With the announcement of the G-20 summit will be held in Korea, eyes are starting to turn to Korea. And the Korean Government is likely to treat the event with the same degree of purpose as the 1988 Olympics. Like the Seoul Olympics, South Korea is being recognized for its remarkable economic achievements during the last century – and likely future achievements for the coming one hundred years.
We need to remind ourselves the South Korean economy, largely driven by extremely bright and hardworking entrepreneurs, and supported by national economic planning, has climbed out of post war poverty to OECD member status. While much of Korean business professionals’ thinking has served them extraordinarily well during the last half of the twentieth century, the twenty-first century is challenging Korean companies with the advent of so-called developing countries offering competitive products and services at significant lower prices.
As such, Korean companies are being forced to move their offerings upscale to where the overall value proposition needs to be marketed at prices greater than of the sum of the parts. Buyer-perceived value requires Korean sales and marketing professionals to think in terms beyond features, functions and price. To sell the overall benefits of Korean products and services, a new mindset is now required to be developed.
Today, the adequate lack of awareness of this competition shift is being evidenced in the drop in Korean export market shares in advanced economic markets. Furthermore, to date, few Korean companies have been able to move from the earlier authoritarian mindset that stresses the “one, best answer” approach to problem solving. The Korean education system stresses rote memorization as the only practical path for academic achievement. In contrast, Western education introduces critical and creative thinking to young students and then reinforces this approach to problem solving later in the academic careers. Upon graduation, Western business management expects this approach to problem solving to be further developed and implemented by their employees.
Of special concern is that most Korean managers and executives are inadequately aware of critical thinking, and how their competitors are effectively implementing this thinking, both abroad and increasingly in Korea. Contrary to unfair stereotypes held by many non-Koreans, creative thinking does exist within Korea, but it is often systemically repressed within large organizations. Only a few senior executives may expect the intellectual freedom to apply critical thinking in these largely top-down, strictly managed organizations. Yet, to be internationally competitive in this new century, Korean managers at all levels need to adopt critical and creative thinking without undue fear of reprisal from senior management. The good news is that in some of Korea’s more progressive and multinational corporations, this problem is being rectified, albeit perhaps not as quickly as younger managers may wish.
To make the transition from the current status to where Korea needs to move, intensive business professional skills training may be in order, initially to be conducted at senior management levels and later at middle and junior managerial levels to ensure that the new thinking is properly understood and accepted as young university graduates bridge over into business. Ultimately this form of training would be included as part of the new employee training programs. In any case, senior most executive management will need to consistently support and endorse this kind of thinking and related training as part of the overall solution for Korea to regain much of its recently lost competitiveness.
Review of Recent Business History

Before we launch into the primary topic, it is important to remember that “The Miracle on the Han River” was no fluke. Korea’s rise from poverty was created by business geniuses in executive management and among entrepreneurs. We must acknowledge we are inadequately acknowledging in this paper how Korean thinking patterns and management practices have worked extraordinarily well during the last half of the 20th century. Korea’s remarkable climb from poverty is undeniable proof that the current, prevalent forms of thinking and management have brilliantly succeeded – or have at least until recently.
While Korean technology has often been criticized as only being creative in terms of application rather than original development, lacking in the development of world-re known generic product, such as a Xerox copying, etc. most Koreans don’t know the world’s first MP3 player was created by Saehan Information Systems. Today MP3 players are either being out marketed by Apple or underpriced by Chinese knockoffs. So the stereotype remains that Korean engineers adapt others’ discoveries to the Korean market and/or improve on original, foreign design for local manufacture and eventual export. But we should recognize that Samsung is number two in world among corporations in registered patents after IBM.
Current Drop in Korean Competitiveness
Still having stated the above, the current situation is looking a bit grim. Korean exports have slid in US market share in each of the past three years with electric goods and electronics slipping from 9.25% to 5.37%, according to the Korea International Trade Association (KITA). The blame for this slippage is that Korean products are losing price competitiveness to goods made in China, India, Brazil, Vietnam and other developing countries
According to the Global Financial Centers Index (GFCI)1 released by the City of London Corp., as of March 2009, Seoul ranks 53rd , slipping 5 positions from the prior year’s survey, among 62 among global financial centers after years of hype of making Seoul a financial hub of Asia. This is distressing, since as of September 2007, Seoul ranked number 42, while six months later Shanghai and Beijing scored even higher, ranking 31 and 46 respectively. Today, the top financial centers in the world have not change their standings of being rated first through fourth with London, New York, Singapore and Hong Kong being recognized in that order. If it’s of any comfort, Tokyo slide 8 positions in one year to be ranked 15th and Shanghai dropped down rank to be rated 35th. In any event, clearly, government-sponsored slogan campaigns, without serious financial reform, have been a failure.
