The Samsung way : transformational management strategies from the world leader in innovation

295 Pages·2015·5.51 MB·English

by  Lee, Song, Kyungmook, Chae-yong

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CONTENTS

Preface
Acknowledgments
PART ONE TWENTY YEARS TO THE TOP
Chapter 1 Why the Samsung Way?
Chapter 2 How Did Samsung Become a World-Class Corporation?
PART TWO EVOLUTION OF THE SAMSUNG WAY
Chapter 3 Leadership and Governance The Core of the Samsung Way
Chapter 4 The Evolution of Samsung’s Management System
PART THREE HOW DID SAMSUNG SUCCEED?
Chapter 5 Samsung’s First Success Factor Competency in Creation of
Speed
Chapter 6 Samsung’s Second Success Factor Synergy Through
Convergence
Chapter 7 Samsung’s Third Success Factor Evolutionary Innovation
PART FOUR SAMSUNG-STYLE PARADOX MANAGEMENT AND
THE FUTURE OF THE SAMSUNG WAY
Chapter 8 Internal Co-opetition and Paradox Management
Chapter 9 The Future of the Samsung Way
Notes
Index
PREFACE
In the early 1990s, Samsung Group’s products were at the top of many industries
in Korea, but they were in the second or third tier in global markets. By then, the
effects of major changes at home and abroad were seriously affecting the
conglomerate. Democratization in the 1980s had ignited a labor movement that
had led to soaring wages and the end of Korea’s run as a low-cost production
base. Moreover, Japanese manufacturers, Samsung’s main rivals, had moved
offshore to avoid the sharp appreciation in the yen that followed the 1985 Plaza
Agreement. When their leading technology and brands in electronics were
combined with low labor costs in Southeast Asia and China, Samsung’s
struggles in global markets were clearly visible. Finally, forecasts that the
electronics industry would shift from analog to digital technology in the twenty-
first century were amplifying long-term concerns.
In response to these major changes resulting from democratization,
globalization, and digitization, Samsung Chairman Lee Kun-Hee unveiled his
New Management initiative in 1993. The strategic blueprint completely
transformed Samsung, allowing it to overcome the threat of competition and
pave the way for its taking advantage of new opportunities. It included the lofty
goal of improving Samsung’s products and services to the point of excellence
and making Samsung one of the leading global companies of the twenty-first
century. In the days of analog, Samsung had lagged behind Japanese electronics
companies, but Chairman Lee dreamed of Samsung’s outdoing them in the
digital age through aggressive, preemptive investments. The effort to achieve
these audacious goals was summed up in Chairman Lee’s directive to his senior
executives: “Change everything except your wife and children.”
Now, 20 years later, Samsung is one of the world’s leading companies,
holding the number one spot in key electronics businesses like mobile phones,
televisions, memory chips, display panels, and rechargeable batteries. All
elements of the company’s operations, including corporate strategy, management
systems, and core competencies, were realigned in accordance with the goals of
the New Management initiative. As a result, Samsung now occupies the leading
position in the global electronics industry. The company’s transformation over
the past 20 years and its rise to the forefront of the global corporate stage has set
a compelling precedent for both Korean and foreign companies.
While a number of books have been written about Samsung’s rise to the top
and Chairman Lee Kun-Hee’s role in its transformation, most of these books
were written for the entertainment of the general public. Professional analysis
and applications of theory from a management scholar’s perspective on
Samsung’s strategy and its main strengths have been lacking. Moreover, several
scholarly books on the subject lack in-depth, systematic analysis. Data about
Samsung have also been difficult to acquire, and access to interviews has been
challenging; thus, newspaper articles and publicly available data have often been
the only materials available to management scholars. As a result, both foreign
and Korean managers who wish to understand and benchmark Samsung’s
management system for their own companies have been unable to find
information to aid them in their endeavors.
Under these circumstances, we have had the good fortune to be asked by the
Samsung Economic Research Institute (SERI), a think tank of the Samsung
Group, to conduct in-depth research into the sources of Samsung’s
competitiveness and to learn about its future plans. With SERI’s cooperation,
since 2004, we have interviewed more than 80 of Samsung’s key executives,
including CEOs, with most of them coming from Samsung Electronics. SERI
also provided data about Samsung for examination and analysis. From 2008 to
2011, while serving as Samsung’s academic advisors, we obtained a wide
variety of information about the company. In 2011, as a result of this research,
we published an article in the Harvard Business Review (HBR), in collaboration
with Professor Tarun Khanna at Harvard Business School, on the factors
influencing Samsung’s success. This was the first case analysis of a Korean
company to be published in HBR. Overall, during the past 10 years, beginning in
2004, in the process of conducting research and analysis, we have broadened our
understanding of Samsung as a company, serving as academic advisors,
educating executives, and writing research papers and case studies.
This book is the result of 10 years of careful research, during which the
authors focused on Samsung’s transformation and takeoff during the past 20
years since the New Management initiative. Among Samsung’s many
subsidiaries, we concentrated our efforts on the company’s world-class
electronics subsidiaries, particularly Samsung Electronics. This book presents
Samsung’s three major management paradoxes, along with an in-depth analysis
of Samsung’s distinctive competencies, and particularly the management system
that Samsung built in the process of resolving these paradoxes and developing
the Samsung Way. A broad picture of Samsung’s future tasks is also included.
We believe that this book will be helpful for executives and employees who
want to understand and benchmark Samsung’s management system and its rise
to the top. In particular, both corporations in advanced countries and latecomers
in developing nations that want to catch up with front-runners can learn from
Samsung’s example. In addition, our analysis of Samsung’s paradox
management strategies and systems will provide many points of learning for
management scholars and students.
We also believe that employees at Samsung, especially foreign employees,
can understand or reevaluate Samsung’s transformation, core competencies, key
success factors, and management systems and mechanisms since the New
Management initiative by reading this book. Our analyses and opinions may not
necessarily be definitive, and they may differ from those of Samsung’s
employees. Yet since they are the views of outside experts, we believe that they
merit attention and consideration. We hope that this book can help lay a
cornerstone for further development of Samsung’s strategies, management
systems, and capabilities.
The book was written with interview support from Samsung’s executives and
employees, yet it is based on independent judgment and analysis. All of the
content included herein represents the personal view of the authors, and does not
represent Samsung’s official stance.
Samsung’s future depends on its employees. We sincerely hope that the
company can overcome its external and internal challenges wisely, and further
evolve and develop the Samsung Way by taking its unique paradox management
system to the next level. We hope that the findings in this book can play some
part in this process. We also hope that executives and employees at other
companies, in particular non-Korean companies, as well as business scholars and
students studying business administration all over the world, can understand
Samsung better by reading this book.
Professors Jaeyong Song and Kyungmook Lee
Seoul National University