Can Korea be Truly Creative? It Already Is.

The passing of Steve Jobs last week prompted a worldwide reflection of the incredible life and achievements of Jobs. Koreans joined in the reflection, filling online channels with tributes to and quotes from Jobs. For Koreans, however, the tributes to Jobs were not simply about the celebration of Jobs' legacy. Around the globe, and certainly in Korea, Steve Jobs has come to embody the concept of creativity itself, particularly in the context of modern economy. Therefore, Jobs' passing provided a moment of self-reflection about the frequent criticism of Korea, brought up by Koreans and Korea-observers alike: although Korean economy generates cutting-edge technological products, it is not truly creative like Apple, led by Jobs, is. Korea's hagiography of Steve Jobs following his death, in a large part, is a hagiography of creativity that it considers lacking.

I do not think it is healthy for Koreans to engage in such hagiography, for three reasons: (1) creativity is not, and must not be, the ultimate goal of a national economy; (2) creativity, depending on its type, can be vastly overrated and underrated at the same time; (3) creativity was not the only reason, or even the most dominant reason, why Apple and Steve Jobs were able to build their amazing achievement.

In making these points, not for a second am I discounting the importance of creativity in a national economy. Creativity is one of the most important traits in human life. It is the driver that brings us the products that make people's lives easier, fuller, better. Apple is a wonderfully creative company because it has been able to envision such products better than any other company in the world. Only an idiot would dismiss the role of Jobs in making a moribund company (Apple in mid-1990s,) as well as himself, into a cultural icon. My points are only that Koreans' obsession with creativity is unhelpful, and that Apple is not a good model for Korean companies to emulate.

(More after the jump.)

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Wealth and Jobs, not Creativity

In elevating creativity to an end itself, economic observers tend to lose sight of the ultimate goal for a national economy: wealth and jobs. A national economy is supposed to generate wealth, and create jobs such that the wealth can be shared among citizens in exchange for labor. There is no "creativity scoreboard" by which various national economies make notches. Creativity is important, but is not an end to itself. The importance of creativity is no more than the extent to which it contributes to the creation of wealth and jobs.

Based on the decade-plus experience of "creativity-led" economy, the evidence appears strong that although creativity is great for generating wealth, it does poorly in generating jobs. This figure alone speaks volumes: Apple, Google, Facebook and Amazon collectively employ just 113,000 people, a third of GM’s payroll in 1980. Similarly, Samsung Electronics, LG Display and LG Electronics -- the leaders of Korean electronics -- collectively employ nearly 300,000 people, in a country whose population is less than 1/6 of America's.

Apple, Google, Facebook and Amazon are certainly much more valuable collectively than Samsung Electronics, LG Display and LG Electronics -- to be precise, more than five times as valuable based on estimated market values. But consider this -- although Apple's market value is around 2.5 times of Samsung Electronic's market value (around $330 billion versus around $138 billion,) Samsung Electronics employs nearly four times more employees than Apple (around 188,000 versus around 49,000.) For more -- ahem -- apples-to-apples comparison in terms of market value, Google's market value is approximately 25% greater than Samsung Electronics, but Samsung Electronics employs more than six times of the number of Google employees. And the reason for this is obvious: Samsung Electronics focuses heavily on "uncreative," labor-intensive (but high-grade) manufacturing, while Apple and Google focuses on the "creative" endeavors and farm out the actual production.

("creative" and "uncreative" are in quotes because, as described further below, manufacturing in fact is plenty creative. The designation here is more about perception, not about whether or not there is actual creativity involved.)

If you were in charge of a national economy, would you rather have 20 companies like Google, or 20 companies like Samsung? The answer is not obvious, and will depend on what you value more. There may be perfectly good reasons to choose 20 Googles over 20 Samsungs. But choosing 20 Googles comes with an inevitable conclusion -- your national economy will generate 25% more wealth, which will be distributed to 1/6 of the number of people. To a severe degree, wealth will be concentrated on the top. For a national economy with 20 Googles to achieve a similar level of distribution as the one with 20 Samsungs, the taxation at the top bracket will have to be so drastic that the people who do make money through Google will revolt.