Search on “international competition” on Korean newspaper web sites and you can find additional examples of Korea’s drop in international competitiveness. But the point we are making is that, within an international context, the Korean mindset sometimes appears to be potentially to be responsible for this drop in relative, international competitiveness. More than ever, international commerce, particularly at the advanced levels, requires more than ever detailed planning based on critical thinking and imagination. Contrary to the emotional need to get things done as quickly as possible, even in Korea there are no shortcuts to good planning and execution.
Employees at all levels must appreciate, if for no other reason, that their jobs are at risk given the increased levels of international competiveness. A more competitive awareness needs to be more widely spread within more Korean companies – and not just limited to the presidents’ offices and the international departments.
During the past five to ten years, just as world-class competitors have entered the Korean market, Korea companies are seeing the need to compete more effectively globally, ideology has taken priority at the national government level, which has led to confused and sometimes contradictory government planning. With the inauguration of Lee, Myung-bak, however many people hope Korea may be back on a practical business footing. Obviously, international commerce is key to Korea’s long-term growth and prosperity. Yet twenty-first century international competitiveness is already proving itself to be remarkably different than what it once was during the last half of the last century. As such, a change in thinking may be required for Koreans to more effectively compete in the international marketplace.
Examples of Predominate Korean Thinking
Let’s look at some representative case studies of Korean thinking in the workplace.
Software vendors, for example, are expected to act as or support systems integrators to custom develop or greatly modify software to meet the “unique” requirements of each Korean company. While software modification and adaptation is commonplace around the world, Korean companies take customization to a new level – often for idiosyncratic reasons premised on the special demands of the client company. In fact, even Korean software providers go through a bit of a charade in making a big deal of how much they are customizing their products when in fact most installations require much less modification than the customers may realize.
This practice may seem to be quaint at first glance, but upon further examination one finds often the customers will demand software changes that can be in fact extremely expensive to software engineer and ultimately costly to maintain. Client companies can be extremely inflexible about these unique requirements. Again, the official reason is that the information systems must conform to senior managers’ preferences in running their companies. The management approaches are often internally defined as the “one, best way” by a specialist, an executive, the company’s founder, or the current practices of the market. Making suggestions of alternative business processes for any reason can be hazardous to one’s career unless one is in senior management or if one has been asked to do so by a powerful executive.
In contrast, Western companies often reconsidered their management processes. They can be remarkably open to package software that needs only minor software customization, but sometimes requires significant business process modification for the overall cost effectiveness of the company’s business. In other words, while the “not invented here” and “one, best way” can be found in Western companies, such prejudices are not nearly as strong as may be commonly found in Korean organizations, as we will later explain in this paper.
Let’s now look at an even more common example of Korean decision-making: the way organizations traditionally evaluate options like major purchases or strategic decisions.
First, an evaluation committee is drawn up. These representatives consider their options by determining evaluation or selection criteria. As one of the first steps, it is common to turn to well-recognized “experts.” These people may reside within the organizations, but often they are university professors or other outsiders recognized and respected by top management. As such, they are commonly regarded as possible or likely possessors of the “best knowledge.”
While Western evaluators will also look to respected authorities for insight and guidance, those opinions are at least initially kept at arm’s length, since the authorities’ or experts’ prior work is considered at best as only one source of information. Korean organizations, however, are more likely, due to political considerations, to uncritically accept the findings found in the experts’ white papers or verbal opinions. These findings are massaged into the evaluation criteria so as to make experts’ findings meet evaluation committee’s needs.
Having witnessed the Korean evaluation process as a competitor on numerous occasions, we notice that the initial evaluation conclusions, as evidenced by the selection criteria, seem to be based on the following questions:
1. How have other companies dealt with similar problems?
2. What are the relevant committee members’ personal relations with others inside and outside of the organization -- and how will the selection criteria impact on those relationships?
