Innovation #8 Innovate or perish

A wall at Hunet's headquarters shows major projects done by employees at Hunet to fulfill its mission to make the world a happier place through "edutech." / Korea Times photo by Yun Suh-young

Online education company Hunet never stops swimmin’

By Yun Suh-young

Why should companies exist?

“To make employees happy,” says Hunet’s founder and CEO Cho Young-tak.

When employees are happy, service is improved, and with better service, more customers appreciate the brand and become loyal to the brand -- hence the virtuous cycle. It’s common sense, but it’s easier said than done.

Hunet is a Korean online education company established in 1999, which both functions as a platform and content provider. It has been touted as one of Korea’s rare and innovative companies with its forward-thinking work culture and ethics. Several of its unique policies stand out, such as unlimited vacation, a paid one-month sabbatical after five years of service, flexible working hours, retirement age set at 100, retirement pension provided until death after 15 years of service and unlimited book supply, to mention a few.

It also allocates 20 percent of work time every week for employees to study whatever they want to help them improve in work and life. It’s called “Fri (free) Learning Day” and takes place on Fridays for the entire day. Not surprisingly, being an education company, its employees must learn continuously. Every day, employees get an hour to spend on learning -- anything from watching performances to going to school -- and these are calculated as “credits.” Every employee must fulfill 365 credits a year.

The company also holds “Innovation Battles” where each team competes on how they have innovated in their work or work processes and shares them with the entire staff at the end of every month. The winning team, based on the accumulated total score at the end of the year, is gifted with an overseas trip. This year’s grand prize is a visit to Silicon Valley.

The “Idea Park” is where employees throw in whatever ideas they have on improving the company’s service, office culture, facilities or work process. Great ideas extracted from this platform actually come to life.

Its CEO doesn’t have his own desk and sits beside employees -- he believes a company should exist to make people happy, not to make money.

Some of this sounds similar to that of successful global startups stemming from Silicon Valley, but what makes Hunet impressive is its implementation of other policies that is eye-opening, even to the most innovative companies in the world.

Hunet’s CEO Cho Young-tak believes in what he calls “happiness management,” a term he claims to have created back in the early 2000s when he was mulling over how to improve his company.

Happiness management basically has three pillars as its philosophy: 1) A company is not for maximizing profit, but maximizing happiness, 2) Help others first and others will help you, and 3) Employees come first in the pursuit of stakeholders’ happiness.

Changing the society

“In the beginning, everyone thought I was too idealistic,” Cho said during an interview with The Korea Times. “That meant unrealistic. But after 15 years of doing this, people are now taking it in better.”

Cho entered the workforce in 1988 as an employee at Keumho Group, one of the local conglomerates. He quickly earned respect from peers and superiors, climbing the ladder to the strategic core, but he was always witnessing irrationality and inefficiency at the workplace.

“It was extremely hierarchical. The process to receive the ‘go’ from the CEO took six months due to the layers of approvals we had to get. I studied business management in college but I started studying more on the topic after I started work. I wanted to become a global expert on business management so I made some notes for myself on how to run a company if I became the CEO,” Cho said.

Hunet employees are at work in its headquarters in Guro-gu, southern Seoul. / Korea Times photo by Yun Suh-young

“It wasn’t all set from the beginning. But I decided I needed a business model. I traced back to business theories and they all said companies exist to maximize profit. But I thought such a world would be desolate. It would justify all the bad actions committed by the company. So I decided I shouldn’t do business to maximize profit. Then why should I run a company? Well, companies were formed of people and I started wondering what I can do for people. I came to the conclusion that if I make people happy through business, the deeds will return. If we help others first, they will help us.”

Cho explicitly said he is not interested in making money. Work, he said, is not a means to making a living, but a means to pursue one’s purpose in life and grow and develop.

“What’s most important in modern society is corporations. They create added value and they are where many people are affiliated. So if more companies apply happiness management, it influences society. CEOs will no longer be slaves to money and will be happier. They will have peace at heart and smile all the time, with positive energy,” he said.

“I want to spread this as much as possible. Through books, through online and offline programs and so on. We have something called the happiness management university where we educate 30 CEOs every quarter on happiness management. If 10,000 CEOs implement this, then Korean companies will change. It’s best to change the CEO to change the company. Wouldn’t it be great to have more people looking forward to going to work on Monday?”

But society needs to keep up with the changing pace.

