HYBE Corporation: A Case Study

in Transformational Change

PPM 206: Organizational Change Management

Deepali Singh (2300325MBS)

MBA SM (Sem 2)
Introduction

This report explores HYBE Corporation's 2021 transformation from artist management
agency Big Hit Entertainment to a comprehensive entertainment lifestyle platform
company. The report will analyse the driving force behind this shift—the need to
diversify offerings and become a leading entertainment platform—alongside the benefits
and challenges of transforming and managing a complex ecosystem while maintaining
their core identity.

Company Background
Hybe Corporation, formerly Big Hit Entertainment, is a South Korean entertainment
company founded in 2005 by Bang Si-hyuk. The entertainment powerhouse has
experienced a remarkable rise to prominence in the global entertainment industry. Hybe
Corporation's early years were marked by a focus on developing domestic talent and
navigating the competitive landscape of the Korean music industry. They began as a
small artist management company with big ambitions. The company’s goal was to
harness the power of the fans who support them—not on but off the stage—and thereby
ensure both the company and its artists can grow and, ultimately, contribute to the
growth of the music industry.

A turning point came in 2013 with the debut of BTS, a boy group that would propel Hybe
Corporation to international fame. The company's innovative approach, leveraging
social media and strategic marketing, fostered a dedicated global fanbase for BTS.
This success, with BTS achieving record-breaking achievements and chart-topping
music, placed Hybe Corporation in the spotlight of the global entertainment industry.

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 BTS have successfully become global pop icons of the 21st century, driving growth and sales.

Rebranding
In March 2021, Big Hit Entertainment rebranded into an entertainment lifestyle platform
company under the name Hybe Corporation. The company underwent a complete
organizational restructuring, with the name "Big Hit Entertainment" becoming Big Hit
Music under Hybe's new Labels division.

Need for Change

Internal Drivers:

● Need for Diversification: Big Hit, known for success with BTS and TXT, aims to
become a comprehensive lifestyle platform company, encompassing music
production, artist development, and venturing into new media like gaming,

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 webtoons, and dramas. This diversification will reduce reliance on a single artist
or group for success and revenue generation.
● Expansion of Vision: The company leadership envisions Hybe as a leading
entertainment and lifestyle platform. This broader vision requires a brand that
reflects their ambitions for growth beyond artist management.

External Drivers:

● Competitive Landscape: The entertainment industry is constantly evolving. By

transforming into HYBE, the company aims to stay competitive by offering a
wider range of content and services to a global audience.
● Evolving Fan Culture: Modern fan culture goes beyond music consumption.
Fans are increasingly interested in additional content like documentaries, video
games, and merchandise. Hybe’s transformation allows them to cater to this
evolving fan demand.
● Market Opportunities: The global entertainment market thrives on diverse
content. By expanding their offerings, Hybe has positioned themselves to
capitalize on new revenue streams and tap into emerging market trends.

The Transformation Process

Recognizing the need for change, Hybe underwent a complete transformational

change in 2021. Along with the rebranding, the company implemented an extensive
organisation-wide structural change, which included the introduction of new divisions
and leadership restructuring.

New Divisions
Hybe segmented its business operations into three divisions: Label, Solution, and
Platform.

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Labels engage in unique and independent creative activities. They are also responsible
for artist management. Hybe has a multi-label system, a result of several mergers and
acquisitions both in South Korea and abroad, with each label independent of each other.

Labels Under Hybe Corporation (Source: HYBE Corporation)

Solutions help the labels by providing business solutions, and drive business initiatives
based on music, performances, IP, multimedia content, education and games.

Platforms connect and expand all Hybe services. They have their own fan platform,
Weverse, that acts as a communication channel between artists and fans.

Hybe Japan
The company’s Japanese subsidiaries were integrated into a regional headquarters
named Hybe Japan. Japan is one of the major markets and revenue streams of Hybe,
and thus, this change gave the Japanese team a degree of autonomy in music
production, artist management and talent development for the Japanese market. This
move, aside from being a major structural change, also offers the potential for cultural
integration and change. By acknowledging the distinct cultural nuances of the
Japanese market and empowering the local team to leverage their expertise, Hybe has
paved the way for a gradual integration of work styles and management approaches,

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fostering a more collaborative and regionally-sensitive environment within the larger
corporation.