3. What are the overall organization’s current political trends and how the selection criteria follow those political winds?

4. How can the selection criteria be politically leveraged to gain a personal advantage with an evaluation committee member by using the opportunity to enhance the “politically correct” expert’s position/image? In other words, what may be the opportunities for positive blow back by relying on the expert?

5. How may the final evaluation or selection meet the satisfaction/ego requirements of the top managers?
This is not to say there are no other relevant evaluation criteria. Of course there are. But we have seen that obscure selection criteria can be given remarkably heavy weighting due to political considerations – sometimes at the expense of much more relevant evaluation criteria.
Before we proceed, we should point out it would be unfair to say there is no Korean rhetorical process. One can see it in some of the better editorials of Korean newspapers. A common format is a problem statement or question, followed by different points or facts, summarized by a conclusion. What is often lacking is a discussion of the pros and cons of the thesis or argument. In other words, there is rarely a checking of assumptions or serious consideration of alternative views or options. Furthermore, there are often points, while sometimes interesting, which do not lend themselves to the conclusion.
One long-term American resident of Korea who is fluent in Korean calls this form of thinking a “bucket of rocks.” He described wading through countless reports over the decades so lacking in organization that it seemed that the ideas were written down willy-nilly, similar to throwing rocks into a bucket. In other words, these reports seem to be a mish-mash of observations, conclusions and opinions. Too often the final reports lack logical presentations, logical build-ups, and end without clear, logically supported conclusions.
For those who are lacking in Korean language skills, a first impression can be that Koreans are remarkably wordy in presenting their ideas. And, as these foreigners develop their Korean language skills -- or simply participate in meetings where Koreans state their opinions in English, the foreigners discover that their Korean counterparts seem to be pulling ideas from the air, rattling off ideas and opinions that may at best only be relevant to the subject at hand. Koreans daily endure public speeches where the speaker covers the subject in many ways and from different directions, but often lacks an introduction, body of logic and relevant conclusion.
These recommendation reports, given their jumbled organization, frequently lack adequate consideration of various possible scenarios so there may be no self-checking of logic to justify their advocacies. Rather, many report writers blindly “barrel down the runway” advocating the “one, best solution.” As a result, implementation plans rarely address many of the real, practical issues that could affect – and counter – long-term implementation and operational processes. The common practice is to quickly set off on an agreed upon/authorized direction and then deal with problems as they are encountered.
Now, there are some advantages to be said for this approach. This type of thinking has allowed Korean organizations to be remarkably quick and nimble. But there is also a lot of expense and inefficiency being “swept under the carpet.” So, from a foreign perspective, Korean implementation can come across as chaotic. At the same time, much of the waste is not formally recognized by managers during the break-neck rush to get things done within short time frames. The liability is that this approach works only if the evaluation criteria get it right on the first attempt, and the implementation is fortunate enough not to encounter any significant problems and there are remarkably capable and experienced people on the implementation team. Getting enough of these positive factors consistently in place, however, is not likely to happen for most companies anywhere in the world.
Creative Thinking Found Among Koreans
A common complaint – or we should say, a stereotype – held by Westerners is that Koreans lack in lateral, critical and creative thinking. At the same time, if one considers what one needs to have in mental capacity to properly play a good game of gō or as the Koreans call it, paduk, such skills are essential to win against a competent opponent. And not surprisingly, Korea has a sizeable population of capable paduk players – several at the master level.
So, if there is in fact native critical thinking, let’s remember the first MP3 player was Korean and that Samsung is number two in world among corporations in registered patents after IBM. On the other hand, we must also recall the worst example of suppressed thinking was the tragic Korean Air crash in Guam at the end of the 1990’s when the navigator dared not challenge the pilot’s authority in the doomed cockpit. Much of this mindset can be traced to the educational system.
So why is Korea in this current dilemma?
The twenty-first century that the G-20 summit will be addressing is increasingly presenting many more choices of varying strengths and weaknesses. The traditional “one, right way” approach is increasingly proving to be less feasible in the multinational world in which Korea must more effectively compete.
