[INTERVIEW] Hyundai Motor Group transforms from fast follower to game changer

Bomi Yoon

Chung Euisun, executive chair of Hyundai Motor Group, speaks during an award ceremony as he was awarded the “Visionary of the Year” from Newsweek’s 2022 World Automotive Disruptors Awards at One World Trade Center, April 12, 2022. Courtesy of Hyundai Motor Group

‘Hyundai Way’ author discusses carmaker’s adaptation in EV era

By Baek Byung-yeul

Hyundai Motor Group is moving from being a fast follower to a game changer by leading innovation through a fast transition to electric vehicles (EVs) in the era of autonomous driving and electrification. In addition, the company is transforming its role in mobility, which is expanding to include robots, air taxis, purpose-built vehicles and hydrogen cars, according to Don Southerton, a business consultant and author, Thursday.

Southerton, CEO of U.S.-based consulting firm Bridging Culture Worldwide and author of “Hyundai Way: Hyundai Speed,” a book dealing with the Korean automotive group’s business strategy, also credited the group’s second leader Chairman Chung Euisun, with bringing the carmaker to a market-leading position by implementing changes faster than its competitors at a time when the industry is being disrupted.

“For decades, Hyundai Motor Group was seen as a fast follower. That has transitioned as Hyundai among automakers is now seen as a game changer, innovator and forward-leaning company,” Southerton said in an email interview with The Korea Times.

“In basic terms, a fast follower closely watches and tracks a brand leader, and then quickly emulates. This eliminates many risks. It is a very common business model. But in highly competitive industries like automotive, the brand leader holds an advantage and will be seen by customers as offering something new and exciting,” the consultant added.

The consultant and author has been associated with the automotive group since 2003 as he provided Korean cultural training and workplace insights to Western teams of Hyundai Motor’s U.S. affiliates. He has provided workshops and learning content to Hyundai Motor teams globally as well as its affiliates such as Kia and Hyundai Mobis.

He recently released the third edition of his book “Hyundai Way: Hyundai Speed,” which shows how Hyundai Motor Group is leading the way through agile transformation amid the rapidly changing conditions in the automotive industry.

Don Southerton, founder and CEO of Bridging Culture Worldwide

“Notwithstanding, Hyundai Motor Group’s new ventures in robotics, urban air mobility and robot taxis autonomous driving technology, I feel Hyundai, Kia and Genesis in their e-vehicle roll-out have set themselves apart from the competition — especially in exciting new designs,” Southerton said in response to a question on what makes the automotive group the most innovative compared to its rivals.

Southerton raised some key questions automakers must address amid the unpredictable conditions faced by the industry: “How fast will consumer demand for EVs, hydrogen fuel cell vehicles and autonomous vehicles hit critical mass? Also, how fast can Hyundai transition in Korea, and other key markets around the world to this next generation of vehicles as consumers broadly adopt EVs and increasing levels of autonomous mobility become practical?” He further noted that the technologies being developed come at a huge cost.

He still evaluates the automotive group positively because “these moves are in line with the automaker’s rebranding as a mobility technology company and the growing importance of digital technology in the auto industry.”

When asked what strategy Hyundai Motor Group needs to take to compete with U.S. EV giant Tesla, Southerton said, “Tesla, as the first mover, has a strong advantage over the entire market. Hyundai Motor Group has made inroads, as I mentioned, by offering sharp-style designs and models in its extended lineup of EVs.”

Learning from predecessors

Southerton also said Chairman Chung has been succeeding the automotive group’s philosophy from his predecessor ― his grandfather and Hyundai Group founder grandfather Chung Ju-yung’s “can do” leadership and his father and Hyundai Motor Group’s first chairman Chung Mong-koo’s “quality-first” management.

By learning from his grandfather and father, Chung quickly determined that pursuing the right changes at the right time was the path to sustainable growth for the automotive group, said Southerton.

“Hyundai’s early management style was influenced by Founder Chung Ju-yung and his charismatic personal ‘can do’ leadership. Management teams of the 1960s, 1970s and 1980s, in turn, modeled their style after the founder. In the wake of global expansion during the late 1990s and 2000s, successor Chairman Chung Mong-koo’s leadership influenced Hyundai’s management style. His style, too, evolved as the company became a highly integrated and vertical global ‘quality-first’ automaker in markets worldwide,” Southerton said.

“Change is now again well underway with the 3rd generation of family leadership under Chairman Chung Euisun. I believe he has learned that Hyundai must transition with the times. For example, Hyundai and its sister companies Kia and Genesis are becoming more agile and streamlined companies,” he added.

Carmaker needs to navigate labor issues wisely

Speaking of things that the automotive group needs to resolve for sustainable growth, Southerton said the carmaker is urged to navigate labor issues wisely at a time when automobile companies require less manpower.

With more EVs hitting the road, cars will require significantly fewer parts, which consequently means a reduced workforce is essential, and the backlash from employees who face being laid off by the company is expected to be even stronger.

Hyundai Motor Group has faced challenges in negotiating with labor unions in Korea. This year, Hyundai Motor succeeded in negotiating wages with its union without a strike for the fifth consecutive year, but Kia struggled to reach a deal with its union.

Kia went through multiple rounds of negotiations before reaching a tentative agreement with the union on Oct. 17. The union demanded that the company give priority hiring opportunities to children of retirees and longtime employees with 25 years or more of service in addition to wage increases. In the end, the two sides were able to reach a tentative agreement only after the union gave up its demand for priority hiring of employees’ children.

Regarding this, he said how well the company mends its relationship with the union will determine whether the group’s future strategy can be successfully executed.

“There is a transition from manufacturing internal combustion engine (ICE) vehicles to EVs. That said the unions had similar past concerns when Hyundai Motor Group moved from a focus on sedans to transitioning to SUVs. The bottom line will be how best to transition workers from ICE to EVs with job guarantees and training for workers in the new technologies and opportunities,” Southerton said.

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