Innovation strategy of korean enterprises and development of high quality human resource experiences for HCMC businesses

Nguyen Hoang Tien, PhD Thu Dau Mot University Innovation Strategy of Korean Enterprises and Development of High Quality Human Resource – Experiences for HCMC Businesses Chi ến lược đổi

1st International Scientific Conference “Southeast Vietnam Outlook” on:

“Developping High Quality Human Resource, Asian Experience for Ho Chi Minh City Metropolitan Area in Vietnam ”

07 December 2018, TDM University, Binh Duong

Nguyen Hoang Tien, PhD Thu Dau Mot University

Innovation Strategy of Korean Enterprises and Development of High Quality

Human Resource – Experiences for HCMC Businesses

Chi ến lược đổi mới sáng tạo của các tập đoàn Hàn Quốc và sự phát triển ngu ồn nhân lực trình độ cao – kinh nghiệm cho các doanh nghiệp TP.HCM

Abstract: In the era of international economic integration and time of the industrial revolution 4.0 taking place at a rapid pace with creative and innovation strategies at the enterprise and corporate level not only in the field of science and technology supported by the deployment of high quality human resources being the pedal and launch platform for all businesses in the economy to continue to grow and reach out

to the world Businesses in some Asian countries have been successful and thriving

in comparison with Western counterparts with greater experience in science and technology development and longer tradition of business and market economy Among Asian countries, South Korea is a typical country with world-class corporations that are constantly on the cutting edge of creative innovation at the expense of biggest research and development budget in the world to implement this strategy This level of private corporate investment, as a percentage of annual profit

or revenue (which is already huge compared to corporations in the world of the same size) is always higher than any other business in the world At the same time, these corporations attach great importance to the training of highly qualified human resources as a prerequisite for their innovative strategy in recent decades This can also be an important lesson for Vietnamese enterprises wanting to develop high quality human resources in order to orient their development strategy similar to the leading corporations in Korea This article will analyze and point out appropriate solutions for Vietnamese enterprises following that path

Tóm t ắt: Trong thời đại hội nhập kinh tế quốc tế và cuộc cách mạng công nghiệp 4.0

đang diễn ra với tốc độ vũ bão những chiến lược đổi mới sáng tạo chủ động ở cấp các doanh nghiệp và tập đoàn không chỉ trong lĩnh vực khoa học và công nghệ và được hẫu thuẫn với việc triển khai nguồn nhân lực chất lượng cao sẽ là bàn đạp và bệ phóng

để các doanh nghiệp của nền kinh tế tiếp tục phát triển, lớn mạnh và vươn ra thế giới Các doanh nghiệp tại một số nước trong khu vực châu Á đã thành công và phát triển bứt phá so với doanh nghiệp của các nước phương Tây có bề dày kinh nghiệm trong

phát triển khoa học và công nghệ; có truyền thống kinh doanh và nền kinh tế thị trường lâu đời Trong số các nước châu Á, Hàn Quốc là quốc gia tiêu biểu với các doanh nghiệp (tập đoàn) tầm cỡ thế giới luôn chú trong xây dựng chiến lược đổi mới sáng tạo với mức chi khổng lồ cho ngân sách nghiên cứu và phát triển nhằm thực thi chiến lược này Mức chi này, tính theo phần trăm của lợi nhuận hay doanh thu hàng năm (vốn đã rất lớn so với các tập đoàn trên thế giới có cùng quy mô) luôn cao hơn

so với bất kỳ doanh nghiệp nào khác trên thế giới Đồng thời các tập đoàn này rất chú trọng tới việc đào tạo nguồn nhân lực chất lược cao là điều kiện tiên quyết phục vụ cho chiến lược đổi mới sáng tạo của mình trong những thập kỷ gần đây Đây cũng có thể là bài học kinh nghiệm cho các doanh nghiệp, tập đoàn Việt Nam muốn phát triển mạnh mẽ nguồn nhân lực chất lượng cao nhằm định hướng phát triển chiến lược tương tự như các tập đoàn hàng đầu của Hàn Quốc Bài viết này sẽ phân tích và chỉ

ra những giải pháp thích hợp cho các doanh nghiệp Việt Nam trên con đường đó

Keywords: Innovation strategy, high quality human resource, Korea, Vietnam

T ừ khóa: Chiến lược đổi mới sáng tạo, nguồn nhân lực chất lượng cao, Hàn Quốc,

Việt Nam

1.Innovative business strategy

Innovations are seen as basic elements in development of competitive advantage of companies Innovative activities of companies make it possible to create value for customers Innovations may create new industries, new customer segments, new market niche or new sources of competitive advantage Innovations not only create competitive advantage but they can also eliminate competitive advantage of the other companies Innovative business strategies include new approaches to competition within a given sector Innovative business strategies often serve as a basis

of the best achievements in most industries Innovation-based strategies are mentioned by all relevant authors dealing with business strategies Companies with better innovative competitive position are able to withstand the crisis more successfully Innovations are supposed to help companies to reach a higher level of prosperity Innovations are considered as important conditions for competitiveness of companies This statement is supported by very well-known blue ocean strategy It is based on innovating values and continually creating new industries (Krause, 2016)

