Lee Kun-hee – who turned Samsung from unknown to giant

In a statement regarding Lee Kun-hee’s death at the age of 78, Samsung stated that “His legacy will endure.” In fact, it was Lee Kun-hee who turned Samsung from an unknown company associated with poor quality into the name of the world’s leading technology.

Early contact with Japan

Mr. Lee Kun-hee was born on January 9, 1942 in Uiryeong Village, South Korea, during the Japanese occupation. He is the third son of Samsung founder Lee Byung-chul. A few years earlier, his father founded Samsung as an exporter of nuts and fish. He was sent to Japan at the age of 11, shortly after the end of the Korean War. His father wanted his children to learn how to rebuild Japan from the ashes of World War II.

In Japan, Lee admits to feeling lonely and finding it difficult to make friends due to dissatisfaction between Koreans and Japanese in wartime. He returned to Korea but then returned to Japan to study economics at Waseda University, and then studied business administration at George Washington University (USA) but did not receive a diploma.

His early exposure to advanced Japanese technology helped him form a foundation for Samsung Electronics by forming alliances with companies like Sanyo and adopting chip manufacturing and manufacturing technologies. TELEVISION.

Mr. Lee began his career at Tongyang Broadcasting Company, a subsidiary of Samsung, in 1966. He became the group’s president in 1987, breaking the traditional Confucian custom of being the eldest son. Excuse me. His brother, Lee Maeng-hee, was originally selected to run Samsung in 1967 when his father retired, but his management style has caused friction with the founder’s trusted people.

The second son, Lee Chang-hee, once severed the family relationship and moved to the United States. After that, Mr. Chang-hee also returned as president of Samsung. But in 1976 he was diagnosed with cancer, so he turned the business over to Kun-hee. Mr. Chang-hee died in 1991.

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Mr. Lee has a slightly hunched figure due to a traffic accident. He has a soft voice, round and expressive eyes, not typical of a strong man. However, their personality, vision and leadership opinion are different.

“We are in a very important transition,” Lee said shortly after accepting the position of president of Samsung, in an interview with Forbes. “If we don’t move to more capital- and technology-intensive industries, our survival could be at stake,” he said.

In February 1993, five years after taking over from his father at Samsung, Lee Kun-hee was disappointed not to make his mark. He summoned a group of Samsung Electronics executives to a Best Buy store in Los Angeles (USA) to do a reality check on the Samsung brand. There they saw the Samsung TV in the corner of the shelf, covered in dust, priced almost $ 100 cheaper than the Sony model.

In the tense meeting that lasted nine hours, Lee initiated a strategic shift at Samsung to gain market share through quality, not quantity. The company will attract talent from abroad and will require top executives to have a deep understanding of the foreign market and how to compete there. “It’s a lot like Mao Zedong trying to change the Chinese mindset,” said Chang Sea-jin, a professor at the National University of Singapore.

Four months after the Los Angeles meeting, Lee called managers into a conference room at the Hotel Frankfurt, where he came up with a “New Management” plan, encouraging executives to “change everything but your wife and sons “.

The meetings were tough, often lasting up to 10 hours, and the participants were even afraid to drink water because they didn’t want to interrupt Mr. Lee’s discussion when he wanted to go to the bathroom.

In 1995, to emphasize quality, he visited a Samsung factory in the city of Gumi after a batch of cell phones was found to be defective. What happened next was legendary.

According to “Samsung Electronics and the Struggle for Leadership of the Electronics Industry”, a 2010 book by Tony Michell, 2,000 workers from the Gumi factory gathered in the yard and were forced to wear headbands labeled “Quality is above all “. Mr. Lee and his board of directors sit under a banner that reads “Quality is my pride.”

Together they watched as $ 50 million worth of phone numbers, fax machines and other inventory smashed into pieces and caught fire. The staff cried. Commentators say Lee is a type of leader driven by a constant sense of crisis. And he infuses it with his leadership teams to foster change and fight complacency.

“The external business environment is not good, but there is no sense of anxiety in the organization and people seem presumptuous. I need to tense up a bit and constantly remind managers of the need to have a feeling of crisis,” he recalled in a 1997 essay. .

‘Unlimited power

Samsung entered a phase of global conquest in the 2000s, using flashy gadgets and slick marketing to cement its name in the minds of Western consumers. However, Mr. Lee rarely appears in public. He is a devoted collector of sports cars and crafts.

Lee’s business acumen makes him admired in Korea. But at the same time, he and the empire he built were criticized by critics and shareholders alike for their economic clout, unclear governance and decentralization, and suspicious transfers of wealth. family.

By 2007, it had identified the next impending crisis for Samsung. China moves up in the low-end manufacturing sector, while Japan and the West continue to lead in advanced technology. Korean companies, including Samsung, are sandwiched.

But when Samsung’s next review began, allegations surfaced that it had evaded billions of dollars in taxes. In 2008, Lee was accused of manipulating a political fund and helping his sons buy Samsung shares at low prices. Prosecutors could not prove both charges, but Lee was convicted of tax evasion and embezzlement. And instead of challenging the charges, he surprised South Korea by announcing his resignation on live television.

“20 years ago I promised that the day Samsung is recognized as a first-class company, its glory and its success will be all yours,” he said in 2008, in front of his employees, his voice almost a whisper. “I am very sorry that I could not keep that promise,” he said. He was pardoned the following year and was re-elected president of Samsung in 2010.

Since then, he has had less responsibility within the corporation and has delegated authority to an army of operations, and promoted his son, Lee Jae-yong, as vice president, in preparation for the transfer of rights. last force. In 2013, Forbes still honoring him as the second most powerful Korean, second only to the Secretary General of the United Nations, Ban Ki-moon.

Focusing on the crisis and his hard work has helped Lee grow from his father’s business into a vast business empire with assets worth 424 trillion won ($ 375 billion) in May. 5/2020, with dozens of subsectors ranging from electronics, insurance, shipbuilding to construction.

Samsung Electronics has grown from a second-tier TV maker to the world’s largest technology company by revenue, surpassing Japanese brands like Sony, Sharp and Panasonic in chips, televisions, and monitors; Ending Nokia’s dominance and beating Apple in the smartphone business.

After a heart attack in 2014, his son and vice president of Samsung Electronics, Lee Jae-yong, became the face of the company. When his health deteriorated, he needed help walking and was susceptible to respiratory illnesses after treatment for lung cancer. He is less present at Samsung headquarters, spending a long winter vacation in Japan or Hawaii.

But his power over the corporation remains unfettered. Whenever you travel abroad, at least four of Samsung’s top executives, along with corporate and security personnel, will be at the airport to say goodbye.

At Samsung’s human resources development center, tens of thousands of employees attended training sessions on the ramshackle history of a Frankfurt hotel meeting room. Given that the majority of Samsung employees are in their 20s and 30s and have not experienced Lee’s heyday firsthand, this tribute is meant to remind them of the need to “think crisis.”

Of course, Mr. Lee is not always successful in business. Believing that electronics would become an indispensable part of automobiles, he began selling automobiles in the mid-1990s. However, Samsung Motors was sold in 2000.

Also, the relationship with Hollywood is short-lived. In 1995, Steven Spielberg told Mr. Lee over dinner about investing in a studio. Despite being a movie buff, in the end the president of Samsung and other executives talk mostly about microchips.

“I thought to myself:” How did you know about the movie business when you were obsessed with semiconductors? “Mr. Spielberg later recalled:” It was another night at night that turned out to be completely. wasting time”.

Session An (theo Reuters, New York)