SK Group Chairman Chey Tae-won gives a TED-like talks to group executives in which he wore a wireless microphone and casual clothes.

SK Group Chairman Chey Tae-won called for tremendous changes in such arenas as business, organization and corporate culture.

“There is no future unless SK breaks the mold in an age of sudden death,” SK Chairman Chey told a meeting of CEOs of the group’s subsidiaries at the SKMS Research Institute in Icheon, Gyeonggi-do, on June 30.

With Brexit, Britain’s decision to leave the European Union, fait accompli, an unprecedented gloomy business management situation is on the horizon in the second half of this year, as growth forecasts of the Korean economy have been lowered, and Korea has seen its exports decline for the 18th consecutive month. Amid a flurry of uncertainties, Chairman Chey urged CEOs to establish steps to reinvent business, organization and corporate culture tailored to satisfy each subsidiary’s business environment and implement action plans until the next CEOs’ meeting in the second half.

“The current business management situation dictates the fact that any company that does not change might be faced with sudden death, disappearing any time, not in a slow fashion,” Chey said. He stressed that they should have a mindset of changing all things if they want to avoid a severe price.

Chairman Chey has emphasized the importance of “disruptive innovation” to rebuild a strong SK Group since his return to the group’s top management last year. Chey’s latest remark is not too different from those made in the past, but his most recent remarks are the strongest-yet. Chey added that subsidiaries might see lower return on equity (ROE) rates and price-earnings ratio (P/E Ratio) drop below 1.

Chairman Chey stressed a sense of crisis during the meeting. Growth forecasts of the national economy have declined and external and internal economic circumstances are getting uncertain. Making things worse, Brexit has made all these risks more volatile. In order to overcome the current situation, he called for CEOs to work out detailed plans to innovate the way subsidiaries do business, the way employees work and ways of upping the ante in asset management efficiency. 

The next CEOs meeting is to be held in late October. 

The first thing Chairman Chey stressed was the need to innovate business models that each company develops. “If the environment changes, we need to change the way we make money.” They should reconsider business fundamentals how they sell what to whom, he noted. CEOs are asked to vet products, customers of markets of each business from scratch without being glued to conventional practices. 

Second, Chey urged CEOs to rethink the way they work. He called for them to determine whether all things ranging from commuting to working hours, taking leave, assessments, and compensation are appropriate in accordance with current changes. 

Chairman Chey also touched on the improving of asset management efficiency. “Financial resources and fundamentals are taken into account in a mid- and long-term perspective,” he said. To this end, he called for the improving of asset management efficiency as an essential prerequisite.

He urged CEOs to create an environment in which SK Group members can max out their brain activity on a voluntary and aggressive basis.

Chey gave a TED-like talk to the participating executives in which he wore a wireless microphone and casual clothes for one hour. It was a move to concentrate his concern on the management conditions of the subsidiaries, analysts said.

SK Group headquarters’ building in Seoul (Photos: SK Group)