has long been the hallmark of South Korean and Japanese industry, must now be replaced by a more experimental approach that embraces failure as a learning tool. This shift is necessary not least because the technological gaps between countries are rapidly closing.
While the United States previously dominated the industrial sector, its role was largely supplanted by the historic surge of Japan and South Korea, which climaxed in the 80s and 90s. Now, the rise of China and the emerging potential of India have intensified price competition.
“South Korea and Japan, which led the manufacturing industry in the past, are now competing more and more fiercely with Chinese companies in terms of price competitiveness and cost structure,” says Sekinada.
Digital integration
In order to remain competitive, organizations must move beyond simply lowering prices and instead provide what Sekinada calls new experience value. This involves combining physical products with AI and digital services to create a unique user experience.
For instance, global leaders in the technology sector have already transitioned from selling simple devices to providing entire digital environments that keep customers engaged through constant updates and personalized assistance.
Samsung, one of South Korea’s most successful corporations, provides a clear illustration of this transition by evolving from a manufacturer of phones, televisions, and appliances into a leader in connected living. The company has introduced new tools that allow consumers to use its smartphones as a central control point from which to manage lighting, temperature, and security systems through a single screen.
Gap between traditional and modern
A significant challenge for traditional powerhouses is the fundamental difference in how work is performed. Manufacturing typically requires a step-by-step process where research and development departments spend years perfecting a single item. In contrast, the world of AI and software requires a rapid cycle of planning, execution, and evaluation where prototypes are tested and improved quickly based on immediate feedback.
For that reason, says Sekinada, “the way of work is fundamentally different, making it difficult for traditional manufacturing powerhouse companies to develop their software and service organizational capabilities.”
While the sincere work ethic and shared cultural understanding found in East Asia have built strong industries like semiconductors and electronics, these same strengths do not exactly translate to the high-speed flexibility required for digital innovation. To bridge this gap, companies could create new business units that blend physical engineering with digital programming.
Prioritizing social value
Beyond corporate strategy, there is a growing need for executives to consider the broader social impact of their organizations. South Korea currently faces unique challenges, such as the heavy concentration of economic activity in its capital and a birth rate that is the lowest in the world, hovering around only 0.72% in recent years.
This demographic shift means that the future labor force will be smaller, making it even more important to automate routine tasks. Keeping workers fulfilled and engaged has been a struggle in both Japan and South Korea in recent years.
“Employees should be provided with a workplace where they can feel the meaning of work and the rewards of life at the same time,” Sekinada argues.
“In a society where the economy has already grown sufficiently and is enriched, no one works just for wages. This is because as AI technology develops, humans must do creative things that only humans can do, not just work. They need to be immersed, help others in the process, and be recognized for value and rewarded by society. Anyone looking for a point where these factors overlap can still create value in the AI era.”
