Understanding and Implementing Corporate Independent Companies (CIC)

The success premise of the mountainous illegitimate bait industry is independence in three volumes, emphasizing the need for financial, personnel, and business independence.

### Understanding CIC: A New Approach to Corporate Innovation
* 💼 CIC, or "Company in Company," is a concept where an independent division within an existing business organization operates like a **separate company**, emphasizing **independence without separate legal status**.
* 🏢 The idea behind CIC is to address the challenges large and medium-sized companies face in making **quick decisions** and fostering **internal innovation** within complex organizational structures.
* 💡 Successful CICs must achieve **financial independence**, **personnel independence**, and **independent decision-making** to thrive within the parent company.
* 📊 Five common obstacles to CIC success include: 
- not granting **sufficient independence**
- misunderstanding the CIC's **role**
- inefficient **decision-making processes**
- lack of **resources**
- conflicts with existing company **structures**.
* 🌐 Naver and Kakao are cited as successful examples of implementing CICs, with Naver's CICs evolving into **fully independent companies** over time.
* 🔒 Legal and operational challenges must be addressed to ensure the **independence and success of CICs**, including creating **operational regulations**, establishing **dedicated operational teams**, and considering **future spin-offs or mergers**.
* 🌍 For companies considering establishing overseas CICs, it is recommended to **create detailed operational regulations**, **define key members' roles and potential rewards**, and **consider legal implications for future independence**.
* 📈 The text concludes by emphasizing the **potential of CICs to drive innovation and new market strategies**, highlighting the importance of **careful planning and execution** for successful implementation.

As expected, if the wife's independent company has such concerns, the success premise of the mountainous illegitimate bait industry is independence in three volumes. Hello, I am a lawyer at Law Firm 10, leading the corporate team. Today, I will take a look at the concept of CRC, which stands for Compain't Compact, and why many companies are introducing CIC these days, what its characteristics are, how it differs from in-house ventures, and what legal aspects need to be prepared. Have you heard of the term CI system? CIC is a company within a company, translated into Korean as an independent company within a company. Let me briefly explain the concept of CI seals. Internal independent CIC is an independent division of the existing business organization.

As a company, it means an organization that operates overall tasks such as finance, personnel, operations, legal affairs, etc., necessary for investment and new business development, separately like individual companies, with each CI (Corporate Identity) representative of each CI. This concept of managing tasks like individual companies without separate corporate status is not the same as the concept of a legally recognized company. CIC (Company in Company), meaning this computer company, in other words, a separate independent company, is not a concept recognized by the law. CIC operates like individual companies, emphasizing the difference from existing corporate companies or ventures, without independent corporate status. It is a concept created and used in the industry to highlight this point. So, when you think of CIC, you can think of it as an organization that operates like individual companies without separate corporate status. Many companies like SK, Naver, Kakao, LG, etc., have recently introduced CIC and conducted research on the strategies of other companies.

Let me explain the background of Dongrim Company that emerged in the mountains. Existing large companies in Korea and medium-sized companies find it very difficult to make decisions within the organization. It takes a long time, requires attention to political aspects, and it is not easy for business to develop in this complicated situation. Consequently, various incidents that hinder internal growth momentum occur frequently in daily life. Therefore, there is a concern that it is not easy to create something new with the current internal structure. Even if there are excellent ideas, they often get buried. When someone suggests trying something new, like establishing a separate entity to test the idea, many employees hesitate and fear the challenge.

When you go as a corporation, not even a listed company with no name, you might feel resistance, psychological collapse, or burden psychologically. From the perspective of the management company, there may be concerns about resistance, psychological burden, synergy, and operational issues. Think about creating a team internally, making decisions quickly, and entering the market rapidly. However, creating a new corporation with unverified business ideas and market areas may not go well.

It's difficult, we have to dissolve the corporation again, and among them, we have to get approval from the existing investors, which makes things complicated. That's why this compromise form is a concern. It's not a separate independent corporation, but an organization within our corporation registry and dissolution, but it gives complete independence, so that it doesn't touch us, doesn't even consider our opinions in personnel management and operations. If independence is guaranteed in overall human resources and management regulations, wouldn't it be okay? And if so, for example, employees of a company like A will remain unchanged, but if they work hard, they can expect a stronger incentive here. At the end of the example, I wanted to mention a bit that internally in our company, there were some slow and frustrating parts, but some employees say they want to experience working in a new organization.

It's about meeting needs, so independent companies emerge to diversify business, enhance efficiency in developing new products, and develop new markets. They aim to attract talented employees who are considering leaving due to lack of motivation, to support a creative organizational culture, and ultimately to seize new markets by making decisions faster. This is a very similar concept to corporate ventures, which have similar concepts.

I am creating and operating an internal venture team, and the Benz of this mountain is actually similar to the basic purpose and concerns of an independent company in this mountain, and internal venture progresses from similar concerns. In terms of the degree of independence, the independent companies in this mountain guarantee independence more firmly in all aspects, while Benz is still positioned as a familiar concept within the organization. Therefore, in terms of this degree of independence, the external independent companies are evaluated as organizations that ensure much stronger independence. Similarly, if a single independent company was born with such concerns, the premise of success for the first company is that it must achieve financial independence, secondly, it must achieve independence in terms of personnel, and thirdly, it must make independent business decisions. How the next company can become independent ultimately depends on this.

