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Management Report

Management reports, briefs issued by Samsung Economic Research Institute

Self-organizing Management in Times of Change

Self-organizing Management in Times of Change

YOUN Young-Soo

Apr. 3, 2006

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Growing uncertainties dominate business management. Companies in the marketplace must survive global-scale competition. One type of business is worried by rivals from another type of business stepping into their territory as they come under increasing influence of industrial convergence and conglomeration.

A sharp fall in communications cost enables all business parties to interact with one another more vigorously. Combination of new technologies and rapidly spreading information industry brings new knowledge and innovation. Dramatic changes have been more pronounced in the field of semiconductors. In 1965, Intel's founder Gordon Moore said complexity of an integrated circuit (IC) would double every 18 months. Today, the IC cycle has been shortened to once every 12 months, according to Chang Kyu Hwang, head of Samsung Electronics' semiconductor operation.

Due to an in increase in factors forming business environment and interactions among these factors, businesses must deal with unexpected and punctuated changes. These include the Black Monday stock market crash in 1987, the Asian financial crisis that also swept through Korea in 1997, and debt moratorium crisis in Russia and Brazil shortly thereafter. These abrupt changes sent shockwaves across the world, shaking the global business community, not just Asia. Even the smallest change will affect the world economy. On 18 February 2005, for example, the Bank of Korea told the National Assembly that it may diversify its foreign exchange reserves. That small news rocked the foreign exchange markets and moved bourses around the world.

In this tightly-knit world, businesses must approach change in new way. In the past, they strove hard to predict future changes, hoping to develop and execute action plans. Now, it's an outdated approach, no longer appropriate for the rapidly changing environment. Today, businesses need to perceive themselves as a living system that adapts itself to environmental changes so that they can evolve smoothly. Thus, they need to reinvent themselves into organizations that accept changes and continue to grow.

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