[Executive Corner] Putting Employee Well-Being Above All Else
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By News Reporter
“While IR is traditionally understood as Investor Relations, I view it as Insight Relations.” LG CEO William Cho has often expressed this sentiment, and I wholeheartedly share his point of view. Over the last 25 years, I have dedicated considerable time to understanding the intricacies of the world’s capital markets, including a stint as an analyst in the IT and tech industry. My experiences have shown me that the active exchange of information and knowledge between companies and investors is essential for mutual success. Today, I take great joy and satisfaction in seeing our company make a significant impact in the market and among investors by presenting our latest business strategies. Being part of this new leap forward is truly gratifying.
Last year, we announced a major business transformation, unveiling our vision to become a “Smart Life Solution Company” that connects customer experiences across home, commercial spaces, mobility and even the metaverse. To achieve this, we have set ourselves the “Triple Seven” target: seeking to reach seven percent average growth rate, seven percent operating profit and an enterprise multiple (EV/EBITDA) of seven, all by 2030. We also plan to invest over KRW 50 trillion for qualitative growth by the beginning of the next decade.
Naturally, the attention of Korean and global investors and analysts began to focus on our enterprise value. Numerous questions were raised regarding the foundation and substance of our “Smart Life Solutions,” our growth potential and whether the announced changes were valuable enough to warrant the long-term investment of assets. As an analyst who has witnessed LG’s various transformations and efforts over the years, the initial market reaction was entirely understandable.
Building on “responsibility” and “authentic communication,” which have been upheld as core values of investor relations (IR) for decades, we have expanded the involvement and role of top management, thereby enhancing trust in our corporate activities. We have also significantly improved policies aimed at increasing shareholder value. In addition, we are expanding efforts to contribute to the healthy development of capital markets from a macro perspective.
Communication Leadership
As the shift in business direction marks a critical turning point with regard to the company’s future blueprint, it was only natural for those leading the changes to step forward and take on the role of “communicators.” Accordingly, starting with the
link hidden, please login to view, our CEO, CFO and other top executives have engaged in open and candid communications at key IR events, such as the general shareholders’ meeting, corporate briefings for global investors and . Beginning this year, the regular earnings conference calls, which were previously led by IR and business unit management, are now overseen directly by the CFO. Active Policy Changes to Improve Shareholder Value
In addition, we announced a new three-year dividend policy (covering fiscal years 2024 to 2026) earlier this year aimed at enhancing shareholder value. This policy includes changes such as adjusting the dividend record date, changing the dividend cycle, setting a minimum base dividend and increasing the dividend payout ratio.
In August, we became the first among the affiliates of Korea’s top 10 conglomerates to announce a value-up participation disclosure aimed at enhancing corporate value. On October 22, we ,” a master plan to boost shareholder value and normalize the company’s valuation. To enhance predictability for investors, we will continue with the base (minimum) dividend of KRW 1,000 per share and semi-annual dividends, which both began this year, while also considering quarterly dividends in the future.
Growth with the Market
Most people reading this article are likely well aware that companies, investors and the market are interconnected in an organic relationship. LG Electronics aims for healthy, mutual growth with the capital market. To this end, we have developed an IR Activity Management System that quantitatively analyzes IR activities for publicly listed companies and are sharing our operational know-how both internally and externally. Additionally, we have been collaborating with the Korea Investor Relations Service (KIRS) for several years, giving lectures on the direction of IR activities related to ESG (environmental, social and governance) and consistently contributing to the development of the capital market.
Personally, as an analyst, I take great pride in sharing the knowledge and expertise I have accumulated from working at various companies and, through this, contributing to the positive cycle of market development alongside my colleagues.
Earlier this month, we were honored with the Financial Services Commission Chairman’s Award (Grand Prize), the highest award in the corporate category, at the 2024 Korea IR Awards hosted by the KIRS.* The award holds great significance as it acknowledges our contributions to maintaining systematic and sincere communications with the market, as well as our efforts to secure a stable investment base as recognized by capital market authorities and various experts.
Going forward, we will continue our commitment to proactive and genuine communication across all business activities to further build investor trust. I, too, will continue to strive to establish LG as an “Insight Leader” that drives healthy, mutual growth for the market, companies and investors alike.
