New Management Paradigms are Adopted by Companies Home and Abroad

With the rapid change in the business management environment and fierce international competition, the “survival period” of companies is shortening.

Accordingly, an increasing number of companies are adopting new management paradigms for survival such as sustainable management, design management, brand management, and ethical management.

American consulting firm McKinsey & Co. analyzed that the average life of U.S. companies in 1955 was 45 years, but it has been reduced drastically to 15 years as of 2005. In addition, McKinsey predicted that only 30 percent of the currently existing companies will survive 25 years later.

According to Strategic Consulting, a European firm, the average life span of Japanese and European companies is only 13 years, and the average life span of some 2,000 American IT companies is a mere 10 years.

In Korea, only 16 out of the top 100 companies that existed in 1965 have succeeded in surviving until now. The Korea Chamber of Commerce and Industry said 40 percent of new companies manage to stay in business for only less than five years.

The 21st century’s new management paradigm that companies from both home and abroad are paying attention to is “sustainable management.” It means the pursuit of profits and sustainable growth through contribution to society and environmental preservation.

Posco, Samsung SDI, Samsung Electronics, and Hyundai Motor Company have already adopted sustainable management as the future management ideology.

Other new paradigms at the center of attention include fun management that induces employees’ creativity, design management that improves added value through design innovation, brand management that attaches importance to brand value, co-existence management that enhances the growth of both large and small-and-mid sized companies, ethical management that pays attention to business ethics, and quality management that gives importance to quality.

Jo Dong-seong, the director of the Institute for Industrial Policy Studies and a professor of business administration at Seoul National University, said, “Blind pursuit of profits no longer guarantees a long survival for companies. Companies that return tangible and intangible benefits to society can develop for a long time.”

Kang-Woon Lee Sang-Soo Kim kwoon90@donga.com ssoo@donga.com