Samsung’s 4,70,000 employees get no pat on the back from chairman Lee

Dec 16 2013, 13:58 IST
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Samsung Electronics Chairman Lee Kun-hee (Reuters) Samsung Electronics Chairman Lee Kun-hee (Reuters)
SummaryLee Kun-hee, man who built one of most profitable in the world, sends team mail, tells them to raise their game.

Lee Kun-hee, the man who built the most successful, most admired and most feared business in Asia — a $288-billion behemoth that is among the most profitable in the world — had a message for his employees this year: You must do better.

At other companies, congratulations might have been in order.

His companies were headed to another extraordinary year. But this was Samsung, the South Korean industrial group that Lee, an elfin man with a stubborn will, transformed from a second-rate maker of household appliances into a conglomerate with a flagship electronics business that has left most rivals eating its silicon dust. There would be no pat on the back for Samsung’s 470,000 employees. Instead, in June, he sent a company-wide email sternly urging them to raise their game.

“As we move forward, we must resist complacency and thoughts of being good enough, as these will prevent us from becoming better,” Lee, who is 71, wrote. Samsung’s management, he said, “must start anew to reach loftier goals and ideals”.

Two decades earlier, having taken over the company from his father, Lee met with dozens of his executives and gave them a similar order, one that remains embedded in company lore: “Change everything but your wife and children.”

That message was effective. Samsung’s sales are equal to about a quarter of South Korea’s economic output. Samsung Electronics, the flagship, posted $190 billion in sales last year — about the same sales as Microsoft, Google, Amazon and Facebook combined.

Last year, Samsung shipped 215 million smartphones, about 40% of the worldwide total, analysts estimate; this year, it is expected to ship more than 350 million. Interbrand, a marketing consulting firm, ranked Samsung as the eighth-most-valuable brand in the world. Lee is one of the world’s richest men.The company’s sweet spot has become electronics: It makes chips, display panels and many other electronic parts, and then assembles its own smartphones and other devices.

This kind of vertical integration has fallen out of fashion in the West, where it is considered unwieldy. While Apple designs its hardware and software, for example, the company buys chips from other companies, including Samsung, and outsources the assembly of iPhones, iPods and iPads.

But many years ago, Lee prodded his lieutenants to see the company’s deep reach into the supply chain as a competitive advantage, not a burden. So far, it has worked for Samsung.

“I don’t think people realise how effective a machine

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