By Park Won-jae, vice president and head of IR Division at LG Electronics
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* Hosted by KIRS under the Korea Exchange since 2001, the Korea IR Awards are presented annually to companies and individuals who have contributed to the healthy development of capital markets through effectively IR activities. Companies and individuals recommended by analysts and institutional investors are selected through a rigorous evaluation process conducted by a professional review panel and a selection committee.
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By News Reporter
As smart home and electrification technologies emerge as key trends in the home appliance sector, we are seeing an industry-wide shift away from simple product sales to a more service-oriented business model.
Smart home technology simplifies the management of complex devices through a range of helpful automation features. By utilizing insights gained from home appliances and Internet of Things (IoT) sensors, the latest smart home tech can better understand customer’s lifestyles and needs. This, in turn, enables the delivery of proactive, tailored services that reduce the burden of household chores. As the technology advances, we move closer to the realization of what LG calls the Zero Labor Home.
*This image is designed to aid understanding of a smart home solution that connects and controls devices within the home (Image Source: Feepik)
Smart home solutions have become a major focus not only for appliance manufacturers but also for IoT, telecommunications, construction and big tech companies. The introduction of smart home standards or protocols, such as Matter,1 is enhancing connectivity between appliances, IoT devices and home systems. Moreover, generative artificial intelligence (AI) and ambient computing2 technologies are making it possible for users to control devices and services through voice commands alone, saving them time and making life at home far more convenient.
*This image was created to aid understanding
One of the leaders in this space, LG recently introduced its latest AI Home solution, offering users the ability to control their home appliances and IoT devices through conversational voice commands. FURON, LG’s generative AI agent and the brain of the AI Home, is able to learn and remember users’ preferences for various devices and apply the appropriate settings in the given situation. Furthermore, LG AI Home connects seamlessly with appliances and IoT devices from a growing number of global brands and integrates flawlessly with various types of apps through ThinQ ON, LG’s AI home hub. The company is continuing to expand its AI Home ecosystem to offer users a broader range of smart home solutions and services.
The transition from fossil fuel to electricity-powered products is a significant global trend – one that is expected to accelerate due to the enforcement of international regulations aimed at mitigating global warming. Boilers are rapidly being replaced by heat pump heating systems, gas ranges by induction cooktops and gas dryers by heat pump dryers. Against this backdrop, LG is actively strengthening its research and development (R&D) programs to discover more efficient and reliable heat pump technologies. These efforts include the recent completion of the company’s “global R&D triangle” to create specialized solutions for cold climates, and the hosting of the Global Heat Pump Consortium, which was founded by LG in collaboration with international universities.
*This image was created to aid understanding
Moving forward, electrification technology will evolve into smart home energy solutions that optimize energy generation, storage and usage within the home. Ultimately, this evolution will give rise to living environments whose occupants can enjoy convenient cooking, heating and cooling – and a dependable supply of hot water – while simultaneously reducing household energy consumption and environmental impacts.
Known for its expertise in smart life solutions, LG has always emphasized the importance of innovation. LG’s core technologies, including the linear compressor (refrigerators), Direct Drive motor and TrueSteam technology (washing machines, Styler), and dual rotary and scroll compressors (air conditioners), have played a crucial role in the company’s rise to leadership in the global home appliance market. Looking ahead, the role of LG’s R&D division will be even more vital in discovering new electrification and smart home technologies. Through a commitment to excellence and a spirit of inquiry, LG will continue to lead the way to a better future.
By Oh Sai-kee, Head of LG Electronics Home Appliance and Air Solution R&D Center
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1 A smart home and IoT device connectivity standard developed by the Connectivity Standards Alliance (CSA). Matter enables seamless interoperability between smart devices and platforms from diverse ecosystems.
2 Ambient computing refers to technology that is able operate invisibly in the background, blending into the environment and working automatically without users noticing its presence. Also referred to as “invisible computing” or “disappearing computing”.
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By News Reporter
The global market for smart home technology is experiencing unprecedented growth, due in no small part to the rapid advancements in artificial intelligence (AI). Boasting the ability to learn from people’s device-usage patterns and preferences, AI-powered home solutions can provide highly personalized experiences tailored to each customer’s unique needs.
