When Failed Products Are Found, Anyone Can Stop the Production Line

Impossible is Nothing-

It was in the mid-1990s when an innovation training program was first implemented at Changwon Factory. Kim Ssang-soo, the then-general director, who has become widely known as the “Preacher of Innovation,” and who now is the vice-chairman of LG Electronics, formulated the program for employees at the Changwon Factory. In December 2001, Chairman Koo Bon-moo ordered the program to be expanded throughout all of the corporation’s affiliate companies.

During the five days of training sessions, “trainees” were continuously required to achieve what they had always considered impossible. They worked on the production line for eight hours a day and solved additional assignments at night. They took a look around the production line in just two hours and found 100 things to be improved.

The 10-hour climb on the last day was the highlight of the training. During the session, trainees were given seemingly absurd tasks such as “fish-catching.” It does not matter that they did not have any instruments, and that it was the dead of winter. It means they should think from a totally new point of view. It is indeed a harsh process, but few were left out from the process.

Changwon Factory: Mecca of Innovation-

At 6:00 p.m. on April 15, the second refrigerator production line at the Changwon Factory had the number “1401” on the display screen above it. The initial production target was 1360, but the number means that the actual output surpassed the target by 41 units.

White home appliances being produced at the factory—refrigerators, washing machines and air conditioners—are widely considered unprofitable in Korea, a country with high wages. Nevertheless, their operating profit margins (OPM) reach as high as 10 percent.

“This is because innovation activities have been deeply embedded in individuals, leading toward improvement of the whole system,” explains Kim In-seok, executive director of the management planning team.

Simply by pulling a string overhead, any worker on each production line at the Changwon Factory can stop the whole line. Such enormous authority is given to on-the-ground workers in an effort to prevent failed products from being produced.

On that day, the head of the labor union as well as senior executives attended a press conference on the company’s vision. The company explained that its labor-management relationship is much better than others because it has implemented the five-day work week, and workers are being paid as much as they work.

The Goal: Being the World’s No. One-

In the “Press Conference on New Digital Home Appliances and Mid- and Long-Term Visions” held on that day at its “Mecca of Innovation,” Changwon Factory, LG Electronics expressed its aspiration to take the top spot by 2007, leaving Electrolux—the world’s biggest consumer electronics manufacturer—behind it.

It aims to increase its sales volume, estimated to be 10 billion dollars this year, to 14 billion dollars by 2007.

Lee Young-ha, executive vice-president LGE Digital Home Appliance Division, said the company “will establish its image as a premium brand in the world’s largest North American and European markets.” “For this purpose,” he added, “We will build new production bases in Europe and start more factories in Mexico.”

Sang-Hoon Kim Suk-Min Hong sanhkim@donga.com smhong@donga.com