Associate Professor, Seoul National University
Key Takeaways
With a skilled workforce, strong partnerships, and a focus on unmet medical needs, South Korea is poised to become a major player in biotechnology.
Diverse management teams have 19% higher revenue due to innovation.
Research suggests CEOs who overestimate their abilities are less likely to invest in options that grant their companies flexibility. This can be limiting for a new venture.
Joon Mahn Lee’s journey as a leading voice in entrepreneurship began in 1998 when building enterprises was considered taboo in South Korea, a country devoid of any venture capital eco-system in a globalising world. But he decided to take the plunge.
As the years progressed, South Korea’s entrepreneurial aspirations gained prowess. It was almost as if the country’s growth story was running in tandem with Lee’s efforts to put South Korea on the map of entrepreneurship. Joon went on to carve an illustrious career spanning a quarter century. Currently, a professor at the Seoul National University (SNU), with a stellar track record conveying his unwavering dedication to entrepreneurship, Lee’s CV includes a glorious list of awards and grants he has won every single year from 2009 to 2022.
Is diversity in company culture intricately linked to innovation? How do overconfident CEOs hurt their companies? Is South Korea on its way to globalise its rich knowledge in science and biotech? In this conversation with Horizon Search, the SNU Professor attempts to spell out the answers to some intriguing questions that tickle curious minds.
Entrepreneurship in South Korea: Waves of Change
2007, South Korea. Not the best time to get a headstart in entrepreneurship. When Joon set out to attain his doctorate in Strategic management & entrepreneurship from Wharton that year, he had anticipated a ride through choppy waters. Koreans believed that choosing to build your venture meant succumbing to failure.
“Twenty years ago, there was no entrepreneurial ecosystem here [South Korea]; there were no VCs,” says Lee. However, as more Koreans ventured overseas to seek education from Stanford and Wharton, things began to change swiftly. “Many students learn about US venture capital culture overseas,” Lee remarks.
Things are sharply different in modern-age South Korea. Data shows that Startup-powering VC investments in the country are growing faster than in any other Asian Tiger nation. With $16 billion-plus raised in the last decade alone, the country’s startup investment is on a high-growth trajectory. Seoul has managed to produce 15 unicorns, from a relatively small pipeline of startups.
The cherry on the top is the thriving lifestyle industries: Gaming (video game sales inched over $6 billion in 2021), K-Beauty, a powerhouse boasting a $11 billion market, and a food delivery market worth $15 billion with a 40% YOY growth.
Innovation in Diversity
A 2018 study conducted by the Boston Consulting Group examined 1,700 companies from eight countries and discovered that companies with diverse management teams have 19% higher revenue due to innovation.
Jog your memory a little to reminisce about the launch of the first-ever iPhone: “An iPod with touch controls, a phone, and a breakthrough internet communications device,” that is how former Apple CEO Steve Jobs described the revolutionary product which sought to reinvent the phone.
Innovation is combining knowledge in unexpected ways. Apple’s diverse teams result from America’s multicultural fabric of society built on the tenant of opportunity for all. Korean countries like Samsung and LG have focused solely on incremental product improvement, Joon says this singular focus has resulted in them missing the bus on radical innovation.
Globalizing Biotech
"People are living longer but that does not mean we are healthy. Biotech firms will be focused on this." — Joon Mahn Lee
South Korean popular culture has transcended boundaries and found a wide appeal overseas. But Lee believes that much of the fire ignited by viral pop stars and K-drama celebs will eventually die. Because multimedia is bound by the spoken and written word, Lee says South Korea’s Biotech revolution will emerge as the largest source of soft power in the coming years. Biotech’s role will play an even more integral role under the pretext of South Korea’s ageing population and deteriorating quality of life.“People are living longer but that does not mean we are healthy. Biotech firms will be focused on this,” Lee says.
South Korean Biotech is a revolution in waiting for a couple of important reasons:
South Korea’s highly skilled and educated STEM workforce ensures a steady supply of talent to fuel innovation in the sphere.
The country’s proximity to major Chinese and Japanese markets and other international collaborations.
It is home to a vibrant ecosystem of key players in life science: LG Chem, Samsung Biologics, Celltrion, Green Cross Corporation, and Hanmi Pharmaceutical are a few of the many.
Start-ups are leveraging cutting-edge technologies such as AI & ML and genomics to develop groundbreaking solutions to address unmet medical needs.
The Overconfident CEO & Real Options Investment
The mainstay of Joon’s research interest has been leadership through uncertainty. In an academic paper for the Strategic Management Journal, Lee establishes how overconfident CEOs end up hurting their company’s ‘strategic flexibility’ in the long run. Taking a cue from data based on public US companies, Joon explored the investment decisions of certain CEOs involving real options, granting companies the freedom to make business decisions and evaluate investment opportunities. The study suggests that CEOs who tend to overestimate their leadership capabilities invest less in real options because they believe they can put their best foot forward even amidst adversity.
Advice to Budding Entrepreneurs, Lee’s Future Plans
A diversity champion, Joon emphasizes the importance of going beyond number-crunching.“If you’re serving a part of the population, the numbers can be skewed in your direction,” he says. Lee urges entrepreneurs to talk to as many diverse people as possible to gain real-world insights. On a personal note, Lee acknowledges the limitations of his current research based on US data and expresses his commitment to conducting deeper research focused on the Korean context ensuring his teachings find relevance to the future entrepreneurs of the country. Joon leaves this conversation with encouraging words for aspiring Korean entrepreneurs, telling them to keep their eyes on the horizon as entrepreneurship gets better.