The Startup and Korea’s Productivity Problem

With the Korean startup still in its infancy, there are many questions left to be answered including how startups will interact with the deeply intrenched Korean conglomerates (chaebol) to how the ecosystem will attract outside investment.

Lost in all of this is one question whose importance is consistently underrated or just forgotten:

How will Korean startups adopt productivity?

This may seem like a strange way to pose a question as productivity is not something you adopt but rather a barometer to measure how well you are working. However, in order to better understand the current environment and analyze potential future paths this question must be raised and its answer can take one of two forms.

The first is the rigid, traditional structure of the large Korean conglomerate. The second is what Silicon Valley offers which is a more forward thinking model that involves consistent tinkering, trying to figure out what works best.

This blog will take a deeper dive into what each of these styles are and what they could represent for the future of the Korean startup.

The Chaebol Model: The Antiquated Path of Repetition

Productivity is reflective of a society so what better way to understand the environment in which Korean startups are operating than by analyzing the country’s largest employer, the chaebol.

The traditional Korean office values superficiality over measurable effort. It is not about what you are able to produce but rather performing certain perfunctory actions in order to been seen as a hard worker.

An example of this is the unnecessary work hours put in by a typical office worker. This is not usually due to a heavy workload but rather the fact that leaving before your boss is anathema and a quick way to garner the scorn of fellow coworkers as well as get passed over for the next promotion. It does not matter what you produce but rather your loyalty to your superiors.

What drives this point home is the fact that when one leaves the office, there is an expectation that you alert the rest of your team of your departure. This is partially to show others that you are leaving before them, that you are not as “dedicated” to the company as them.

Furthermore, there is the weekly company dinner. This is an exercise in forced binge drinking until the early hours of the morning only to stumble into work a little bit later nursing a horrendous hangover. There is no better strain on productivity than a hangover and Korea’s bottom-dwelling status in the OECD in this category proves just that.

The top-down approach to management is another aspect of productivity where the chaebol fall short. Those on the lower rung of the company hierarchy are not supposed to create or have ideas, they are supposed to follow whatever their bosses come up with regardless of its potential or obvious flaws. This kills any hope of creativity by silencing a large portion of the company and, when you kill creativity, productivity decreases and repetition flourishes.

This repetition of ideas has historical relevance as the way the Korean conglomerates rose so rapidly in the 1970s and ‘80s was they copied the processes in place in other countries and “Koreanized” them. This worked back then when Korea was not at the forefront of technological innovation but now Korea has no one to copy and these large companies are struggling because of this.

Korean conglomerate productivity is an optimization function where the variables are constant. It is such that years ago, companies decided the current output of productivity was sufficient and stopped tinkering with the equation.

Now, any change is seen as an unnecessary risk and productivity is stuck at its subpar levels.

Silicon Valley: Optimizing for Productivity

The polar opposite of the productivity present in the chaebol is the masterful artwork of productivity that is occurring in Silicon Valley.

Unlike the Korean chaebol, your work hours do not matter, where you work does not matter, even how you work does not matter. What matters is the quality of what you produce.

In SV, companies are toying with six-hour work days, have people work from home (or from halfway across the country), and have flexible work hours. These are concepts that would send a chaebol manager to an early grave.

While Korea has a stagnant optimization equation for productivity, SV is consistently tinkering with theirs. Seeing what does work, what does not work, and implementing the necessary strategies to reach full optimization.

Given all of this, it is no surprise that Silicon Valley is on the forefront of innovation and truly changing the world.

What Path Will the Korean Startup Take?

What each path means for the future of the startup ecosystem in Korean is relatively straightforward. If the traditional chaebol model carries over, the startup scene will greatly suffer as innovation will be hampered, creativity will not take off, and the lack of productivity will sink any early-stage startup that needs its workers as efficient and focused as possible.

The Silicon Valley choice, on the other hand, would greatly benefit the Korean startup ecosystem in multiple ways. Apart from sharp increases in productivity, innovation, and creativity, adopting a newer more liberal approach to business would show a willingness to engage in other activities that are not present in the contemporary work environment. This could mean the empowerment of the female voice and adoption of equal wages or a more meritocratic structure of business operation.

While this seems like an easy choice, things are not that easy. Korean startup founders and managers, like all humans, are shaped by experiences and biases. Many of them are products of the chaebol and have been professionally molded in this environment. If you have ever tried to change a belief or thought process that was deeply imbedded in yourself, you understand how difficult it can be. Attempting to get these founders and mangers to accept a more liberal approach to management can be quite the ask.

All that being said, hope is not lost. The influx of younger Koreans and Korean-Americans into the startup scene gives hope that the younger generation that has not experienced the chaebol-style of management can implement a much more SV-based way of viewing productivity and set the Korean startup off on the right path.

A path towards growth and a future without limits.

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