Chairman Heo Tae-soo Marks '1 Year in Office'... Embedded Digital DNA in GS

Huh Tae-soo, Chairman of GS

[Asia Economy Reporter Park So-yeon] Heo Tae-soo, Chairman of GS Group, marked his first anniversary in office on the 1st. Over the past year, Chairman Heo has instilled a message throughout the group emphasizing the need to adapt to rapid changes in the business environment. He is credited with planting the seeds of change by accelerating digital transformation, the driving force for GS Group's future growth, and recruiting external talent.

◇If You Don't Change, You Will Be Left Behind... Become a 'First Mover'

At the New Year's meeting held last January, Chairman Heo emphasized to employees, "To overcome uncertainty, respond quickly to environmental changes, always be loved by customers, attract many talented people, and become a continuously growing company, we must secure the lacking capabilities and prepare for the future."

At this event, Chairman Heo shared with employees a sense of crisis that failure to adapt to the challenging business environment is unacceptable, and urged GS to become a first mover that turns uncertainty into opportunity through digital transformation.

To this end, Chairman Heo emphasized ▲securing and nurturing talent with digital and global capabilities ▲strengthening 'digital transformation,' and for improving work methods and organizational culture, he requested ▲building an agile organizational culture ▲creating an ecosystem of 'open innovation.'

This reflects Chairman Heo's strong determination to use accelerating digital transformation as a breakthrough for innovation and his bold judgment that innovation cannot be delayed or postponed even for a moment.

◇The Theme of the First Year in Office: 'Innovation,' Planting the Innovation Engine of Silicon Valley

In January last year, Chairman Heo personally attended the 'Stanford Design Thinking Symposium 2020' held at D.camp in Yeoksam-dong, Gangnam-gu, Seoul, where he inspired and spread an innovation mindset to about 100 executives and employees, including CEOs of GS affiliates, marking his first official event after taking office.

At this event, Chairman Heo emphasized, "Building cooperative relationships with various business partners, including startups, to exchange healthy influence is the way to enhance sustainability for companies and society," and expressed his intention to "actively disseminate open innovation and advanced innovation methodologies introduced and verified by leading companies in Silicon Valley to each affiliate as a driving force for innovation."

Furthermore, following his emphasis on change centered on 'digital' at the early-year New Year's meeting, Chairman Heo immediately created opportunities to encourage innovation mindsets among employees, signaling the start of change as an innovation evangelist.

◇Digital Transformation, the Driving Force for GS's Future Growth

Chairman Heo stated, "I urge you to strive for digital transformation that combines IT and data to advance our business structure. In the mid-to-long term, by integrating digital capabilities into our core technologies, expanding new businesses related to our core business, and extending beyond the domestic market to the global market, we will be able to lead the future market with differentiated capabilities that no one can match."

This means that the only way to respond to change and crisis is to accelerate digital transformation, and the key element for this is a change in work methods.

Accordingly, GS has made a major effort to change work methods. They began full-scale digital transformation by introducing SaaS (Software as a Service)-based collaboration solutions and continuously educate employees on how to use collaboration solutions and digital devices, initiating changes in work methods.

Additionally, to enhance each employee's digital work capabilities, GS provided tablet PCs and introduced video conference equipment and systems, enabling video meetings with affiliates and expert lectures, thereby establishing a participatory work system.

To support this, GS plans to equip digital transformation-related infrastructure based on artificial intelligence (AI), big data, and more for practical use in work.

Alongside this, GS reconfigured existing office spaces to foster creative ideas by breaking down confining walls and creating spaces where people can naturally gather and communicate, and shared various meeting spaces with affiliates.

Moreover, in July, Chairman Heo visited a factory located in the National Industrial Complex in Yeosu, Jeollanam-do, to review achievements and encourage employees, reinforcing digital transformation activities on-site.

This digital transformation is actively implemented on the ground as well. GS Caltex Yeosu Plant is promoting a digital twin by creating a virtual factory identical to the real one in cyberspace, conducting various simulations based on on-site data to significantly reduce costs and risks compared to actual situations, while efficiently improving technical accuracy and productivity.

GS Retail has established a Digital Customer Experience (DCX) Promotion Office to respond to the future distribution environment. Accordingly, in January, they opened a future-oriented convenience store at the BC Card headquarters.