The issues of innovation implementation from perspective of globalization are regarded as key factors in the development of technological competitiveness of enterprises In the global economic environment, a number of important changes have taken place First, the technology intensity of products and services has increased significantly, making it (technology) a key factor of competitiveness The perspective

of innovative activity intensification facilitates a change of how modern business is perceived, making it necessary to redefine the structure and environment for performed management processes (Pachura, 2015) Innovation is an important issue for many companies Innovation causes the company to be distinguished and attractive to customers Consequently, innovation leads to generation of revenue and profit Innovations based on a close connection with customers’ needs and expectations are characterized by much lower risk of failure and by lower costs of

their introduction into the market In response to changes in the market environment, contemporary companies must search for more perfect and more innovative ways of operating The ability to change and use innovation as an essential source of competitive advantage becomes a fundamental element of the competitiveness and success of the company (Czarniewski, 2016)

Literature of management theory and practice comprehensively addresses the issues of innovativeness and its importance for creating a competitive advantage of modern enterprises From the perspective of such attributes as: free diffusion of knowledge and technology, widespread occurrence of social and economic phenomena, the share of intelligent markets, unification of customer preferences or standardization of the quality level, we can conclude that innovation is subject to globalization There are two key approaches to the issues of the development of innovativeness of enterprises identified in the literature: integrating and network approaches In the integrating approach, as a result of the linkage of the technical and organizational aspect with the social one, the development of innovativeness takes place in an environment of innovative structures existing within organization The innovative potential develops through intensification of the flows of knowledge and skills at the level of networks within an organization The development of enterprise innovativeness in the network approach takes place as a result of the existence of cross-organizational networks which determines the character of the environment of innovations The intensification and use of the flows of knowledge and skills at the level of external networks enriches the innovation potential

Global innovational networks in a network approach to innovation are a form

of international cooperation among enterprises in the sphere of scientific research and development for the creation of innovational technologies and their implementation

in production They can be created in any sphere of economic activity Their members could include entrepreneurial structures, R&D institutes, and other subjects of economic activities of any ownership form The organizational structure of global innovational networks differs depending on the specifics of the sphere and its subjects Global innovational networks play an important role in development of the modern global economy because they stimulate international cooperation in the sphere of innovation, the translation of knowledge in the global economic system, and general scientific, technical and production development With vast scientific research, they create a technical and methodological basis for the research and development of innovative products by transnational corporations and national innovative enterprises Complex study of the phenomenon of global innovational networks made it possible to determine that they consisted of the unification of efforts

of innovational enterprises and R&D centers from various countries for joint conduct

of scientific research and creation of innovations The most important peculiarities that determine the specifics and characteristics of the activities of global innovational networks are the international character of activities, the realization of large projects, the revolutionary direction of R&D, clear goal setting, and initiation by large investment funds The advantages of global innovational networks are the attraction

of significant investments, the creation of unique infrastructure, and a large volume

of innovational capital (Egor et al, 2016)

2.High quality human resource issue

For businesses, to develop innovation based strategy, they need high quality human resource and adequate talent management strategy High quality human resource or highly educated human resource or talents are individuals who can make

a difference to organizational through immediate contribution or by demonstrating

their highest potential Talent management is a process of identifying, recruiting,

retaining and developing talented people It is related with more comprehensive and integrated activities to secure the flow of talent (major resource) in an organization, bearing in mind that talent is a major corporate resource Talent management starts with the business strategy and what it signifies in terms of the talented people required

by the organization Ultimately, its aim is to develop and maintain a pool of talented, high skilled people Its elements are described below (Nguyen Hoang Tien, 2017, pp 143-144):

 Attraction and retention policy – these policies describe the approach to ensuring that the organization both gets and keeps the talent it needs Attraction policies lead to programs for external resourcing Retention policies are designed to ensure that people remain as committed members

of the organization The outcome of these policies is a talent flow that creates and maintains the talent pool

 Talent audit – identifies those with potential and provides the basis for career planning and development; ensuring that talented people have the sequence of experience supplemented by coaching and learning programs that will fit them to carry out more demanding roles in the future Talent audits can also be used to indicate the possible danger of talented people leaving (risk analysis) and what action may need to be taken to retain them

