The end of a business culture

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The end of a business culture

The keystone of Samsung Group’s restructuring outline released on Tuesday is the shutdown of the Future Strategy Office that served as the conglomerate’s command center under the direct command of the Lee family. Top executives Vice Chairman Choi Ji-sung and other heads of seven departments under the office will resign while the 200 staff members will return to their previous Samsung units. The strategy office began as a personal secretariat for group founder Lee Byung-chull with 20 members. It navigated the Samsung ship for 60 years, and its retirement suggests a new path for Samsung management.

Perspective on the strategy office has been mixed. It has been credited for coordinating between strong owner leadership and professional entrepreneurs to keep the Samsung legacy a success. Its clandestine work style and mighty power over business organizations, appointments and supervision, however, drew criticism. Its role as a lobby channel was confirmed for having arranged funding for the president’s powerful friend Choi Soon-sil with corporate money.

A corporate command center worked effectively at a time when limited resources had to be well appropriated amid plans to catch up with the global mainstream. But its role no longer is needed now that Samsung has become a multinational name. Weekly meetings among the corporate heads of Samsung companies and other group-led activities will cease to exist as to bestow greater autonomy to individual units and their boards.

Samsung’s leadership has come under fire with its leader Lee Jae-yong in custody and facing bribery as well as other criminal charges during tumultuous business conditions at home and overseas. Samsung Electronics and other leading companies must explore new businesses and move swiftly to maintain leadership in the semiconductor and smartphone markets. In the IT sector, fast investment and management actions are necessary to stay ahead or they can never entirely come back as seen with Toshiba and Nokia.

The group operations will run separately with Samsung Electronics in charge of technology, Samsung C&T of bioengineering and heavy industries, and Samsung Life Insurance of financial units. It will stop using the Samsung Group name. We will have to wait and see whether the changes really go beyond the nameplate.

JoongAng Ilbo, March 1, Page 26
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