Everything Korea: Episode August 24—A Longer Answer

In a June Vodcast I shared a “short answer” describing my work consulting for CEO and C-level management as well as the teams.

My short answer has been what client and long friend, a CMO for a major company best described my practice to others as Everything Korea… I also like having been introduced as “ a high power consultant” or Don is “the guru, the guy CEOs want to have their voice heard with…

In particular, I provide counsel and solutions based on my years working with Korean business—a good part in the international expansion into new markets and the challenges that surface.

I also shared why I post weekly Vodcasts, frequent media commentaries, case studies as well as books on Korea facing topics.   They all serve as channels to educate and inform.

This said, in my consultancy each engagement needs to be approached on a case-by-case basis—no two situations identical.

If you feel you might benefit from my Korean business insights, I’ve blocked out my availability to chat and discuss…. Just go to http://www.meetme.so/southerton

In closing, I’ve included a “Long Answer” List of varied media resources and interviews that share and highlight the scope of my work as well as advise for Korea facing companies.


Wall Street Journal Korea Real Time

“Southerton Advises Non-Koreans in Overseas Korean Offices”


Busan Hap

“Korea Facing: Interview with Korea Global Consultant Don Southerton”


Korea Herald

“The Tall Man’ and the globalization of Hyundai Construction”


Wall Street Journal Korea Real Time

“Hyundai Motor: Cruising or Skidding?”


The Korean Car Blog (a selection of articles authored by Don Southerton)



“New Urbanism”


Korea Magazine

Cover Story: “Songdo”



“How Korean car makers beat out the Japanese”


Leaf Chronicle

“Growth Summit Focuses on Global Jobs”


Oh, one more thing, even more links to resources are available upon request.

Everything Korea: August 17 Korean Succession, A Commentary and FAQ

It’s hard not to be a watchdog for Korean facing issues that grow in concern and could potential have a global impact on the organizations and clients I support.

In an interview for an upcoming segment for the Korean media show “Koreascape” on globalization, I was also asked for my opinion on the recent drama within Lotte, Korea 5th largest chaebol over control of the Group. The host Kurt Achin, a seasoned journalist, shared concern over the bold move by one of the Founder’s son to take control of the Group, which has drawn considerable media and popular notice to the ongoing issue of succession among the chaebol. This media attention has not only been limited to Korea, but showed up on Page 1 of the WSJ as well as AP and the other leading wire and new service. [BTW Lotte is Korea’s largest retail, distribution, tourism and construction Group with a growing international presence and annual sales estimated at more than $100 billion. Also, Chaebol is a common South Korean term for their conglomerates, often multinational, global enterprises led by a Chairman and in most instances family controlled.]

This brings us to a media summary on the topic of Korean Family Succession, as well as a FAQ sharing my thoughts.

To prefix my comments, in her book, How to tell your story so the world listens, Bobette Buster author and USC Adjunct Professor notes:

“It has been said that Industrial Age ended after the end of World War Two. Then, it was superseded by the Age of Information via the computer, the 1960s boom in Madison Avenue advertising…and television. Then with the Internet boom of the 1990s, there followed in 2003 with viral explosion of the social media. With this a new deceiving conceit arose: anything worth knowing is available at our fingertips. This immediacy has curiously, made people less curious about discovering the world, at least to any depth.”
korean companies
The author then points out; we often “… know the facts, but not the context in which they happen.”

Let’s start with what we know and specifically fueling so much concern, and then I will share some context in a FAQ.

An editorial on the Lotte controversy in Yonhap, the Korean newswire service, writer sums up popular sentiment:

“Koreans are sick and tired of these internecine fights when the managerial control of a chaebol moves between generations.” More so, “who will succeed a family decision, rather than a formal shareholders’ meeting.”

Fuel to the fire…
In July, amid considerable media attention, Samsung C&T and Cheil Industries agreed to an $8 billion merger that essentially consolidated the Samsung Group’s Lee family sway over Samsung Electronics, the Group’s flagship. This move sparked the ire of activist shareholder Paul Singer, CEO of U.S. hedge fund Elliott Associates. The American firm publically felt the deal would undervalued their substantial stock holdings in Samsung C&T while overvaluing Cheil to the benefit of the Lee family successor. Samsung rallied their supporters to win over Elliott in a heated vote.

