How 2nd-generation entrepreneur achieved 'quantum jump'

By Lee Jang-woo

Lee Jang-woo, professor at Kyungpook National University

By Lee Min-hyung

• Published Jun 11, 2020 4:53 PM KST
• Updated Jun 12, 2020 11:06 AM KST

Leaders of large conglomerates or entrepreneurs of the younger generation in Korea have drawn attention as innovators who lead the local economy. On the other hand, the achievements of the second-generation entrepreneurs, who innovated companies founded by the first generation through what may be called a “quantum jump,” are not well known.

In line with business characteristics or environmental conditions, companies often build sustainable competitiveness and create greater opportunities over the years. As a “going concern,” companies can create quality jobs by surviving and prospering beyond generations.

Recently, as a typical second-generation entrepreneur, Chairman Shin Chang-jae of Kyobo Life Insurance in Korea marked the 20th anniversary of his inauguration as the leader of the insurer.

As Shin turned Kyobo Life, facing a deficit of more than 250 billion won, into a profitable company generating more than 500 billion won every year and raised its capital from 350 billion won to 10 trillion won, the insurer quantum jumped to join the domestic “big three” of life insurers in Korea. What we should pay attention to is the innovation itself that has made this quantitative growth possible.

First, Kyobo Life's second-generation innovation started with practical vision management. As soon as he took office as chairman, Shin started to capture all employees' expectations for the future over six months.

Consequently, he found the reason for the existence of an insurance company is "We help everyone not to be frustrated by future adversities." This reflects the essence of life insurance, and it made financial planners take pride in being an “expert of insurance coverage for customers” rather than simple salespersons. The vision or the company goal, which is complemented with all employees every five years, serves as a pivot that allows employees and the company to consistently move in one direction.

The second is the leadership of taking?the?initiative?and?setting?an?example. “Transparency in management” cannot be reached unless the leader takes the initiative and sets an example. He was most concerned about “emperor-style management.” In order to prevent himself from falling into arbitrary decision-making, he implemented board-oriented management, filling more than two-thirds of the board seats with outside directors.

This is a device to enhance transparency in management and to abide by the principle of checks and balances. That is why Shin changed between the nameplates of "Shareholder" and "CEO" while he spoke in each position at the Council of Labor and Management.

The third is principle-oriented management. In order to keep the principle of “customer satisfaction and insurance coverage for customers,” Kyobo Life launched “Lifelong Care Service” for the first time in the industry and dramatically improved its sales culture.

In addition, while its competitors were obsessed with short-term profits or performance, Kyobo Life thoroughly complied with risk management principles and consequently recorded the industry's highest profitability in the 2008 financial crisis.

This principle-oriented management also shined in “separate representative management system,” under which the chairman and CEO is focusing on future strategies such as new business, and the president and CEO is mainly in charge of insurance sales. This is to cope with sudden external changes by means of clearly defining roles and responsibilities based on their expertise.

At the root of the second-generation innovation of Kyobo Life is the spirit of independence fighters?over three generations of the Shin family and the Shin of today's personal philosophy of humanism, as a former medical doctor.

Regarding his quantum jump management, however, I, as a management scholar, would like to emphasize his sincerity. In many cases, surprisingly, second-generation entrepreneurs who have not systematically learned management theories or business techniques demonstrate a new Korean-style management as an outlier.

This may be because sincerity is more important, although expertise is also needed for the success of innovation. The era of the Fourth Industrial Revolution has been accelerated, where innovation is the only way to survive. More will be expected from the second-generation entrepreneurs of the “Quantum Jump.”

*The writer is a professor at Kyungpook National University, who formerly served as president of Inspiring Insight in Business Society.