Samsung’s ‘Start-up’ initiativeSamsung Electronics has announced the so-called “Start-up” initiative to reinvent its corporate culture and working environment and make itself as bold, fearless and agile as a startup venture. The electronics giant has embarked on a sweeping corporate makeover for the first time since Chairman Lee Kun-hee launched “new management” after he took the helm of the business group in 1993. The initiative raises hope for a new turning point for Samsung Electronics in the ever-evolving and challenging technology world.
Samsung established an effective top-down corporate structure under the new management agenda in the 1990s that helped its output reach global standards.
The conglomerate outpaced its Japanese and Taiwanese rivals one by one through faster technological advancement and better yield. But the quintessential bureaucratic and forceful drive that helped fuel the company over the last two decades now hinders its progress as the industry is more led by software than hardware competitions.
Industry analysts predict Samsung Electronics’ first-quarter operating profit would stop at slightly over 5 trillion won ($4.28 billion) — over than 1 trillion won less than the previous quarter. Samsung fell to fifth place in the Chinese smartphone market this year. Apart from memory chips, Samsung incurred 77.6 billion won losses in sales in China last year. After reaching a saturated point in the global market, smartphones alone cannot drive Samsung’s earnings in the future. The company could be headed downhill without a dramatic breakthrough in the corporate culture.
The latest initiative is aimed at restructuring Samsung’s working environment so that ideas can be more freely and quickly explored after first scrapping its bureaucratic horizontal culture.
The new leadership under younger Jay Y. Lee, who has been leading the electronics behemoth on behalf of his bedridden father could help make it leaner and younger, allowing it to adapt to the world’s fast-changing business environment.
But the success of this ambitious startup experiment hinges on creativity and a healthy business ecosystem. Samsung Electronics must do away with its old ways of trying to domineer others with its cherished winner-take-all mindset. Instead, it must promote symbiotic innovation and marshal other companies to join it on its new path just as it aggressively took the lead in changing our corporate culture after introducing the new management system two decades ago.
JoongAng Ilbo, Mar. 28, Page 30