Bob's Gutsy Leadership Blog

A Powerful Lesson from Hyundai 

One thing that really confuses employees is when the manager pursues a long, painful “values/mission/charter/vision/strategies/objectives/goals” exercise.  First of all, what does all this stuff mean, and second, why take many months when the problems/opportunities are typically obvious.

The strong leader cuts out all that complicated jargon and simply explains that the vision is WHAT we want to become or to have happen, and the strategy or strategies are HOW we are going to achieve the vision.  Each strategy should have measures that can be easily tracked to check on progress. 

Hyundai Motor Company was launched in 1969, and by 1999 it was the twelfth largest auto manufacturer.  During this period, it focused exclusively on pushing sales via price promotions, with little attention given to its many product quality issues, resulting in their cars being poorly rated by industry publications.

In 1999 Chung Mung-Koo became CEO of Hyundai.  He announced that the vision for the next 5 to 10 years was to become the 5th largest auto manufacturer in the world. That is WHAT Hyundai wanted on achieve.

After a thorough analysis of their business, Chung announced the strategy was to become an industry leader in quality and reliability. That is HOW Hyundai was going to achieve its vision.  Chung selected the industry-standard J. D. Power and Consumer Reports auto quality and reliability surveys as their measures. He then reorganized the company to totally focus on achieving the strategy.

For example, he replaced most of the top executives, who almost all had sales backgrounds, with strong leaders with extensive engineering skills and experience.  He appointed a quality/reliability executive for each Hyundai model (e.g., Sonata, Elantra Santa Fe, etc.), with the authority to shut down a production line if quality/reliability expectations where not being met.  The salary of all employees was tied to quality/reliability measures. 

In 2007, JD Power announced Hyundai placed #3 in quality, almost beating out #1 Porsche and #2 Lexus, but ahead of arch-rivals Toyota and Honda.  Most importantly, in 2007 they were the #5 in global auto sales.  Ever since Hyundai has had very competitive quality/reliability ratings and maintained the #5 or #6 position in annual global sales. 

Net, just remember the key rules:

Vision = WHAT   Strategy = HOW

You will save the organization a lot of time versus the painful exercises that a consulting group would love to put you through.  Clearly, simple and easy to understand vision/strategy/measures properly implemented can generate a huge impact, as Hyundai demonstrated!  

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