Smart City, Songdo International City and the Incheon Free Economic Zone (IFEZ).

Hyundai Motor Group Chaebol Reform

April 7, 2018 Don Southerton Commentary Comments Off

As a follow up to news on Hyundai Motor Group chaebol reform, we are seeing some interesting developments. First Samsung is one of the few Groups yet to reform their shareholder structure. That said, I feel they will adopt one similar to Hyundai’s recent plan– a hybrid from the traditional Korean Holding Corp. model.

For starters and some clarity regarding the spin-off and merger within the Hyundai Motor Group Chaebol reform, Hyundai MOBIS, the new de facto holding company still plans to further beef up its core auto parts business.

That said, operations for both domestic Korea modular and A/S parts will move over to GLOVIS as announced—overseas operations will remain under MOBIS.

In particular, MOBIS as the Group’s nerve center will focus more on R&D, and investing in future growth drivers like autonomous vehicles and connected cars.

Next… and getting lots of media coverage and in my opinion nothing that radical.

On Wednesday, Elliott Advisors, a hedge fund sponsor subsidiary of the U.S. fund, called on Hyundai Motor Group to step up its efforts to overhaul its governance structure after announcing it had acquired more than US$1 billion (1.05 trillion won) worth of stocks in three key affiliates of the Korean automotive group.

“While this step is encouraging, more needs to be done to benefit the companies and stakeholders,” Elliott said in a statement.

The hedge fund sponsor also called for a detailed roadmap to further enhance the Korean auto giant’s corporate governance, optimize balance sheets, and enhance capital returns at Hyundai affiliates.

Elliott Advisors said in the statement it looks forward to engaging with management and other shareholders directly on these issues and offering recommendations regarding the proposed plan.

In response, Hyundai said it will make continued efforts to enhance shareholder value and the worth of its affiliates while focusing on better communicating with shareholders.

I’ve also seen HMC sources note they plan to meet with Elliot teams during an upcoming investor event.

Again foreign investment in Korean publically held companies is nothing new.

For example, HMC’s total foreign ownership is about 46% of the Common Stock. Kia is at about 38%.

Elliott Advisors is estimated to own only a combined 1.4 percent stake in Hyundai Motor, Kia Motors and Hyundai MOBIS.

One more thing…

Did you have an opportunity to review my detailed 5 Page Report on Hyundai Motor Group Chaebol reform…. If not I please contact me… as has been very well received.

I’m also available to comment and answer questions as always…

No One Does What You Do: Korean Business Advisor

March 31, 2018 Don Southerton Commentary Comments Off

As a trusted friend constantly reminds me, “Don, no one does what you do,” providing solutions as a highly respected Korean business advisor.

This noted…Contracts, legal agreements, and negotiations go hand in hand with business. I was once told that in Korea the purpose of signing a contract or agreement was essential to formalize the partnership. Over time terms would be subject to change and re-negotiation.

My Korea facing experience has been that the contract fundamentally solidifies the working relationship. However, to maintain the partnership contractual obligations the contract will require on-going changes to reflect business conditions. In contrast terms in legal agreement in the West are seen as immutable.

Challenges

Major differences in how Korean and Westerners perceive legal agreements can surface during the negotiation stage and even after the contract is in place. In particular, requests by Korean teams for changes to a Western company’s standard agreements and contracts can cause considerable frustration, especially for their legal counsel. In the West some “red lining” of a document may take place but legal teams may see unprecedented levels of questioning the most basic contractual language. Great patience may be required to walk Korean teams through the Western legal terminology and clarifications of what cannot be changed within the document to maintain compliance with international laws.

Finally, it is not uncommon for terms to be re-visited and questioned by other Korean departments—often with limited or no international legal or business experience— despite months of work between the Western and Korean lead teams!

Oh, one more thing

Ensuring success and sustainability in dealing with Korea-facing business partnerships will require well-communicated expectations and cross-cultural understanding. In particular, any business plan and strategy need to take into account differences in the cultural realities between the West and Korea.

