Revisiting Premises Held by Firms by Prof. Bae Jong Tae (KAIST)2016-08-31Hit:2612
Revisiting Premises Held by Firms by Prof. Bae Jong Tae (KAIST)
Prof. Bae Jong Tae (KAIST) has called for a change in business strategy because the high-growth strategy of the past is no longer available. Prof. Bae stressed the importance of setting a new sustainable development goal that can yield sustainable profit and also satisfies all the stakeholders involved.
Recently, the mass media has been providing different news. We live in a structurally and environmentally very different society compared to the past. The agenda that we have kept and followed may no longer be applicable to the new society that we now live in. Traditional and classical business strategies are already obsolete and the population of working people is continuing to decrease.
The division between nations and social hierarchies has been growing. This has become so rampant that a change and adjustment of a capitalistic system that has led the world’s free trade market is necessary. Some of the fundamental questions should be keenly addressed such as why should a firm exist, what value should a firm seek, what principles should a firm be based on.
“What should the objective of a firm be, and why should a firm exist?” When we examine the middle and long term goals of a company, it is easy to see a similar pattern of the constant growth on the company profit graph. Of course, a firm should generate profits for sustainable growth. However, the population of working age people in many countries has been declining, and the low-growth is alarming, and firms worry that they may no longer be able to make sustained profit. South Korea is also experiencing this. Companies should put more emphasis on survival and sustainability issues, rather than putting everything into making a profit. A new paradigm that reflects sound and sustainable growth is needed as a proxy for the CEO’s competitiveness, rather than how much revenue the CEO has generated.
“What should the focus of the firm be?” So far, many firms have focused too much on the work management, which has isolated their employee. They widely believe that they are just tools to make further growth. Employees have been managed as if they were efficient machines. The new shift calls for developing dynamic and versatile employees who no longer deal with the same routine mundane tasks.
Mr. Lee Hyung Woo (CEO of Midasit) said, “We fail to create new business not because of a lack of opportunities, but because we don’t have the proper people to work with.” The new paradigm should regard employees as a source of creativity for actively leading the firm. Employees should be empowered to tap their motivation, ambition, humanity, and value. The answer lies to how we treat our fellow human beings. The former CEO of Samsung, Mr. Lee Byung Chul, once said, “Looking back of my life shows that I spent about 80% of my time only by looking for a good and qualified employee to work with.” The philosophy of recruiting the right person is still viable and the importance should receive more attention.
“How should the firm be managed?” In the times of high uncertainty, a business does not follow a linear cycle of ‘organization – operation – evaluation’. Always a new variable comes in that no one expected. Therefore, a new organization should be lean, energetic, flexible, and agile enough to carry all the uncertain factors and be adjustable to meet the rapid trends of the market.
In conclusion, in this time of high uncertainty, where everything seems like disruptive ambiguity, a new business model that focuses importance on human value is necessary. This will generate sustainable development through innovation, creativity, and entrepreneurship based on each employee’s devotion to seek opportunities, value creation, and maximization of happiness. Revisiting a firm’s requirements and calling for some changes are truly needed in this time of high business uncertainty.