Fossils in blue jeans

By Jason Lim

“Fossils in blue jeans” was the title of the press release by the Korean Chamber of Commerce and Industry (KCCI) and the global consulting firm McKinsey & Company on their findings in an assessment of South Korean corporate culture and organizational health. This was the second report following their first one 2016.

Some improvements were noted. According to Hankyoreh, “The proportion reporting that they were “not chronically working overtime” rose from 31 percent to 46 percent, while the number reporting “no inefficient meetings” climbed from 39 percent to 47 percent. The percentage reporting “no unnecessary reports” jumped from 41 percent to 55 percent, and the number reporting “free dialogue, questions, and communication” increased from 55 percent to 65 percent.”

The improvements seem pretty good to me, but the KCCI was not satisfied. When asked whether they could “sense the improvements to corporate culture,” 87.8 percent gave negative responses: 59.8 percent agreed that “there have been some changes, but the culture cannot be seen as improved,” while 28 percent called the changes “merely for show” and said there was “no effect whatsoever.”

“Most of the assessments of corporate culture improvements consisted of phrases like 'cosmetic reforms,' 'no enjoyment,' 'for show,' 'fossils in jeans,' and 'inefficient,'” noted the KCCI in its press release. “Corporate improvement activities have been skewed toward creating new systemic appearances, which has often led to fatigue and cynicism among staff members.”

The killer line was when the report quotes an assistant manager at a mid-sized company: “They allowed casual dress to 'promote communication' and abolished the use of titles to address people, but they don't actually listen to opinions. It's the same overbearing old men; they're just wearing blue jeans.” Ouch.

The KCCI wants Korea Inc.'s culture to have “a faster work execution process, a light organization delegating powers and responsibilities, fostering talent with a focus on autonomy, and encouraging a playing coach style of leadership.”

Unfortunately, Korean companies excel in exactly the opposite: a bureaucratic hierarchy, which does not nurture the KCCI's desired cultural end-state well. Hierarchies excel in coordinating and controlling resources across relatively stable systems. When objectives are clear within a consistent environment, coordination through hierarchy has traditionally been the preferred method of organization.

And this worked well for Korea, Inc. during the Miracle of Han River days because the objective has been clear. Copy what the advanced economies have done as quickly as possible and do it cheaper and better. This business model didn't need a culture that was flat, encouraged networking, or nurtured meaningful development _ top down driven speed and efficiency was all it took.

However, when complexity emerges as a result of advancing technology, cut-throat competition, and/or a fast-changing environment, hierarchical organization begins to fade in efficiency and adaptability while networked organizations begin to excel. The reason is: “Decentralized systems trade information for control. The more uncertainty there is about the best courses of action for any given agent or group of agents, the more valuable is information relative to the value of control.”

In such situations, the principles of “variety, competition, allocation flexibility, devolution, and activism” provide the foundation for successful adaptation. In a globalized world where the risk landscape continues to broaden, the rate at which organizations learn may become their only substantial source of competitive advantage. And innovation, which can also be defined as “applying problem solving to information,” is all about providing that right corporate ecosystem for such solving, learning and sharing to happen faster for you than it does for your competition.

In short, this means a corporate culture in which information flows naturally and freely and where authority is derived from competence, not seniority or positions. Culture is an ingrained process through which your employees, partners, collaborators, customers, and other stakeholders engage with one another. And through this process of active engagement will be the next big thing, or even the next smaller but important things will come about. More importantly, the engagement process is actually building that level of multidimensional, cross-cutting relationships that will undergird how your company goes about its work.

This means that for the KCCI to get what it wants in terms of corporate culture in Korea, it needs to move the norms of what constitutes the common set of behaviors and underlying beliefs that drive Korea Inc.'s culture of doing business. This is critical to the bottom line. As McKinsey writes, “Healthy cultures enable organizations to adapt. In a world where the one constant is change, culture becomes even more important because organizations with high-performing cultures thrive on change. The converse also holds true: Unhealthy cultures do not respond well to change. Our research shows that 70 percent of transformations fail, and 70 percent of those failures are due to culture-related issues.”

The world is changing at breakneck speed. Can Korea Inc. keep up?

Jason Lim (jasonlim@msn.com) is a Washington, D.C.-based expert on innovation, leadership and organizational culture.