I picked up this book by accident yesterday and couldn’t put it down. It is a fascinating story that pulled the curtain a little bit into the mystery surrounding arguably the biggest company in South Korea and one of the tech behemoths of the world, Samsung. The book covered from the early days of Samsung, the background of its founder, BC Lee, to the transformation to one of the most important tech companies in the world. The chapters into Industrial Design and the marketing war against Apple in the US were highly interesting to me. It’s captivating to read about why the management structure, the low trust feature of Korean culture and the bureaucracy squandered what could have been lucrative opportunities for Samsung including the purchase of Android, music deals with label companies. A common theme throughout the book is how impossibly bureaucratic the company is as well as the complex relationship between the Korean government and the company. Finding a similar relationship between a corporation and a state in another country poses a tough challenge. The Korean government needs Samsung to advance innovation and keep the economy strong while Samsung needs favors from the government to keep the Lee family in control and out of jail.
Personally, I was working at an advertising agency in Vietnam and involved in a pitch with Cheil, an in-house agency for Samsung at the time. The urgency, the impossible deadlines and the last minute changes discussed in the book rang true to my personal experience. We received a request to pitch on Friday and were asked to present the next Monday. My friends to this day in the advertising world in Vietnam still complain about this aspect of working with Samsung.
If you are interested in learning about this company, how it is different from a publicly traded Western corporation and its history, this book is for you. I can’t help, but admire the tenacity and the effort put into this book by the author.
How Samsung came to positioning itself against Apple
“Samsung’s market researchers in the United States thought Apple’s “Think Different” motto was pompous and presumptuous. Their research suggested that Android users—who used Samsung products—considered themselves smart and independent in their choices. In contrast, they saw fans of Apple products as consumers who fancied themselves creative but were, in reality, sheep—followers. Samsung had decided to embrace the opposite strategy to Apple’s: tailoring a version of each product for everyone who wanted something different.”Source: Samsung Rising
How the founder or the ruling family was treated
“When the chairman visited a Samsung manufacturing plant, employees were told to park behind the plant, as their cars were too ugly—apparently they offended his aesthetic sensibility. Mints were placed in the bathroom for employees to use, to sweeten their breath from the kimchi (Korean pickled cabbage) that they ate at mealtimes. Employees were cautioned not to gaze down from the windows at the chairman when he arrived. Security guards lined the road, and when the chairman’s limousine pulled up, a long red carpet was rolled out.”
“One employee was charged with trying all the local restaurants in a city where the Lee family was to visit,” a former employee told me. “He’d write reports on their dishes and wines.”
“When the chairman and his family traveled to Germany, staying at the five-star Hotel Adlon in Berlin for a week of vacation in August 2004, Samsung booked the entire fourth and fifth floors and a full conference room, setting up a “situation room” where his aides could monitor the chairman’s every move and ensure his well-being.”Source: Samsung Rising
Importance of Samsung to Korea’s economy
“According to crisis simulations I have carried out, if Electronics stocks fall by 70%, both Samsung Insurance and Samsung C&T will become bankrupt. It is an inevitable domino game. If Samsung Life Insurance and Samsung Fire Insurance become bankrupt, the entire insurance industry in South Korea goes into crisis. If employees at Samsung Group and all its supplier firms (whose exact number is unknown to the public) lose their jobs, unemployment rate in the country is estimated to rise by 7.1%. (Its current rate is 3.5%.)”
“If the Samsung Group were to fall, he goes on, the country’s National Pension Service, a major shareholder, would lose an estimated 19 trillion won (about $16.7 billion) in investment. And corporate taxes would decrease by an estimated 4 trillion won (about $3.5 billion). “If the entire Group falls, and with it multitudes of suppliers that depend solely on Samsung, South Korea’s biggest banks are at risk of insolvency.”Source: Samsung Rising
Alleged origin of the name Galaxy
“Why the name “Galaxy”? Samsung has never publicly told the story. But over coffee in Palo Alto, California, former Samsung senior vice president Ed Ho told me about a $95 bottle of wine enjoyed by its top executives, the Terlato family’s “Galaxy” red blend. It inspired Samsung executives to later choose the name “Galaxy,” which had to them a premium ring, for their phones.”Source: Samsung Rising
Samsung screwed up a chance to acquire Android
“One such story was rampant in Samsung’s offices. Android founder Andy Rubin offered to sell his operating system to Samsung in late 2004, as he told journalist Fred Vogelstein in the book Dogfight.”
“You and what army are going to go and create this? You have six people. Are you high?” was basically what the Android founders were told. Rubin found himself butting up against the Korean company’s preference for working with large corporations.
“They laughed me out of the boardroom. This happened two weeks before Google acquired us.”
Google paid an estimated $50 million for Android. The operating system would become the backbone of Google’s products on just about every non-Apple smartphone. Google vice president David Lawee later called it his company’s “best deal ever.”
What a missed opportunity for Samsung, employees thought. Samsung now depended on Google to power the software on its phones.”Source: Samsung Rising
How Lee Kun Hee wanted his employees to focus on quality control
In March of that year, he ordered his employees to prepare a giant bonfire, a sort of purification ritual, near the mobile handset factory in Gumi, an industrial city in the south-central part of the country.
“The chairman summoned factory workers and engineers to a courtyard, assembling them in phalanxes against the barren, wheat-colored mountains. They were made to don headbands that read QUALITY FIRST. A banner over the courtyard read QUALITY IS MY PRIDE. A virtual mountain of cellphones, fax machines, and whatever else was deemed junk—over 140,000 devices worth $50 million—stood before them.
A few employees at the front approached a microphone, raised their right hand, and read pledges that they would treat quality control with the utmost seriousness. The chairman and his board of directors listened from a row of seats nearby.
At a prearranged signal, nine employees rummaged through the mounds of metal and plastic, hammering each phone or device into pieces and throwing the shattered remains into a pile.
Then they “covered the pile with a net and poured petrol on them,” Gordon Kim, human resources director, told me, and set them on fire. After they had melted and burned, a bulldozer razed the remains.”
“If you continue to make poor-quality products like these,” the chairman announced to the workers before him, “I’ll come back and do the same thing.” Some of the people who had designed and built the phones cried. It was “as if their babies had died,” Kim Seon-jeong, a former financial executive, told me. Moreover, to be humiliated like that before the Samsung “emperor” was the ultimate loss of face.”Source: Samsung Rising
The challenge in working with Samsung
“They worked to inject more life into Samsung’s engineering jargon describing new products. A few weeks before each product launch, the team would receive a thick technical tome consisting of hundreds of pages. They had to tear through it, decipher it into everyday language, and select the top six or seven features to promote to consumers. Then, without being allowed to see the new phone before the launch, they’d crunch the engineering-speak into a PowerPoint presentation called a “product positioning document,” which they’d present to the agency.
Both Samsung’s team and 72andSunny were always racing the clock. Product unveilings, called “Unpacked” events, were typically held in March or April. The engineering manual arrived in February. Three times a week, Jo held a teleconference with the agencies to ensure everything was on track.”Source: Samsung Rising