Independence is a crucial presence in the success of a private company, even if it is a public company. Mr. Ko Chang-gae has created a seed for independence, but ultimately, independence does not guarantee security together, and in practice, it should be the same. The salary system should be the same, and opportunities should not be different. Focus only on what will benefit our company, and touch upon what needs to be touched, but once you start touching upon what you have gained, there is no reason to create a reason for the computer. Then there is no difference from the existing one. So, if we were to create an independent company in the computer, how would we systematically and practically nurture and protect independence and maintain independence in that area? That is the key. For financial independence, you can also use an independent audit system, and separately through public accounting.

When you have an office, you can have a financial system and even create a separate business registration to operate for impressive independence. To ensure independence, you can have a separate representative, and this representative, not just a team leader in the CRC, can have the authority to organize the organization and make changes to the personnel reward system differently from before. In practice, this aspect is a significant concern. From the perspective of the existing company, it raises questions about fairness. Employees who joined under the same conditions and signed the same labor contract may wonder why the personnel policy has changed suddenly. Therefore, ensuring complete independence while rigorously maintaining confidentiality is a practical challenge. This involves business independence, development research, or cell G, and such business aspects.

In making decisions, it is important to ensure independence in complex decision-making processes so that decisions can be made very quickly without the need for a complex hierarchical approval process. It is crucial to ensure the independence of business decisions in such aspects. Understanding and guaranteeing independence is a fundamental premise for the success of an independent company. I have identified five obstacles to the success of independent companies. The first obstacle is not granting independence despite setting up a committee for independence based on a complex power structure. The second obstacle is the lack of understanding in managing concepts such as whether the CRC is a team, a venture, or a telecommuting system. This lack of understanding often leads to the improper operation of independent companies. The third obstacle is the inefficiency of the decision-making process, which still exists.

When creating a CRC and making decisions, ultimately, it is made possible only through management. And it is not an independent company. Fourth, seeds were created due to lack of resources and talents, and financial support was provided from there. Then, support should be given in reverse while supporting independence. Instead of just creating seeds and cutting off support later, it should be properly adjusted. Fifth, due to conflicts with existing companies and debts, independent companies may not operate properly as they act as a parasite. Therefore, there are more cases where independent companies fail than expected. So, I looked into three conditions for the success of independent companies and five pains why independent companies are not operating properly, and cases. As a representative example, in Korea, Naver and Kakao are companies that utilize CIC well, especially Naver.

It started as a new business division within the organization in 2005, and after ten years of growth, it evolved into a venture on the mountain. In 2014, they thought it could be given more independence, so in 2015, they created CIC to turn it into an independent company on the mountain. They believed it had great potential in new markets and operated CIC so well that they decided to fully separate it. In 2017, a separate entity was established as a wholly independent company, ensuring its independence. Naver's CIC operates in this manner, systematically nurturing many CI talents such as On-A, Apollo, Adobe Revel, Poster, Ace, Naver Group's Bae, Naver Search, and Laber.

They provide support and ensure independence, while now there are cases that have succeeded. In 2017, Do-ye, a separate law was established as a Naver webtoon, and in 2019, Naver Financial became independent as well. Those CICs that have rolled well and successfully settled have been given independence. On the contrary, some have become independent by establishing separate corporate entities and then returned to being a CIC. Kakao is also facing many concerns now regarding the organization of Hum Earth related to Kakao. They are contemplating how to integrate commerce into KakaoTalk to maximize revenue and secure operating profits. KakaoTalk is actually closely related to commerce, so there is a lot of consideration on how to reorganize this part. Close to December 2018, they conducted a review to establish an independent corporate entity.

It is created and comes out, but after that, in September 2021, an independent law was enacted to liquidate the independent corporation within the corporation and make it into a CR company. In September 2011, it merged three times in an independent corporate form, so it was made into an independent company. If we do it like this, there is a limit to controlling to create synergy at the group level. The e-commerce part merged with our side, Tier 5 V-dubbing, to create strong synergy in one framework and one corporation, so it was made into CIC. As a result, CIC was not in an independent form, but rather as an internal division, so CIC was dismantled and had to be made into a new business division. Therefore, in January 2022, CRC was also eliminated and reorganized into the e-commerce business division within the organization. In the case of Naver, it was the opposite. Generally, from the mountain team, skipping internal ventures, they directly leap to independent ventures.

And then, in a more independent form, the independent law goes like this. On the contrary, in the case of independent companies like Kakao Commerce, after evaluating it as an external independent company, with the dismantling of this CIC, it is just integrated into the business division as a commerce business division within the organization, thus restructuring in a way that creates strong synergy within one organization. This CIC can be made independent as needed, or it can be reorganized into a business division. Depending on the intentions of management, shareholders, and management, we can consider how to operate this. In the case of companies like SK Telecom, operating CIC in SK Broadband, and also in the case of LG Group, LG Electronics operates in a CIC form, ensuring independence in management planning, finance, etc., without interference.

