[The Editors' Verdict] Will LH Become the Next "Fallen Dinosaur"?

2 Years Ago Employee Land Speculation Scandal
Cried for Innovation but... Controversy Over Poor Construction
Hoping to See Proper Innovation This Time

Giant corporations are often compared to "dinosaurs." The phrase "the fall of the dinosaurs" is used to describe these once-mighty companies that have disappeared into history. In fact, looking at corporate history, dinosaur companies like Kodak and Nokia boasted histories spanning over 100 years and maintained the number one position in the global market, but they have now vanished, teaching us the lesson that "nothing lasts forever."

The common reason cited for the downfall of these seemingly impregnable fortresses is their neglect of innovation. Kodak developed the portable digital camera, and Nokia was the first in the industry to develop smartphones and tablet PCs, yet they failed to respond properly to changes in the external environment due to complacency about their existing market shares and left new technologies unattended. Kamal Munir, a professor at the University of Cambridge, pointed out in his Wall Street Journal article "Five Reasons for Kodak's Demise" that "Kodak's management completely failed to understand how much the world around them was changing."

Currently, Korea Land and Housing Corporation (LH), the largest public enterprise in South Korea, is embroiled in controversy over poor construction and is a "dinosaur organization" with total assets of 213 trillion won (as of 2022). In terms of sheer numbers, it ranks fourth after Samsung (486 trillion won), SK (327 trillion won), and Hyundai Motor Company (270 trillion won). It far surpasses LG (171 trillion won), POSCO (132 trillion won), and Lotte (130 trillion won).

Let’s turn the clock back two years. In 2021, the land speculation scandal involving LH employees became a hot topic, sparking discussions about the need for innovation at the "dinosaur company" LH. At that time, the LH president, along with the Prime Minister and the Minister of Strategy and Finance, all vowed to "pursue innovation at a level equivalent to dismantling through bone-cutting efforts." However, just two years later, the LH president again bowed his head, saying, "We will push for a large-scale organizational innovation."

Did this incident occur suddenly? At the National Assembly audit held in October last year, there was a barrage of criticism regarding preferential treatment and revolving-door practices involving LH retirees. Investigations revealed that six companies where LH retirees were re-employed had won contracts worth a staggering 635.3 billion won over the past 10 years for services and construction projects commissioned by LH. Furthermore, the Public Enterprise and Quasi-Governmental Institution Contract Office Regulations (Ministry of Strategy and Finance decree), which prohibit awarding sole-source contracts within two years of a retiree’s departure to companies where they are employed or have started businesses, were found to have been violated. There were also allegations that appraisal firms with former LH appraisers were heavily selected as appraisers in the 3rd New Town project implementer evaluation.

Five months earlier, during a confirmation hearing, then-Minister of Land, Infrastructure and Transport nominee Won Hee-ryong said regarding LH restructuring, "I will deeply consider what is best for the nation and society." However, one year later, only distrust remains toward not only the public enterprise but also government ministries. How long will they keep just reviewing? It is uncertain whether Minister Won, who was once considered a potential presidential candidate and is expected to run in next year’s general election, will be able to achieve LH restructuring within his term.

Peter Drucker said, "Plans are only good intentions unless immediately acted upon." Companies that executed innovation have become mega-corporations dominating the global market, while those that did not have ultimately disappeared into history. We sincerely hope that this incident will be the last and that true innovation will be demonstrated.

This content was produced with the assistance of AI translation services.