Of course, there may be a business model in the future that finds a happy medium of creativity that leads to job creation. However, by now we do know from experience that although creativity-centered economy may generate fabulous amount of wealth, it does not generate enough jobs for a populous country like U.S. or Korea. If one cares about income polarization and hollowing of the middle class, one must also care about focusing excessively on creativity in the economic theater.

What Kind of Creativity?

There should be no doubt that Apple is a wonderfully creative company. But at the same time, Apple's creativity is wildly overrated. Similarly, Steve Jobs deserves to be praised for his creativity. But at the same time, many other people who deserve the equal amount of praise for their creativity receive not a fraction of the attention received by Jobs. Why does this happen? It happens because people consistently overrate the tangible things that are understandable and close to their lives. Again, no one is denying that Apple's products demonstrate fantastic creativity. But their creativity is praised in large part because the products are tangible, understandable and close to people's lives.

Take a look at this article, for example, which explains out Samsung is able to keep up with Apple even though Galaxy S does not create a psychotic fan base like iPhone. (By the way, the writer of that article is an unabashed Apple fan who wrote two Korean language biographies of Steve Jobs.) Essentially, Samsung's production line has an extremely fast reaction time to precisely caliberate the amount of production based on consumer response. If Galaxy S sells well, Samsung can instantly double its production by an efficient and innovative use of its manufacturing lineup, which includes machinery as well as its employees. If it does not, Samsung can quickly change the production into a different product with little down time. Coming up with this type of production line undoubtedly takes creativity. But have you ever read a hagiography of how creative Samsung is for coming up with this system? Me either.

Here is another example. Korea is the world's leader in shipbuilding, based on the ships' monetary value. (Korea is second to China in terms of the ships' tonnage.) The three largest shipbuilding companies of the world are Korean. Entire Europe produces less than one-tenth of the ships that Korea produces. And it is not the case that Korea manages to do this by leveraging cheap labor. Korea's shipbuilding companies are notoriously well-unionized, and their employees are paid well enough such that Ulsan, the base city for Hyundai Heavy Industries, has the highest average income among all Korean cities, doubling the national average income. Korea's competitiveness arises from the fact that it delivers high quality and innovative ships -- for example, a new container ship from Daewoo Heavy Industries that reduced carbon emission by half while carrying even greater number of containers. Have you ever heard or read a praise of creativity for Daewoo Heavy Industries? You are lying if you said yes.

One can argue forever about whether the creativity it takes to build an iPod is greater or lesser than the creativity displayed in above examples. But this much is certain: in all of the examples above, there is a great degree of creativity involved. And no one hears about how creative they are, because one cannot hold a manufacturing process in one's hands, and rarely does one see a highly sophisticated ship that nonetheless plays an integral role in a modern consumer's life. Creativity displayed in a tangible, visible household product will always be overrated because it is constantly available. (This is the same reason why I previously wrote that Korea's economy is slightly overhyped.)

This then goes back to the point about the national economy. Creativity deployed in a manufacturing process or in a less-than-sparkling product like container ships generates wealth and jobs just as well as creativity deployed in shiny consumer electronics. Then does it make sense to fixate on the creativity involved in making shiny consumer electronics while understating the creativity involved in logistics and other manufacturing -- particularly given that manufacturing creates a lot more jobs? When a national economy already features world-leading corporations, does it make sense to shift the creative focus away from those industries?