It’s here I can help as a Korean business advisor proving solutions., and echoing my opening statement. “Don, no one does what you do.”

https://bridgingculturekorea.blogspot.com/2018/03/no-one-does-does-what-you-do-korean.html

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Korean Business Speed: Real Fast

March 24, 2018 Don Southerton Commentary Comments Off

For those with ties to Korea as well as popular brands like Hyundai, Kia and now Genesis, we realize Korean business speed is critical–a competitive advantage used to leapfrog past more established rivals.

Korean business speed means things need to get done today and now, not tomorrow.

Others, too, have observed similar, and as Automotive News Asia Editor Hans Greimel pointed out in his 2017 article, “Hyundai Motor Group employees pride themselves on a frenetic corporate cadence dubbed Hyundai Speed, a kind of pedal-to-the-metal obsession with doing everything fast. Real fast.”

http://www.autonews.com/article/20170812/OEM03/170819923/hyundai-speed-design-cycles

I, too, have long found it as the driving force in Hyundai’s DNA. In fact, when quizzing seasoned Korean executives on wording for the title for my 2014 book, the term “Hyundai Speed,” was came up often and was strongly recommended.

I noted in my book’s Forward…

In the wake of the recent accomplishments of the Hyundai Motor Group and respectively the Hyundai Motor and Kia Motors brands a question is often raised, “What makes Hyundai so successful? As author, I tackle this question from a cultural perspective, leaving aspects of such as sustainable production networks, ever changing consumer appeal and brand image staying power for my colleagues in the industry.

My objective for Hyundai Way: Hyundai Speed is simply to share insights into the Hyundai Motor Group—a unique inside view of a unique corporate culture. In addition to the growing number of Hyundai and Kia Motors enthusiasts wishing to learn more about the carmaker…

Moving fast—a common trait

To answer my own question on what makes Hyundai so successful, as well as Samsung and other successful Korea brands, I’d say moving fast—real fast–was a common trait.

That said, moving fast to many Koreans and Westerners working with Korea, means balli balli, a defacto core value impacting everything from immediately responding to email requests for data to launching major projects.

[For the pros- and- con’s of balli balli see my article. PP. 3-4 http://www.bridgingculture.com/assets/toolbox.pdf]

As for moving fast, here are my 3 takeaways…

With short timelines, the focus is then on identifying the critical tasks that contribute most and with quickly moving on to execution.
The longer the deadline, the more time gets spent in analysis and discussions with an ever-lessening focus on the task.
Noting the Korean decision process can be time consuming, when a decision is made, all come together and move forward

All said, when working with Korean leadership and teams understanding their perspective is key…. and allows us to, in turn, “ work within the Culture,” and then provide alternatives. The later, something I strive to provide as a trusted advisor.

Here as needed…Call, Text, or Email… all work.

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Korean Business: Similar but Different Norms

March 17, 2018 Don Southerton Commentary Comments Off

This week’s read looks at Korean Business and, similar but different norms.

For starters, I was asked last week re: my availability for Bookings & Requests. Best to email me, or call.

That said,.. Following a recent C-level meeting, I had the opportunity to chat with the local subsidiary’s Korean CEO. He hoped I’d shared with his team how the company in Korea and the US differed from the Group’s many sister firms—many westerners wrongly assuming a high level of conformity across the Group.

I assured him that “yes,” I shared in mentoring how even within the Group I, too, had experienced that each company had its own unique culture. And, not only did sister companies differ but in some cases how the Koreans recruited and working at companies within the Group were different.

On parting the CEO pointed out another key point to be shared was that Koreans dispatched to support the division’s overseas operation over time came to see things differently than domestic Korea-based teams. He, for example, had come to “see things differently, too.”

Building on this…

Prior to a global workshop on the ever-changing Korean workplace, a senior Korean executive asked that I also explain to the group of predominately North Americans and Europeans that despite perceived outward appearances and their homogenous society that no two Koreans are alike….In other words, he asked that I help dispel common stereotypes, etc.

I agreed and did my best to pass on the message that like Westerners–behaviors, mindset, and experience varied among Koreans…this despite strong corporate culture and indoctrination.