Noting, I have prepared a three point FAQ look at context behind Korean succession, past and present.

1. What’s driving Korean family succession?

Looking back, Korea’s chaebol model is strongly rooted in their past. Neo-Confucianism, the dominant secular ideology of the nation going back to 1392, required all government officials and bureaucrats to pass rigid civil service examination for local, provincial or court positions. The Korean monarchy was the exception, male primogeniture used to determine the next ruler. Likewise, within Korean families, the eldest son and his descendants take precedence over siblings and their descendants. Elder sons took precedence not only over younger sons, but all sons took precedence over daughters—even elder daughters.

With the modern era and end of Japanese Colonial Rule, Korean business groups emerged. Family run, they gained considerable momentum during the 1960s, 1970s, and 1980s under the state-run policies mandated by the government.

At times this was a love/ hate relationship between the Groups and Government—with transfer of family wealth becoming an issue as the first generation of Founders handed over control to their children.

It is here we also see the first controversies surface. Following Korean traditional Confucian norms that dictated the eldest son be granted control over the family holdings as the next patriarch in some cases as with Samsung and Hyundai, a sibling or relative other than the eldest was selected by the Founder. In some instances, the elder sibling(s) fell out of favor of Founder, while in other cases a younger son assumed the role following the death of an elder son or if there was no son, a relative would take control.

2. How is the recent merger at Samsung associated with succession?

A second set of issues with wealth transfer centers on inheritance taxation—a tax levied up to 50% of the patriarch’s assets. To avoid the hefty tax, defacto holding companies allowed the second generation to gain control over the Groups with a marginal investment and little direct inheritance of the patriarch’s holdings.

As we move into a 3rd Gen of family control Groups like Samsung and Hyundai Motor have been engaged in similar lengthy and well orchestrated fiscal moves to transfer wealth and control. Much of this is through merging smaller companies, which the future successor has a substantial interest, with a larger Group’s firm, gaining control with no investment of monies. i.e. Samsung C&T and Cheil Industries.

A second method is work funneling.

In this process, Korean chaebol families have considerable ownership stakes in many of the privately held sister companies.

Next, the other subsidiaries give these smaller companies a huge amount of business to increase their revenue. Finally, these smaller companies grow considerably over time and can move to an IPO or sell some of their holdings to outside investors. i.e. Hyundai Glovis and Innocean Worldwide.

The families can then use the revenue stream to buy stock in other key publically traded subsidiaries and their chaebol’s defacto holding company.

In both cases, ownership stake along with circular, cross and pyramid (radiant) shareholdings give them direct and indirect control over the entire Group.

3. Noting public sentiment regarding succession, how likely is it for the South Korean President Park Geun-hye to toughen corporate laws?

As I note above, there has been a longtime Love/ Hate relationship between the chaebol and the Government. Despite the chaebols’ dominance and influence, they are increasingly coming under pressure from new laws and regulations designed to increase financial transparency and accountability of family members.

For instance, the government recently enacted a “deemed inheritance tax,” so that family members can’t get around South Korea’s inheritance tax laws, and has revised commercial laws to tighten requirements for reporting internal transactions.

This said, at time when addressing Korea’s sluggish economy is a priority for the current administration, few feel President Park Geun-hye will lash out at against the Groups. I see pressure being exerted on Lotte to resolve their family differences. I also see succession plans by Samsung and Hyundai continuing, with the reins of control and ownership transferred as planned—with hope to draw as little attention as possible.

To conclude, as a colleague expressed recently that for succession plans still in the works, their transition will come late in the cycle. As others bring attention to the issue, transitions that must and will occur from the current and aging leadership to the next generation will gets more a legal focus and public scrutiny.

I’d add this means focus and resources the Group’s leadership should have on running their business will be re-directed to dealing with succession. Decisions impacting their global operation could be delayed as well as the approval process, which require a high level sign off.

Question? Comments?
Why not schedule a chat? http://www.meetme.so/southerton
Or, Direct Questions to questions@koreabcw.com

How to tell your story so the world listens, Bobette Buster

Everything Korea: August 10 Episode Workplaces: Korea and US (and UK)

Deconstructing key aspects of western workplace in contrast to norms in South Korea continues to draw my attention. This week I add U.K. workplace insights since it, too, has a strong entrepreneurial and creative class–taking risks and learning from mistakes as seen there as part of the process going hand and hand.

