I have often been frustrated with Korean corporate culture, leadership and talent management. In my view, no other country in the world comes close to achieving so little (low work efficiency and employee satisfaction) with so much (smart, diligent and loyal talent).

When working for a Korean conglomerate, I felt suffocated by the inflexible and monolithic corporate culture that didn’t allow room for creativity and innovation –two critical factors for success on the global stage.

I’ve experienced first-hand, how the diverse and creative ideas of employees are wasted by the top-down militaristic corporate culture. It’s with this experience that I firmly believe the key to changing Korean corporate culture, leadership, and mindset is globalization.

But first, let’s assess how far have we come.

Are Korean companies globalized?

I’ll start with a bold statement, that many might not agree with at first: No Korean Conglomerate has achieved globalization yet.

Orit Gadiesh, Chairman of Bain & Company, summed things up quite nicely when speaking at the Davos World Forum in 2015.

Until now, ‘Globalization’ for Korean firms meant manufacturing in Korea and selling it overseas. However, that model is now facing its limits. In order to be a truly global company, it cannot only remain as a mere exporter of products but a global operator. It needs to have a globalization strategy not only for product development and marketing, but also financing, strategic outsourcing, creating alliances, and talent acquisition as well. You must globalize the mindsets.

If you just look at the number of countries in which Korea operates, global sales percentage and number of foreign employees, one might think that many Korean companies are already very globalized.

However, if you look closer, the companies that have a high overseas presence (more than 50% of sales coming from abroad) such as Samsung Electronics, LG Electronics, Hyundai Motors, Hankook Tire, etc., are manufacturing-based firms that don’t need much “globalization” in order to create revenue globally.

However, in the service or financial industries, where globalization is a prerequisite, the report card for Korean companies overseas is a disaster.

Korea’s top service and finance-based companies such as CJ, KB Financial Group, and Mirae Asset are struggling overseas. Moreover, Samsung Life, Samsung Securities, Hyundai Fire & Marine Insurance and Shinsaegae, all part of Samsung and Hyundai group that have multiple globally recognized manufacturing based companies, have no global presence at all (less than 5% of their sales coming from overseas).

Why haven’t service industries fared as well as those in manufacturing?

Basically, it is a totally different ball game in the service and financial field. It is about people. You cannot simply sit back and expect the locals to buy products shipped from Korean factories thousands of kilometers away.

Bringing in more non-Koreans in leadership positions, providing more authority and career vision to the locals in overseas subsidiaries, having workshops and training regarding cross culture are some of the necessary steps.

Respecting and understanding the local culture and having the local employees at the key decision-making positions, is required. And it’s there that Korean company’s “globalization” aspirations are lacking.

One good example is SK Hynix, a Korean semiconductor manufacturer. SK Group, a Korean conglomerate which runs the largest telecommunications company in Korea, struggled to expand its business overseas for a long time.

From its initial global expansion to Mongolia in 1999, it established S-Fone (mobile communication operator) in Vietnam in 2000. SK drove into the bigger markets from 2005 as it created a joint venture, Helio, with Earthlink (wireless provider) in the US, and entered China by acquiring a stake in China Unicom in 2007.

Even with this continuous effort and investment, all SK Group’s overseas businesses were unsuccessful.

However, in 2012, by acquiring Hynix ( the semiconductor manufacturer), SK Group was finally able to discard its perception as a Korean ‘local’ company. Although SK faced difficulty in expanding overseas with its service oriented businesses, it found its salvation in the manufacturing industry with SK Hynix, currently, the world’s second-largest memory chipmaker bringing in more than 90% of sales overseas.

Likewise, the globalization level needed to succeed in finance or service-oriented industries are much higher compared to the manufacturing industry. Then what is my definition of ‘true globalization’?

What is ‘True Globalization’ of a Company?

True “globalization” of a company is, at its most basic, a change in its DNA –such as the corporate culture and mindset. It’s not about the number of overseas sales, global workforce or any of the standard KPIs.

Korean conglomerates, however, often mistake the global success in the manufacturing industry as ‘successful globalization’, and only focus on the hardware and not the software (if I may mix metaphors), which is easier to recognize and manage. However, this is extremely dangerous. It is because going forward, the success of a company will require the globalization of the culture and mindset — the software of the organization.

Glovation (Globalization + Innovation)

Compared to the change in the ‘hardware’, the change in the ‘software’ of an organization not only is much difficult and requires a longer time, but it also requires innovation from the core of the organization. This ‘software’ innovation will threaten the authority figures in various leadership positions because a change in leadership is pre-requisite. Ironically, it is up to them to accept this fact, let down their authority and initiate this change towards true globalization.

First step towards Glovation (Globalization + Innovation)

Korean conglomerates have taken the first step to achieving this ‘glovation’. I believe the first step of any problem solving is defining and acknowledging the problem. They now realize the importance of cultural or software change and is putting in various efforts to speed up this process.

Bringing in more non-Koreans in leadership positions, providing more authority and career vision to the locals in overseas subsidiaries, having workshops and training regarding cross culture are some of the necessary steps.

I could see this change directly because I’ve been training and delivering these lectures to Korean conglomerates for more than 5 years now. The topic of the lecture is shifting. 5 years ago, it was more geared towards making non-Koreans understand the Korean culture, business manners, and work process. In short, it was making the foreign workers Koreanized. However, now, the audience are Koreans, and the topic is about global mindset and accepting diversity.  

Start-ups setting their eyes on the Global Market

Moreover, there are many companies in the booming start-up scene that are looking to go global. Some are headed by competent and young entrepreneurs who received education overseas or have worked in a global environment. For these start-ups, there are no older men in leadership positions putting barriers to change or no legacy of the past to follow. I believe these are the companies that will achieve true ‘glovation’ faster than the older conglomerates and will lead the cultural change in the Korea.  

This change towards glovation will be a long and slow process, but I hope to be a part of this change.

What do you think?

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