◇Leading the Spread of Collaborative Culture with the Open Innovation Community '52g'

To accelerate open innovation, GS launched the GS Group Open Innovation Community '52g' on June 1 last year, aiming to cultivate creative human capital capable of responding more quickly to change and began full-scale open innovation.

The '52g' innovation curriculum covers important topics related to change, such as design thinking, digital transformation, and Silicon Valley's innovation methodologies.

Each lecture is delivered by local speakers in real-time webinars, providing opportunities for real-time interaction with speakers, maximizing the learning effect of open innovation.

In 2020, over 100 employees voluntarily participated in the '52g' community, and a learning challenge program was conducted where participants identified on-site problems and carried out projects based on what they learned in training, encouraging active problem-solving.

◇Securing a Foothold for Future Business, Establishment of GS Futures

GS completed the establishment of the venture investment corporation GS Futures, laying a solid foundation for GS's future business. This followed Chairman Heo's request at the GS Executive Forum held in June last year, urging, "GS should actively secure new growth engines, including beyond areas such as digital, environment, and clean energy, which we have yet to explore."

GS Futures is a company funded by 10 companies, including the holding company GS Corporation, GS Energy, GS Caltex, GS Retail, GS Home Shopping, GS Global, GS EPS, GS E&R, GS Power, and GS Construction. Its purpose is to discover and invest in promising companies that can create synergy with GS Group affiliates.

GS Futures plans to prioritize investments in companies related to the group’s businesses, including digital and eco-friendly energy sectors.

◇Strengthening Competitiveness, Bold Integration of Distribution Divisions within the Group

GS Retail and GS Home Shopping, the two major pillars of GS's distribution division, merged in November last year. The merger of these two companies, strong in offline distribution and online mobile commerce respectively, is seen by the business community as a strategic move to create a commerce tech leader and enhance global competitiveness.

This was a proactive measure to secure an advantage in the fierce survival competition in domestic and international distribution markets. Recently, the domestic and international distribution markets have rapidly reflected the major trend of combining online commerce and offline stores for service differentiation, such as Amazon expanding offline stores like Amazon Go, Amazon Fresh, and Whole Foods, and collaborations between Naver Shopping and logistics companies.

As a result, the distribution division within the group has been unified into a new corporation, GS Retail, becoming a mega-commerce company with assets of 9 trillion KRW, annual transaction volume of 15 trillion KRW, and 6 million daily transactions. It plans to compete not only with domestic distribution companies but also with global distribution giants like Amazon.

Going forward, the integrated GS Retail aims to achieve a transaction volume of 25 trillion KRW by 2025, planning to increase the mobile commerce channel's transaction volume, which has rapidly emerged as a new shopping channel, from the current 2.8 trillion KRW to 7 trillion KRW, showing active steps toward a roadmap of over 10% annual growth.

◇Devoted Talent Love Focused on Recruiting External Talent

Chairman Heo's passion for talent was also evident in the first regular executive personnel announcement made in November last year. The business community evaluated this personnel move as reflecting Chairman Heo's traits as an 'investment strategist.'

In the 2021 executive personnel, GS made a total of 30 personnel changes, including a dramatic recruitment of three senior executives (two at the vice president level and one at the executive director level) from outside the company. This is the first time GS has recruited senior executives at the vice president level or above externally.

In particular, Vice Presidents Kim Sung-won and Shin Sang-chul, who have proven business experience and digital capabilities in various fields to lead new businesses in earnest, are the most notable appointments.

Vice President Kim, recruited as head of the Energy Resources Business Division at GS Energy, majored in law at Seoul National University and passed the civil service exam. He has achieved outstanding results as an energy expert in government agencies and large corporations. He is evaluated to have a high understanding of the energy business and excellent insight into market changes based on his human network, and is expected to make a significant contribution to GS Energy's growth.

Vice President Shin, recruited as head of the New Business Support Group at GS Construction, is a certified public accountant with an MBA from the University of Michigan Business School. He is an investment expert and manager recognized for his excellent business capabilities through new business investment, corporate acquisitions, and fund management at a renowned asset management company. He is famous for turning around Hollys Coffee, which had been suffering losses, by emphasizing hand-drip coffee and popularizing the premium coffee market, transforming it into a profitable company.