Yeouido Stock Street, dubbed Korea’s Wall Street, has remained a much quieter and colder place this year than normal, due to unprecedented company restructuring efforts and slump in the Korean stock market more generally. Restaurants that line the street are losing money by the day and vacancies can be seen in the buildings. Back when I was a student, big electronic quotation boards were everywhere displaying current stock market prices as they changed live throughout the day. There were in fact a great many securities companies back then. However, that has all now passed. The stock market environment has changed to such an extent that the quotation board can now only be seen in within the Korean stock exchange itself. 

The financial world has changed beyond all recognition. Banks used to be primarily concerned with handling petty cash. Today, many transactions, such as paying utility bills or remitting congratulatory money for a wedding, are carried out online and through mobile banking, saving people from going to a bank. Shops such as bakeries and coffee shops that are positioned near a subway station have a large floating population and thus can still do fine. However, small stores selling underwear and everyday goods, which used to make a fortune on the street with many people coming and going, are on the wane. Even in supermarkets, sales of baby products like milk powder, diaper and baby bottles, are down. It is not because of where they are per se, but because of what they sell – everything which is now available online. This dramatic change has been brought about by people purchasing products using their PC and mobile. In the past, we had to walk into the shop to buy things, but now we can order most things online, even while we are travelling on the bus or subway. I myself use a smartphone to handle most of my work. Likewise, the advent of the smartphone has changed our life irrevocably and the impact of technology continues to change how we live, as well as broadening the business horizon. 

Dear Asian Beauty Creators, 

Three-quarters of this year have already gone. As we survey our company today, one thing stands out: the company has become highly polarized. While we seem to be doing fine from a high level perspective, once we drill down to the granular level, this is far from the case. With our growth in the global market, we have seen our strong sales in China and ASEAN countries; with the development of the digital space, our business in digital channels is going well. Plus, we are seeing good results from roadside shops like innisfree and ARITAUM, with customers responding quickly to what we provide. However, channels that were once strong are now struggling: this includes door-to-door sales, department stores, as well as mart and agent channels that have continued to grow over the last 20 years. 

I ask myself why not everything goes as planned when there are so many competent and talented individuals working hard for AMOREPACIFIC Group to break through the crisis. I think it all depends on how fast we achieve customer-oriented management and the extent of the efficiencies we can realize in accomplishing our goal. I will give you one example. Walmart is the largest discount store in the United States. Yet, it was in fact a late mover that came after Kmart, which was the creator of the new business model: namely discount stores. As the leading company, Kmart used to have stores in large cities around the U.S. In the 1980s when I was in the U.S., I used to shop at Kmart. But, when I went back after a couple of decades, I saw no Kmart. In its place was Target, another large mart. Kmart failed to keep up with the flow of the times and, as a result, it went out of business. Walmart took the lead in the market, even though it came late into the market. The sole thing that made it popular was its slogan – Everyday Low Price. Giving discounts everyday was not common in those days. The ABC of retail business was to first sell products at a regular price and then give an adjusted discount at a certain time of the year. 

Walmart was able to undercut its competitors and yet ensure a stable supply of products because it had a special system. It was this which allowed it to fulfil its brand promise and slogan. Walmart's distribution system is different from that of other retailers. Most retail companies run a warehouse where they stockpile products and then distribute them nationwide. However, Walmart did away with this warehouse system. It instead bought a large plot of land (cargo area) between the manufacturers and stores where incoming trucks unload products and Walmart trucks come and pick up the products, which are then sent directly to stores. This distribution system involves no warehousing or waiting time and is called cargo exchanging, or more popularly ‘cross-docking.’ 

To ensure efficient cross-docking, Walmart adopted GPS (Global Positioning System) and became the first to use GPS navigation in its distribution system. GPS was originally designed for military applications, but it was opened to the public in the 1980s. At that time, other retail companies outsourced transportation because unloading and loading products using trucks was too complex and difficult. Walmart was different: it bought 2,000 trucks, installed GPS on all of them for cross-docking and arranged the scheduling. As a result, Walmart was able to strengthen its competitiveness.    

