As SK Innovation celebrated its 60th anniversary in 2022, 2023 marks the beginning of a new 60 years of its history, and it is also the second year SK Innovation and all of its subsidiaries execute their Financial Story.
To learn more about the company’s strategies and plans for this year, we’ve met the executives of SK Innovation and its subsidiaries and asked them in detail. For the fifth interview of this series, we invited Park Sang-kyu, CEO of SK Enmove, and talked about how the company is making efforts to become an “Energy Saving Company.”
Q1. In December last year, SK Enmove took the new corporate name and you were appointed as the company’s new CEO. These changes seem to make stakeholders’ interest in SK Enmove this year grow greater than ever. So what is your thought and expectation of 2023?
For me and for SK Enmove, 2023 is the year when we make a fresh start. A new start may bring anxiety or vagueness to someone, but it can bring excitement or anticipation to some others. For SK Enmove, 2023 is a year of excitement when expectations will come true.
In the past, under the name of SK Lubricants, SK Enmove achieved various great results. Especially, last year our business performance was excellent, and it’s not just about the numbers. We also showed to our stakeholders how our Financial Story had been executed one by one. This year, SK Enmove will carry out the “expansion of the Financial Story,” which will befit with our new name. I hope 2023 will be a year when everything we plan can be carried out.
Q2. So how is SK Enmove innovating its business model to realize the “expansion of Financial Story” that befits the company’s new name?
We are living in a world where not only business performance but also gaining sympathy and support from stakeholders including customers, society, and business partners decide whether a corporate can gain higher. The rule of the market has changed. In that sense, some people seem to have a negative outlook in the long term about SK Enmove’s future due to expansion of electric vehicles. However, that is not true. This is not only because the demand for high-quality lubricant and lube base oil for the next 10 to 20 years is steady, but also SK Enmove has been already proceeding with the innovation of its BM (Business Model), preparing for the EV era step by step.
▲ The liquid immersion cooling system of GRC, which was invested by SK Enmove, displayed inside SK booth at CES 2023 held in Las Vegas, USA in January 2023.
SK Enmove has been developing the “electric vehicle (EV)-related products” targeting a new era, and also already making supplies to world-class EV makers. In addition, by expanding cooperation with other EV companies, we are also preparing to develop e-fluids that improve battery efficiency and enhance safety. Moreover, the innovation of our BM goes beyond the focus “for the vehicles” and expands to the area of “thermal management,” such as the Data Center. The acquisition of shares in GRC, an industry-leading partner, also falls under that category. GRC and SK Enmove have currently been expanding our cooperation to product research & development scope.
▲ Visitors at SK booth during CES 2023 held in Las Vegas, USA in January 2023 are playing a game related to GRC’s data center liquid immersion cooling technology.
I believe changing a name means a renewal, whether it be an identity or a lifestyle. SK Enmove also wants to show the direction for our BM innovation through the change of our company’s name.This means that the change started from the consensus that our identity should eventually shift to an “Energy Saving Company.” I’m confident that our value will receive higher evaluation.
Q3. Stakeholders are curious about how to enhance the value of existing businesses through business model transformation.
I believe that values of existing businesses are judged by how much fundamental competitiveness they have. Last year, SK Enmove did record decent results, but the market environment was not favorable. In the lube base and lubricant oil business, the price of raw materials rose and the risks of the logistics supply chain continued. Most outlooks for this year’s economy are still negative and companies that haven’t ensured internal stability will face great difficulties.
SK Enmove is trying to overcome the difficult business environment through “structural improvements.” In terms of lube base oil, I believe sticking to the basics of the Stable Supply of Quality Products (SSQP) and operational optimization should be the priority. In the case of lubricant oils, brand value is a very important factor. It is directly related to improvements of profitability and growth in the global market. SK ZIC will increase its brand value through the innovation of the BM mentioned above, and SK Enmove’s strategy for brand enhancement is also being prepared accordingly.
