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Change of Paradigm in Knowledge-based Economy, Fourth Industrial Revolution
Finding Solution in People-centered and Knowledge Productivity Management
Chairman of Dosan Academy and Former Chairman of GE-Korea Seok-jin Kang


The world situation today is caught in a maelstrom of unprecedented changes. England decided to secede from the European Union and China who accomplished brilliant economic growth is preparing to jump up to the level of major economic powers. Also, highly developed information and communication technology (ICT) and the Internet of the Things (IOT) is prompting a new wave of the ‘Fourth Industrial Revolution’ in today’s world through the integration with the manufacturing industry. No one is certain what may happen tomorrow and Korea is indeed in a serious situation of ‘crisis’ or ‘opportunity.’ For this, this edition of <Power Korea> interviewed Chairman Seok-jin Kang who pioneered the advanced model for globalization and opened up new horizon of the value creation management while leading GE-Korea as chairman for 21 years, asking how Korea may turn the crisis it faces into opportunity and the direction that Korea should take for the future.

Suggestion from Former Chairman of GE-Korea Seok-jin Kang who Devoted Himself to Pioneering Globalization and Knowledge Management 
Kang is best known as the person who pioneered and succeeded a model for globalization during the period when he managed GE-Korea for over 20 years. He became the CEO of GE-Korea in the beginning of the 1980’s when the concept of globalization was not familiar to the international management circles and developed and implemented the strategic plan for globalization based on his own management philosophy which comprised strategic tie-up, long-term partnership with local companies, and localization of management at GE-Korea at the time, and these became the standards for globalization today. He also implemented the people-centered management which was to treat all members of the organization respectfully and respect their knowledge and idea, and as a result, he made all members of the organization share company’s vision and value, develop the sense of ownership by themselves, and passionately put all their efforts into their tasks; he realized the management approach leading to value creation while winning customer trust and satisfaction. As a result, Chairman of GE, Jack Welch adapted GE-Korea’s localization method as the globalization model for entire GE in the 1990’s when the globalization became the key task. 

In 2001, Kang and Jack Welch retired from GE together and jointly established CEO Consulting Group with the refined professional managers and great scholars in the management field in Korea at the time to practice their social duties of transferring their knowledge and experience of advanced management to the managers of small and medium enterprises of middle standing and venture companies in Korea that needed them and have devoted themselves to the task. Following the recommendation of Joseph Kessel, the world-renowned scholar in the management circles and the President of the Business School of the University of Twente in the Netherlands, and Dong-seong Cho, the President of Business School of Seoul National University, Kang engaged himself in the academic research in a new research area; management leadership, organizational culture, and the correlation between the productivity of knowledge and value creation, centering on the cases of the advanced management of GE and the success of representative companies of Korea at the University of Twente in the Netherlands for 8 years from 2007. As a result of this long effort, he completed a lengthy 289 pages long research paper in 2015, which was registered as the World Intellectual Property, and he also received the Ph. D. in Business Management from the University of Twente in Netherlands with it. On the other hand, he has given many lectures in the management circles and academic circles on the direction that Korean economy and management circles shall take in today’s advanced Knowledge Economy Age based on the concepts he summarized through his academic research and the experience of implementing advanced management. For he has the insight into the world situations more prominently than anyone else, we need to listen to his words on how to overcome uncertainties in the world economy and the crisis that today’s Korean economy faces.

Fundamental Change Required in Entire Society to Effectively Cope with Coming Fourth Industrial Revolution
Develop Open Society to Secure Advanced Technology Unique to Korean Industry and Promote Creative Integration of Technologies 
Making Rough Sketches for ‘Second Miracle on the Han River’

Kang said the ‘Fourth Industrial Revolution’ will be brought to us regardless of our choice by the advanced information and communication technology and the Internet of Things in the ultra-integration age unlike the First, Second, and Third Industrial Revolutions that have brought changes to the industrial structure, and it would be difficult to adapt to the ‘Fourth Industrial Revolution’ with Korea’s current bureaucratic and non-communicating social culture that sticks to formalities and traditions and it may become a great crisis for Korea. He said we need to turn the ‘Fourth Industrial Revolution’ into a new opportunity for growth to achieve the ‘Second Miracle on the Han River’ by developing a new social culture that enablescreative integration through mutual, open, and wall-less communication and exchange among all sectors of the society including private and public sectors, various industrial sectors, and cultural sectors and builds a new future through creative integration and promotes mutual growth. He also said we have no other choice in this age but to build an open social culture where all sectors of it can communicate openly and integrate with each other creatively and if we fail to do so, the ‘Forth Industrial Revolution’ can be a great disaster for Korea.

Kang said Korea needs a complete changeover of the social structure in order to cope with the Fourth Industrial Revolution effectively. He stressed that we need to pull down the ‘wall’between industries, classes, and generations and develop the social culture of communication, mutual growth, and coexistence. This means that the creative integration would become possible only when the open social culture that encourages us to integrate knowledge and information we have and express our opinions and thoughts freely. He also said that Korea will pull off the ‘Second Miracle on the Han River’ if it is ready to embrace the ‘Fourth Industrial Revolution’ based on this creative and integrative social culture.

He emphasized that the entire nation including all sectors of the society, government agencies, industrial circles, and the civil society shall boldly participate in rebuilding the open social culture that can embody creative integration by moving away from current social culture that has settled with and held fast to bureaucratism, non-communicating tradition, and fixed ideas through future-oriented, innovative, and wall-less open communication for Korea to turn the ‘Fourth Industrial Revolution’ into a new opportunity and pull off the ‘Second Miracle on the Han River.’

Kang and other leading figures of our society are making preparations to establish the ‘Creation, Integration, and Mutual Growth Forum’ in order to share the common goals of the times with the entire society.