Comparing Korean and Western Educational Systems
Many people, including South Korean President Lee Myung-bak, are very critical of the Korean education systems when they compared it with those of other countries. When it comes to science and math, Koreans are near the top globally, but when measured in liberal arts and related subjects, students do substantially less well.
The twenty-first century is presenting many more choices of varying strengths. The traditional “one, right way” approach taught in the Korean educational system and enforced in society is proving to be less feasible in the multinational world in which Korea must more effectively compete.
Consider the differences in education between the West and Korea. In the beginning, Western schools teach children essay composition in grade school starting with the summarizing of information as a preliminary step to later writing essays. The real difference in educational systems begins in middle school where Western students learn to outline and prioritize information so as to organize ideas, facts, and known data into a logically organized form. High school students are required to do simple original research, requiring them to find sources of information, evaluate what information is relevant, and faithfully cite information sources, since plagiarism is considered to be a serious academic crime with severe penalties.
Meanwhile, in Korea, children are taught correct answers and methods. There is little effort to teach composition, so that quality business letter writing skills are often beyond the capabilities of many college graduates. In middle and high school, students learn by memorizing facts, dates, formulae, etc. so as to achieve maximum scores on multiple-choice exams – even in the case of foreign language testing. Assigned “research papers” require students to cite information sources, but they are generally not taught how to organize information into a logically sequenced format. Fundamental evaluation and analysis skills are frequently not taught.
Furthermore, plagiarism in Korea is not considered a serious academic crime and teachers often ignore it and rarely bother to check – even at the graduate school level.
As a result Western university graduates, regardless of academic major, are expected to be able to have fundamental skills for empirical analysis and evaluation that organizes all data, facts, theories in a logical development order; develops and evaluates various possible objectives beyond philosophical ideas; reveals and analyzes all known influencing factors; considers potential future changes and secondary results; constructs interim analytical “proofs” to check for gaps in logic; and documents not only “what” and “how” but also sources of information for possible double-checking.
After surviving a secondary academic hell of memorizing facts and figures, many Korean university students essentially take a vacation during college days. Most have learned the “best” answers or ways – often uncritically accepting what has been taught to them by their teachers and seniors. I have even heard stories of Korean university students not being permitted nor encouraged to question or develop ideas on subjects in front of their professors.
The good news is that recently, Korean universities, recognizing this problem, are attempting to introduce creative thinking, but we still don’t know if these fixes are enough to correct the overall problem.

Korea’s Double Blind Spot
Today, many, typical Koreans seem to operate with a double blind spot. That is, one, there is a lacking of critical skills in the organization and prioritization of data, facts, theories; analysis of information to reach conclusions with options for solutions; and objective evaluation procedures that exclude concerns of what may best please their superiors. The second blind sport is that of unawareness that such skills exist and they are critically being applied by their international competitors.
To further understand this matter, consider the difference in logic between Koreans and Westerners. For example, Westerners – particularly North Americans – often ask, “Can you back that up?” In other words, they place a high premium on empirical relevant and specific data. Whereas Koreans are more likely to ask, “Is that right?” That is, beyond what is factually true or false, Koreans give major consideration to personal, philosophical and political issues during the logic building process? Intangible personal/emotional opinions are continually interjected throughout the evaluation process, intermingled with empirical data considerations – often without a “building process” of logic developments.
To give a recent example, consider what happened about three years ago when American business professionals visited Korea to discuss leasing land for an engineering project at a government industrial zone. The considered lease contract didn’t specify requirements for security deposits and maintenance fees. When the foreigners pointed this out, their Korean counterpart responded, “Are you saying you refuse to put up the deposit and pay the common costs?” The Korean then launched into a long, philosophical discussion on the justification of both costs and criticized the foreigners’ “show of bad faith” by the Americans’ “questioning” the need for the two financial obligations. In other words, they had a failure to communicate given the differences in logic.
Current Korean Thinking in International Arenas
The problem can be even greater. In a March 2008 edition of Newsweek¸ there was an excellent account of the Hyundai & Kia success story in America. Yet, while recent years have been good for the Koreans, there are some new challenges as Hyundai attempts to move from only selling high quality “econobox” low- and mid-range automobiles to now marketing upscale, luxury vehicles in the $25,000+ niches.