In particular, factors contributing to how Koreans might differ can include: generational issues, global travel, work, and educational experiences, and significantly how they were mentored in a management style.

As for the later, during a team-building workshop held several years ago, a senior Korean manager openly shared some insights on Korean management styles.

He noted that within his Korean division teams were mentored by seniors in one of several styles…. Some senior managers fostered a “soft” management style of collaboration, while others used a “hard” autocratic style.

Elaborating more about how he was mentored, he learned to first present the challenge to his team, then ask his juniors to prepare their recommendations. And in the case of working in the overseas’ subsidiary, he learned to ask the American colleagues for their ideas vs. directing the team on what to do–a style he’d been taught by his longtime boss.

Pop Question.
What similar but different norms and styles have you experienced with Korea based companies?

dsoutherton@bridgingculture.com

https://bridgingculturekorea.blogspot.com/2018/03/korean-business-similar-but-different.html

A Question on Korean Decisions

March 14, 2018 Don Southerton Commentary Comments Off

Earlier this week I was asked for a cross-cultural insight into the “why” behind Korean expatriates intervening in what some feel is the local decisions process. More so, these decisions may be one-sided, lack collaborative and mutual engagement and have consequences.

In turn, western teams see themselves consulted only to validate preconceived ideas or to implement directives from Korea.

This has to lead to in some cases local Western management seeing their input and expertise being marginalized– more so with complex situations and long-term planning “drilling deeper” may uncover ramifications.

In my experience due to the hierarchical Korean approval model, decisions take time–lots of time 🙂 That said, when Korean teams are under enough pressure they are driven to take immediate action. With no ill intent and out of expediency, it can result in little local joint discourse related to potential trade-offs and risks in projects assigned to the local subsidiary.

Particularly deep local concerns on this narrow and reactive workplace approach, one can draw an analogy to jigsaw puzzle building.

All Possible Options?

The pieces to a puzzle have many unique sides. There may be different ways to place them into the puzzle. What is required is to look diligently at all possible options.

Like all challenges, one needs to explore the different possibilities to find the right solution and how the piece fits into the overall puzzle—essentially one needs a reflective mindset.

As a Korean colleague has pointed out, their society beginning with grade school does not promote reflective thinking and instead looks to promote a thought process that leads to more immediate results. In fact, Korean high school students spend more than 14 hours a day studying, memorizing and preparing for exams—a model that stifles creativity.

I also see a cross-cultural aspect with many Korean decisions the result of a team workplace’s collective thought process, and in contrast, reflective thinking stems from an individual’s core consciousness.

Bottom line – reflective thinking requires taking acquiring knowledge and then calling upon one’s own experience, utilizing evaluative skills and admitting a personal bias.

The result is a broader perspective and a better view of the bigger picture.

Without working through a robust analysis of a problem from multiple angles and considering potential repercussions a solid evaluation can never arise.

All this said, my message for Korean teams is that there are immediate benefits to thinking outside the box through a reflective and conscious lens, the time invested in the analysis will lead to most effective solutions—required in times of high stress.

Questions? Here as always…

https://bridgingculturekorea.blogspot.com/2018/03/a-question-on-korean-decisions.html

Ten Valuable Insights into Korean Business

March 10, 2018 Don Southerton Commentary Comments Off

This read shares Ten Valuable Insights into Korean business. This is something I often incorporate into advising and mentoring. That said, we have to admit US-North Korea talks top the list of newsworthy topics this week, although the Steel and Aluminum trade issues are not to be overlooked. I do have my opinions 🙂

On Ten Valuable Insights into Korean business ,,, As food for thought, I am not advocating we drop Western norms and practices. In fact, it was developed in collaboration with a senior Korea manager more as a reference.

Specifically, we looked to share a perspective and explain to the local team the company culture in Korea — the Westerner employees lacking first-hand knowledge in the mother company and seeing the Company only in their local operations.

Ten Insights

• Trust There is a very strong trust within teams and in the company. This is often because of a legacy in achieving many bold accomplishments — often seemingly impossible tasks.

