Quickness isn’t everything

When I read of the recent arrest of Kim Jong-shin, former president of the state-run Korea Hydro and Nuclear Power, it was within a day of an industry insider phoning me to report that one of Korea’s largest manufacturing companies was on the verge of collapse, with some $35 billion of debt which came to four times the company’s estimated assets.

What bothered me is that once again we find highly intelligent and educated individuals behaving as if there are no long-term consequences for their actions. How can a nuclear engineering CEO think that by allowing counterfeit parts the nuclear plants would not eventually come to a halt and that an ensuing audit trail would not lead back to him? How can a top executive believe that running a company like a Ponzi scheme, premised on consistent increased income growth, would not eventually lead to corporate and personal ruin?

A simple explanation is that these individuals - and similar leaders of government and industry - consider themselves smarter than most people (a fair assessment) and believe they will outwit normal procedures and safeguards. And in the short-to-medium term, they are almost always correct. But it is the long-term that does them in.

Since I first came to Korea in 1975, I have seen in the media endless names and photos of senior bureaucrats and corporate leaders being exposed for corruption. Sometimes I wondered if it may be cases of ineptitude, but I cannot recall a single instance of that being the case. Rather, there has been a consistent pattern of brilliant tactical maneuvering without serious consideration of long-term consequences - in other words, a lack of strategic thinking.

Perhaps the greatest example of this mentality was former President Park Chung Hee, who kick-started his country into becoming today’s economic powerhouse. His fatal flaw was being unable to effectively plan and prepare beyond five years. That translated into his inability to establish a political foundation that would allow for a peaceful and orderly transfer of power. Instead, he systematically removed potentially contending politicians and other civic leaders so his power would remain uncontested. Ultimately as his economic programs succeeded in developing a strong middle class that clamored for greater civic freedoms, he was unable to effectively accommodate that inevitable paradigm shift. Tragically, he was gunned down by one of his closest staff members as a desperate maneuver for political change. One may argue the cause for all of this is the Korean penchant for the quick-quick, or bballi-bballi, mentality that even many foreigners refer to in their quaint if shallow understanding of Korean culture.

This lack of strategic thinking has created a flip-side mentality of making the Koreans off-the-cuff tactical champs. If I was in a totally unexpected quandary, my first choice among allies would be a Korean. But this bballi-bballi rushing about creates more chaos than meets the eye. In the place of long-term planning and contingency planning, we find a preference for form over substance, as frequently expressed in Korean as pom saeng, pom sa - to live and die by form.

I’ve witnessed frightening examples of pom saeng, pom sa in major as well as smaller Korean companies. Even with managers with MBAs from top universities, too often management systems are meaningless exercises. These processes generate regular reports for senior management. But as the information systems folks put it, “garbage in, garbage out.”

Junior- and middle-level employees are daily hassled into “rush” assignments in a bballi-bballi fashion without adequate time to properly accomplish prior tasks. Accuracy is too often tossed out the window and best-guessed information is inputted into the management systems. As a result, very few Korean executives genuinely have a feel for the financial condition of their operations. What they do know is how to get new business and unfairly squeeze their suppliers. The in-between bits essentially make up a black box.

To give a not-too-distant example, following the so-called IMF crisis almost 15 years ago, some of Korea’s largest banks were sold to foreign investors who brought in seasoned bankers. The new executives were shocked to discover the banks lacked even approximate understandings of their cash positions and cash flows. Furthermore, beyond simple bookkeeping, there were no genuine accounting departments.

Another example: over the years, I have frequently asked auditing companies how common is cost accounting being applied among their clients. The consistent reply has been essentially not at all.

I recall a senior management professor of a very well-known American business school gleefully getting a one-year sabbatical to come to Korea to study the “secret of Korean management.” I personally knew this gentleman and when he told me of his coming activities, I sardonically wished him the best of luck. Of course, he was displeased with my attitude. A year later, I crossed paths with the same professor. I asked what he had learned. He looked at me, frowned, and attempted to change the subject.

Given all of this, there is no simple panacea for something so profound to Korean culture. The best solution may be possible under this new ROK administration by genuinely punishing top executives and bureaucrats for their wrongdoings rather than giving out taps on the wrist through suspended sentencing and presidential pardons. If Korea is ever to break out of this cultural pattern, it must come through concrete and meaningful sanctions whenever the bballi-bballi mentality eventually leads to breaking the law. Perhaps only after real change in criminal justice will the Koreans reconsider the overall wisdom of bballi bballi.

* The author is president of Soft Landing Korea, a sales performance consulting firm, and senior advisor to IPG Legal.

by Tom Coyner

This lack of strategic thinking has created a flip-side mentality, making Koreans off-the-cuff tactical champs.