In some ways I am personally draw to the British and specifically a Wales’ spin on business. This was well captured in a David Hieatt, Co-founder of The Do Lectures & Hiut Denim, 2011 workshop titled “Love Luck and Ideas got a town making jeans again.” So take some time listen, it’s well worth the time. More so, for my Korean friends in Korea and those Koreans working in overseas operations the video shares values that are actually tied to business like Love, Luck and Sentiment.


BTW I love David’s quote that jeans are “the creative uniform for the creative man”. Captures something I was missing, but so true,


This said, we all recognizing there is a gap in norms, values, and attitudes between the West (and in this case Wales in the U.K.) and South Korea, so what are construction steps can be taken to bridge the gap and lead to solutions.

Frankly that where my expertise comes in. I provide a strategy, coaching, and training to overcome cultural impasses that if not addressed do lead to frustration, stalled momentum and high turnover of the best staff and leadership.

Why not schedule a chat?   http://www.meetme.so/southerton

Or, Direct Questions to questions@koreabcw.com

Links of Interest

Case Study https://www.scribd.com/doc/271936685/Creative-Workplace-Culture-U-S-and-Korea

Hiut Denim http://hiutdenim.co.uk

Everything Korea August 3 Episode: K-lobalization, A New Concept?

In the recent case study, I mentioned K-lobalization. To many, this was a new concept. In reality K-lobalization was something I coined in 2008. I’d add to a video’s content, which I recorded in March 2008 on the topic (but still very relevant).

In particular we find Korean companies in 2015 are better defining their strategy globally. This means they are instituting a bolder standardized approach to marketing, branding and operations. In the past they have taken a more fragmented approach, with lots of variations from region to region.

Please take a few minutes and review the video from 2008…


Oh, one more thing. As an additional resource, here’s an excerpt from

Korea Facing, Secrets for Success in Korean Global Business

By Donald G. Southerton, 2013

Chapter 1 K-lobalization (Globalization with a K for Korea)

When I began supporting overseas non-Korean management teams for Korean companies, I often heard staff looking for a time when Koreans would fully embrace local western business norms, step aside in key decisions, and let the westerners “run things.” Why?

The overseas branches of Korean companies commonly have a CEO who is a Korean expat managing the company or region with local support. The CFO and technical support can be expats, too. Most often these Korean expats form the core for business operations in the host country. By the way, the expats below senior management are often called “coordinators” in the West. However, the Korean term is ju jae won.

In the larger overseas subsidiaries, Korean expats are assigned to the major departments, including sales, marketing, HR, and product development, along with engineering, and design divisions. In many, if not most, cases these expats are not assigned manager roles but operate as a “shadow management” with considerable oversight of local operations. For westerners unfamiliar with the Korean model, this “oversight” usually translates into the Korean expats requiring sign off on all decisions—trivial to substantial. This can be a huge challenge when newly assigned expats have little specific background in or knowledge of the host country’s operations and market. Cognitively, they recognize localization is needed but, especially if under pressure to perform, may defer to their Korean company procedures and cultural norms. In other cases, Korean firms have also initially resisted local management guidance and followed what they felt would be the best approach. Sadly, they performed poorly and eventually yielded to the local teams.

Times do change. Recently, and unlike a decade or so ago, many Korean teams and management have become increasingly global savvy. More significantly, following the global recession of 2009-10 when many international firms experienced setbacks, Samsung, Hyundai Motor Group and LG soared and as a result some Koreans see their model as superior to rival western brands.

I call this K-lobalization—when Korean firms boldly promote their own unique management style and corporate culture internationally and across many markets.

Book Available on Amazon at:


I look forward to your questions and comments


Everything Korea: Episode July 27 Insightful Feedback and Resources

I’ve just begun compiling feedback from the new case study. Contributions from readers, like you, show highly engagement in the study as well as many dealing with some common issues.


One that surfaced was although they have achieved much success Korean brands in their overseas operation need to adopt MORE to local norms including accepting failure and missteps. If not, and as a consequence growth will stall and be unsustainable–something of recent concern that we see occurring globally amid strong competition by rivals and changing markets.