For the first time in years, the company was substantially missing sales targets. What appears to be lacking in the company’s approach is consistent marketing that adds luxury value to the equation of basic features and price that has successfully sold the lower-priced cars. In sales, we refer to this element as the “value proposition” where the total value of the product or service is greater than the mere sum of the parts.
Nonetheless, just a year later, the Hyundai Genesis was named “Car of the Year” at the January 2009 Detroit Motor Show. The Genesis became the first Korean car, and also the first Asian automobile, to win the ‘The North American Car of the Year’ award in the large luxury sedan category. Even Hyundai will admit the main reason for developing the Genesis was a push back against imported, primarily German, luxury sedans in the Korean market. In fact much of the styling and key components originated in Germany. But all of this makes for a successful marketing strategy: emulate what works best from abroad, redevelop, refine, export – and sell at a lower price than the competition. Still more important, Hyundai created for the Genesis a totally new product development methodology while spending more effort than in the past in getting both American and Korean driver feedback on prototype vehicles. 2
Here is one last example: Korean Aerospace Industries, together with Lockheed Martin, has produced arguably the world’s best jet trainer, the T-50 Golden Eagle. It is also the world’s most expensive. Given its high performance, extreme versatility, quality engineering and manufacture, the plane offers a superior value proposition, not only as the ultimate trainer, but if need be, as a quality attack plane. Unfortunately, as of this writing, the planes have not found a buyer outside of Korea. The apparent difficulty is that the Korean sales team are having difficulties in positioning this superior product, given that the Koreans may have not yet graduated from the “features, functions and price” school of selling associated with lower level product sales which is commonplace in the markets of developing countries.
As Korean companies move up the food chain to create and market products that cannot be produced by competitors in developing countries, they are being forced to market using an advanced sales paradigm that emphasizes the overall value proposition. While some Korean companies will get over this current hurdle, this is not likely to be an easy task.
When one considers the thousands of young Koreans who live and study in Western countries each year, one would expect to see some of this internationally competitive thinking having a greater impact on Korea. But, as we have so often witnessed, when these same young Koreans return to Korea, they are smothered by the pom seng pom sa (“live and die by form”) approach common in lower and middle management. Too often business measurement data is essentially made up to satisfy uncritical superiors’ “get-it-done- on-time” expectations. For example, all business students must study cost accounting. But to date, we have yet to find a Korean company earnestly using that and other professional business measurement criteria beyond, at best, going through the motions. As such, personal politics – often in the form of departmental warfare – reigns supreme. As a result, the actual financial health of a company is often unclear.
To be fair, just as in the US, Koreans companies often succeed simply because their competitors are as ill-managed as themselves. However, American companies, for example, got a rude wake-up call in the 1980s when Japanese companies began offering superior quality assurance and inventory control management systems. After initially dismissing the Japanese threat, American companies “faced the music” and revamped important management systems to meet and sometimes beat the Japanese at their own game.
In other words, inferior management and related traditional thinking works well so long as there is no new competition. But that is not the case today as the Korean marketplace continues to open up to some of the world’s most competitive foreign companies and as Koreans companies are being forced by newly developing countries’ products to compete more intelligently in advanced markets. Given this, Korean executives need to reassess their organizations’ competitiveness.
Questions for the future
In the twenty-first century, many Korean companies are facing greater G-20 competition. The above-summarized planning shortcuts are likely to be even more costly in terms of waste and even more likely to result in a further drop in competitiveness.
Korean executives may do well to honestly ask themselves and their organizations the following questions:
• Are the academic processes and related business practices that once served Korea well now preventing Korea from moving up to the next level?
• Should any OECD country’s primary industries compete with those from developing countries?
• Can Korean companies expect to successfully compete higher up the food chain where the value propositions can be much more important than simply price and features?
• How well can young Korean employees and their managers “think outside the box” to anticipate foreign competition?
• Can Korean managers develop and execute effective business plans based on the best of all known scenarios? Can they also consider what issues may remain unknown or impossible to define as a means to double-check their preferred plan of action and to develop contingency planning?