 Talent relationship management – the process of building effective relationships with people in their roles It is concerned generally with creating a great place to work, but in particular it is about treating individual employees fairly, recognizing their value, giving them a voice and providing opportunities for growth The aim is to achieve talent engagement, ensuring that people are committed to their work and the organization It is better to build an existing relationship rather than try to create a new one when someone leaves

 Performance management – a means of building relationships with people, identifying talent and potential, planning learning and development activities and making the most of the talent possessed by the organization Line managers can be asked to carry out separate risk analyzes for any key staff to assess the likelihood of their leaving Properly carried out, performance management is a means of increasing the engagement and motivation of people by providing positive feedback and recognition

 Learning and development – essential components in the process of talent management ensuring that people acquire and enhance the skills and competencies they need Policies should be formulated by reference to employee success profiles, which are described in terms of competencies and define the qualities that need to be developed Employee success profiles can be incorporated in role profiles

 Career management – consists of the processes of career planning and management succession Career planning shapes the progression of individuals within an organization in accordance with assessments of organizational needs, defined employee success profiles, and the performance, potential and preferences of individual members of the enterprise Destination jobs are identified for high-potentials, which are attainable only if the employee continues to perform, impress and demonstrate growth potential Management succession planning takes place to ensure that, as far as possible, the organization has the managers

it requires to meet future business needs

A talent management strategy mentioned above consists of a view on how the

processes of talent management should mesh together with an overall objective, to acquire and nurture talent wherever it is and wherever it is needed by using a number

of interdependent policies and practices A talent management strategy involves (Nguyen Hoang Tien, 2017, pp 144-145):

 Defining who the talent management program should cover; what is talent

in terms of competencies and potential; future talent requirements;

 Developing organization as an Employer of choice (a great place to work) and ensure that good-quality people are recruited who are likely to thrive

in the organization and stay with it for a reasonable length of time;

 Providing opportunities for career development and growth with jobs full

of autonomy, interest and challenge through designing jobs and developing roles that give people opportunities to apply and grow their skills; good working environment with work processes and facilities enabling rewarding jobs and roles to be designed and developed;

 Balancing between working and life by providing scope for achieving a reasonable balance between working in the organization and life outside work;

 Talent audit, that is to identify those with potential and those who might leave the organization and management succession planning procedures through identifying the talent available to meet future requirements and indicate what management development activities are required

The development and implementation of talent management strategy requires high-quality management and leadership from the top and from senior managers and the human resource function The approaches required involve emphasizing growth from within, regarding talent development as a key element of the business strategy, being clear about the competencies and qualities that matter, maintaining well-defined career paths, taking management development, coaching and mentoring very seriously, and demanding high performance

3.High quality human resource in support for innovative business strategy

Ability to be creative and continuously innovate has become critical success factor for any business in the era of Industrial revolution 4.0 Hence, creativity and innovation should be acknowledged as a company's core capability The creativity, innovation and inventiveness are crucial for the survival and success of today's knowledge-based, technology driven organization It can augment organization’s

innovation capacities Five factors that drive the need for creativity and innovation in organizations today are (Ali Taha et al, 2016):

(1) Superior long-term financial performance associated with innovation; (2) Customers prone to demand innovation;

(3) Competitors are getting better at copying past innovations;

(4) New technologies enable innovation;

(5) What used to work doesn’t anymore

In order to succeed and to remain externally adaptive, businesses must create

a high performance culture that fosters creativity and promotes all round innovation

of their talented people Innovation will be encouraged when organization culture and the way of thought of people inside converge to collectively create new ideas (Ali Taha et al, 2016) However creativity does not necessarily mean innovation There is creativity without innovation, but there is no innovation without creativity So creativity precedes innovation Creativity means to bring new ideas; innovation means converting these ideas into a successful business

The high level human resource (talented people) management is one of the basic elements of an effectively and innovatively managed company In the era of the Industrial Revolution 4.0 and knowledge-based economy, its importance becomes strategic as the effectiveness of activity within this scope (talent management) largely determines the achievement of the company’s competitive advantage High level human resource, highly educated and professionally qualified human resource, talented individuals or generally knowledge-based resource can be particularly important to ensure this advantage, but they may also play a significant role in the process of creating innovativeness, as well as to contribute to the improvement of the organizational performance The most appropriate practices pointed out in the talent management strategy mentioned above may be adequate for organizations attempting

to gain a competitive advantage based on innovation These practices are very much different compared to those usually applicable for companies searching for traditional sources of competitive advantage several decades ago (Staniewski, 2011)

4.Case of Samsung

Samsung Electronics Company (SEC), founded in 1969, has reigned as not only the largest manufacturing company in Korea, but also one of the leading global competitors worldwide SEC can be considered as one of very few companies that manage to go beyond mere imitation of global competitors, leverage resources, accelerate the pace of organizational learning and manage to attain seemingly impossible goal that is to become a global market leader