LG is at the forefront of this trend, setting new standards and creating new possibilities and value with its advanced AI technology. Earlier this year, the company redefined AI as “Affectionate Intelligence,” emphasizing its commitment to creating empathetic and caring AI that delivers unique customer experiences. At IFA 2024, LG unveiled its vision for the future of home living under the theme “Experience, Affectionate Intelligence Home.” The company’s Berlin showcase highlighted how AI can transform everyday life by anticipating and meeting customers’ needs in a variety of different situations and scenarios.
IFA 2024 saw the debut of LG’s latest AI Home solutions, designed to bring the convenience and freedom of the “Zero Labor Home.” Offering far more than just simplified device control and connectivity, Affectionate Intelligence introduces empathy and care to the smart home environment, enhancing customers’ quality of life in myriad ways.
Central to LG’s vision is LG ThinQ ON, an AI hub that seamlessly orchestrates the operation of all smart devices in the home. Through ThinQ ON and innovations such as the LG Self-Driving AI Home Hub, LG’s booth gave IFA attendees an opportunity to see firsthand how AI can help create a comfortable and connected home experience. Individually and collectively, the company’s innovations exemplify the concept of Affectionate Intelligence, where AI not only responds to commands but also understands and evolves to meet changing needs.
Firstly, LG AI Home provides “Conversational Interactions,” allowing users to control home appliances and Internet of Things (IoT) devices with voice commands alone. The brain of LG AI Home is the company’s generative AI agent, FURON, which integrates advanced large language models (LLMs) such as OpenAI’s GPT-4 Omni. FURON combines learning and contextual understanding with real-time spatial sensing and user lifestyle data to optimize the home environment for each user.
As an example of how this works in practice, if a user says, “Hi LG, I’m going to sleep. Please turn off any devices that are still running,” the AI Home Hub will assess the situation and respond accordingly, such as offering to turn off the dryer if it has nearly finished its cycle. The hub can also tailor the environment for a good night’s sleep by playing the user’s preferred relaxation music and dimming the lights.
Additionally, FURON learns user preferences for different device settings, remembering and applying them at the appropriate times for personalized comfort and convenience. Designed with flexibility, FURON can incorporate additional LLMs to evolve with new technological developments.
LG AI Home also offers an “Upgradability” feature, allowing users to upgrade their existing appliances into AI-powered devices, delivering the convenience and comfort of LG AI Home while saving them the expense of buying newer models. For example, connecting a non-AI TV and an occupancy sensor to ThinQ ON allows LG’s intelligent system to pause content when the user leaves the room and resume it upon return. Similarly, connecting an air conditioner and a sensor enables automatic adjustment of airflow strength and direction based on the user’s position within the room.
LG has been at the forefront of smart appliance innovation since 2011 when it added Wi-Fi modules to its home appliances. Continuing its leadership, the company introduced ThinQ UP, leveraging on-device AI chips and appliance-specific operating systems for feature upgrades and peak operational performance. These customer-centric innovations enable conventional appliances to “evolve” into AI-powered ones, improving daily life and solidifying LG’s leadership in AI home solutions.
Finally, LG AI Home offers “Extensive Connectivity” with various global brands’ appliances and IoT devices, working smoothly with all kinds of apps, including calendars, transportation services and online shopping platforms. Users can effortlessly manage their schedules, control household devices and receive real-time updates for a more personalized and connected home experience.
LG is continuing to expand the LG AI Home ecosystem. Through its acquisition of smart home company Athom, LG has ensured that ThinQ ON can connect with over 50,000 devices and IoT appliances and is compatible with more than 1,000 third-party apps. This presents users with a wider range of smart home solutions and services to choose from, giving them the freedom to create the convenient home lifestyle they’ve always dreamed of.
While LG’s AI solutions work in perfect harmony to help realize the company’s Zero Labor Home vision – where household chores are automated, and people have more time to relax and enjoy life – the LG Shield security system vigilantly protects customer data around the clock.