In cases where guarantees are provided, let's first conceptualize and concretize the concept of independent businesses up to now. Then, let's look at the success factors, pains, success cases, and how they are applied in large companies. Lastly, for those of you who are considering establishing an independent overseas business, I will briefly discuss how you can create it, how to operate it, and how to seize opportunities. First of all, in order to attract investors, we need guidelines on how we will operate this overseas independent business, who will be in charge of the operation, and how we will operate it in detail. That's where the overseas independent business operation regulations come in.

Regulations should include detailed guidelines on purpose, installation methods, overall operation, management, maintenance, investment, decommissioning, etc. The first step is to create operational regulations, and the second step is that for a single independent company to succeed, it is not about just leaving it alone, right? Ensuring the independence of a single independent company while providing financial support and opportunities to synergize with existing businesses, in this way, a dedicated operational organization is needed to grow independently. Therefore, it can serve as a communication channel between the parent company and the CIC, enabling independent synergy. So, do we need a dedicated organization or personnel for this? Thirdly, if the core members of the independent company are involved, ultimately, considering successful business mergers and even branching out as an independent entity in the United States.

There may be cases like this, and in preparation for that, it would be good for key members of the independent overseas company to specify weaknesses in the company through a detailed agreement. For example, it could be discussed what issues there are in the company and how we, as external parties, think that the form of this CRC is appropriate. Therefore, I, as a member of the CRC, may feel burdened, but if the CRC takes on such risks and successfully establishes a subsidiary later, I would appreciate it if you could guarantee me 3% of the shares. Additionally, I would like to secure 3% in options. If not, I would like to play a role at least as a non-executive director, and if there are individual requests like this, a separate agreement reflecting those requests may be needed. Therefore, legally, you may need to consider these aspects and proceed.

I think that in order to successfully establish a mountain independent company, it is necessary to make efforts. I have looked into mountain independent companies with you to revitalize various businesses outside the mountain by operating a circuit and utilizing independent companies outside the mountain well, which I think is a very good system for various new businesses and new market strategies. Also, I hope you make specific detailed considerations in advance, establish operational regulations, sign contracts, and even create a dedicated team in order to successfully settle down. Thank you for your attention so far.

사내독립기업의 성공전략과 실패요인, 대기업의 CIC도입 사례

스타트업, 주주권, 경영권분쟁, 협상, 설득, 대화에 대해 이야기 합니다. 
'류재언 변호사의 협상 바이블'과 '대화의 밀도' 저자이며, 8년간 세바시 협상스쿨을 운영해왔습니다. 
경영권분쟁 및 스타트업 전문 로펌 법무법인 율본의 대표 변호사입니다. 

[협업문의 및 SNS]
이메일: yoolbonlaw@gmail.com
인스타그램 https://www.instagram.com/ryoo_jaeeon/
브런치: https://brunch.co.kr/@jaeeonryoo


협상가 류재언변호사 

The Concept of CIC (Company in Company) in Korean Business

Many Korean companies are now adopting the concept of CIC, which stands for Company in Company, as a way to operate tasks like individual companies within their existing organization.

CIC is an independent division of a business that operates separately, aiming to overcome the difficulties of making decisions and driving internal growth within large and medium-sized companies in Korea.

The introduction of CIC is driven by the need to test new ideas and enter the market rapidly, while also addressing concerns about resistance, psychological burden, and operational issues within the existing corporate structure.

Establishing an Independent Company within a Corporation

Creating an independent company within a corporation requires approval from existing investors and a clear focus on guaranteeing independence in human resources and management.

The goal is to diversify business, enhance efficiency, and attract talented employees, similar to the concept of corporate ventures.

Financial independence, personnel independence, and autonomous decision-making are crucial for the success of an independent company, requiring a systematic approach to nurturing and protecting independence, including the use of independent audit systems.

Ensuring Independence in Independent Companies

Independent companies face challenges in maintaining fairness and confidentiality while making rapid decisions.

The success of independent companies depends on overcoming obstacles in granting independence, understanding management concepts, improving decision-making efficiency, managing resources, and resolving conflicts with existing companies.

Naver and Kakao in Korea serve as a successful example of creating independence through separate business entities and nurturing new talents within the organization.

Restructuring of Corporate Entities: Successes and Challenges

Some corporate entities have successfully gained independence through separate laws and reorganization.

There is a trend of integrating independent companies back into the main business division to create synergy.

Large companies like SK Telecom and LG Group are operating independent business divisions to ensure management independence.

The process of establishing and operating independent overseas businesses also requires clear guidelines and regulations for attracting investors and defining operational responsibilities.

The Importance of Operational Regulations and Dedicated Organizations for Independent Companies

Operational regulations should cover installation, operation, maintenance, and decommissioning guidelines for independent companies.

Creating a dedicated operational organization is essential for the success and independence of a single company, providing support and synergy with existing businesses.

It is important to specify weaknesses and establish detailed agreements for overseas expansion, while also considering the need for a dedicated team to ensure the successful establishment of an independent company.