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THE INVESTOR
August 14, 2022

Market Now

4 years in, Koo’s leadership still in making

  • PUBLISHED :June 29, 2022 - 09:11
  • UPDATED :June 29, 2022 - 09:11
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LG Group Chairman Koo Kwang-mo on Wednesday marks his fourth anniversary at the helm of the nation’s fourth-largest conglomerate, with his leadership taking shape, though not yet completed.

Koo, then 40, took office as chairman and CEO of LG Corp., the holding unit, on June 29, 2018, following the death of his father, Chairman Koo Bon-moo. He was the youngest person to lead one of the nation’s top four chaebol groups, which also include Samsung, SK and Hyundai Motor.

Pragmatism is a keyword that defines his four-year tenure.

One of the key moments of change was when LG Electronics decided to ditch its decades-old smartphone business last July.

The group’s crown jewel was suffering from chronic operating losses as its smartphone business had long been sandwiched between top two players -- Samsung and Apple -- and Chinese runner-ups with cheaper pricing. But it was a tough decision to depart from a symbolic market where LG had a 26-year history.

But Koo pushed ahead with the withdrawal plan to focus resources on more futuristic areas like automotive solutions and artificial intelligence. For the same reason, the firm withdrew from the solar power panel business in March this year.

At the same time, LG also spent big to secure future growth drivers.

Following a 1.4 trillion won ($1.09 billion) acquisition of Australian automotive lighting systems developer ZKW in August 2018, LG set up a joint venture, called LG Magna E-Powertrain, along with Canadian automotive parts supplier Magna International in July last year. Completing its automotive push is LG Energy Solution, the electric vehicle battery maker that is investing heavily to expand its production capacity around the world.

Employees say corporate culture at LG has also become more flexible and speedier under Koo’s leadership, with unnecessary meetings being reduced for better efficiency.

“Internal communications have become more flexible and speedier, and the overall decision-making process is getting faster,” said an LG official who wished to be unnamed.

Koo’s practical approach boosted the financial performance of LG companies as well.

LG Group’s revenue jumped 15.4 percent to 147.62 trillion won in 2020 from 127.39 trillion won in 2017. The market cap of the group’s 61 listed firms also more than doubled during the same period to 196.3 trillion won.

Industry watchers say the young leader’s practical leadership may have helped improve profitability across LG companies but now is the time for him to show a clearer and bigger vision for the future.

LG has long been known for its founding philosophy -- harmony among people -- that prioritizes stability over change. Largely due to such corporate culture, LG companies are rarely involved in family feuds over ownership or disputes with business partners. But stressing pragmatism still seems to fall short of being able to shed itself of the image that it is lacking in innovation and aggression.

Last month, LG announced plans to invest 106 trillion won over the next five years, including 10 trillion won in batteries for electric vehicles, 3.6 trillion won in AI and data, 1.8 trillion won in eco-friendly technologies and 1.5 trillion won in bio industry.

Those burgeoning fields are still in their nascent phases, with huge resources being poured with little profits in sight. Adding to the uncertainty is the gloomy outlook for the global economy amid widespread fears of an economic downturn.

A senior official within the tech industry, who spoke on condition of anonymity, said Koo has streamlined LG’s business portfolio in the past four years, and that his practical approach has helped improve profitability overall.

"His true leadership will be evaluated in the coming years through the performance of LG’s future growth drivers,” the official said.

By Lee Ji-yoon  (jylee@heraldcorp.com)

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