Read the room or lose the market: Lessons from South Korea’s latest corporate gaffes

TWO recent controversies, both playing out in Seoul but with global implications, offer the corporate world a hard lesson about survival in the digital era.

The first involved the Disney+ drama Perfect Crown, a romantic fantasy starring the singer IU that became one of the most globally watched Korean series – until mid-May, when it stood accused of depicting Korea as a vassal state to China.

The problem: a coronation scene in which the Korean king wore nine ceremonial tassels instead of 12, and officials shouted “1,000 years!” instead of “10,000 years!”

Most Koreans would not have noticed. But enough did. These details positioned Korea as a tributary state rather than an independent empire. The backlash was severe.

IU and co-star Byeon Woo-seok had to post personal apologies on social media.

The spark was not a love of history. It was sensitivity to narratives that could undermine Korea’s sovereignty.

Korea has vehemently objected to the claims put forth by Beijing’s Northeast Project, an academic initiative launched in 2002 that concluded that historical kingdoms in the Korean peninsula – such as Goguryeo – were part of Chinese civilisation.

If that furore caught regional attention, the next one went global.

The trigger was a Starbucks Korea promotion around a large reusable tumbler it called a “tank”, launched on May 18 with the slogan “slam it down on the table.”

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Imagine a promotion in New York on Sep 11 featuring a tumbler called “airliner” accompanied by a “watch out for the towers” jingle, and you can see how this went down.

May 18 is the anniversary of a 1980 uprising in the city of Gwangju, when a military dictatorship killed some 200 protesters.

“Slam it down on the table,” recalled the 1987 torture death of student activist Park Jong-chol; police used these exact words to falsely claim that an investigator had merely clenched his fist and thumped a table and that somehow Park had collapsed.

That murder galvanised the mothers of Korea and, within months, nationwide protests brought down the dictatorship. It remains a touchstone of the country’s democratic consciousness.

The corporate damage was instant and severe.

CEO of Starbucks Korea Jung-hyun was dismissed. Chung Yong-jin, the chairman of Shinsegae Group, whose affiliate operates the chain under licence, issued a public apology and mandated an afternoon of sensitivity training for all Korean staff.

A subsequent internal investigation – limited because executives had no right to examine employees’ phones – suggested the fiasco was a consequence of foolishness, laziness, and (marketing planners take note) a sloppy over-reliance on artificial intelligence, rather than wilful mischief.

Beyond performative compliance

What unites these two cases is inattention. It is the failure of a certain type of institutional awareness that is becoming the defining corporate liability of our era.

That is not to say that executives are dozing at the wheel – they can’t be. In business, risk lurks everywhere: consumer trends, rival products, regulations, labour and technology.

Mitigating it is the whole point of “stakeholder relations”. The issue is a risk that, while not entirely new, remains difficult for many in the C-suite to grasp.

Thirty years ago, a tone-deaf campaign might have annoyed some customers, generated a letter to the editor and faded.

Today, audiences sit in the theatre stalls armed with digital “machine guns”. An offending image is screen-grabbed and shared before the marketing team has had its morning coffee. Outrage escalates in hours.

Politicians get pulled in – they, too, have to avoid being accused of not caring. Following the public outcry against Starbucks’ fiasco, South Korean President Lee Jae-myung posted on X that he was “outraged by this inhumane and disgraceful behaviour by profiteers who deny the values of the South Korean community, fundamental human rights and democracy”.

To deal with this type of risk, the corporate fashion these days is to pre-emptively appear virtuous. That’s why companies are all in on being nice. They love people and puppies and the rainforest.

Of course, this doesn’t fool people. Members of the online public have a radar for performative. They know companies exist more fundamentally to make profit, not to be good citizens.

For global companies, the temptation is to treat exposure as a compliance problem: add a cultural sensitivity checklist, hire a diversity officer, run a workshop. But checklists don’t catch what you don’t know to look for.

What is required here is a particular executive skill and the infrastructure to act on it.

A generation ago in Korea, when the presidential Blue House ran the economy, the CEO skill that determined corporate success or failure was government relations.

That was why the legendary Hyundai chairman, Chung Ju-yong, once put in a competitive bid – reportedly one Korean won – to rebuild a bridge across a river. He impressed the president, got the contract, did the job, and went on to earn billions in subsequent government contracts.

The skill needed now is a feel for the impact of what the company says and does, regardless of its actual business, in the markets where it operates.

To exercise it, the responsible executive needs the kind of support movie directors get from the “scripty” – someone who checks for visual and narrative continuity between scenes shot in different places at different times.

The idea here is similar to the approach big oil and gas companies took when they stopped fighting the environmentalists and hired them instead.

These experts sat in corporate headquarters and reviewed plans to assess potential environmental damage. The system wasn’t perfect, but it amounted to a huge change.

In a world where society increasingly wants its companies to be good, and not just profitable, firms need teams that review what they do from a societal expectation point of view. This is a function that needs to be taken as seriously as financial compliance.

The digital world has not made culture less important. It has made it inescapably central. The companies that thrive will not be the ones with the best crisis communications. They will be the ones that invested, seriously and structurally, in not needing them.

The writer is the CEO of Insight Communications