• Family Traditional family norms permeate the work culture (Elder brother as boss, senior managers, etc.) and the related concept that co-workers are seen as family.

• Challenge A one-word summary of the Korean workplace would be Challenge — both in what it has overcome and in what it expects of its global employees.

• Input Companies are very hierarchical but actively demands input from all levels. In fact, top management make decisions based on the expectation that the lower levels have considered all possible outcomes and challenges.

• Teamwork Once a decision is made all dissenting or differing opinions unite to embrace success.

• Solution In Korea, employees do not bad mouth or put down their company. In fact, employees feel that such an attitude is “part of the problem” and not “part of the solution.” Even among friends, negative thoughts are not shared.

• Relationships From higher ranks to the lower ranks, they are very hierarchical. But, here are also very protective organizations. On one level, norms dictate that Seniors are demanding of their Junior employees. One reason is to make sure Juniors learn the work expectations, practices, and culture.

On another level, workers must ensure that mistakes are not made that could reflect badly on their Seniors the department or the company. Once a Junior works for a Senior that Jr. is part of a network of other employees under the umbrella or protection of the Senior.

• Expectations There are very high expectations that must be met. Doing a great job is what you are paid to do…

• Collaboration The American workplace process is often to receive an assignment, clarify details, go off, work hard, and come back to the manager with the result. The Korean staff will take a different approach. They will receive an assignment, work and discuss it collectively with others, and go back to the manager on multiple occasions informally to make sure they are following the path the manager wants. This method takes times, but Korean workers know when the manager sees the result, it will be what the senior requested.

And in closing and Ten Valuable Insights into Korean Business …we conclude w/ Adaptability Flexibility and acceptance of change. Projects are subject to lots of change — some speed up, while others stall.

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https://bridgingculturekorea.blogspot.com/2018/03/ten-valuable-insights-into-korea.html

Songdo and Cisco IoT Smart City

March 5, 2018 Don Southerton Commentary, News Comments Off

Songdo and Cisco Smart City

Cisco has been a long time partner of smart city Songdo International Business District. I recall as the city was in its early stages a team of their executives visited Songdo and marveling over the plans.

Datamation.com notes:

Songdo, South Korea

In South Korea, Cisco created a “living lab” called the IoT Cube to drive innovation into the Songdo technology deployed there. South Korea is considered one of the most advanced countries in regard to smart city and Internet technology. Using advanced concepts like fog computing, Cisco was able to demonstrate real-time data tracking and analytics for Songdo’s citizens, which was critical to assuring that resources were where those citizens needed them to be.

This was a very real example of the next generation of 5G wireless networking and became a global showcase for what will be possible. Songdo is yet another Cisco innovation center location.

https://www.datamation.com/commentary/cisco-blending-social-responsibility-with-long-term-business-growth.html

Weekend Read # 8: Relationships

March 3, 2018 Don Southerton Commentary Comments Off

Relationships… amid disruptive market conditions perhaps the greatest ripple effect challenge to Korean global business is how best to maintain positive and collaborative working relations between Western and Korean teams.

This March weekend read provides some recommendations.

Relationships matter

From a cross-cultural perspective, Korean commerce is dependent upon relationships and interpersonal interactions.

Western business, in contrast, leans toward process and procedure.

Therefore when Korea-facing working relationships are strained, culturally, there is a heightened impact throughout the entire organization.

Without discounting market conditions and intense pressure to meet aggressive sales goals, I see the impact of adapting to a rapidly changing and disruptive business landscape at the core of many strained relationships.

As author Thomas L. Friedman points out in Thank You for Being Late: “As we transition from an industrial-age economy to a computer-Internet-mobile-broadband-driven economy—that is, a supernova-driven economy—we are experiencing the growing pains of adjusting.”

Drilling deeper, I have found this acceleration has markets and industry sectors ever shifting.

For example, the automotive industry is witnessing and adjusting to new consumer preferences, such as collaborative consumption shared ride services, self-driving autonomous technology and eco-friendly vehicles.

