Tales of Chairman Lee

Lee Chul-ho
The author is a columnist of the JoongAng Ilbo.

The Shilla Seoul Hotel, which opened in 1979, was built with red-brick tiles on the main building. If you look closely, you can see that the color of the tiles is slightly different on the lower and upper floors. During the final stage of construction, Samsung Group ran out of money. It somehow managed to raise some money, but by the time it tried to buy supplies, it couldn’t find the same tiles it started with. It had to finish the building with tiles that looked almost the same. Although it was the largest business group in Korea, Samsung was not immune to the liquidity shortage caused by the second oil shock in the late 1970s. The New York Times recalled Samsung had been an obscure maker of cheap TVs and unreliable microwave ovens sold at discount stores when Chairman Lee Kun-hee ascended to the helm of the group in 1987.

We need not be reminded of the staggering leap in the status of Samsung during the 26 years of Lee’s leadership. Samsung is now the No. 1 producer of smartphones, TVs and chips. Lee’s death reminds us of his management style. The turning point came in a speech in 1993 in which he urged employees to “change everything except your wife and children.” The ingenious choice of “stacking” wafers for chip fabrication was another turning point. When his aides enumerated the risk and costs, Lee determinedly said, “Let’s look at things from a far-sighted and simple perspective. Won’t it be easy to build things up instead of digging a tunnel?” That was how Samsung Electronics was able to divorce itself from Japan’s Toshiba to go solo in chip production with proprietary manufacturing technology.

Another impressive moment for Lee was in 1995 when he piled up 150,000 defective cellular phones and set them ablaze. Their poor quality had affected sales and this was Lee’s solution. After the semiconductor division delivered its first profit, Lee went after cellular phones in 1988, his second year as chairman. The business incurred losses for seven years due to strong competition from companies like Motorola. Instead of giving up, Lee pressed on, envisioning a day when every person would own a mobile phone. Such boldness could not have been possible if the company had not been run by an owner. In 1994, Samsung finally produced a customized phone that worked best in the Korean environment. Korea was the only country where Motorola had not been the bestseller.

Lee was an avid movie lover. His favorite was the epic classic “Ben-Hur.” In the famous chariot race between the enslaved Judean prince and his estranged friend and archrival Messala, Ben-Hur didn’t need a whip to run his chariot of four white horses, while Messela’s black horses were whipped relentlessly to go faster. On the night before the race, Ben-Hur spent time with his horses and gave them words of encouragement. Ben-Hur and his white horses triumph as Messela is dragged behind his horses after his chariot is wrecked and trampled by another chariot. “Messela was a top handler, but Ben-Hur was a different kind,” Lee used to say.

Many criticized Samsung for its dynastical management. But CEOs at Samsung companies could last five to 10 years. Lee had promised to make the group a heavenly workplace for salary-earners. Samsung Electronics produced world-class CEOs — Yun Jong-yong Chin Dae-jae, Hwang Chang-kyu, Lee Ki-tae, Choi Gee-sung and Kwon Oh-hyun, to name a few. They all recall how they were given authority to make management decisions although they consulted important matters with the chairman’s secretariat office. Like Ben-Hur who trusted his horses, Lee had full faith in his people.

Ieodo, the southernmost part of South Korean territory, is strategically and environmentally important. A project to establish an ocean research station had been pushed by Science and Technology Minister Kim Si-joong in 1993. The strategy and economy ministries rejected the plan citing a lack of budget. Minister Kim turned to the private sector to draw funding for chopper and submarine tourism instead. But Hanjin Tourism and another Samsung travel agency also turned away.

According to Kim’s memoir, the president of Samsung Heavy Industries suddenly came to his office seven months later and offered to take up the science-tourism project at the corporate expense of 12.8 billion won ($11.3 million). He later learned that Lee lambasted executives upon hearing about it after he returned from a business trip to Germany. “The minister would have pursued the project for the country, not for his own ego,” Lee said and commanded Samsung Heavy Industries to take up the project as it would serve the country well. The project, however, did not proceed due to a conflict between then-President Kim Young-sam and Samsung. The mission was finally completed by President Roh Moo-hyun, who served as an ocean and fisheries minister.

Chairman Lee was an acute reader and judge of the state of things. In 1995, he observed that Korean politics were fourth-rate, its government third-rate and companies second-rate. In 2007, he pointed out how Korea was in a poor state, falling behind Japan and closely chased by China. Upon reporting his death, CNN lauded him as a real pioneer.

Jeju Gov. Won Hee-ryong paid his respects to Lee by saying, “We have built a broad and far sight on the shoulders of the giant.” Lee’s transforming of a mediocre company into a multinational giant obscures his personal flaws. We may have to recall his courageous words whenever our society faces challenges. May he rest in peace.