Why Samsung pays its stars to goof off by Nicholas Varchaver

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Part 1

This story is when Lee Kun-Hee, a chairman of the South Korean electronics giant Samsung, made a decision in the early 1990s to conduct his organization reform and globalization. Dispatching young employees to other strategic countries to learn other culture, language and networks for Samsung’s better understanding on a global market, he showed a true meaning of investment in the future. V.H. at the first page of this chapter points out that U.S. corporations nowadays tend to miss in action for global business, which they should learn more from Samsung case. By the end of 1980s, Lee Kun-Hee started to realize that the company Samsung has weak foundation, and the products were not innovative yet ubiquitous. Most of all, Samsung had a static and inward-looking atmosphere created from family management with a Confucian culture. In 1993, Lee and his son imported a new management initiative bringing more of employee autonomy, promotions and achievement-based payment rather than traditional sense of management style. Within a decade, Samsung took off globally and became a successful brand. For example, their smartphones Galaxy series are among the few to be able to compete with Apples’. By 2011, Samsung ranked as the 17th most valuable in the world in terms of its brand, according to the annual Interbrand Poll, leaving Sony (Sony was ranked 37th, the writer of this paraphrased paper searched herself; https://www.interbrand.com/best-brands/best-global-brands/2011/ranking/) – the company that defined electronics supremacy for decades (pp.48).

Part 2

After the New Management initiative, Lee launched Samsung’s another transformation with a simple concept that their young employees can be dispatched to other countries to learn their culture, so that they can use the benefits of increased global awareness for Samsung. Since 1990 some 4,700 employees have been dispatched to 80 nations. Although it is not a new idea in that already from the late 19th century Japanese trading companies used to send their employees to other nations for training, traditional Japanese dispatch is quite limited in timeline and cost. In Samsung, there was also complaints from the executives on the cost, which was around $100,000 per specialist on top of salary and benefits for a year, as well as on the fact that the company cannot use young human resources for a year. They raised additionally a risk of losing such young human capitals while they are being dispatched in corresponding countries. Despite of the complaints, Lee removed the views and expanded the program for two decades and counting. The regional specialist experiences, which refer to young employees who are dispatched to other nations, start with three-month boot camp at a massive company facility in South Korea to learn the language of which they are living in with at other countries. An example was used in this chapter that the company even posted notes English and Japanese phrases in the camps’ bathrooms so that the employees can see and learn when they wash up. The camp included more than language learning in that there was social and physical practice as well such as meditation, lessons on table manners, and avoiding sexual harassment.

Part 3

Then, they were dispatched to other nations, in early days to U.S. and Europe and then to more emerging markets as in recent years. They were not allowed to take their families together during the dispatch duration, but the company used ‘’goof off and learn’’ theme to make the employees meet up local people and make networks, to write a report about what they found. One of the first regional specialists Park Kwang Moo was mentioned in this chapter that he spent a year in the former Soviet Union to learn culture and language of Russians; it became a help when an annual report of Samsung specifically credited this in 2003 that the company had been selected as the Narodnaya Marka, the best national brand in Russia. Also another example of a regional specialist in Indonesia was reported in this chapter saying that thanks to the information that the specialist brought up to the company, they were able to provide a safer guide for customers with better product design when Indonesian consumers were more likely to have problems with unauthorized product-repair services. This regional specialist program as nurturing connections to key persons in other countries using their Samsung human resources and better understanding of local markets were proclaimed by themselves as a key factor for their successful business. Many regional specialists showed high rates of returning to the company after their dispatch, and over the years the program changed to be more in a direction of increased control (pp.53). Also, the selection of the candidates for the program became to be made by the executives. That enabled more supportive management for the program. Large companies in South Korea including Hyundai Oilbank, Hanwha and LG Chemical have adopted similar programs and Korea’s largest banks including Kookmin and Woori also started to send their human resources to emerging countries for the same purpose with Samsung’s. Further, Japanese corporates including Mitsubishi, Itochu and Marubeni began to introduce similar version of this regional-specialist program.

Part 4

To Sum up, in this chapter we learnt: How Samsung evaluate their business performance since 1990 How the great long-term research strategy adopted by the company paid off now days by positioning Samsung as a market leader in electronics. Samsung innovation was the result based in a deep understanding of the local people culture; And why other companies find no problem in adopting Samsung research strategy.

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