Hanwha Ocean to adopt Kyocera founder Inamori’s amoeba management

South Korea’s Hanwha Ocean Co., the world’s third-largest shipbuilder, said on Friday it has partnered with Japan’s Kyocera Communication Systems Co. (KCCS) to jointly develop a new management system to improve productivity and cut costs.

Hanwha said its new management style will be based on the “Amoeba Management” system devised by the late Kyocera Group founder Kazuo Inamori.

Executives from Hanwha and KCCS signed an agreement to set up a joint task force at Hanwha’s Geoje shipyard in South Gyeongsang Province.

The task force, made up of experts in manufacturing processes such as production, design and cost management, will be responsible for working out an efficient management system customized for shipbuilders, according to Hanwha.

“We aim to achieve production innovation by introducing a new management system,” said a Hanwha official. “All our employees, including executives, will be imbued with a sense of ownership to lead the company.”

MANAGEMENT BY ALL

Amoeba Management, a concept created by Inamori is a management system that begins with dividing an organization into small units called "amoebas."

It nurtures leaders with managerial awareness while achieving what is known as "Management by All," whereby every employee plays a significant role and voluntarily participates in managing the unit, according to Kyocera Corp.

The amoeba approach ensures detailed oversight and meticulous operational execution that extends to the very edges of the organization, it said.

Under the amoeba system, Kyocera said the company's management philosophy is entrusted to each amoeba leader. Even if these individuals have limited experience, they serve as the true managers of their small units, formulating and executing their business plans under the approval of upper management. This framework fosters new generations of leaders brimming with managerial awareness in the early phases of their careers.

HANWHA TARGETS 30% PRODUCTIVITY IMPROVEMENT

Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering Co. (DSME), said it plans to apply a profit and loss management system for each organization across all production divisions to increase productivity by 30% and maximize cost competitiveness.

Last year, Hanwha Ocean posted 7.41 trillion won ($5.46 billion) in sales on a consolidated basis, up 52% from the previous year. Its backlogged order value stood at 25.66 trillion won.

However, the shipbuilder posted an operating loss of 196.4 billion won due to heavy marketing costs and personnel and product management expenditures.

Earlier this year, Hanwha Ocean said it would exit the money-losing container shipbuilding business to focus instead on profitable vessels such as liquefied natural gas (LNG) carriers.

Established in 1973 as DSME, Hanwha Ocean has been one of the world’s major container shipbuilders. Hanwha is the only Korean company that has built submarines for the country's Navy since 1987.

Write to Hyeon-woo Oh at ohw@hankyung.com

In-Soo Nam edited this article.