Models of Innovation in Japan and Korea: MITI and KIDP

Korea’s strength in the creative industries, together with the strength of their multinational brands, is regarded as a model by other Asian countries. How did this model come about?

The Korean Ministry of Trade, Energy and Industry was at the heart of Korea’s industrial and economic development efforts. It was initially modeled after the Japanese Ministry of International Trade and Industry (Tsusho sangyo sho or MITI), Japan’s central institution for industrial policy, research, investment and development. MITI supervised and led economic policy together with the Bank of Japan, the Economic planning agency and other ministries. Created after World War II in response to Japan’s problems with rising inflation and falling productivity, MITI was a supra-institution influencing all aspects of domestic and foreign economic policy, holding close ties to Japanese companies. Its advantages were largely organizational: Instead of disconnected units with differing agendas and different layers of red tape, MITI was one integrated organization with one goal.

MITI allocated foreign technology and controlled access to foreign currencies, and it was acutely aware of the importance of design: it created a “Good Design Selection System” which became the Good Design Award in 1957. MITI was most influential from the fifties to the seventies, in a period called heavy and chemical industrialization (jukagaku kogyoka) – the movement from mining and textiles to machinery and finished products. For these early stages of industrial development, MITI’s integrated structure meant a great degree of overview, a long-term focus and effective managerial control. However, MITI’s “central planning” approach was not designed for the dynamics of competition and the non-linear nature of innovation.

Already in the early fifties, MITI denied Sony, when it was still a small start-up, the $25,000 the company needed to license transistor technology from Western Electric, with the argument that the technology wasn’t impressive enough to justify the expenditure. Only after two full years of trying, Akio Morita was able to convince MITI to reverse its decision. MITI also had a scheme to merge the many companies in the automotive industry into a small number of large players and have them develop a “people’s car” so that the ministry would designate one single car producer. This scheme, inspired by Germany’s WWII “people’s car”, now known as Volkswagen, might have undermined the competitive drive of Japan’s different carmakers. The Japanese car industry resisted, and the “people’s car” scheme was ultimately scrapped. By the eighties, when Japanese products – most famously Sony’s Walkman – started to become must-have products in the West, MITI had already lost much of its influence.

By the start of the nineteen-nineties, Japan’s brands and products had been at their all-time high, while products of Korean industry, which would later take global center stage, had hardly been seen outside of Korea. At the time, products made in Taiwan and Hong Kong had more global recognition than products made in Korea. If there was a Korean brand known outside of Korea it was Gold Star, a logo appearing on audio electronics by a company which would later get to be known as LG (the abbreviation of Lucky and Gold Star, respectively, a combined cosmetics, chemicals and electronics company which produced the first toothpaste and the first transistor radios in post-war Korea).

Korea’s Ministry of Trade, Industry and Energy, while modeled largely after its Japanese predecessor MITI, was different in several ways. Similar to MITI, it held close ties with Korean industry, but it’s approach was dictated by the need to achieve economic growth even faster than Japan. Consequently, its initiatives had to be more flexible.

A case in point was the industrial design program carried out by the Ministry’s agency KIDP (Korean Institute of Design and Packaging, later renamed to Korean Institute of Design Promotion), where a number of foreign designers have been invited to visit Korea in order to design products for Korean companies – myself being one of them. The program was put together to address a pressing problem: until 1985, Korea’s domestic market was protected from foreign imports. By the early nineties, the gradual process of liberalization of foreign imports was almost complete, exposing Korea’s domestic consumers to foreign goods which quickly gained in popularity. As a consequence, the domestic consumption of Korean products dwindled fast.

SMEs and chaebols (Korea’s large companies) alike needed to find a solution, and KIDP’s industrial design exchange program was launched in the early nineties to remedy the situation by inviting selected foreign designers. This was a fundamentally different approach from the Japanese, whose design promotion efforts involved exclusively Japanese designers.

The Korean program had to be implemented in a matter of months. To find international designers KIDP had to rely on word of mouth, and that was not easy: The country was not widely known in the West, so much so that when I told Western colleagues about the program, they often did not know about Korea or where it was located.

The uncompromising practice orientation of the program was previously unheard of. Foreign designers often wanted a phase for research and introspection before they would design, while the Koreans wanted them to come up with a design virtually the next day. The program was adapted and a research phase was added.

The aftershocks of the program started a much larger cultural and economic shift. It instilled genuine interest in the advantages design can bring to Korean companies, it started a boom in domestic creative industries and it made design a desired field of study and occupation for Koreans. After 5 years, change was visible; after 10 years, Korean creative industries became globally known.

A decisive point in the KIDP initiative was that it was focused on real change. Foreign designers have been flown in, introduced to a Korean company, and their job was to design a product for them. Quite some results did not fulfill expectations as the program initially lacked effective mechanisms to evaluate both companies and designers. However, as the program went on, much was learned and this learning applied to the next round. This was not just a temporary event, meeting or congress, it was an initiative characterized by strong intent and focus on actual economic change.

The second important factor for the Korean model of innovation was the active involvement of large companies. LG hired its very first foreign chief designer (myself) and Samsung started the Innovative Design Lab of Samsung (IDS) in Seoul. IDS was another interesting model: it was called upon to experiment with innovative design approaches for interactive, product and automotive design. I taught and researched in Design Membership, a unit where design students completed advanced design courses and internships. Samsung Design Membership is still running, while IDS itself was eventually closed down in the early 2000s.

Samsung IDS was an organization external to Samsung. It came up with great ideas, but had trouble in communicating with the decision making structures within Samsung. LG’s approach was more integrative. Leadership is, as always, important: Myung-Jae Cho, LG Household and Healtcare’s CEO at the time, was a visionary leader with impressive determination and knowledge.

What can we learn from the Korean model? There are several important points:

Take what works, but adapt it to your time and circumstances

The early MITI “central planning” approach was powerful, but only adequate in the first phase of Japan’s economic development. The Korean ministry, while formed after MITI, was not an imitation of the Japanese model. To work in its time and circumstances, it had to be more flexible, faster, more innovative and more risk-taking.

Respond to new challenges with new ideas

As long as Korea’s domestic market was protected, Korean manufacturers had no pressing need to create world-class products. With the opening of its market to foreign competition, the need to upgrade its industrial output was immediate, and the country quickly responded with innovative initiatives.

Focus on change in the real world

Korea was very clear about its intent to change its industry for the better, and it acted on it with an program focused on actual change to which it allocated the necessary resources. While design support organizations in other countries engaged mostly in talks and short-term events, KIDP focused on actual design projects with actual companies.

Act decisively and fix it on the way

While others engaged in pondering about what would be right or wrong for design and the creative industries, Korea acted decisively to find out. The Korean program took risks, made mistakes, and learnt from them. At the same time, Korean organizations experimented with different approaches to find out what worked and what did not. By fixing things on the way, they ensured a flexible response to the challenges of a radically changing economic environment.

The initiatives of the nineties decisively changed Korea’s long-term prospects in design and the creative industries. Although it was initially in a less favorable position than the other “Asian tigers” (Taiwan, Hong Kong, Singapore), these initiatives resulted in establishing the design profession firmly in Korea’s skill set. Today, Korea has world-class brands leading by design and Seoul has a vibrant design and creative industries scene at par with New York, London or Berlin.