[News Space=Reporter seungwon lee] “Face the crisis and take action immediately.”

Lotte Group held an unusual two-day, one-night 'Marathon CEO Meeting' (2025 Second Half VCM, Value Creation Meeting) ahead of the second half of this year, and spread Chairman Shin Dong-bin's urgent message, "Failure is not something to be afraid of, but rather not trying anything," throughout the group.

Chairman Shin Dong-bin emphasizes sense of crisis in heavy atmosphere

Chairman Shin held a meeting in a solemn atmosphere from July 16 to 17 at the Lotte Human Resources Development Center in Osan, Gyeonggi Province, with the participation of about 80 people, including his eldest son, Shin Yoo-yeol, the head of the Future Growth Office (Vice President), and the CEO of Lotte Holdings. They also sought fundamental solutions to the rapidly changing management environment and poor performance. Representatives of major affiliates such as distribution, chemicals, food, and holding companies calmly diagnosed the performance in the first half of this year, the innovation tasks of each business unit, and the strategy to expand the competitiveness, productivity, and future growth engines of the entire group.

“Go beyond the classic frame”… At a crossroads amid deteriorating performance and internal and external troubles

 Chairman Shin Dong-bin asserted, “Will the CEO ignore the current problem or boldly change it? Not even trying is failure,” and demanded “return to the basics” such as brand innovation and business structure improvement, as well as “quick execution.” Lotte Group’s estimated total sales for the first half of this year were approximately 85 trillion won, a slight decrease from the previous year, and all of its main businesses showed a slump compared to the previous year.

Lotte Chemical and Lotte Shopin recorded sluggish performance, while the food sector, including Lotte Welfood and Lotte Chilsung Beverage, is evaluated to have maintained growth despite the burden of raw material costs due to an increase in the proportion of overseas sales. 

“Change the way to success”… PEST·AI·Precision business strategy concretization

Chairman Shin ordered the instillation of organizational DNA that can immediately respond to political, economic, social, and technological environmental changes using the keyword “PEST management.” He also pressured each business unit to come up with an actual implementation plan.

The chemical group was ordered to rapidly improve its business structure and strengthen risk management. This is a pressure to implement preemptive restructuring in response to the global economic downturn and sluggish exports. The food group was ordered to strengthen premium and differentiated brands and develop new markets. The distribution group was emphasized to integrate online and offline and expand personalized services for ‘maximizing customer needs and innovating shopping experiences.’

In particular, ▲performance-centered personnel system, ▲strengthening job expertise, ▲actively introducing AI and digital work innovation, ▲ESG (environment, society, governance) and open innovation (strengthening cooperation between Lotte Ventures and startups) emerged as practical innovation keywords. 

Crisis Management + Essential Management, Lotte's Transformation Experiment in the Spotlight

The industry evaluates this VCM as “a place where Lotte publicly declared that it must constantly change in order to avoid failure.”

In particular, since last year, as internal and external risks have accumulated, including ▲encroachment of domestic demand by Chinese local distributors ▲structural variables such as global inflation, high interest rates, and low birth rates ▲deterioration in profitability of major affiliates (Lotte Shopping and Chemical), the consensus is that “if we do not act immediately, the entire group could be eliminated,” the biggest change is that there is a high level of consensus. 

In fact, after this meeting, Lotte is expected to make visible changes such as ‘improving efficiency of store closures and new investments’ in the distribution sector, reorganizing overseas joint ventures in the chemical group, and expanding investment in ultra-premium products in the food group.

Back to the basics: ‘Don’t be afraid of failure’… Immediate action is the key to survival

In the end, this Lotte executive board meeting emphasized the fundamentals of management: “brand, efficiency, and digital innovation,” and became a signal for a major change in organizational culture: “If you don’t want to fail, don’t stop trying.”

The market consensus is that Chairman Shin Dong-bin's message to look ahead to the management environment in 5-10 years and take action now is a warning and solution to all large corporations in the VUCA era.

Meanwhile, VUCA is a new word that takes the first letters of Volatility, Uncertainty, Complexity, and Ambiguity. It was originally used as a military term at the U.S. Army War College in the 1990s, and was used to describe the rapidly changing atmosphere and unpredictable world situation after the end of the Cold War. Since then, the term has been used in management, economy, and society in general, and comprehensively expresses today's rapidly changing business environment.