A leader in AI home solutions, LG will continue to push the boundaries of customer-centric innovation. Before the end of this year, LG plans to introduce IoT devices, including motion and light sensors, air quality sensors, temperature and humidity sensors, and smart plugs, all designed to integrate perfectly with ThinQ ON. Customers will be able to purchase an AI Home package featuring these new devices with professional installation by qualified technicians. In addition, ThinQ ON will add support for the Athom ecosystem, allowing users to connect their AI home to an even more extensive array of products and services from other brands.
LG’s Affectionate Intelligence will soon extend beyond the home, connecting different spaces in people’s lives, from cars to commercial environments such as hotels and offices. The company is committed to creating a sustainable future where its intelligent and caring AI technology is always there, working autonomously and proactively to enhance every experience.
By Lyu Jae-cheol, President of LG Electronics Home Appliance & Air Solution Company
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By News Reporter
In the second episode of the ‘Customers at Heart’ series, we arrive in Egypt to see how the LG team here are introducing customized solutions that seek to improve the entire customer experience.
In Egypt, a country where 72 percent of its 111 million population are internet users according to
link hidden, please login to view, the popularity of online shopping is significant. Recognizing this, LG Egypt has taken an extra step to understand and analyze the needs of local customers, aiming to elevate their online shopping experience. Customer needs in Egypt, related to LG’s Online Brand Shop (OBS), both in the digital and physical space, were identified and categorized into three main areas: simplified access to information on store locations or LG appliances; an expanded range of payment options for OBS purchases; and increased flexibility in scheduling for delivery, installation and repairs.
The subsidiary took into account local customer data, even analyzing numerous customer call records and Voice of the Customer (VoC) data to better comprehend their preferences. For example, they observed that over 70 percent of Egyptians use WhatsApp, the messaging service. However, as the country is in the nascent stages of digital finance, many consumers still prefer cash payments. Thus, LG Egypt aimed to provide a wider range of payment options and unique benefits to attract people to the OBS.
Incorporating various data, the company enhanced its messaging features and created an All-in-One chatbot service through WhatsApp. With this service, customers can now choose their nearest store and, by clicking ‘Connect to Promoter’ and selecting text or video chat, they can connect with a knowledgeable sales representative.
LG Egypt also broadened its payment system by offering a method to pay for online purchases in cash upon delivery or in installments. They also improved purchasing benefits, such as member discounts and cleaning service coupons valid for a year from the purchase date.
The company also streamlined the delivery and installation process, allowing both to occur on the customer’s chosen date. This eliminates the need for customers to contact the call center separately for installation, saving them valuable time.
And to ensure customers receive the maximum benefit from their products, LG enhanced its after-sales service by scheduling service technician visits at times convenient for the customers and ensuring issues are resolved in a single visit – eliminating the need for lengthy waits for repairs. To cater to all customer needs, the Egyptian branch introduced ‘same day contact,’ a service that ensures technicians call customers on the same date of order request receipt; ‘Evening Care+’ for customers unavailable during regular office hours; and ‘On time – One Time’, which provides repair reception and processing during evening hours (17:30 – 20:30). The company also streamlined returns through its ‘Instant Exchange Process,’ handing customers the ability to effortlessly request returns or replacements by taking photos.
These innovative changes to the customer experience have been praised by customers nationwide. Its chatbot and location-based features have played a big part in boosting customer satisfaction, and the numbers back this up. Last year, OBS sales increased 169 percent compared to the previous year while registered OBS members went up 79 percent. After witnessing these results, LG Egypt committed itself to further diversifying its customer care program and increasing the All-in-One chatbot’s applicability to provide the ultimate differentiated experience to LG Brand Shop visitors. The company also plans to expand their dedicated service infrastructure to around 90 percent, ensuring that customers associate LG services with ‘On Time – One Time.’
Stay tuned for the next episode of ‘Customers at Heart,’ where we’ll be heading to another global LG office to learn how they’re thinking out of the box to enhance the customer experience.
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By News Reporter
In business, meaningful growth can’t happen without innovation. It’s essential if your organization is to evolve and thrive, and if you’re serious about adding value to people’s daily lives.
With a thirst to drive innovation, and a wealth of knowledge in the area of IoT, I set out to establish and grow my own startup. I’m happy to say I succeeded in this endeavor. However, with the business model being rather narrow – a continuous cycle of making products and then selling them – there were limitations to what I could do.
