Tuesday, January 14, 2014

Sneak Preview: Hyundai Way Hyundai Speed, Part 1

Hyundai Way: Hyundai Speed
A New Article Series by Don Southerton

The Hyundai name and brand have steadily gained global recognition. Established in the late 1940s, Hyundai’s growth over the next decades paralleled South Korea’s rise as an emerging and vigorous economy. By the early 2000s the highly diversified Hyundai Group restructured and split into a number of independent and specialized units, including Hyundai Heavy Industries (HHI), Hyundai Merchant Marine (HMM), Hyundai Engineering and Construction (HEC), and Hyundai Motor Company (HMC). As Hyundai Motor expanded into a highly integrated auto manufacturer composed of numerous sister companies and subsidiaries, the name, too, evolved. By 2011, with the latter company surpassing the original organization and former affiliates in overall global success, it was renamed the Hyundai Motor Group with focus on three growth engines—automotive, steel, and construction

To avoid confusion, I use Hyundai Motor Group when discussing the mother organization and terms like Hyundai Motor Company (HMC) and Kia Motors Company (KMC) when referring to specific divisions. That said, at times I use “Hyundai” and “Hyundai Motor” in a broad inclusive sense with regard to culture and heritage.

Part 1: The Quest
Hyundai has a rich heritage, a history of overcoming great challenges, and a legacy of bold innovations and positive, forward thinking. “So, what makes Hyundai so successful?”  In the wake of Hyundai’s recent accomplishments this is a question often raised, but rarely answered. An objective of this series of articles is to share insights into the Hyundai Motor Group—a unique inside view of a unique corporate culture--as well as sharing my quest to uncover, define, and communicate the true Hyundai Way.

Stepping back to August 2005, I was conducting cross-cultural training and coaching sessions at Hyundai Motor’s newest manufacturing facility in Montgomery, Alabama. In the early months of the car plant operations, tensions between the American and Korean teams were mounting. Production of the first vehicles in a new facility is always a daunting task.  The additional cultural dimensions and language differences only compounded the odds of having a smooth launch. Recognizing the challenges, senior Korean leadership asked if I could provide team-building workshops that would allow the respective managers to better address escalating concerns and issues.

Consensus was that the problem was “cultural”—Koreans not understanding Americans and visa-versa. I had been working across the Hyundai and Kia Motors organization for several years and I had dealt with what I thought were similar situations. However, a few hours into the Alabama workshops I uncovered the true cause of the strained relationship, but it was not what I had expected.

Most of the American teams were veterans of car manufacturing—hand picked because they had been top performers at Ford, Toyota, Nissan, Honda, Mercedes Benz, and GM North American plants. In contrast, the Korean teams were Hyundai Motor Company career employees—most having worked for a decade or more at Alabama’s sister plant in Asan, South Korea.

What surfaced in discussions was that many of the new American managers had been searching in earnest for a Hyundai Way—documented policies and procedures that would guide them in decision-making and day-to-day work. For example, former Toyota managers looked for a model similar to the Toyota Way, while others who had worked for Ford Motor Company sought standard operation procedure manuals (SOPS). Not finding a set Hyundai Way resulted in some Americans feeling that there might be a communications and language issue. More concerning, a few hinted strongly at trust issues and that Koreans were deliberately withholding vital information.

Listening to the group, I had a realization.  Over the years working with Hyundai and other Korea-based businesses, I found sharing historic background and differences between Korean culture and other cultures as a proven, effective and commonly accepted cross-cultural learning model. Nevertheless, it became crystal clear to me that what was truly needed in this situation was to clarify and impart an intangible—the Hyundai Way or vision. The problem was that a true grasp of HMC goes beyond in-house corporate value training programs produced by human resources and organizational development teams. PowerPoint presentations and manuals are not sufficient.  Instead, understanding a corporate culture is experiential, situational, and acquired over time.

A Shared Mindset
Jumping forward several years… on a number of occasions I have shared my quest to better understand the Hyundai Way (and triggered by the work in Alabama) with veteran Korean staff and executives. Time and time again, I found those long employed by the Company reflecting for a moment and then stating frankly that the Hyundai approach was not easy to explain. For example, one senior Korean pointed out that within Hyundai there are several management styles and approaches to tackling an issue depending on the person’s lineage. Groomed by their seniors, junior members of teams adopt the mentor’s methodology and leadership style—some “hard” and demanding, others “soft” and preferring collaboration.

Another Hyundai executive imparted that the Hyundai Way was acquired over time. He added that, with the exception of some minor differences among the sister companies, the transferring of key people among the companies, such as Hyundai Motor, Kia Motors, and Mobis (the parts and modular division), creates a shared mindset. At a minimum, Korean teams understand the thought process and methods of others across the organization regardless of the affiliations.

The Korean executives did agree that understanding the corporate mindset by both Koreans and non-Koreans working across the organization was vital to the continued success of the Company. My quest has been an ongoing pursuit to define and share that mindset.

Corporate Culture--Art or Science
Defining intangibles, such as a company’s culture, heritage, and core values, is a challenge.  Like fish in water, we often fail to “see” our culture and values because they are the mediums within which we work and exist.  In addition, even when clearly defined, transferring corporate intangibles across cultural and regional borders is difficult. That said, top global companies do, in fact, recognize the need and find ways to share these intangibles with their teams and organizations.

Building on the  strong vision for the organization  of the late Hyundai founder Chung Ju Yung(discussed in detail in a future article), we also recognize the powerful influence his son Chairman Chung Mong Koo has had on the firm’s culture.  As of this writing the Hyundai Way continues to evolve with the third generation, Vice-Chairman Chung Eui-sun now assuming a key leadership position at HMC.

A Starting Point: Entrepreneurship
In the course of crafting this work, a driving force that continually surfaced was Korean entrepreneurship. Exploring the strong ties between entrepreneurship and Hyundai culture is then a second goal for this series. However, economists accept no single definition of entrepreneurship or one that fits all economies and eras. For example, Alfred Marshall in his 1890 classic Principles of Economics and in other works noted that entrepreneurs were the driving force behind industry, act with limited information, and that entrepreneurship was a rare skill.   In contrast, noted economist Harvey Leibenstein argues that the dominant characteristic of entrepreneurs is their ability to perceive gaps in markets. They then develop new goods, services, or processes to fit those needs. Moreover, Leibenstein points out that entrepreneurs have the ability to innovatively combine various inputs to satisfy the market.   In turn, esteemed management guru Peter Drucker in Innovation and Entrepreneurship: Practice and Principles found that in some cases, entrepreneurs may not produce a new product but use creative innovation to apply knowledge and technology developed elsewhere to their local market niche.

Nevertheless, by combining relevant theories I have arrived at a generalized set of qualities which aptly apply to Hyundai as discussed in this work. Hyundai leadership has a long history as  risk takers, organizers, coordinators, gap-fillers, and innovators.  They seek out new ways of approaching a challenge, benchmark against top competitors, and quickly implement new practices.

Global Success
A final goal of this series of articles is to share Hyundai’s global success model—including the challenges of running a highly integrated manufacturing organization with operations worldwide.  These challenges are compounded with the Group’s growth initiative of expanding beyond autos to fully integrate steel and construction within the Hyundai Motor Group family. I also provide some thoughts on prospects for the brand’s continued, sustained growth.

In Part 2 of this series, I will explore the ties between Korean and Hyundai heritage with deeply rooted culture and tradition that still strongly impact the modern workplace.

Copyright 2014

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