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SKorea fosters startups as it seeks economic shift

Youkyung Lee (via AP/ SMH) | May 31, 2013
South Korea's government wants to cultivate entrepreneurship after years of diminishing returns from the reliance on state-favored companies known more for their massive scale and aggressive competitive instincts than bold thinking and creativity.

The lofty aspirations are set against cultural values that inhibit risk taking: an emphasis on respecting seniority and hierarchy, long working hours meant to demonstrate loyalty to company and intense pressure for the young to succeed at school and college.

"Honestly, school is absolutely not helpful," said Kwon, who while running Ecube Labs is paying full tuition and doing the minimum course work required to graduate. "If it were like the U.S., I would have dropped out. But in South Korea people still ask which school I went to."

"Sometimes I feel like I'm in a dilemma. When I'm in school, I think about work."

Still, there is no shortage of belief in South Korea that it can bring about another transformation. After fighting in the 1950-53 Korean War ended in a truce, the South's economy was in ruins. Within a generation it was emerging as one of Asia's most dynamic nations.

Park, the current president who wants to inspire original thinking, is the daughter of dictator Park Chung-hee who championed rapid industrialization and the rigid, efficiency-at-any-cost culture of the conglomerates.

Added impetus for change has come from a U.S. court's stinging rebuke in 2011 of Samsung Electronics Co., the flagship of the Samsung empire, for infringing Apple Inc.'s intellectual property. Although a federal judge reduced the $1 billion fine that a California jury imposed on Samsung for copying Apple's iPhone and iPad, the verdict was a reminder for South Korea that the success of its biggest company was built on the innovations of others.

"Samsung is the world best in producing goods or services that others make at cheaper costs and differentiating them by adding new features," said Song Jaeyong, a professor at Seoul National University who has served as an external advisor for Samsung since 2004. "But it had not made what doesn't exist in the world, like Apple did."

"Samsung's culture is a culture of hierarchy, a culture that emphasizes efficiency, which was great for enhancing competitiveness in manufacturing," said Song. "But for creative innovation, it is important to have diversity, openness, flexibility, open communication and an attitude of learning from failures. Samsung's corporate culture lacks these qualities."

After the California verdict, Samsung began experimenting.

In December it began a project, dubbed Creative Labs, which seeking to emulate a startup ethos, allows some employees to take 6 months to a year off their regular work to collaborate on projects that no deadlines, profit targets or rigorous management rules.

Ki Yuhoon, a low-ranking engineer in Samsung's semiconductor division, can hardly believe she is now leading a team that includes a designer, a developer, and a marketer who are all older and more experienced.


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