These structural improvements cannot be made just by understanding, but only when the same goal is pursued in terms of MPR/S* as one body. In addition, now is the era when we need the “total value perspective which contributes to happiness of stakeholders” such as major customers and JV partners. I think that fundamental competitiveness is finally established when the perspective is expanded to the business activities which solve their needs and pain points.
(*) MPR/S: The concept that organizational operation is performed for each product by integrating Marketing (M), Production (P), and R&D (R) as a body from the beginning to the step of bringing the product to a market (MPR), and that the Supporting organization should perform L/H/C (Lead/Help/Check) for MPR as much as possible so that MPR for each product can exert strong power (MPR/S)
Q4. Regarding SK Enmove’s competitive edges, we can talk about the distinction of SK Enmove’s lube base oil that has been dominating the global premium lube base oil market, the branding ability ahead of peers, the experience in creating and leading new markets, and so on. What is the biggest strength of SK Enmove in your opinion?
To put it bluntly, SK Enmove’s biggest strength is our members. Making high-quality lube base oil, branding, marketing, and creating a market are ultimately done by people. I’d like to emphasize that SK Enmove’s work productivity per employee shows one of the highest level in the world. I think it is possible because they voluntarily and willingly fulfill their roles. That is why I think each and every member is an invaluable resource, who is indispensable as the greatest asset of our company.
▲ SK Enmove’s EVF (Electric Vehicle Fluid) (the first product from left) displayed inside SK’s booth at CES 2023 held in Las Vegas, USA in January 2023.
In other words, our members themselves are SK Enmove’s capability of innovating the BM and the company’s executive ability. For example, even now, the development of e-fluids is strictly done by SK Enmove’s executive ability, made up of our members’ executive ability. I think my task here is to create a culture where every member can grow together and work as “one team.” I hope to make all members feel happy with pride and a sense of belonging when working at SK Enmove and to consistently create a virtuous cycle in which the competitiveness of SK Enmove continues to increase in the global market.
Q5. There seems to be a lot in what you have just said, “The greatest strength of our company is its members.” SK Enmove is trying to form a new identity as an “Energy Saving Company,” so how can the company’s members accomplish this new vision based on their abilities?
There are many, but let me find the answer from the perspective of our members, which is our greatest strength as mentioned earlier.
First, the ability to recognize change in the right direction at an opportune time is important. In other words, it can also be called “entrepreneurship.” I think appreciating a change is no different than recognizing that the future paradigm is shifting. SK Enmove agreed that the paradigm is heading towards ESG management and Net Zero. If so, I think the people who work for the company should also increase their understanding of the keywords.
Second, the executive ability mentioned above. Even if we recognize changes in a timely manner, we will not be able to respond to them or change ourselves without the spirit of taking on challenges and the ability to execute.
Last but not least, we need the attitude to share knowledge and experience of change and direction without information asymmetry. In order to promote the Financial Story successfully, it is necessary to work together, discuss smoothly among the MPR/S, and solve difficult tasks as we learned from SKMS**. In fact, all these processes eventually come from words and actions that are considerate and respectful to each other. A positive work culture in which members can communicates horizontally is what a company embarking on a new path should have.
(**) SKMS: SK Management System, the management philosophy of SK
Q6. Before we end this interview, would you like to give any other message to the company’s members, stakeholders, and readers of SKinno News?
In the past, SK Enmove used to be known as the company that makes SK ZIC lubricant oil, and for those who know a little more about the industry, the company that makes YUBASE lube base oil. This is because “what” a company makes is important to define its identity.
But what we need to think about more fundamentally than “what” is “why.” That is, what is the meaning of the service or products we provide. To SK Enmove, that is “increasing energy efficiency.” Increasing energy efficiency means saving the Earth’s resources, accordingly. The paradigm shift, symbolized by Green, demands such direction.
For us, the identity of “Energy Saving Company” is not merely an ideal option anymore; it is a must. Of course, that path is never easy to take, but SK Enmove has potential. Even though how we are taking step by step may make us look slow, we are taking the right path without deviation since we are using SK Enmove’s solid identity as a milestone. I hope we will receive great support for SK Enmove’s changes and challenges.