To paraphrase one well thought out response that nailed it dead center with this profound statement. With regard to their local Korean business operations “[a] company needs to foster innovation rather than just be a fast follower.


Adding, “The challenge is with ‘Acceptance of mistakes’, which as you noted [ in the case study] is one of the foundations for American’s success. Culturally, failure [for Koreans] is not an option. Until they realize that it can serve as a foundation for success, they won’t be able to go much further.”


Again, in the next few episodes look for a more well thought out feedback, which I share on the case study.


Meanwhile, changing the topic slightly, but sharing as solutions…I’ve offered considerable content over the past several years in video format—first are a series of 5 concise videos, and second a more recent 2015 presentation—all captured in high resolution and quality audio. I strongly encourage you to view.


For the 1st five videos they run 2-3 minutes, and the last video about 26 minutes.


Opportunities and Challenges



Common Misconceptions



Lesson in Localization



Competitive Advantage




A Shift in Korean Management Styles



Korea Perspective



As always I’m happy to answer questions, please direct them to questions@koreabcw.com


Until next time…

Everything Korea, July 20 Episode: a Case Study Sneak Peek

This week we have something special, a preview of a new case study.

Over the past month I have been sharing the role of the creative class in the workplace–Korea and America. To clarify I looked at the “culture” needed to foster the Creative Mind in the workplace, and in particular recognize their values, norms, and attitudes. The new case study is the result of this study and research.

Cover Art July 20This said, I have attached a link to this new Case Study. Please take a moment to download and read. I would appreciate any feedback and comments before we offer it to a wider Korea facing distribution.

And by the way…

If you and your company would like to discuss challenges, I would be happy to chat. I’ve found each company has its own dynamics and I approach this case-by-case crafting an approach tailored to the client.

So until next time…

Schedule a chat? http://www.meetme.so/southerton

or if you have a Direct Question? Go to questions@koreabcw.com

Download Link for the Case Study



Everything Korea, July 13 Episode: a Roadmap for Creative Class Korea and US

In the two previous posts we looked at the dynamics required to nurture a creative and innovative workplace. In particular, Korean work values, norms and attitude surfaced as polar opposites to the characteristics of the western creative class workplace. In turn some core change would be required if Korea aspired to develop a strong sustainable innovation-driven economy. In fact, the current South Korean president, Madame Park, Geun-hye recognized this and upon election boldly had proclaimed a “Creative Economy” as her platform for Korea’s economic growth over her 5 year term in office.

Frankly most in Korea’s private and public sector have found this high level government mandate hard to embrace—in part because the overall concept was difficult to grasp within their current society. And, as I have pointed out what drives a creative economy is creatives as well as the unique communities that align with values and sustain their lifestyles. For example over-hearing a tech startup chat in edgy Golden, Colorado coffee shop Pangaea, I quizzed the three young entrepreneurs on “why Golden?” They response was 1) lifestyle, and more specifically rock climbing 2) access to established startup and incubator hubs like Boulder and Denver, and 3) available local funding for startup, the community quite wealthy.

To give another snapshot, Biz Stone former Twitter co-founder shared in a recent weekly update on his current venture Super.me, his partner Ben Finkel’s view on their work culture

* The world is our oyster. We get to build awesome software, dream up future products, use the best technologies, and get well paid for doing it. There’s no handbook, but the challenge is part of the thrill.

* We have tons of flexibility in our work style, no micromanaging and minimal bureaucracy. Of course, we can still improve our work processes, but this is another problem we get to collaboratively improve together.

* Working with a small, creative group thinking up and building future products—that has always been my dream. Of course, the products won’t work as planned, we’ll have to adapt, redirect, and persist.

In a future Everything Korea episode, I’ll suggest some steps Korean companies need to take if they look to build a creative workforce in their domestic Korean divisions, but before I tackle that set of challenges, I would like to address the need for Korean overseas operations to be sensitive to the needs, values, and attitudes of the creatives with their local organizations. Studies show that up to 1/3 of the American workforce are now part of the creative class. The best companies recognize this trend. Sadly, firms that ignore this reality, suffer.

My big concern is that Korean companies with global operations may fail to recognize this reality, too. This reality was well captured by Authors Josh Hammond and James Morrison in their book The Stuff Americans Are Made Of.

