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
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