Leadership Restructuring
In June 2021, Bang Si-hyuk stepped down as the CEO of Hybe Corporation to focus on
music production. He was replaced by Park Ji-won, previously the CEO of Hybe HQ (a
wholly owned subsidiary of the corporation). A Hybe America division was established,
with Lenzo Yoon and Scooter Braun as co-CEOs, leveraging their expertise in the
Western music market. This restructuring thus placed leaders in roles best suited to
their skill sets, leading to a more specialised and efficient leadership structure to
effectively navigate the complexities of becoming a multinational company in an
expansionary phase.

Acquisitions
Hybe has undergone certain strategic acquisitions to expand their business offerings
and streamline their operations. One of their major business ventures was acquiring
Ithaca Holdings, the company of Scooter Braun, who has managed big American artists
such as Ariana Grande and Justin Bieber. This was a structural change leading to
collaboration and resource sharing across the two companies, along with cultural
exchange. Hybe has also acquired several smaller South Korean entertainment
companies, such as Pledis Entertainment and Source Music, a structural change
focused on talent acquisition.

Hybe Solutions
This division is the diversification arm of Hybe’s corporate transformation and
restructuring. It goes beyond the traditional music production focus, venturing into new
areas to create a more comprehensive content and fan engagement ecosystem. Its
areas of operations include:

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 ● Video and Drama Content: Hybe Solutions manages the creation, editing and
distribution of various video content, such as documentaries, reality shows,
television dramas (upcoming), and scripted content featuring their artists.
● IP (Intellectual Property) Development: HYBE Solutions is responsible for
identifying and developing HYBE's existing artist and character IPs into new
content formats like webtoons, mobile games, and merchandise. A famous
example is TinyTan, the IP characters representing the BTS members. Such
creations reduce dependency on artists and free the artists to pursue their
musical ventures while bringing in revenue.
● Learning & Education: This arm focuses on creating educational content using
artists and their IP characters. This includes interactive Korean learning online
classes and online music and dance workshops.
● Merchandise Development & Distribution: This involves designing, producing,
and distributing official artist merchandise like clothing, accessories, or
collectables. Hybe Solutions also explores licensing opportunities for Hybe's IPs
with other merchandise manufacturers.
● Artificial Intelligence: Hybe Solutions has been exploring AI tools to enhance
content creation and fan experience. This includes music production, virtual
reality, and interactive fan platforms.

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Source: @cinder_lena on X (formerly Twitter)

The Hyper Nomad Workplace Strategy

Another key aspect of Hybe’s transformation is the adaption of the hyper nomad
workplace strategy. Inspired by the “Hyper Nomad” concept coined by French economist
Jacques Attali, it describes individuals who utilize technology and information to work
freely and independently across locations.

Hybe's strategy emphasizes employee autonomy and choice. Employees can choose
where, when, and how they work based on their needs and tasks. The traditional
concept of fixed desks and cubicles is replaced with a dynamic and open workspace.
This encourages collaboration and fosters a sense of community.

Cultural Change

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This strategy represents a significant shift in the company's work culture. It moves away
from a traditional, hierarchical office environment towards a culture that emphasizes
flexibility, autonomy, and remote work. It requires adjustments in employee
expectations, work styles, and communication patterns, and leads to a changed
emphasis on results and deliverables rather than showing up.

Structural Change
This strategy necessitates changes in the physical workspace itself. This involves a
move away from fixed desks and cubicles towards a more open floor plan with mobile
furniture and a variety of work settings. This structural change impacts how teams
interact and collaborate, requiring new tools and communication protocols to maintain
efficiency.

Model Alignment

Hybe’s transformation aligns with and follows Kotter's 8-Step Change Model.