Moreover, Walmart was an early adopter of the Internet. It exchanged products and transaction information with large food companies and other suppliers in real-time. Through this, it was able to reduce its losses from inventory obsolescence, as well as cutting opportunity loss resulting from a product shortage. Revealing detailed information was something that other companies would never have dared attempt because it meant losing the advantage in business negotiations. However, Walmart did this to help both manufacturers and retailers better manage their inventory and, at the same time, allow it to concentrate on enhancing its own price competitiveness.   

Walmart has made considerable efforts to act upon its slogan, adopting advanced technologies to accomplish this goal. To that extent, it was fast to approach customers and make its business efficient. This is the 21st century, though, and Walmart is now engaged in competition with Amazon, one of the largest e-commerce companies in the world. Many are watching them as to who is going to win this competition, where the speed of responding to customers is the greatest prerequisite for victory.

Dear AMOREPACIFIC Group members, 

There are three business management frames: by the month, week and day. And as you all know, we have long managed business based on per-month performance, just as many other companies have done. It means that we break down each year into 12 months when making our business plan, set a goal for each month and check the progress every week. Walmart, on the other, has practiced week-based management, which is to break down one year into 52 weeks, set a goal for every week and check the progress each day. Amazon uses day-based management, looking at the plan over the course of 365 days. It has set 365 goals for one year and checks its attainment of its daily goals on an hourly basis. For example, if sales are different in the morning and in the evening, it looks for the reason, analyzes what has happened in the world and how it could affect its business. It does this so that it can then respond faster. 

As such, business today runs faster than ever before. That is, the business environment is changing with the tremendous advances seen in information processing technology. Years ago, when information had to be recorded in longhand, there was not enough time to manage business on a monthly basis. The introduction of PCs into the office enabled week-based management. Smartphones have made it possible to handle much more information in a prompt manner, enabling day-based management. 

We must change our management frame and practice week-based management. Yes, it is different from what we have done. We have in fact practiced month-based management for decades. But, we now need to practice management through collaboration and coaching. Moreover, Week-based management is not about planning, but about putting that plan into action. We need improvements to our structure. For example, a team manager might hold a meeting with his team members on Monday to look into what must be done within the week and coaches them to find opportunities and threats, such as a big festival in the neighborhood or a competitor launching a new store. This then enables them to seize opportunities while coping with threats. Then, the head of each Division would meet team managers on Tuesday to discuss opportunities and threats going on within teams and coach the managers for performance improvement. On Wednesday, the head of each BU would meet the Division leaders and do the same; on Thursday, the BU leaders share their BU’s matters on ABC meeting. Finally, on Friday, all the discussed matters will be shared with all members of the company. This is what week-based management looks like. In order to practice this, coaching is required at all levels, because coaching can help individual members better understand their job, develop appropriate competencies and work with greater agility and speed.  

We need to make changes as in how we could respond faster to the needs of customers and, at the same time, help individual members develop their capabilities. When I first read about Walmart, I could not understand what it was all about, but now I understand the importance of responding fast to customers, having in place a fast-cycle management system and the fact that these can change much.   

Dear members, 

In the 21st century, competition is not about size, but speed. It is important to know how fast we can move. If door-to-door sales, agent and mart channels are slower than the speed at which customers respond, we need to make them act faster. If nothing changes, even though we are competent and working hard, we must look back upon ourselves and ask ourselves whether the way we work is behind the times. Moreover, we must make full use of new technologies to do better in areas we have long done well. The door-to-door channel needs to change its old-fashioned way of collecting money. There are things that we must change. We must not respond at the speed we have done so in the past. No matter how hard we work, nothing good can result if the way we think and work is inadequate. In order to solve the problems we face, we must change our management metabolism from month-based to week-based. GIANT (Global Integrated AMOREPACIFIC New ERP Transformation) project aims to organize a neural network that serves as the foundation of week-based management. It is designed to help find and use information faster, without having to go through red tape. 

Technology is changing all our lives. Now, the center of the world is shifting to Asia and I'd like you to understand this global megatrend and take this as an opportunity to develop appropriate capabilities in response. When people gather and their competencies are brought together, the organization can grow strong. There needs to be leaders who can help the organization grow bigger and move faster. Many challenges lie ahead of us. I'd like you to become the heroines and heroes in the course of AMOREPACIFIC Group working toward becoming a company that leads the world beyond Asia by building a system for this goal. Let's practice week-based management together and shape a better future with innovative digital mobile technologies. Thank you. 

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