Globalization and the Downturn

How should Korean companies prepare for a downturn within a globalized society? This post is worth a read from Harvard Business Online.

When things go bad, investment, not cutbacks, is what makes a difference in the long term. This is especially true when it comes to marketing and communications, and it’s one of the reasons Samsung emerged from the Asian financial crisis with such a high brand equity – investing in marketing in a downturn (this is something Martin Roll has discussed in the past and touched on here before).

Communications can sometimes be a paradox – speak more when more people are less vocal and you’ll be heard more. This is a valuable reminder to Korean marketing professionals planning budgets for 2008 in the context of an uncertain future…!

Oldboy!

I’m sure when I woke up on Saturday morning I had entered into some strange new world where Korean cinema had taken over reality.   My Korean is limited, so I couldn’t quite make out the story, but I had a hunch from the images of the Hanwha Group chairman, interrogation rooms, police chief from Namdaemun and lots of images from a Korean nite club.  I was startled by the hype itself; the news broadcast must have had at least 6 separate but related items.

According to the Korea Herald (latest news) on Tuesday, “the case allegedly involves [Kim Seung-youn, chairman of Korea’s 12th largest conglomerate (chaebol)] and a team of his bodyguards kidnapping and physically assaulting employees of a bar in Seoul on behalf of his 22-year-old son.”  His son reportedly suffered facial injuries that required 11 stitches following a fight with the bar employees.

Analysts from Meritz Securities Co. are saying that the impact is only short term.  However, the incident makes fun of the group’s grand vision for 2007 where the chairman Kim promised that the company “will become the greatest brand of all mankind that improves humanity and the value of life.”  Hmmm.

Keynes once wrote, “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”  I think Keynes was exaggerating, but I don’t think, if these allegations are founded, that this would apply to even this most extreme situation.

Putting the incident to the side, Hanwha’s ambitions are unquestioned.  However, can Hanwha deliver on its audacious promise, even whitewashing this recent incident?  Should companies make promises it can’t keep? 

I think we all know the answer to this.

Corporate Social Responsibility (CSR) is a term that is thrown about flippantly.  It is neither philanthropy, volunteerism or ’cause marketing’.  Simply, it’s about businesses doing the right thing within the context of the society in which it operates and provides goods and services.  CSR is achieving commercial success in ways that honor ethical values and respect people, communities and the natural environment.  What’s changing now is that global companies, and ambitious Korean companies, need to adhere to global standards.

To say the least I’m skeptical that Hanwha will achieve its corporate vision as it looks to become a global company.  CSR visions, which I believe the Hanwha statement to be, should not be throw-away-catch-phrases that earn short term admiration and perhaps marginal brand equity.  CSR is a way of doing business and is more about what a company does from between 9 to 5 and how it treats its employees than slogans, donations or other such activities. At its core is reputation management – the stakeholder perception of how a company runs its business.  When a company treats its employees well, there are fewer supply chain or customer disruptions.  Robust environmental management practices result in reduced energy inputs, more efficient production systems, and less waste to manage.

I think Korean companies need to think more carefully when it comes to CSR and growing their reputation in a global context.

Brand Health Check

Preparing a breakfast seminar with Martin Roll, author of Asian Brand Strategy, I started thinking about how a typical Korean company thinks about brands.  I would guess that for most Korean companies the “brand” entails the logo, an advertising slogan and maybe a celebrity face (though it’s often hard to remember who Rain is representing this week!) – and very little else.  There appears to be a very generic and, dare I say, superficial appreciation in Korea of how deep a brand has to go before it really affects the way that customers respond to it.
Martin Roll focuses on Asian brands and argues that branding should be an issue for the boardroom, not just the marketing department. I agree with that 100%, but I’m not sure that a lot of Korean company boardrooms would have branding on the agenda in a meaninigful way. Ultimately, to drive the brand from the top needs a lot of buy-in and public evangelism from senior executives. However, Korean senior executives are generally very publicity shy, largely for fear of repurcussions from their comments.

Which implies that the development of global Korean brands will require more than just a shift in strategic focus: it will need a wide-ranging change in many corporate cultures.

Living in Color?

Attending a client media event yesterday I was reminded of how important it is that an organization’s brand identity – and particularly its visual elements – are consistently and prominently featured at every touch-point.

Press conference settings (at least in Korea) can often be generic, with little to differentiate one from another save for the logo on the podium and maybe a few strategically located banners. When the venue features the corporate color scheme in every aspect of its décor, though, the impact of the event is significantly enhanced.

The psychology of color is complex, and I don’t claim any expertise in this area. However, simple common sense should indicate that when people are brought into an environment in which they are literally immersed in the colors of the brand – particularly when those colors are strong and vibrant – it adds an important element to the brand experience.

Given how much effort goes into defining and protecting corporate identities and in particular the colors that they incorporate, it sometimes seems that to restrict their use to corporate letterheads and business cards is something of a waste. Why not use corporate colors to enhance the workspace, to decorate public areas, cubicles or employee rest areas? What about selecting colors designed to influence moods? Many hospitals have been doing this for a long time, especially in respect of waiting rooms for anxious families. Why not decorate meeting rooms in a color scheme conducive to relaxing clients? But for most corporations the “corporate identity” is little more apparent than the label on a pair of designer jeans – it’s there if you where to look for it but they’re all the same from the other side of the street.

I kicked off the day yesterday surrounded by bright primary colors and I came out of the event feeling considerably livelier than I usually do after an early start. It might have been due to the color scheme, it might have been something else. But it certainly made a change from the usual.