Crisis in Advanced Parts and Materials Industries, Bases of Leading Export Industries and Production Industries of Korea
- State level support for R&D and securing differentiated and advanced technologies are pressing tasks

Kang stressed that the most important task is toreestablish the cooperative relationship with China which quickly emerged as the world’s second economic power and has recently undergone rapid changes. China has been the production base of the world’s conglomerates based on cheap and plentiful labor andhas also achieved the advancement of industrial technologies and basic sciences, and the worldwide competitiveness of Chinese industries and companies made brilliant progresses based on huge domestic market which accounts for 1/3 of the world market. For Korean export industry, China has grown in to the No.1 export market, pushing America aside. However, he pointed out that we should consider the reality that many industrial sectors of China are quickly becoming competitive against the key industrial sectors of Korea while there are positive aspects about China’s growth. In fact in the shipbuilding industry where Korea had maintained the top ranking for many years, China has overtaken Korea’s position and now Korea’s shipbuilding industry is faced with serious crisis and urgently needs to secure differentiated and advanced shipbuilding technologies in order to overcome the crisis. China has also been outplaying Korea in the advanced parts and advanced materials industries which are the bases for leading export industries and production industries in terms of technological strength and cost competitiveness due to Chinese government’s policy to promote its industry, and this has placed small and medium enterprises of middle standing in the advanced parts and materials industries lacking independent R&D capacity in the life or death situation. Kanggave a firm opinion on how to cope with such crises and which strategy to deploy.   

Kang emphasized, "Small and medium enterprises of middle standing without independent R&D capacity and technological strength cannot overcome serious life or death situation if not firmly supported by the government. It is certain that the crisis of the small and medium enterprises of middle standing, the backbone of Korean economy,will evolve into the crisis of the entire industry." He also said, researchers of all science and technology research institutes of various fields in Daedeok Science Town, the representative science and technology research complex of Korea operated by the taxpayers’precious money, shall closely support small and medium enterprises of middle standing without independent R&D capacity and technological strength in the advanced parts and materials industries by fully acting as the R&D institute for such enterprises in order to resolve the crisis in the advanced parts and materials industries. Kang visited Daedeok Science Town many times as a guest speaker and made such suggestions to the heads of research institutes, andsome of them considered his suggestions positively and even promised to implement them. However, he has not seen a single case where his suggestion was embodied.

Fortunately, however, President Geun-hye Park made the election pledge to develop small and medium enterprises of middle standing into the hidden champions of Korea as those in Germany, and impressed by the pledge, Kang emphasized the importance of Daedeok Science Town in fulfilling the pledge at the meeting between President Geun-hye Park and Korea Employers Federation held before the inauguration. Later, he expressed his regret that the government agencies related with this matter could have not implemented this important policy task even after President Park visited Daedeok Science Town as many as twice after inauguration and declared that the science research institutes funded by government would act as R&D centers of small and medium enterprises in the advanced parts and materials industries to turn them into hidden champions of Korea. He said this policy commitment shall be fulfilled during the remainder of President Park’s term of office and if not, it will lead to a national crisis where the parts and materials industries, the backbone of Korea’s leading export industries, will lose the competition against China. 

Business Leaders in Today’s Knowledge Economy Age Shall Primarily Focus on Developing Creative Organizational Culture for High Knowledge Productivity to Maximize Value Creation, Ultimate Goal of Corporate Management
Kang said the most important responsibility and obligation of a manager is to achieve corporate value creation successively, and this requires the knowledge productivity and value creation maximized through people-centered management leadership. He emphasized that the manager of the 21st century’s Knowledge and Economy Age shall become the leader of ‘knowledge productivity management’ and ‘people-centered management’ who treats all members of the organization respectfully, respects their creative knowledge and idea, and incorporates such knowledge and idea into the value creation management to work together to achieve the ‘Common Dream and Vision’, the value creation, which he or she shares with the rest of the organization. The concept of value creation that Kang summarized in his dissertation after 7 years of academic researchincludes all of the following; 1) Growth in Sales and Net Profit, 2) Increase of Company’s Market Value, 3) Enhancement of Corporate Reliability and Image, 4) Increase of External and Internal Customer Satisfaction, 5) Corporate Capacity for Sustainable Growth, and 6) Social Role as Corporate Citizen.

As explained, he summarized the concept of knowledge productivity (KP) management into the act of respecting creative knowledge and idea of the members of the organization and applying them to management most efficiently to achieve the maximization of value creation, the common dream and goal of all members of the organization.

The manager shall develop a non-bureaucratic, free,and open organizational culture without boundaries betweenranks and departments that can lay the foundation for a creative and knowledge-productiveoriented organizational culture that encourages the use of knowledge and idea of all members of the organization. This open organizational culture enables free imagination and develops creative new ideas, and the leader of management shall guide the organization in a direction that it concentrates all of its resources into discovering creative knowledge and idea of its members and applying their knowledge and idea to management promptly regardless of their rank and department in order to execute them efficiently. This approach for enhancing knowledge productivity can be applied not only to corporate management but also the management of state and public institutions.

Kangsuggests a direction that our country, society, and corporate management shall take in order to efficiently cope with the Fourth Industrial Revolution, the great wave of change coming toward us in the 21st century’s Knowledge Economy Age. 

Kang is a manager, painter, and also poet. Kangsaid, ‘Management is a composite art which develops creative ideas and new knowledge through continuous imagination and integrates such knowledge and idea with materials and operations to create thousands of times greater values.’ The composition of the rough sketch for Korea’s advancement has been completed and now it is there for the leaders of various fields to paint on top of the sketch to complete the painting. We look forward to Korea getting through the turbulent age and sailing toward the unknown ocean.
 


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