A possible set of solutions
Given the above and presuming that the observations are largely correct, there may be a need to upgrade professional business skills through critical and creative thinking training. In the past, both public and private institutions have sent promising young managers abroad for business education. As invaluable as that experience may be, it can be wasteful if, when Koreans return, they are forced by senior management to conform to traditional thinking and traditional business processes
Young college graduates may need some kind of re-education as they cross the critical bridge between their university and business lives. This business skills training program should provide specialized, experience-based training that stresses individual, creative, analytical thinking that is channeled into critical processes to help future managers and leaders to assess and evaluate operational options and strategies.
But before even attempting the above, the senior most management needs to be on board with this kind of internationally competitive thinking – and they must be fully supportive of this kind of training. So as a first step, executive training would be needed, followed by middle management training. At a minimum, this preliminary training would be required for ongoing operational understanding and appreciation of this new mode of thinking.
Naturally, the training would need to be in line with the organization’s philosophies and yet would foster creativity and the freedom to help take the company to the next level. Given such the natural tendency among many Korean organizations may be to develop this kind of training internally. There are some strong plusses and minuses in doing so.
The plusses would include certain managerial control to ensure that young employees are keeping in line with the overall company philosophy. Also, if there is a sophisticated training group within the company, it may be possible to develop this program so that it effectively impacts all levels of managers and employees. Finally, this kind of internal education is more likely to be incorporated into the regular budgeting processes as opposed to special one-off training expenses.
The minuses of creating and facilitating this kind of program as internal education are as follows. First, there may be a lack of adequate, internal experience and knowledge in this form of business skills innovation. Training should be done by a mature, world class faculty – possibly recruited from the US or Europe, possessing international experience, ideally matched up with local trainers who understand Korean education systems and managerial thinking processes.
Second, while the overall direction and content should be developed in concert with senior management, the program itself needs some autonomy, free from the many political influences that exist in any organization found anywhere in the world.
Third, the training program needs to develop its own integrity, based primarily on global thinking and competition -- and away from the natural organizational trends generated by in-group thinking. The program’s primary mission is to help young Korean managers to be globally competitive by being able to employ out-of-of the-box thinking in their planning. If placed within the formal control of the greater organization, there may be a danger that the program’s key mission may be subordinated to contemporary political developments when in fact the value of this kind of education is for the long-term well being of the organization.
A Six Point Development Program for Global Business Leaders is an example of what we specifically recommend to address the above concerns. The core of any program would need to be based on specific training in analytical thinking and create problem solving. The following is an example of what might make up the curricula’s training modules:
1. World Class Analytical Thinking and Creative Problem Solving
2. Global Strategic Planning and Effective Implementation
3. Disciplined International Negotiation for Agreements and Results
4. Building and Maintaining Strong Global Customer & Employee Relationships
5. Optimizing Efficiency through Strong Multinational Team Leadership
6. Communicating Effectively in All Directions – At Home and Abroad
Final Considerations
Today, Korea’s executives are reassessing international competitive pressures daily. These pressures are certain only to increase on both domestic and global markets.
The old saw of the last century was to “think globally and act locally.” But increasingly this shrinking globalized world is forcing everyone to “think globally and compete locally everywhere.” Preferred work patterns and mindsets need to be regularly assessed to consider whether they are helping or hindering organizational competitiveness, both abroad and now even at home. This paper ultimately is advocating professional business skills training that focus on critical and creative thinking.
Executives when pondering whether and/or how much of this kind of training is really needed, they could do worse than ruthlessly ask themselves the following questions:
• Is my company at an internationally competitive crossroads where new strategies are essential for medium- and long-term survivability of the corporation?
• Does our company’s decision-making adequately address our expected – and unanticipated – challenges?
• What are the real costs – not just the reported expenses – of our planning and implementation efforts in situations when we have to frequently react to unforeseen events?
• Do our products, sales strategies and personnel seem to be in sync – or out of sync – with the rest of the G-20 market?

Footnotes:
1The Global Centres Index 5, http://217.154.230.218/NR/rdonlyres/8D37DAE2-5937-4FC5-A004-C2FC4BED7742/0/BC_RS_GFCI5.pdf
2“Hyundai Confirms Equus for U.S. Market in 2010,” Jeffrey N. Ross, Autotropolis, August 14, 2009, http://www.autotropolis.com/research/hyundai-equus/

* Writer is President of Soft Landing Korea. Ltd.
All copy rights are reserved with the © Soft Landing Korea. Ltd. 2009.