The authors cite seven cultural forces that define Americans:

  • Insistence on choice
  • Pursuit of impossible dreams
  • Obsession with big and more
  • Impatience with time
  • Acceptance of mistakes
  • Urge to improve
  • Fixation with what’s new

I feel Korean companies need to recognize and adopt a creative culture in local markets to sustainable recruit and retain this talent — a difficult challenge even for many American companies strongly rooted in older workplace norms. Again quoting Richard Florida, “ Many companies are merely presenting a cheap, façade of the alternative [creative culture]—a Ping-Pong table, perhaps an espresso machine.”Cafe-1

So for starters, Korean companies that need to draw upon local creative class talent will find that locating in right community can be half the battle. This means a locale that embraces diversity and openness, with some edgy counter-culture thrown in. Interestingly, we know there is considerable synergy between the creative class workforce in these communities like San Francisco, Austin, TX and Boulder, Colorado—a huge side benefit to any firm looking to nurture their workforce.

Perhaps the greatest hurtle is ensuring that Korea workplace norms and company practices do not over-power and overtake local norms—resulting in a stifling of the very creativity the Korean company so desires… In the worst cases, top creatives will exit and those that stay make no attempt to tap their creativity.

Again this is not an easy task, and frankly one I spend considerable time as a consultant providing leadership and teams—Korean and Western– with strategy work arounds and solutions.  And, I do have solutions.

More to come on this topic, in the meantime if you and your company would like to discuss, I would be happy to chat. I’ve found each company has it’s own dynamics and I approach case-by-case crafting an approach tailored to the client.

So until next time…

Oh, one more thing…. I am back in SoCal and OC two days this week. Some time still open.

Schedule a chat? http://www.meetme.so/southerton


Direct Questions? Go to questions@koreabcw.com

Everything Korea, July 6 Episode: An Edgy Korean Counter-culture?

To recap my thoughts in previous posts, a strong Creative Class is seen as key to sustaining a forward-leaning, innovative economy. Going hand in hand with this is workplaces that embrace diversity and openness, are not opposed to self-expression, promote individual recognition for hard work as well as resulting compensation (more than a base pay) for doing what they are good at… and they work in a community offering an engaging and even edgy lifestyle.

So where do I see disconnects between South Korea and America?

For starters in America the old Fordism and Company Man model at least for the creative class has shifted. Workers were once strongly tied to the company, this relationship nicely summed up by Richard Florida, “You were a company man, identifying with the company and often moving largely in the circles created or dictated by it.” Today, creatives value their unique social identity–one able to move intact from firm to firm and well as assuming the risks and absorbing the benefits companies once backed.

In contrast, rooted in Korean norms and collectivism, Korean workers strongly identify with their company—perhaps more so within the major Groups like Samsung, Hyundai, LG, and SK, as well as those working for a high profile global brands in Korea like Nike.

These organizations tend to be highly traditional vertical (and often horizontal) corporations— top-down management hierarchically flowing workload down to teams (most often operating in silos) with the Taylorized expectancy they follow routines and norms long established. In contrast, a creative work culture dies when so regimented as Florida points out, “ like rote work in the old factory or office.” A long hour chained to cubical cranking out Point points is very different than a culture where ideas are conceptualized inside one’s head in a café over a latte or during a trail run.

All said, one could argue Korea may not be wired for fostering a sustainable creative culture.

What I do find as encouraging is many in Korea on a personal level attracted to and appreciate counter-culture. There is an ever growing segment is their society adopting a lifestyle more conducent to creativity. Much of this influence has been Koreans exposed to the global art scene, the influence of expat non-Koreans, plus Koreans embracing their own traditional artisan heritage. In some ways, this movement has taken on a rather edgy Bohemian feel… one I find very cool.

Dylan and 60s

Seoul LP Bars, the 60s and Dylan.

For example, Korean media reports there are a growing number of “dives with DJs and extensive collections of LPs,” many located in ultra-hip neighborhoods…. walls plastered with album covers from the likes of Pink Floyd, Jimi Hendrix and B.B. King. The interiors shrines to Bob Dylan and Neil Young and the cultural revolution of the 1960s.

One more thing,

I have a request for my friends both Korean and non-Korean expats in Korea to share their observations, especially on the emerging counter-culture.