Kotter's 8-Step Change Model

1. Establish a Sense of Urgency: The need for diversification and staying
competitive in a changing market were highlighted by the top leaders as reasons
for change. Big Hit's success with BTS highlighted the potential limitations of
relying on a single artist group for growth. Saturation in the K-Pop market further
fueled the need to diversify offerings. Additionally, modern fans crave diverse
content beyond music. HYBE needed to adapt to meet these evolving demands
and stay relevant.
2. Form a Powerful Guiding Coalition: Appointing Park Ji-won, with experience
beyond artist management, and establishing Hybe America with global expertise
demonstrated a unified leadership vision for expansion.

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 3. Create a Strategic Vision: The rebranding to Hybe and the establishment of
new divisions represent a clear vision for the company's future.
4. Communicate the Vision for Change: Communication efforts around the
rebranding and new strategies included team briefings and press conferences.
5. Empower Broad-Based Action: The Hyper Nomad Workplace Strategy
empowers employees by offering them more autonomy and flexibility. The new
solution division empowers employees to develop new content formats and
engage fans in more diverse ways.
6. Generate Short-Term Wins: Early successes in new ventures like Hybe
Solutions helped maintain momentum for the change.
7. Consolidate Gains and Produce More Change: Hybe continuously evaluates
and refines their strategies to maintain progress. They offer training programs to
equip employees with the skills and knowledge needed to thrive in the
transformed organization.
8. Anchor New Approaches in the Culture: Embedding the Hyper Nomad
approach and a culture of innovation will be crucial for long-term success.

Systematically addressing each step of Kotter's model increases the likelihood of

successful implementation and employee buy-in for this complex change initiative.

Impact of Change

Increase in Revenue and Profits

Owing to the diversification and expansion, the revenue and profits of Hybe grew by
more than a fifth in 2023 as album sales doubled and post-COVID conditions allowed
more concerts to be held.

● Revenue: The company's annual revenue grew 23% compared to 2022,

reaching KRW 2.17 trillion (approximately USD 1.63 billion).

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 ● Profits: Net profits for the year tripled compared to 2022's results and even
surpassed 2021's figures, reaching KRW 187 million. This impressive profit
increase came despite a net loss in the fourth quarter (KRW 53 billion or USD
39.8 million). However, this fourth-quarter loss was lower than the previous year.
● Album Sales: Hybe artists collectively sold a staggering 43.6 million album units
in 2023, doubling the sales figure from 2022.
● Fan Engagement: Their global fan platform Weverse surpassed a staggering 10
million monthly active users, and the number of artist communities on the
platform surged by an impressive 72% year-over-year to reach 122 by the end of
2023.

Brand Identity

Shifting from a music-centric agency to a comprehensive entertainment platform has

elevated HYBE's brand image and reach. Catering to evolving fan culture through
diverse content has strengthened fan engagement and loyalty, leading to increased
brand advocacy.

Artist Development

Hybe Solutions lets artists explore new skills through content creation, while acquisitions
like Ithaca Holdings open doors to global collaborations. The Weverse platform fosters
deeper fan connections, allowing artist input on creative direction. Additionally, the
Hyper Nomad work environment grants artists more control over their schedules,
potentially reducing stress and allowing them to pursue personal projects. Artists at
Hybe have started exploring other areas, such as video creation, production and
gaming.

Challenges

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One major hurdle is balancing music production with the demands of new content
creation. Artists may need to carefully manage their time to ensure both music, their
core competency, and new endeavors like webtoons or games receive the necessary
attention. Another challenge lies in integrating artists from acquired companies.
These artists might have different training backgrounds, working styles, and
expectations. HYBE will need to create a smooth onboarding process and provide
cultural sensitivity training to ensure a successful integration into their organisational
system.

Conclusion

By diversifying beyond music and fostering deeper fan connections, Hybe Corporation
has seen impressive results in revenue, fan engagement, and artist development.
However, balancing artist workloads and integrating new talent requires ongoing
attention. As Hybe navigates these challenges, their ability to adapt and innovate will
determine their ultimate place in the ever-evolving entertainment landscape. One thing's
for sure: Hybe's bold move has set the stage for a future filled with exciting possibilities
for both artists and fans.

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 References

https://www.hybecorp.com/eng/main

https://weverse.io/

https://taskhuman.com/insights/leadership-through-restructuring/

https://online.hbs.edu/blog/post/types-of-organizational-change

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