“Since a company’s culture is influenced by the overall social culture, it’s quite difficult to remain apart from society. If society is horizontal it’d be easy, but Korean society is extremely hierarchical. So even our employees will become hierarchical when they leave the office. So it’s extremely important to change the culture of companies in general, to influence society. The bigger they are, though, the harder it is to change. Those at the top want to hold onto their authority.”

The question is, will it be possible to change CEOs who are stuck in a fixed mindset?

“Historically speaking, those who refuse to change will perish. When we look at the top 30 companies 30 years ago, only 10 of them have survived. It’s nature’s way. If companies and, likewise, people don’t continuously renovate and develop themselves, they will be stuck in their status quo and die, like a frog in warm water not knowing they’re dying until they’re boiled to death.”

Innovation at core

As scary as this sounds, it’s in fact, the truth. And Hunet actively embraces this truth -- change or will perish -- and applies it to work culture. Those who refuse to change and improve will receive a gentle goodbye, or otherwise leave the company on their own.

“Ninety-five percent of employees agree to leadership evaluation. Some extraordinary leaders take negative comments positively and propel themselves to change. They grow exponentially. Others who think their colleagues have misevaluated them when they’re doing just fine, and blame others, don’t grow,” Cho said.

The "Wall of Fame" carries caricatures of employees with their best achievements. / Korea Times photo by Yun Suh-young

In his recent book, “For What Do Companies Exist: Happy Company Hunet’s Story,” Cho mentions his employees are either a grade A or B. There are no Cs because they are either kicked out or pushed up to level B.

“If there’s a C player, they are informed six months in advance to improve and level up. About one-third level up and about one-third leave the company. But for leaders, even B is a problem. Every leader has to be an A, otherwise, it’s a misfortune for the entire team who will scale down. So a B leader will step down to team member and an A-level staffer will assume the role. There is no automatic hierarchy here coming from age or years of experience. Even when we’re recruiting team managers, the team members will interview their future boss,” Cho said.

“The irony with humans is that they don’t like innovation. It’s human nature. But if we follow human nature, we die. We need to create a culture where people constantly challenge their own nature -- a culture that is horizontal, that is always moving and improving and feels weird to be the same.”

How do employees feel about working at Hunet?

“Our company has an autonomous, participatory and innovative culture. These are our strengths. What I like best is that we have a learning culture. I’ve been at two other companies but I’ve never seen a CEO like ours. I’ve never experienced constant development in other companies as I have here. We’re constantly learning and improving. Relentless innovation can feel burdensome at times, but we try to do it in a fun way. It’s not easy to feel like you’re growing with the company, but here we do,” said Kang Joon-ho, team manager of the Digital Transformation Lab, who has been with the company for 11 years. He said he agrees with pretty much all of what the CEO says.

“Our work is challenging but also we’re open to failure. We learn, communicate freely, suggest ideas, make clear progress and make our own decisions. When I was having a private meeting with our CEO about leadership, he told me our purpose is to create a better tomorrow than today. That phrase stuck with me.”

Kang had already taken two paid sabbatical leaves, which he recommends everyone take.

Roh Hyun-hee of the marketing team, who has been at the company for five years, just recently came back from a month-long sabbatical leave.

“It’s great we don’t have to think about money while we’re taking a break. I went to Europe for three weeks. Our company gives us a lot of freedom, from flexible working hours to unlimited vacations to the sabbatical leave. My friends at other companies complain about various things, but I can’t find much to complain about,” she said.

“We communicate a lot and freely, even with the CEO. In fact, there’s a session with the CEO but we’re not quite used to the discussion culture, so we’re still adjusting. There’s no hierarchy. Everyone is quite young -- average age is mid-30s. It kind of feels like school. We get unlimited educational support, like the internal library where we can order any book we want to read. We also need to fulfill our yearly credits.

“The only thing that’s hard to catch up with is the speed of our CEO. He’s always so much ahead of us adapting and implementing, employees are barely able to keep up!”

The retirement age at Hunet is 100. The CEO himself proclaimed he aims to be the CEO until then.

“It’s not because I’m a tyrant. It’s symbolic. I don’t want people to quit working just because they’re old. Proclaiming to work until 100 is like a challenge statement. You need to shift your mindset. You need to be healthy mentally and physically, productive and add value. To do that, you need to manage yourself well. I announced this as my target because I want people to follow in my footsteps in pursuing this goal.”