A crisis is a terrible thing to waste
The author is the managing director of the Customer Experience Innovation Division at LG Electronics.
“Reform” is a regular campaign promise during election season. Candidates vow reforms that they claim will “cut to the bone.” But their rhetoric does not bear the weight of the pain inherent in such an expression. The Chinese character for reform means grinding the bones to ashes and crushing the body. The Chinese character for innovation is made up of words meaning skinning to remove unnecessary parts to make an entirely new product. Both words convey the idea of excruciating agony in the process of a full makeover.
The Hyundai Seoul, an upscale shopping mall in the financial district of Yeouido, has become a hotspot for the young generation, and that was part of the plan from the beginning. The CEO ordered the second basement floor to be filled with brands he didn’t know. The bold concept has become a legend in the retail industry.
Hyundai Department Store, a traditional retailer, has paved the way to our retail future in response to a fast changing market and consumer behavior by experimenting with the unfamiliar instead of continuing with what it knows it can do well.
The world is changing too fast to indulge in past glory. Sticking to an old success manual cannot win over consumers who have become pickier than ever. Gucci, which was a household name for luxury fashion in the 1990s, became shunned for staying behind the times. A less known creative director has reinvented the Gucci identity and finally brought sales back to the fashion house. Younger appeal with refined restraint and witty design was augmented through digital marketing, helping turn the 73-year-old fashion brand into a 20-something hipster house.
Before discussing how to overcome a crisis, the process of realization and understanding of the crisis is important. Staying oblivious to a looming crisis can become the biggest crisis. As a crisis has a context, comprehending it can be more important than addressing it. Italian thinker Antonia Gramsci around 1930 described a crisis as a state of confusion. “The old is dying and the new cannot be born, in this interregnum, a great variety of morbid symptoms appear,” he wrote. A strong traditional company has an excellent crisis control system. But leaders often are relatively slow in crisis awareness. As their organization is rooted in success, it can be hard to see the need for change until it’s too late.
IT companies most sensitive to change are no exception. Microsoft CEO Steve Ballmer retired upon failing to predict the transition to mobile. Microsoft co-founder Bill Gates was convinced of its mighty power and stable returns. As the company neglected the transition to mobile, however, it lost steam for new growth. In 2007, the company faced its biggest crisis as it lagged behind Apple and Google, which moved onto the cloud.
A fixed mindset is a perspective through which individuals invest capabilities to assure they are winners and leaders. A growth mindset does not set a fixed goal and instead embraces change to evolve. Trends are studied for reinterpretation, not for a blind chase, which bolsters a growth mindset. Satya Nadella, who succeeded Ballmer, realigned the business of Microsoft to place priority on mobile and the cloud. MS reclaimed No. 1 in technology by commanding the largest share in cloud integration service. Reading the crisis and times and acting on the trend can spike creative destruction.
Today, innovation has become more valued than tradition. Complacency in work culture could block innovation. People resist change and reform due to their fear of the unknown and insecurity of not knowing the answers to the questions. But we must move forward even if it is unclear and take on the challenge despite innate fears. For innovation, we must be courageous to break out of the comforts we are used to. As crisis has become a fixture, we must do away with own success manual and awaken the innovation genes. There is no time to waste.
Translation by the Korea JoongAng Daily staff.