I’ll also be pulling together some example of a budding Korean counter-culture scene and what I see as roadmap for workplaces looking to attract and groom creatives—not only for Korea, but also for their U.S. and global operations.

Until next time…

Schedule a chat?   http://www.meetme.so/southerton


Direct Questions? Go to questions@koreabcw.com

Everything Korea, June 29 Episode: the Gap in Norms


Outside my day-to-day support of Korean facing business and clients, I am drawn to ponder on issues and drill deep. I other words research, investigation and then providing commentary on the direction of Korean business from trends inside Korea to Korea-facing international operations.

An example of this process, several years ago I coined the term K-lobalization (Globalization with a K for Korea) as I saw the trend when Korean firms boldly promote their own unique management style and corporate culture internationally and across many markets. A recent manifestation is organization-wide, corporate-directed mandates…. from core value, vision, and management training directives to most recently how they should brand or even target specific consumers in local markets. Usually these programs are expected to be unchallenged and accepted without question by overseas teams—at times not in the best interest of the local operation.

This said, a new topic, which has my interest, was touched upon in May 11 edition of Everything Korea… there I argue a key challenge in Korean success with startups and innovation was “culture.  I would like to expand this perspective more broadly to be the “culture” needed to foster the Creative Process in general. In fact, this is the first of three commentaries on the topic.

Let me explain. What has evolved in America regarding startups, tech, and innovation is they tend to hub in cities with diversity and strong counter-cultures like Boulder, Colorado, San Francisco, Austin, TX, and NYC, although more and more scenes are emerging in Nashville, TN or here in Golden, CO…

Screen Shot 2015-06-29 at 10.25.40 AM

Nuff said…Edgy Austin and Jack Kerouac

Within these communities I have witnessed an amazing synergy not only in day-to-day interactions and dialogue, but also in resources. Actually spending an hour and listening to the chats and even pitches for Angel Funding in edgy Caffe Centro on a South Park Street in San Francisco (the couple of blocks once referred as the Tech Ground Zero and where concepts like Twitter were launched and well as scores of tech companies and startups now call home) one quickly sees why locating in one of these scenes is key. In fact, showing how widespread, I frequently hear similar coffee shop launch pitches in Golden, Colorado.

Let me explain more in detail.

As academic Richard Florida points out in The Rise of the Creative Class, creatives as a group reflects a “powerful and significant shift in values, norms, and attitudes.” He clusters this attitude to be:

1) Individualism

2) Meritocracy

3) Diversity and Openness (which can translate to gender, sexual preference, race and my favorite “personal idiosyncrasies”.)

Of course those familiar with the Korean workplace and by this I don’t mean only the larger organizations but even most progressive firms, recognize there is a huge disparity from these “creative” norms.

For example, in contrast to the individualism within the creative class, in Korea we find deeply rooted collectivism where the group is the primary unit of reality and the ultimate staendard of value.

In collectivistic societies, group goals take precedent over an individual’s objectives. This view does not deny the reality of the individual, but, ultimately, collectivism holds that one’s identity is determined by the group(s) with which one is affiliated.

Collectivistic cultures also require that individuals fit into the group—and “conform.”

Noting this, outside values, norms and attitude, perhaps the gap between US and Korea that also occurs is in “risk mindset.” Today the American entrepreneurs, angel investors and VC who launched Facebook, Twitter, Instagram, Linkedin, Square and now Super continue to look for, invest and provide mentorship and guidance to what they hope will be the next success story…. In most cases they are investing resources in multiple ventures….

This said they know and accept that failure is part of the process…. As Biz Stone (co-founder of Twitter, and an early investor in Square, Medium…and a bunch more) said at SXSW on his most recent work… “the failure of one venture, Jelly, led to success at a venture, Super.me ”

So getting back to Korea the real challenge is not in lack of ideas or topnotch talent, but in allowing and fostering a culture of Diversity and Openness, an acceptance of failure, and tolerating and even embracing non-conformity.

The good news…. I would not give up on Korea and a creative culture. More of my thoughts on this in the next episode of Everything Korea. I even will propose a roadmap for grooming creatives in Korea.