After making the decision to sell my company, I went on to serve as the Presidential Innovation Fellow for Cyber-Physical Systems (CPS), a program run by the White House Office of Science and Technology Policy. It was a valuable and enlightening experience. There, I had the chance to work with leading tech companies to further develop and execute plans for industrial IoT and global smart cities. During my seven years in the U.S. federal government, I realized that there are limits to what governments can do with regard to building smart ecosystems. In the end, private companies are the ones bringing the ideas and concepts of smart solutions and businesses to fruition.
This was when I was first approached by LG Electronics. The company wanted to create a new organization dedicated to the discovery of future businesses. LG offered me this amazing opportunity to head up a team they were in the process of putting together.
I thought deeply about the prospect of joining LG. While the company is universally recognized as a strong player in the consumer electronics field, looking in from the outside, it seemed to lack what some might call, a certain ‘disruptive innovation.’ However, I was intrigued by its determination and desire to uncover future businesses and was confident that the company possessed the agility necessary to change and ‘disrupt.’
Personally, I believe that if there are ten great ideas on the table, seven or eight of them will fail to develop into successful businesses. While many people view this way of thinking about business creation as just plain crazy, LG CEO William Cho is, thankfully, not among them.
At LG NOVA, an initiative I am grateful to lead, our mission is to establish a community for nurturing, growing and creating new businesses in new market areas for LG. Early in the LG NOVA journey, we realized that entering new businesses – or new business areas – is difficult if you’re relying solely on your internal capabilities.
If LG wants to create new home appliances, it is in a good position to do this internally because it is already a global leader in consumer electronics, with all the necessary expertise and experience at its disposal. LG NOVA’s mandate is to explore entirely new and different concepts, not currently in LG’s wheelhouse. Although there are thousands of engineers and experts working in LG’s R&D centers, their expertise is in products and areas of business that LG is already in. This is why the LG executive team resolved to look outside of LG.
Our goal is to explore new business avenues that would, ultimately, help contribute to the advancement of LG Electronics. Startups, by the nature of their business model and ability to be at the ground-level of market needs, are leading the forefront of innovation. However, startups will not partner with just any firm that approaches them. This is why we needed to show that LG, as a company, has the commitment and capability to go far beyond home appliances and TVs. This is where LG NOVA comes in.
To establish ourselves in the market, we came up with the idea of hosting a grand challenge. In September 2021, we announced the launch of
link hidden, please login to view, an annual, global competition for startups where we could identify innovative technologies and business ideas for a better tomorrow. The participating startups were tasked with developing and presenting technology-based solutions for improving daily life, our communities and the planet. The tech areas we asked them to focus on included clean tech, healthcare and future tech/AI. To give you an idea of how it works, imagine there is a startup that creates sensors for use in healthcare devices. They might pitch a scenario or concept where their sensors are deployed in TVs to enable innovative new services. Our own business experts, or entrepreneurs in residence (EIRs), would then work with the startup to assess the feasibility of their idea. In many cases, EIRs would work closely with the startup to develop a relevant, but entirely different business idea that could be exciting to both parties. If the idea was deemed to be viable, and in alignment with LG NOVA’s goals and values, a partnership agreement might result and LG NOVA would launch a new business based on the collaboration. This is how a small, fledgling company can set its unique concept on the fast track to becoming a commercialized product.
Through this process, and by combining our capacity with the startup’s capacity, we can create a joint business where LG has as much ‘skin in the game’ as the startup. And at every step along the way, LG NOVA will be right there with them, from meeting with investors to introducing and marketing the ‘final product’ to customers. Through LG NOVA, we can create new products and services that can make a positive difference – and do it at a much larger scale than a startup could manage, if it were to go it alone.
I am proud to be a part of LG and to help guide LG NOVA into exciting new territories where boundless innovation awaits discovery. And I can say, without exaggeration, that I truly love this role. Ultimately, I’m striving for Innovation for Impact – which also happens to be the motto and the philosophy of LG NOVA. While there are many, many ways to make a profit, we have committed ourselves to achieving profitability in a meaningful way, and to leaving a lasting, positive impact on the world.
By Dr. Sokwoo Rhee, executive vice president of Innovation for LG Electronics, head of LG NOVA
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