Driving hard to become number one! Having taken Hyundai Motors from nowhere to the world's sixth-largest automaker, hard-charging B.J. Park is putting the pedal to the metal as new Young Chang CEO in a bid for market leadership. To employees, his message is simple: "We must change everything!" To the piano market, he says: "We will set the standard for quality and value.".

Young Chang Akki Ltd. was founded in 1956 by J.S. Kim and his two brothers. Initially the company was the Korean distributor of Yamaha Pianos. However, in 1968, when the Korean government levied punitive import duties on pianos from Japan, Young Chang set up its own factory in Incheon, a coastal manufacturing center 20 miles south of the capital city of Seoul. The first year's production was a mere 150 upright pianos. But as Korea's economy began to flourish, volume levels exploded. By 1979, the first year Young Chang pianos were exported to the U.S., the company was producing about 15,000 units annually. Five years later unit output topped 50,000 units, and by 1990 Young Chang was producing over 80,000 pianos annually. That year the company also entered the electronics market with the acquisition of Kurzweil Music Systems.

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By the mid-'90s Korea's rising standard of living and increased operating costs began blunting Young Chang's competitive edge, particularly in the world export market. In response, the company invested $35 million to build a 750,000-square-foot vertically integrated piano plant in Tianjin, China. Just as the plant came online in early 1997, an Asian currency crisis dealt a devastating blow to the Korean economy, and thousands of mid-sized companies like Young Chang. With the value of the Korean won cut in half, raw material and commodity prices surged, sending the local economy into a recession and seriously curtailing piano sales. Aggravating the problem, Young Chang had partially financed its Chinese expansion by floating bonds denominated in foreign currencies. The collapse of the won effectively doubled the company's debt burden. Unable to meet its financial obligations, in 1998 Young Chang was taken over by its main lender, the Korean Exchange Bank.

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Almost immediately the Bank put Young Chang up for sale, but had few takers until archrival Samick stepped forward and acquired a controlling interest in the company in 2004. Samick had just initiated efforts to consolidate the two companies when the Korean Fair Trade Commission ruled that the merger created an "anti-competitive monopoly for pianos" in the Korea market. In 2005, under commission order, Samick placed Young Chang up for sale once again.

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The currency crisis of 1997 also had a transformative effect on Hyundai, ultimately paving the way for its Young Chang acquisition. Founded in 1947 as a construction company by Chung Juyung, Hyundai rapidly expanded through an aggressive diversification program. By the early 90s, it ranked as Korea's largest company and had interests in real-estate, retailing, shipbuilding, chemicals, specialized manufacturing, and auto manufacturing. After the currency shock, Hyundai's board of directors voted to split the sprawling conglomerate into nine separate corporate groups to create a more focused management and financial structure.

Hyundai Development Co., one of the spin-off companies, ended up holding Hyundai's real estate development operations, several shopping malls, and an engineered plastics manufacturing business. Chairman Chung Mong Gyu decided to add Young Chang to his portfolio of companies because he felt that a musical instrument maker would burnish the image of several of Hyundai's Korean residential developments, and because the company had great untapped potential.

Park concurs emphatically on this last point. In Young Chang and Kurzweil he sees striking parallels with his experience at Hyundai Motors. He is convinced that with the right strategy and precise execution, both keyboard companies have the potential to become world leaders. More importantly, he makes a compelling case for how he plans to realize this potential.

The Kurzweil brand was one of the factors that prompted Park to take on the challenge of turning around the keyboard maker. He notes that while there are close to a hundred acoustic piano makers in the world, there are only four or five digital keyboard manufacturers. "The field is not so crowded," he says. In other words, the upside potential is greater.

In the past two decades, Korea has developed a formidable semi-conductor industry, as evidenced by the ascendancy of Samsung, now the world's leading consumer electronics manufacturer. Tapping into this advanced integrated-circuit expertise in Korea is one component of Park's product development strategy for Kurzweil. The other is the company's Boston-based R&D Center, headed by industry veteran Hal Chamberlin. He sees the combination of proven U.S. sound engineering and advanced Korean microchips as providing a world-class technology foundation for the Kurzweil product line.

Using this solid base, he anticipates a steady stream of new product introductions. "Product planning is critical in this business," he reasons. "We will develop a broad product portfolio covering different price points and applications." With an eye towards generating excitement and store traffic, he says dealers should anticipate new Kurzweil products on a regular basis.

Since taking over piano manufacturing operations a year ago, Park has instilled new discipline on the factory floor, as evidenced by lean inventories and immaculate working conditions. However, he says this is just the beginning. Currently, the company is in the process of installing a comprehensive Enterprise Resource Planning (ERP) system that will monitor sales, purchasing, labor costs, inventory levels, and all other facets of the business. He anticipates further improvements in the supply chain management and labor utilization, resulting in meaningful efficiency gains on the factory floor when the ERP system is fully operational by next year. Based on his experience in the auto industry, he says, "ERP, when done properly, can deliver enormous gains."

Having visited the manufacturing operations of virtually every automaker in the world, Park has strongly held ideas about what makes for a high performance organization. On the top of his list: a staff that has a thorough understanding of the manufacturing process and a commitment to quality. Building that type of a team at Young Chang has become a top priority. Weeks after taking the job, he loaded all the employees on buses and took them to a campsite outside Seoul. After an evening together, they awoke the next morning at 4 A.M. and trekked to the top of a nearby mountain to watch the sunrise. The symbolism of the exercise was straightforward but compelling nonetheless: a willingness to try new things and expend extra effort will take the company to a higher level and open up new vistas for the future. The wilderness bonding expedition has been followed up by regular education sessions at both factories, touching on subjects ranging from how pianos are sold to the fine points of instrument quality. "Our people must understand the need for quality," he stresses.

Aside from being the only piano company CEO with an auto industry background, Park is probably the only one who isn't unhappy with the current global downturn in piano sales. He contends that adverse conditions are what build great organizations. "When business is too easy, the tendency is to get sloppy and lazy," he says. And he knows something about adversity.

In 1987, Park was named CEO of Hyundai Canada with the charge of establishing the car company's first beachhead in the North American market. Within a year, the bargain-priced Hyundai Excel had secured over 10% share of auto imports into Canada. It also drew the ire of Ford and General Motors, which jointly filed a dumping suit and asked the Canadian government to levy a 20% punitive tariff. For Park, the battle against the world's two largest automakers was a matter of life and death. If Hyundai lost in Canada, he reasoned that it would be shut out of the U.S. market and would ultimately fold.

After nearly a year of preparing for the dumping case, Hyundai eventually won a favorable judgment in 1988, paving the way for its expansion in North America. However, the brush with calamity intensified Park's drive to upgrade every facet of Hyundai's operations. From the factory floor to the credit and collections department, he drove staff to get better. In the process, he says, "We laid a foundation that could support healthy growth." Tough times in the piano market are providing a similar opportunity today. At Young Chang, he says, "We are building the foundation so we will be ready when the market improves." It's a pledge competitors should take seriously.