Like a moth to a bright light, I am drawn to Korean facing business issues and trends. I explore and then provide commentary on the direction of Korean business from developments inside South Korea to their impact on international operations. To better define this task, my perspective is “culture.”
I’d like to share some thoughts from my most recent visit to Seoul, South Korea—the third in as many months. (This commentary is also available in Branding in Asia)
First, I see huge leaps in the culture that nurtures an emerging “creative class.” In America, as an example, startups, technology, and innovation have tended to evolve in cities with diversity and strong counter-cultures, all of which foster creativity. Those familiar with the Korean workplace … and by this I mean not only larger organizations but also the most progressive firms… once recognized the stark disparity in “creative” norms between Korea and the US.
That said, one can sense the change just strolling down a trendy urban district undergoing gentrification such as Hongdae or Sinsadong where streets and alleys are dotted with vogue shops and hip cafes. Likewise, as rent has soared in these areas, adjacent neighborhoods, Yeonnam-dong and Sangsu-dong, for example, have become home to Korean hipsters and young artists.
In particular, this emerging Korean creative class has generated a demand for and furthered the appeal for chic design, urban art, indie music, and hip, smart fashion as many look to stand out as individuals within a people once depicted cross-culturally as high in conformity. I see this latter trend as a critical shift in Korean society. As academic Richard Florida points out in The Rise of the Creative Class, creatives as a group reflect a “powerful and significant shift in values, norms, and attitudes.” He identifies these attitudes as:
1) Individualism
2) Meritocracy
3) Diversity and Openness (which can translate to gender, sexual preference, race and my favorite “personal idiosyncrasies”)
Gaps
This said, there are still gaps in applying a creative culture to business, especially when a project’s expectations are measured in global terms. Digging deeper perhaps the reason for the disparity is a matter of process and mindset. For example, in the West whether it is a business proposal, a go to market strategy or a roll out, seasoned veterans, in-house or contracted, work from Day 1 to define and flesh out the project. Complementing this approach, their working level teams are experienced. Overall, there is typically considerable investment in time and talent up front.
In contrast, the Korean approach is more to adapt and modify. Since the working teams involved tend to be comparatively less experienced, the project takes them into uncharted waters, so the more practical approach is to tackle each stage as it unfolds.
Additionally, in the West, high-level leadership, such as Vice Presidents, CMOs and COOs, are commonly directly engaged in the project. This enables a more hands-on approach that brings into play their talents and expertise. In Korea, we find it’s a working level team engaged on a day-to-day basis with leadership only periodically briefed on progress.
The challenge arises when western expectations call for detailed upfront plans following a proven model versus ones that are more general roadmaps with fewer specifics.
All and all, I see the engagement of Korean teams in global projects as a positive direction. This promotes the adoption of western approaches to project development enhanced with Korea’s emerging creative culture.
As always, we open to discussing your needs and concerns. Stacey, stacey@koreabcw.com, my assistant can schedule us a time to meet, or chat by phone. For urgent matters, Text me at 310-866-3777
Everything Korea, The New Year Episode: Gazing Back: A Look Forward
2016 in retrospect. 2017 before us.
From a string of weekly trips to OC/ Irvine, California, home to the U.S. HQ offices of Hyundai Motor, Kia Motors, Genesis, MOBIS Parts, Innocean and Hyundai Capital, to somewhat longer trips to a Vegas Dealer Show, NY and LA Auto Shows, HATCI R&D in Ann Arbor, KMMG and the Tier One’s in Georgia and Hyundai in Canada and even longer treks to Seoul, in 2016 I supported leadership across the Korean OEMs and their affiliates.
This said, it was a challenging year for both the western and Korean overseas teams. Bluntly, we all felt the frustration; the common thread—the need to hit steep sales targets. Layered on top was mounting anxiety from South Korea over a declining export economy and a weakening Won. Not to mention, the political scandals touched to the heart of Korean Groups—their Chairman called into the National Assembly and probed if pressured to contribute monies in exchange for special presidential treatment.
Sadly we also saw the abrupt exit of Hyundai Motor America’s CEO Dave Zuchowski, our long time friend who we advised on all things Korea. Still we are honored to support so many in leadership who come to us for advice and perspective—a role we take with utmost seriousness and hold in deep confidentially.
