I have spent part of this summer in four regions of Ukraine.
In these areas, economy is mostly based on conventional, or, rather, old industries, such as logistics/ports, agriculture, and heavy industry (metallurgy among them).
I talked to representatives of big companies in these industries. The general impression I got was that they keep generating big profits but aren’t able to offer anything more on a global scale. As a matter of fact, they don’t have any new driving ideas except for efficient operational management, i.e. they can only keep the current position.
It is aggravated by the growing uncertainty because of the global crisis prophesized for the past year, “same as in 2008”. Besides, competitors heavily invest into in the neighboring countries, in consuming countries, into import phase-out, to expand infrastructure and get even more scale-based savings.
Do old industries in Ukraine have any drivers enabling their global championship from the position of local leaders?
Digitalization Ukrainian way is simply about upgrading the infrastructure of business.
Apparently, the longest-term driver is the focus on technologies.
In Ukraine, they call it ‘digitalization’ but they rather refer to something crucially different (downwards) from how the term is interpreted in such innovation centers as the Silicon Valley or the China Innovation Center.
Digitalization a la Ukrainian is the installation of an IT management system, or merely, upgrade of business infrastructure (the same as electrification or gasification).
Global innovation centers treat digitalization as something totally different. They expect they could filter from the conventional old companies the models and technologies that could be separated from local businesses and sold globally within the industry.
Can Ukraine Compete in Such Innovations on a Global Scale?
I see that it can.
With liberal regulation of access to personal data and with clear ‘interfaces’ for innovative international entrepreneurs, old industries of Ukraine and their physical infrastructure can be a perfect training ground. It could be used to search for varied solutions in AI, to implement pilot projects, and to further scale the technologies for licensing in international markets.
Agroindustry is the first among the old industries in Ukraine that started active experimentation with creating innovations and attempts to sell them in global markets.
The unexpected innovation of this seemingly old-school industry is preconditioned by three factors such as direct correlation of business outcomes with the technological ‘equipment’ (losses during harvesting, etc.), availability of money in the company, and a large share of exports.
Logistics and metallurgy shall follow.
The only bottleneck in the chain of ‘create-an-AI-innovation’ – ‘solve-issues-in the-industry’ – ‘implement-and-test-locally’ – ‘start-global-sales’ is the lack of innovative entrepreneurs who could compete and sell technologies at international markets.
It is because grain or metal exports and the global technological competition make two very different areas. They require different resources, communication, and skills from the entrepreneurs.
Does It Stand a Chance?
The fastest way is obviously to actively promote the country as the testing ground for industrial innovations. It could be a place for making normal ‘interfaces’ with industries and leading companies, easy to understand and transparent to international innovators.
It is the only way to quickly launch the process and not miss the adaptation trend or the use of artificial intelligence systems in the budding industry.
The trend is even more fundamental than others – it is one thing to sell the grown grains or manufacture harvesting machines ‘simply out of metal’. However, it is another thing to sell all over the world the full cycle agrosystems that grow cultures without soil, and the ‘brains’ for unmanned harvesters able to perform all operations in the field.
In case Ukraine misses the trend and fails to produce world champions in traditional industries based on artificial intelligence technology, it will be on the road from being a subject to becoming an object.