This is a new work in progress-- feedback and comments appreciated.
By Don Southerton
Feedback on my writings, including my most recent book Korea Perspective is always welcome. My readers have considerable first-hand experience working for and interacting with Korea-based companies so their input is appreciated and highly valued.
The following is a paraphrase of comment from one reader.
After reading Korea Perspective, I can only agree with your very accurate analysis. Leadership within Korean companies is crucial, since very little action is left to lower level of management. For example, the Western reflective behavior, as you describe in your book, is not encouraged by the leadership. The focus is solutions and quick action.
The comment further notes:
I think a good topic and matter to be studied more is how Korean Companies can really expand and/or consolidate their overseas business without considering a change in their leadership. Unfortunately what I have experienced is if this leadership is ONLY Korean these big companies will face hard time in the future, of course against American companies but I would say also with Indians and nowadays Chinese.
A Roadmap for Korean Management
Mindful of these remarks, in this series of commentaries I depart from a previous focus that has shared insights to non-Korean global teams working for Korean companies.
Instead I provide a roadmap and best practices to their Korean management and overseas divisions. This includes new Korean brands eager to launch their products and services outside Korea. The series is also applicable to those established Korean brands already in overseas markets who could benefit from benchmarking “what works” and “what doesn’t.”
Frankly, too often I see the same missteps re-occurring. What is frustrating is to witness challenges one company endures in their market entry only to see the same (something or other but without repeating “challenges” repeated as another new Korean brand goes global.
So what are these common missteps and how can they be addressed? That is goal of this commentary.
Challenge #1 Dispatching a Korean team to spearhead local U.S. or overseas operations outside Korea.
When expanding into new oversees markets, all companies need to have their HQ operations represented in the local markets. The Korean model for overseas markets has evolved-- improving some over the years. In the best cases, the major established brands have recognized and learned through trial and error that key local leadership and teams, especially sales and marketing, need to be non-Korean and industry veterans.
In addition to local teams, they may still assign expatriates, called ju jae won. In the larger overseas subsidiaries, these 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 signing 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, the Korean teams 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, the Korean-led teams perform poorly and eventually yield to the local teams.
That said, it seems to be common practice that new Korean brands with little overseas experience follow a path that rarely is successful--feeling their best approach is to dispatch HQ personal to the new market and let them figure it out. In many cases those assigned are among the top employees in the Korean HQ operation—knowing their company and its product well. However, to succeed in the West an entirely different set of skills is required. Foremost is a strong knowledge of the industry—one acquired over decades.
All said, the most effective model is to hire a strong local, non-Korean management team but not constrain them with a Korean “shadow” management team that must approve or sign off on all the local decisions. This includes the Finance team assigned to the local operations but always independent of operations and reporting to their own teams in Korea.
Why? To be truly effective, local teams must be empowered to act based on their experience and judgment. Layers of approval may be commonplace in Korea but slow down the process in overseas markets, especially when the Korean support teams have little or no experience in that market or try to operate the business as they would in Korea. Inevitably, the work stalls, frustrating and demoralizing the local teams.
In part 2 of Challenge #1, we will discuss an option in lieu of dispatching a team from Korea. Should the hiring of local teams of Korean heritage with the assumption they will be able best represent the brand in America be considered as an option?
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