With 2016 also came new clients and a range of projects, among these working on the PyeongChang Winter Olympics. Equally appreciated were the opportunities to share my thoughts and perspective to a wide audience including groups like KOTRA NYC, and in media– Branding In Asia who both highlighted work in an interview as well as published a number of commentaries.
So what’s before us in 2017…Trump, the Korean Presidential Election and Succession?
“Trump?”—a name and an uncertainty that surfaces often. I constantly field questions from both Korean and American business leadership on the impact of the election and the new administration. Who would know I would be asked to speak in December about Trump to 45 Korea executives. I also find it interesting that diverse Trump scenarios tied to possible renegotiation of the North American Free Trade Accord by the new administration were mulled at the Hyundai Motor global strategy summit in Seoul.
Looking forward, trade agreements, US military support for South Korea and dealing with North Korea’s nuclear buildup still top the list. On the trade agreement front, my expectation is at some time during the next year it will be looked at deeper by the Trump administration. However, until there is a South Korean president in office, with the impeachment waiting to be upheld by the Courts, we’ll see no Trump-Korean President summit to drill deeper.
Korea’s Presidential Election 2017
What I will be probing for is the “tone” of presidential hopefuls—2017 an election year in South Korea. One candidate, for example, is already demanding the Chaebol model be dismantled.
In particular, my thoughts were summed up in Forbes, a timely December Frank Ahrens’ article remarking it was likely an incoming Korean president could ride into office on a wave of populist anger directed at the nation’s elites. Still, says veteran South Korea business consultant Don Southerton, “a new administration will need chaebol support to drive the economy and jobs or quickly lose public support.”
I’d add we have experienced decades of “love-hate” between the Korean Groups and the government. One minute mandating new rounds of regulations such as restrictions on mutual investments and loan guarantees to curtail chaebols—the next minute persuading chaebol leadership to spur growth. The reality is Group support by Samsung, Hyundai, LG, Lotte and SK is needed to create jobs, invest in R&D and support an incoming president’s initiatives to grow the economy.
Less likely considering the emergence of a more cynical generation that may threaten to upend an old system, nevertheless seeing disruptive politics emerging globally, we could even a new president promising change but openly allied with the chaebol as engines of growth. We’ll have to wait and see. That said, at least in the short run post-scandal I see Groups coming under pressure in laws and regulations designed to increase financial transparency and accountability of family members.
Finally the Succession issue…
What stood out at the recent National Assembly grilling of the top chaebol Chairman, many men in their late 70s, was the targeting of now defacto head of Samsung, who has assumed his father’s role. With the mantle of Samsung now handed to the third generation of the Lee family, we may see similar at Hyundai and the other top Groups. In fact, South Korea’s textile giant Hyosung just announced with year-end the ushering in the era of the group’s third-generation management. I expect more announcements in the weeks to come…
What will this new generation bring forth? For one, Samsung’s successor Jay Y Lee has promised to abolish the conglomerate’s “control tower” the Future Strategy Office in response to criticism about the office’s role in the group-wide business command and control operations. No major decisions such as acquisitions or entering new businesses without the FSO’s scrutiny. On a side note, Hyundai Motor Group is one of the few groups that doesn’t operate a de facto control tower. Unlike more diversified chaebol, Hyundai core business is automotive with its affiliates already aligned in supporting a common interest.
As for succession at Korea’s second largest conglomerate, Hyundai Motor Group’s heir E.S. Chung continues to take a more visible leadership role. For example, E.S. Chung has sought to break away from the old model of a strictly Korean leadership team to more diverse international team as part of his strategy to better position their brand. More recently he re-structured the annual year-end global strategy meeting of 50 Hyundai and Kia Motors Korean executives from their overseas branches. What stood out was the collaborative, open discussion based structure of the summit vs. an older conservative and hierarchical format in which the head of each overseas branch would give a one-way briefing to the Chairman.
We can assume E.S. Chung will continue to follow his design-loving passion, and consensus-building management style in 2017.
Summing up
2017 may be seen as a year of uncertainties—both domestically in Korea and internationally with the potential for a weakening global economy, more disruptive politics and tightening of budgets and spending. The later is concerning since cutbacks would only hamper sales in what may be a tough market.