So until next time…


The Rise of the Creative Class http://www.amazon.com/Rise-Creative-Class-Revisited-Anniversary-Revised/dp/0465029930/

Screen Shot 2015-06-29 at 10.27.29 AM

The Beat Museum http://www.kerouac.com

Biz Stone’s Super.me https://super.me

Screen Shot 2015-06-29 at 10.30.01 AM

Questions and Comments?   questions@koreabcw.com

Everything Korea, June 22 Episode— a Singular Message

I was recently interviewed by Fortune.com—I often contribute to the media. They were looking into the success of Korean car brands Kia Motors and Hyundai Motor in the wake of the latest J.D. Power’s Initial Quality Survey (IQS). To the surprise of many, Kia ranked #2 just below premium brand Porsche and Hyundai ranked 5th, both well above longtime and formerly top ranking Japanese brands.

With much of my work over the past decade supporting Korean global business, especially Hyundai and Kia, and more so, the Korean carmaker has long been a topic of my research, study, writings and media commentary…. My answer on why the Korean brands have achieved such success is simple. Quality has been an almost singular career message by the carmaker’s chairman, Chung Mong Koo.

To share some insights…. I quote from my book Hyundai Way: Hyundai Speed.

By 1999, Chung Mong Koo had assumed control of HMC in addition to his leadership role at Hyundai Precision [today known as Hyundai MOBIS]. Adding to his responsibilities, HMC had also acquired Kia Motors—an early casualty of the Asian financial crisis that ripped across the Korean economy. Having experience in the Hyundai Motor’s after-sale service early in his career, Chung Mong Koo was not without insights into the car division.

Since its founding in the mid 1970s, HMC had focused solely on growth. Indicative of Korea industry at that time, this focus was to produce as many cars as possible—as fast as possible. In turn, product quality and customer satisfaction suffered. From his experience working with consumers at Hyundai Motor’s After Sales division, Chung Mong Koo knew the damage shoddy products could bring to the Hyundai reputation, not to mention the high cost of warranty repairs.

When Chung Mong Koo began sharing his intention to turn Hyundai Motor Company into a top-five automaker, few outside the company took him seriously.

Hyundai, like many family-controlled Korean companies, was hierarchical and at times slow to change if there was a perceived risk. More significant, managers rarely cooperated with one another and division chiefs ran their operations as personal fiefdoms. It was a company of silos. “When a problem occurred, each division would blame other divisions,” says Lee, Hyun Soon, former Hyundai-Kia Motors Vice Chairman and Chief Technology Officer.

Chung Mong Koo’s first step was to replace the former top management with engineers and those with whom he had worked closely at Hyundai Precision. He formulated a strategy to challenge Toyota for quality. Extensive work with a number of top global consulting firms (e.g. J.D. Powers) and benchmarking of the world’s best automotive companies followed. He also sent teams to America to study weather, road conditions and driver habits. Quality control staff increased tenfold to 1,000 and they reported directly to him.

Employees were encouraged to offer suggestions and were rewarded. For example, one worker reported the Sonata and XG350 Grandeur sedans had differently designed spare tire covers. Sharing a common cover saved Hyundai about $100,000.00 per year.

Chung Mong Koo quickly earned a reputation for an obsession with quality. For example, several years ago a new Sonata launch in Korea was delayed for two months with 50 issues that senior management wanted addressed. Employees in the Asan factory worked feverishly to correct these items.

One was a tiny error in the size of the gap between two pieces of sheet metal near the headlight. The problem was not visible to the human eye and was narrower than 0.1 millimeter. However, numerous managers and employees worked on the problem for 25 days before it was solved.

This obsession with quality continues today with the Chairman relentlessly reinforcing the quality mandate to management and teams globally as they strive for zero defects.

All said, for my work I drill deep. I look for and then share with clients the reasons behind Korea facing business, while over time mentoring, coaching and steering teams and C-level leadership to solutions.

If these unique resources can benefit you and your company, I have blocked out some times I’m available to discuss options. Just go to http://www.meetme.so/southerton

For a Link to Hyundai Way: Hyundai Speed, in either Paperback or eBook.

or a Complimentary PDF Copy

#singularmessage #fortune #IQS #kia #hyundai #koreanmotors #koreanglobalbusiness#quality #hyundaispeed #customersatisfaction #top5automakers #qualitycontrol#obsessionwithquality #zerodefects #mentoring #coaching

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