LG: Electronics giant, savior of household crises

Well established industry giants seem to have it easy, don’t they? For one thing, they’ve been playing the game for a considerable time longer than new entrants and I don’t think it’s difficult to see the value of such field experience. They basically know, firsthand, what works and what doesn’t. Simply stick to what works, do it well, and maintain a safe distance from any business concepts or practices that have proven to be simply unworkable, and there’s a considerable chunk of the elusive business success formula out of the way. Add to that some other perks that new entrants can only dream about (such as government support, access to critical data on customers, and massively deep pockets), and it becomes tempting to believe that the very first statement of this blog entry is indeed true.
All jest aside, it is by no means a free ride for any company, big or small, new or well established in any industry. Companies all over the world are in a perpetual battle for consumer’s hard-earned (in most cases anyways) dirhams, dollars, euros, or whatever the local store of value may be. Competition is increasingly more fierce within an industry than across it. One article that I came across in the December 2005 issue of Business 2.0 (available online here) really highlighted the kind of innovations that companies find necessary to give them the edge over their competition. The article uses a plethora of examples of how South Korean electronics giant LG has catered to local lifestyles by adding features that enhance the perceived value of the product for users in specific locales. The Korean kimchi fridge, Middle-Eastern date fridge, and the Indian veggie fridge, to name a few, all seem to be the end result of considerable investments in research and development of an increasingly more market oriented LG.
It’s interesting to apply Hamel’s BCI model to this article because a lot of elements of the model seem to fit snuggly onto how LG is competing. For example, the core strategy elements at play seem to be a very well defined product/market scope that is tailored to tend to local tastes and a basis for differentiation that seems to be centered around including features that add value that competitor products do not offer. One of LG’s core competencies that can be inferred from the article is their ability to understand what benefits are being sought by locals and then finding creative ways to solve culture specific conundrums. This highlights another element of Hamel’s model: the information and insight facet of customer interface. The article mentions R&D facilities set up in various countries to study the environment in order to gather information on local requirements and I see this as a focal point for information and insight activity. And what about Hamel’s notion of customer benefits as a bridging component between core strategy and customer interface? That seems to be exactly what’s at the core of the LG article: satisfying customer derived definitions of basic needs and wants. I also believe that LG is being sufficiently distinctive in its approach to product development to qualify for Hamel’s uniqueness factor as an important underpinning to achieving success. There are other areas of Hamel’s extensive model that apply to the LG case, such as locking out the competition by way of preemption and strategic economies of focus.
All in all, I believe it is safe to say that the LG article adequately demonstrates that corporate big-shots are constantly having to improvise and find creative solutions to generating profits. The solutions that LG locale specific appliances offer seem to be obvious solutions to recurring quandaries, but the Iranian kebab microwave would not have seen the light of day if not for some creative spark on LG’s account. Of course I’m not too certain the Middle-Eastern $80,000 gold plated AV system is an innovation of any sort. I’d file that one firmly under corporate image antics. Maybe the day my prayers will be answered for an AC that filters out shisha (a.k.a. water pipe/hubble-bubble) smoke is closer than I previously imagined.