12/31/14

Authoritarian mentality lives on (Korea Times, 12/31/14) by Casey Lartigue, Jr.




By Casey Lartigue, Jr.

The next time Seoul Mayor Park Won-soon speaks about innovation and new ways of doing business being "deeply rooted" in city administration, I hope he will surround himself on stage with police officers and prosecutors.

The authoritarian mentality is still alive in Korea, as 
Mark Clifford wrote in his 1994 book "Troubled Tiger." Korea remains a "country of elite control" in which "the state oversees everything from wedding ceremonies to corporate investment."

Korea then had 500,000 local government officials, reaching into every sector of Korean society. Two decades later, there is still no issue too trivial for Korea's numerous politicians to get involved in, with even former President Lee Myung-bak discussing in a 2011 cabinet meeting ― yes, a presidential cabinet meeting ― whether men working in host bars should be considered as hostesses. In March 2013, at her first cabinet meeting, President Park Geun-hye's new government endorsed a regulation imposing fines on those caught wearing revealing clothing.

Seeking scapegoats leading up to the 2012 National Assembly and presidential elections, large discount stores were mandated to be shut down at least twice a month, in the name of protecting small business. When Costco didn't comply during litigation, the Seoul city government retaliated by sending in regulators with white gloves to find dirt on Costco. As Steve Austin noted in a Korea Times letter: "Carrefour, the National Cattlemen's Beef Association, Wal-Mart, Lone Star, Standard and Chartered, and Apple have had to fend off these attacks." Korea's authoritarian mentality lives on.

It has become a cliché to say that Korea is a mix of the old and the new, but often there is a reason for clichés. Korea is at the forefront of high-tech, the Seoul city government has dubbed itself a "Sharing City" and established a "Sharing Hub." That openness is partnered with crackdowns, fines and arrests. As Korea Times columnist Jason Lim recently wrote, "Korean culture of governance is still characterized by command and control tendencies tinged with dismissive condescension toward those whom they have been elected to serve."

Seoul is now targeting Uber, a drive-sharing app that remotely connects drivers with customers. Instead of finding space for "disruptive innovation," the Seoul city government has summoned law enforcement to the stage.

The Seoul prosecutor has indicted the CEO of Uber, threatening him with up to two years in jail or a fine of 20 million won. Seoul has shown one sliver of "creativity" ― offering rewards (1 million won) to tipsters who report Uber drivers.

In a recent Wall Street Journal op-ed, Bret Stephens explains why many innovations originate in America (indirectly explaining why few come from Korea): "Innovation depends less on developing specific ideas than it does on creating broad spaces. A free society that is willing to place millions of small bets on persons unknown and things unseen doesn't have this problem. Flexibility, not hardness, is its true test of strength. Success is a result of experiment not design."

Where are Korea's broad spaces "to place millions of small bets" on innovators and new approaches? In explaining his vision of "social innovation," Seoul Mayor Park quoted Peter Drucker: "Innovation is change that creates a new dimension of performance. Change cannot be controlled. The only thing we can do is be in the front, and the only way to stand in front is through organic cooperation and collaboration between sectors."

Cooperation? Collaboration? Can't control change? Nice quote, Mr. Mayor, but threatening to arrest the CEO of Uber doesn't match. In cracking down on innovators, Mayor Park may want to take note of a different Drucker quote: "There is nothing so useless as doing efficiently that which should not be done at all."

In his 2011 book "Capturing New Markets: How Smart Companies Create Opportunities Others Don't," Stephen Wunker asks: "How can companies spot markets that do not exist?" He stresses focusing on "underlying customer need," citing the (perhaps apocryphal) story of Henry Ford saying, "If I had asked customers what they wanted, they would have said a faster horse."

Consumers need freedom to choose among options available in the market and innovators need space, without the threat of arrest. Those "persons unknown" seeing "things unseen" can yield cars rather than faster horses and apps remotely connecting drivers with riders.

The attack on Uber may just be politics as usual ― there are more than 70,000 taxis in Seoul (280,000 across the nation) with drivers voting as a bloc. The unions mainly object to UberX so compromise may still be possible (although "compromise" will mean allowing businesses to choose their competitors).

The Seoul government should drop its ridiculous indictment against Uber. Whatever happens, the outcome can help determine if the prosecutor and police should start appearing on stage with Korean politicians when they say Korea is open to innovation and creative ways of doing business.