Since the introduction of monochrome television sets in 1971, SEC has grown

on average 38 percent a year, broadening its product range from simple consumer electronics and home appliances to advanced information and communication equipment, computers and peripherals and semiconductors SEC is the world’s leading supplier of digital CDMA (code division multiple access) phone hand-sets, with 26% of the market and the leading maker of dynamic random access memory (DRAM) chips, static random access memory (SRAM) chips, computer monitors and LCD TVs In 2005, SEC had sales of U$79.6 billion and operating profits of U$ 7.48 billion This is a remarkable achievement, given that the initial conditions for SEC in

technology, market potential, industry infrastructure and labor skill were highly unfavorable and foreign competitors from the US, Europe and Japan have already aggressively dominating the world consumer-electronics markets

While Japanese companies’ progress is stalling, SEC leaps forward with its successful innovative management and collaboration strategy Collaboration within

a framework of global innovation network with foreign industry leaders allows SEC

to narrow the gap with Japanese companies at an accelerated rate This rapid progress during the growth period is also made by the synergy innovation effect of (Kim, 2007):

1) Heavy investment and activities of in-house R&D1;

2) Leveraging on multiple technology sources, such as licensing, strategic alliances, R&D center in foreign markets, in foreign subsidiaries;

3) Introduction of effective knowledge management (KM) model

SEC used KM concept as an important means of R&D innovation SEC established Samsung Institute of Advanced Technology (SAIT) center in 1987 as SEC’s central R&D facility SAIT uses three major performance measurement metrics (Kim, 2007):

1) Patent quality and quantity;

2) R&D contribution to business performance;

3) R&D efficiency and speed to ensure alignment between SAIT’s R&D innovation activities and SEC’s competitiveness

In terms of highly qualified human resource development SEC’s CEO and management board did the following things (Kim, 2007):

a) Innovation as an urgent issue SEC’ CEO has pushed the company relentlessly to reinvent itself as a more innovative, quality and customer-oriented company For example, in early 1990s he staged rallies at which workers were encouraged to smash poor-quality products with hammers b) Training to integrate and promote talents internally SEC is well known

for its effective new employees training program in which new employees

go through four weeks in-house all round training at the training center to transform college graduate to warrior workers so called “Samsung-man” loyal to the organization

c) Human resource policy reform SEC human resource policy is considered

to be effective and progressive SEC reformed its traditional human resource policy from seniority based to performance and innovation based promotion in order to stimulate productivity and creativity while lowering overall labor costs This is facilitated by points system used for performance appraisal, which allows assessing quantitatively employees’ skills and performance SEC is considered to be the most progressive in its human resource policy as it has the highest ratio of non-family member executives in its top management

5.Conclusion and experiences for HCMC businesses

1 As SEC is ranked 4 th in R&D investment and 6 th in innovation globally, according to Business Korea (www.businesskorea.co.kr)

Domination and leadership are dreams of Vietnamese largest enterprises and corporations Ho Chi Minh City is the largest aglomeration area in Vietnam with headquarters of national high tech corporations To make the dreams come true, they have to study Samsung successful case carefully to draw adequate lessons and experiences, put forward several proposals especially in terms of developing innovations and highly qualified human resource in a global scale

Innovation development:

a) Colaboration with foreign leaders in the field within global innovation networks to leverage their new technoogy and know-how resource in order to boost own innovation development Ho Chi Minh City based enterprises have great opportunities to do so as a lot of high tech FDI project is located and in operation here

in the Eastern part of the City

b) Enhance the innovation based and innovation inspired entrepreneurial intention and spirit of all staff members, especially the highly talented individuals

c) Ensure sustainability of innovation based investment projects in long term

by calculating all kinds of costs involved and benefits obtained, assessing their financial and nonfinancial performance

Talent management strategy (skilled labor development):

a) Attract and retain talent inflow to enhance skilled labor force to maintain firm’s innovativeness and competitiveness In order to do that properly, Vietnamese companies should create strong and intercultural working environment, promote cultural diversity and sensitivity in terms of language and ethnicity of their labor force Operating in Ho Chi Minh City Vietnamese companies have great potential and opportunities to do so

b) Carry out talent audit on an continual basis as skills and competencies pool needed to maintain firm’s innovativeness and competitiveness are changing over time

in a very dynamic context of innovation based economy and Industrial Revolution 4.0 progression

c) Implement human resource policy based on staff members’ productivity and innovativeness, continuous performance assessment partly in short term for saving costs but predominantly in long term for enhancing competitivenees (stronger growth) and sustainability (durable growth) in accordance with global developments and trends of e-learning, teleworking, downsizing (flat, flexible and smart organizational structure), Just in Time delivery and customer service while applying newest technology achievements and latest technology developments offered by smart, innovative economy and Industrial Revolution 4.0

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