Venture-Style Management SpreadingAn employee, identified only as Mr. K, who had been working for an Internet company, was offered a position by Samsung either as an assistant manager or on a one-year contract basis, which enjoyed a larger salary. He opted for the contract position. Samsung, hungry to find specialists, has completely overhauled their recruiting style, allowing applicants to choose their own working conditions. As a result, Mr. K. chose to be 'appreciated' now rather than settle for the stable income of a long-term employee. Samsung is planning to transform itself into a holding company comprising 100 subsidiaries by 2005, some of which will be Internet-based companies.
The introduction of this new venture style management is growing in popularity in business circles. New management systems incorporating features like 'venture holdings', 'speedy and transparent' management strategies, American-style annual salaries, pay incentives are constantly being introduced. With the expansion of the Internet, expanding venture companies, and the rapid digitalization of the management environment, big business is realizing that the management paradigm has totally changed.
An official from Korea Telecommunications stressed, 'Even public corporations are creating in-house ventures or venture funds, giving division heads the authority to approve billion-won budgets.'
Venture enterprising companies such as Hangul and Computer(HanCom), Mirae Industry, Madison are busily establishing holding companies and venture funds. Sources from HanCom said, 'Unlike the big conglomerate, which places high value on securing managing power, venture enterprises give their priority to securing related technologies and the maximization of profit from their investment.
As a result, division of ownership and management has been accelerated. HanCom, which started its transformation into a holding company last year, is partially investing in 17 companies such as Netiang, Hanul Sarang, with stakes varying from 5 to 65 percent. Except participating in monthly 'family company board meetings', the owner is not involved in management at all.
Another feature of venture enterprises is the pursuit of transparent management. At HanCom, business operations conducted by all employees, including chief executives, are displayed on an in-house website.
Simplification of the decision-making process from supervisor to CEO is also being emphasized. At Lycos Korea, even junior officers are given the authority of settling accounts of 100 to 200 million won. 'Though there have been some adverse side effects, we are going to give them the authority to handle higher-settlement accounts.' said Mr. Jung Mun-sool, Lycos Korea's chief executive.
The state-run company, Korea Telecommunications, as well as large private corporations like Hyundai, Samsung, LG, and SK have all declared that investment in Internet venture companies would be included in this year's business plans.
Management style is also rapidly being transformed into the venture-style system. Transparent finance, rapid management decisions, and exceptional incentive systems are arriving at the big conglomerates. They stated, 'We found it would be difficult to successfully run Internet businesses with the existing management style.'
Recently, the incentive system is a topic on everybody's mind in industry circles. Brilliant young brains are being lured to venture start-up businesses, the so-called 'Exodus Phenomenon' from large traditional corporations, forcing large companies such as Hyundai and Samsung to introduce stock option systems.
Large companies were forced to re-establish their benchmarking process. As Internet businesses are booming, once major companies like GE, IBM, and Chrysler are being replaced with Cysco and Amazon.comare the overseas venture enterprises.
Professor Chong Sung-hwa of Yonsei University, however, asserted, 'Large companies should be fully alerted to following and tracking down venture business models. They should turn to large-volume businesses with less risk, while smaller venture enterprisers need to search for small but highly profitable markets.