Advisor Hwang Gak-gyu of Global Korea Insights (hereinafter GK Insights) urged entrepreneurs to prioritize practicality over flashiness.
Advisor Hwang (former Vice Chairman of Lotte Holdings) advised promising startup entrepreneurs in South Korea at the "Dialogue with GK Insights Advisors and the Future Advisory Council" held at the Korea Press Center in Jung District, Seoul, on the 21st, stating, "In the early stages of a business, you face various financial, strategic, and sales-related issues," adding, "Therefore, management should prioritize practicality over flashiness."
Advisor Hwang, who graduated from Masan High School and the Department of Chemical Engineering at Seoul National University, joined Honam Petrochemical, the predecessor to Lotte Chemical. He has served as Jeong Chaek-bon-bu (President) and Gyeong Yeong-hyeok-sin (Head) of the Lotte Group, as well as Vice Chairman of Lotte Holdings. He is evaluated as having made a significant contribution to the Lotte Group's rise from a domestic-focused business to a global enterprise by successfully closing major mergers and acquisitions (M&A).
On this day, Advisor Hwang shared various business situations he encountered at the Lotte Group and how they were handled, emphasizing the importance of practicality.
Advisor Hwang recalled, "I visited a factory in China with Shin Gyeok-ho (Chairman), the founder of the Lotte Group, in 2004." He continued, "At the time, the packaging machines at the local factory were placed with ample spacing between them. Shin (Chairman) criticized this and ordered that they be rearranged to be densely packed, like a Japanese factory."
He further explained, "At first, I did not understand why the arrangement needed to be changed," adding, "I later realized it was an instruction based on the core principle of Toyota's 'Kaizen (improvement: ).'" Kaizen is a continuous improvement activity that eliminates waste and increases added value across all areas of an organization, and is one of the key management cultures of Toyota, which is considered one of the most efficient companies in the world.
By placing machines densely, employees' movement paths become shorter, increasing productivity. Additionally, managers can supervise more equipment at a glance, reducing labor costs. It also allows for securing space in advance for future expansion and saving on unnecessary heating, cooling, and lighting energy consumption in the remaining space until the expansion takes place.
Advisor Hwang stated, "Among the startups I mentor, there was one that, after achieving some success in its business, moved to a new office and tried to provide spacious areas per employee and build large meeting rooms." He added, "Of course, employees would be happy with this in the short term, but I advised them to use a larger office when they grow further in the future, and for now, it is better to sublease about half of the space." This is because it is necessary to strengthen communication by being in close proximity in the workplace, and especially because entrepreneurs should be able to grasp their employees' work at a glance.
Advisor Hwang emphasized that it is important for entrepreneurs to lead their organizations from a long-term perspective and build corporate culture.
Advisor Hwang said, "If you cater everything to the eyes of your employees, your pockets will empty quickly." He added, "Because founders bear all responsibility for the company, it is important to ensure that members can follow your habits from when the organization is small." He further noted, "During the China visit mentioned earlier, Shin (Chairman) was 83 years old and had been in management for decades." He concluded, "Those present here will also need to run their businesses for more than 50 years going forward, and small daily improvements lead to sustainable growth."
Meanwhile, GK Insights is a think tank established by MoneyToday to help more world-leading companies emerge in South Korea. It has appointed business leaders who have managed major global corporations as advisors and formed the Future Advisory Council with young entrepreneurs equipped with innovative business models and technological capabilities. Through dialogues between advisors and the Future Advisory Council, it aims to pass on the know-how and experience of senior executives.
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