An Awesome Track Record
Lee Kun-hee's quest for global recognition: "Change everything except your wife and children"
Former Samsung Group chairman Lee Kun-hee is still very much alive in the minds of the people, especially the employees of the conglomerate he inherited two decades ago when his father Byung-chul died.
When he took over the helm of the conglomerate with over 50 affiliates, not many thought that the junior Lee, then in his early 40s, could match the senior Lee's management ability. He was definitely born with a silver spoon in his mouth and not many knew the depth of his intelligence and ability to steer the nation's biggest business group. December 1, 2007 marked the 20th anniversary of the junior Lee's ascension to the top position of the Samsung Group and the event almost went unnoticed because of the ongoing investigation into allegations of wrongdoing including tax evasion and secret funds. The group chose to skip any ceremonies to mark the occasion at the time.
But reports of the retired chairman's achievements as the CEO of the largest conglomerate in the country began trickling out as if to let the world know about the character and human side of the man.
First of all, the former Samsung chairman is given credit for the globalization of the group's operations by making some of its products well known around the world and making Samsung a popular brand name in the process. When he took over as chairman in 1987, he declared autonomous management, the importance of technology and respect for human beings as his management guidelines and the basis of his philosophy for the conglomerate's 'second' birth'as a business group. He put forward a vision for the group to achieve the status of a first-rate global corporate group in the 21st century and realize an annual net profit of 1 trillion won.
Not many, including experts, believed the targets were achievable when they were announced in 1988 at the group's half-century anniversary. But seeing where the group is now, many nod their heads that the targets have not been pipe dreams, but have been more than met through the sale of its world-renowned products such as semiconductor chips, cell phones and monitors, all of them recognized as top-class products bearing the Samsung brand name.
The former Samsung top manager always called for No. 1 or Only One "If the group wants to survive"under his world-best management philosophy and drive to develop top technology and brand products superbly designed to be the world's best.
The result is Samsung Group's brand value reached $16.9 billion, ranking 19th in the world in 2007, shoulder-to-shoulder with top global companies. One of its major affiliates, Samsung Electronics, has made tremendous progress towards globalization, outperforming Sony in the areas of market value in 2002 and brand value in 2005 as a top electronics maker in the world.
Such feats were so hurtful to the Japanese that their electronics firms banded together to topple Samsung from its top position in the area of electronics. Some Japanese media called on Japanese electronics firms to learn from Samsung Electronics. When the young chairman took over the group, it was the top conglomerate in the country, yet far from achieving the global status it has now.
"Change everything except your wives and children,"the young CEO cried out when he took over. It was this kind of total reform and a management style focused on quality improvement that enabled the group to thrive during the foreign exchange crisis in 1998 through restructuring based on "selection and concentration."Such innovative and tenacious work led the group to win world recognition for its globalized operation.
The group's success under Lee is quantifiable with solid figures. First, its annual sales expanded to 152 trillion won in 2007, up 8.9 times compared to 17 trillion won in 1987. Profit before tax in 1987 amounted to 270 billion won, but jumped 52.6 times to 14.2 trillion won in 2007. The annual sales figures accounted for 18 percent of the country's GDP and annual exports accounted for 21 percent of national exports in 2007.
The market value of the group rose to 140 trillion won during the former chairman's tenure, while exports climbed from $900 million to $66.3 billion, up 73.7 times. The number of employees expanded from 160,000 20 years ago to 250,000 in 2007.
Many factors combined to put the group where it is today, but many experts point to Lee's strong leadership as one of the most contributing factors. His powerful leadership has enabled the group to cope with the rapid changes in the business environment, which has been pointed out in the international media in such publications as The Economist of Japan, Diamond, Bloomberg, Business Week, Time and Fortune, among others.
Credit is also given to the management triangle, formed with the chairman at the top with the strategic planning office and top executives of affiliates as the wings, for the group's performance. Such management acumen was the central force in the group's restructuring to ward off any impact from the financial crisis in 1998 and to make it stronger.
The group went further in improving its operations by continuing to reform with the restructuring made during the financial crisis with the strategic planning office mapping the directions for group affiliates and the heads of the affiliates pursuing those targets.
Another key factor of the former chairman's success has been his focus on training talented employees in various areas of operation, including those overseas. He always said a talented person can feed over 10,000 people in the 21st century as a way to point out the importance he placed on searching for talented employees and training them.
CEOs of group affiliates often interviewed jobseekers directly and made trips overseas to find qualified personnel. The group's management did not neglect providing training to veteran staff and officers including managers and directors to upgrade their management abilities.
The former chairman's focus on personnel training has been such that the group's training facilities are well known to be among the best in the world, especially in the areas of developing management capacity and key values that the group favors, including the owner's management philosophy.
Lee called on the heads of affiliates to focus on what they have to do to keep themselves going in five or 10 years. Each affiliate took the time to find new strategies to keep them in business by coping with various changes in the business environment and by searching for new growth engines.
However, Lee felt that securing talented employees would continue to be a big factor for the group to sustain its viability, as predicting business trends is nearly impossible with changes in the global market coming so quickly these days.
The ex-chairman also directed each affiliate to allocate 8 percent of its annual sales to R&D activities in an effort to boost the global image of its products, especially consumer electronics products such as cell phones, digital TVs, TFT-LCDs and digital products in particular.
The former chairman is also credited for launching sports marketing to boost the brand image for Samsung products beginning in 1997 through its sponsorship of the Nagano Winter Olympics in 1998. In 2004, Samsung sponsored the Athens Olympics'torch relay in 34 cities in 27 countries introducing the world to the first-class Samsung brand. nw
Former chairman Lee Kun-hee of Samsung Group.