Real Reason Why Apple is Successful -- It's not Creativity

At this point, one can make a forceful counterpoint in favor of Apple-style creativity. One could argue: 
"While TK's examples certain involve creativity, Apple's creativity nonetheless stands out because Apple's creativity generated not simply a new product, but a new trend. Instead of fighting in a defined arena, Apple was able to open up a vast new territory with its creativity. Apple's creativity is proactive; others', reactive. Apple fundamentally changed people's consumption patterns; other companies like Samsung could only follow the change. Being reactive is always easier than being proactive, and therefore your position is always more precarious. Take a look at Sony, for example. Although Sony was innovative in its own right, it never redefined the game like Apple did. Sure enough, Samsung was able to catch up to Sony and now exceeds in many areas, e.g. flat panel televisions. Sooner or later, there will be another company to supplant Samsung's place, but by then Apple (or other companies that think like Apple) will have opened up a new frontier."
This is a strong counterpoint, because it is in large part true. Apple as a company opened up new frontiers like few other companies did. But this counter-argument fails because of one critical error: it thinks that Apple opened up new frontiers because it was creative.

Here is an easy example that shows the reason why Apple's real strength was not creativity. Take iPod, for example -- the device that served as a harbinger for Apple's current dominance. There is no question that iPod was a creative, innovative product. Its design was attractive and its user interface easy and intuitive. So, if you are old enough to remember, suppose you are back in 2001. Also suppose that the first iPod equivalent -- known as yPod -- was made by a company called Mela, based in Italy, instead of Apple based in Cupertino, California (which, in this alternate universe, would continue to only make computers.) Mela's yPod is identical to Apple's iPod -- it is small, sleek, modern and easy to use. Mela also has yTunes store, through which all of the latest Italian music will be available to be purchased and downloaded directly into yPod, just like the iTunes store in real life.

Would yPod be nearly as successful as Apple's iPod? Not a chance. But why not? Everything about yPod is the same as iPod. It took exactly the same amount of creativity to produce yPod/yTunes as to produce iPod/iTunes. Then what is the difference? The difference is plain -- far fewer people of the world care about Italian music compared to American one. The ability to conveniently download music -- iPod's greatest strength -- means significantly less if the music is not American.

Here, we get a glimpse of Apple's true strength. The reason why Apple can remake the world's consumption habits is not because Apple is creative. Apple can be remake the world's consumption habits because Apple is American. And American companies can remake the world's consumption habits because America is a superpower. Writ large, the greatest strength of American economy is not its creativity; the greatest strength of American economy is that America is a superpower.

One trait of Americans that constantly amuses me is that Americans -- even the really bright ones -- have very little idea of what it means to be a superpower. Being a superpower means that America gets to make the world in its image. Being a superpower means the rest of the world aspires to live like Americans, dress like Americans, eat like Americans and think like Americans. Sure, there will be small areas in which other countries could set the trend. European fashion designers still have their sway, and Japanese animators and game makers have their sphere of influence. Each country will keep its food for the most part, because food is one of the most intimate elements of a culture. But when it comes to the larger frameworks of life -- democratic regime, capitalist economy, consumerist society, cars, fast food, professional sports, pop culture, hiphop -- people of the world either live, or aspire to live, like Americans. THAT's what it means to be a superpower.

(Aside 1: In an interview I gave recently, the interviewer asked if there is anything in American culture which causes Koreans to automatically recoil in revulsion, like the way Americans do with Korea's dog meat. I had to suppress a chuckle at the naivete of the premise -- as if America and Korea occupy the same space in world hegemony! In fact, Korea's anti-dog meat movement is the prime example of how America's influence as a superpower could arbitrarily reverse a beloved, millennia-old traditions like dog eating.)

(Aside 2: The last meaningful challenger to America's hegemony was Soviet Russia, which -- if you took its narrative seriously -- sought to reshape the world according to its ideals of communism and populate it with the New Soviet Men. Although much ink is spilled on China's rise as a new superpower, China will not be a superpower like the way America is, or even the way Soviet Russia was, in the near future. As formidable as China's military might and economic strength are, it will take at least a century before anyone will want to live like the Chinese.)

