[5 Years of Koo Kwang-mo's Leadership] "Please Call Me CEO"... Holding Company CEO Koo Kwang-mo, Not Group Owner, Triples Market Cap

③Koo Kwang-mo Leadership
Encouraging Autonomous Management by Affiliate CEOs
Leading to Remarkable Performance Growth

"Please call me the representative."

The secret to the strong performance of the Koo Kwang-mo era, which has raised the banner of 'pragmatism,' can be found in this one phrase. Although Koo is the head of LG Group, he asks to be called not chairman but the representative of the holding company. He encourages focusing on the holding company representative role and urges the CEOs of subsidiaries to take responsibility and lead their operations.

Since Koo took office at the end of June 2018, LG's corporate value has grown about threefold from 94.1 trillion won to 260 trillion won. This is attributed to the 'autonomous management' where each subsidiary CEO makes bold decisions such as organizational restructuring and investments. In the case of LG Electronics, as global economic downturn sharply reduced demand for home appliances, it has been operating an emergency management task force (TF) called the 'War-Room' since the end of October last year. CEO Cho Joo-wan personally oversaw the execution of tasks and alternatives by business unit. After the War-Room operation, LG Electronics' operating profit in the first quarter (January to March) was 1.4974 trillion won, surpassing Samsung Electronics' 640.2 billion won for the first time in 14 years since 2009. The second-quarter operating profit estimates (consensus) posted on the financial information firm FnGuide on the 27th also show LG Electronics (957 billion won) exceeding Samsung Electronics (201.5 billion won).

While subsidiaries formed strong crisis response organizations, the group-wide executive meetings were simplified. Since Koo's inauguration, LG has abolished quarterly executive seminars over five years and actively started using online meetings. In the past, more than 400 executives gathered for a single CEO meeting, but now fewer than 50 attend. The meeting content has also changed. Instead of the head of the group unilaterally making major decisions after hearing executive reports, meetings are now centered on topic discussions to solve issues. Because the head of the group does not give 'unilateral orders' but empowers others, subsidiary CEOs can boldly operate organizations like the War-Room. An LG official said, "Koo repeatedly considered what role he should play as the holding company representative to avoid excessively interfering with or irresponsibly neglecting the management of subsidiary CEOs."

Experts also evaluated that the decision-making authority of LG's subsidiary CEOs has increased thanks to the changed organizational culture. Since Koo's appointment, LG has achieved results such as ▲LG Electronics surpassing Samsung Electronics in operating profit ▲LG Electronics Vehicle Components (VS) Business Division turning profitable after 26 quarters (6 years and 6 months) ▲LG Energy Solution ranking second in the global secondary battery market and pioneering the Japanese market after its spin-off ▲LG Chem's market capitalization doubling.

Koo's distinctive bold personnel policies are also cited as the reason pragmatism quickly spread within LG in five years since his appointment. He boldly recruited outsiders as CEOs. A representative example is the recruitment of Shin Hak-cheol, former 3M executive, as Vice Chairman of LG Chem in 2019. Before Shin's recruitment, there was a saying that "the head of LG Chem was always an LG man from the basic materials business division with a chemical engineering background." When Shin was approved as CEO at the shareholders' meeting on March 15, 2019, LG Chem's market capitalization was 26.15 trillion won. As of the closing price on the 27th, it was 49.63 trillion won. The market cap increased by 89.8% over 4 years and 3 months.

At the president level, the notable point was bringing Eun Seok-hyun, President of the VS Business Division, from Bosch Korea in 2019. The vehicle components (automotive electronic devices) business, long criticized as a perennial loss-making business within LG Electronics, turned profitable in the second quarter of last year (April to June) after 26 quarters. Park Joo-geun, CEO of Leaders Index, evaluated, "The establishment of overseas factories worth trillions of won by LG Energy Solution and LG Chem, the spin-off of LG Energy Solution, and the performance increase after LG Electronics' War-Room were possible because Chairman Koo supported subsidiary CEOs to realize autonomous management." He added, "Attention should be paid to the fact that LG Chem, LG Energy Solution, LG Innotek, and even LG Electronics are transforming from traditional B2C (business-to-consumer) companies centered on mobile phones into profitable B2B (business-to-business) companies focused on electric vehicles."