That said, we as a society are also experiencing the need to adapt more frequently and at a more rapid pace than ever in the past.

The good news is we are perhaps adapting faster than anytime in history. Still there is a substantial gap in the high rate of change and speed we adapt. This gap is disorienting and business models that worked in the past have become outdated further adding to stress and frustration.

In my work, this leads to a Korea driven climate of reactive and hopeful second-guess decision-making, or, in some cases, the opposite in stalled action.

In both situations, I feel we need to embrace a middle course— a well thought out and responsive plan.

Again Thomas Freidman, too, recognizes this need to ponder. He notes, and I paraphrase:

Patience… space for reflection and thought. We are generating more information and knowledge than ever today, but knowledge is only good if you can reflect on it.

In closing I return to my original point of the vital importance of maintaining relationships amid the current market condition. No matter how challenging the situation we need to take time and work to forge strong collaborative bonds within teams Friedman again remarks:

And it is not just knowledge that is improved by pausing. So, too, is the ability to build trust, …to form deeper and better connections, not just fast ones, with other human beings.

http://www.bridgingculture.com

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Weekend Read: Hit the Target–a Korean Business Lesson

February 24, 2018 Don Southerton Commentary Comments Off

Don Southerton and Hit the Target

Hit the target, a comment tied to Korean business. A week does not go by without a colleague or client expressing deep concern for what seems an overarching and singular need for their company to reach their sales numbers. To most, despite a number of vital business initiatives, they feel the monthly demand to meet “Plan” is all that matters.

I can recall more than a decade ago while mentoring a new American divisional vice president being pulled aside by his Korean expatriate counterpart, an Executive Coordinator. The Korean obviously under duress and knew I understood the company as well as HQ expectations.

The Korean asked passionately for me to stress to the new American VP they needed to Hit the Target. He repeating the phrase, 3 times so to ensure I got it… then patting me on the back before sending me over to the adjacent office with the VP.

Frankly, as long as I have been working with Korea facing global business it has been the driven force.

In another case, I was a speaker at LG’s Mobile national sales meeting. Capping the upbeat and motivating event, the Korean CEO with a huge graph projected behind him shared their amazing unit sales growth over the years. He then added the next year’s “stretch goal” as a hush came over the room. The new goal a huge bump over past years, which had pushed teams and the organization to their limits.

To be fair, this model is not unique to Korean business. It is also the subject of frequent discussion in Korea.

However, South Korea’s modern economy was once rooted in a state-run export-driven model—the government fixing private industries and well as the nation’s overall production and sales quotas in many sectors.

Today despite leading international as well as Korean economic experts arguing the old model is dated and need to move more to the service sector… the export production model still remains a driving force…

In part with so much of the Korean identity, economy and jobs tied to export production the Groups are under pressure to continue to seek growth each year—push the teams even harder.

So what’s the solution?

First, we need to accept this has long been the foundation of Korean business and it has been their proven success model.

It’s part of their Culture and a norm accepted by many.

In turn, others do hope and argue for Korea to re-invent and redefine itself, less focused on growth numbers and more on a being a leader in new technology and innovation synonymous with Silicon Valley.

Care to discuss some additional solutions specific to your needs?

Dsoutherton@bridgingculture.com

Http://www.bridgingculture.com

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Weekend Read 6: Korean teams

February 17, 2018 Don Southerton Commentary Comments Off

Korean teams.

Continuing with our Weekend Reads’, this week we look at supporting Korean expatriate teams, although the lessons apply well for all of us “working within a Culture.

Here’s the link. Enjoy.

https://docs.google.com/document/d/18pV5rE6yYLGLPIpTydbFBdVzXQsmcXxT8p1o_VQ-g7I/edit?usp=sharing

BTW, we welcome consulting and mentoring opportunities to support you and the team. That said, as always if you have questions, feel free to reach out.

And, If you missed a previous “Read,” you can access under Case Studies at

http://www.bridgingculture.com/what-we-do.html

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Smart City, Songdo International City and the Incheon Free Economic Zone (IFEZ).

Don Southerton Insights on Korean Business