Although iPod/yPod was the easiest example, the same logic can apply to almost all of the famous Apple products. Apple's products were not successful because of their creativity -- or, stated more precisely, the success of Apple's products depended on much more than their creativity. Apple's creativity had the ability to change the world because America has the ability to change the world. In fact, the same applies to nearly all innovative American products. More than anything else, American creativity works because it fits American sensibilities the best, and the rest of the world either lives like America or wants to live like America.

(Aside 3: Some might point to economic nationalism, prevalent in East Asia, that causes the Chinese to "buy China," for example. However, the strength of economic nationalism in brand loyalty is very much overstated -- exemplified by this article that highlights how Li Ning, China's largest domestic athletic gear company, is losing grounds to Nike and Adidas in the domestic market.)

Take Facebook, for example. Facebook is definitely an innovative product. But five years before Facebook, Korea had Cyworld -- a social networking service before anyone in the English-speaking world has even heard of the term "Social Networking Services." And Cyworld became extremely popular in Korea, just like the way Facebook is now. At its peak, Cyworld had more than 17 million members, an incredible figure given that the population of Korea is around 48 million. But although Cyworld attempted to expand beyond Korea, it failed to make a global impression for one simple reason: it was optimized for Korean sensibilities and environment. Cyworld's design was too "cute," and it had many design elements that were compatible with Korea's blazing fast Internet but clunky with slower Internet elsewhere in the world. Now, Facebook may have overtaken Cyworld as the leading social networking site in Korea, and that is not because Facebook is functionally so much better than Cyworld.

So here, we can see it is particularly dangerous for Korean economy to attempt to become "truly creative" like Apple. Such attempt is based on the false idea that as long as Korea can get more creative somehow, it will be able to open up new frontiers in consumer culture like Apple has done. Unfortunately, that is simply not true. People of the world don't want to live like Koreans; they want to live like Americans. No matter how much creative Koreans try, they cannot envision a better fit to an American life than creative Americans.

(Aside 4:  The "yPod" example, in fact, was not an idly chosen one. In 2001, before iPod appeared, the world's best selling mp3 player was made by a Korean company called iRiver. iRiver's Rio mp3 players actually held its own against iPod for a year or two in terms of sale, before iRiver got reduced to a minor player that it is now.)

What is Korea supposed to do then? I submit that a much better model for Koreans to follow is not America, but Germany. Germany of today is not a superpower like America is. In fact, in terms of soft power, Korea may already be somewhat close to Germany:  as much respect as Germany's renowned philosophers deserve, one does not hear too often glowing praises about Germany's contemporary movies or pop music. Germany, like all countries in the world except America, operates within an American framework. But Germany does what it does well incredibly well. It focuses on manufactured products that do not require too much cultural translation -- e.g. automobiles, optical lenses, and sophisticated business-to-business equipments. Leading German corporations like BMW, Leica and Siemens are most certainly creative. Consequently, German economy achieves its goal as a national economy very well. Germany is a wealthy country, and its wealth is distributed widely through jobs. Even in the midst of global economic crisis, Germany's unemployment rate is at admirable 6.1% as of December 2010. And all this happened without needing any path-breaking company like Apple.

Conclusion: Can Korea be Truly Creative?

So, let us finally address that persistent question: can Korea be truly creative?

Please -- Korea is truly creative already. Korean economy today is an ipso facto proof of Korea's creativity, because it is simply not possible to have an economy like Korea without being creative. Steve Jobs may have been a visionary, but so was Chung Joo-Young, the swashbuckling founder of Hyundai who had the cojones to walk in with a meeting with Barclays Bank with little more than a picture of an empty beach in Ulsan, and demanded to borrow the money to build a shipyard on that beach. iPhone may be innovative, but so are the numerous components make iPhone what it is -- the Retina display, applications processor, DRAM memory and Flash memory, all built by either LG or Samsung.

Korean economy certainly should be more creative, more daring and more visionary. That is the only way for it to survive and thrive. But Korea's inability to produce a company that changes the game, like Apple has done, is hardly a knock on Korea's creativity. A lion has its own way of surviving, and so does a fox. America may thrive with Apple, but that road is not for Korea.

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