[Chairman Lee Kun-hee Passes Away] The Gambler Who Led New Management... What Are His Achievements and Management Philosophy?

Chairman Lee Kun-hee at the time of the New Management Declaration in 1993 (Photo courtesy of Samsung)

[Asia Economy Reporter Changhwan Lee] Lee Kun-hee, Chairman of Samsung Electronics, passed away on the 25th at the age of 78. Born in 1942, the late chairman died after battling illness for six years following his hospitalization on May 10, 2014, due to acute myocardial infarction.

Lee Kun-hee, son of Samsung Group founder Lee Byung-chul, led Samsung Group for about 27 years from his succession to the management of Samsung Group in 1987 until his hospitalization in 2014.

Since his inauguration as chairman, he is credited with transforming Samsung from 'Korea's Samsung' into 'the world's Samsung.'

At the time of his inauguration, Samsung's sales were 10 trillion won, which increased approximately 39 times to 387 trillion won in 2018. Profits rose from 200 billion won to 72 trillion won, a 259-fold increase, and the market capitalization of Samsung's stock grew from 1 trillion won to 396 trillion won, a 396-fold increase.

Beyond this external growth, he is also recognized for introducing advanced management systems and creating a corporate culture full of challenge and vitality, strengthening Samsung's management structure and enabling it to establish itself as a world-class company in terms of substance as well.

In particular, in 1993, Chairman Lee declared the "New Management" philosophy, summarized by the phrase "Change everything except your wife and children," and promoted a sweeping innovation across all areas of management. He viewed the starting point of innovation as "human" and adopted the slogan "Let me change first."

He regarded humanity, morality, manners, and etiquette as the most fundamental values that all Samsung employees should possess, and shifted the management direction from the traditional emphasis on quantity to a focus on quality.

Through these efforts, Samsung continued to grow even during the unprecedented IMF crisis that hit the Korean economy in 1997 and the financial crisis in 2009.

In 2020, Samsung's brand value ranked 5th globally at $62.3 billion, and it recorded world-best products in 20 categories including smartphones, TVs, and memory semiconductors, firmly establishing itself as a world-class company.

Lee Kun-hee, Chairman of Samsung Electronics

◆Chairman Lee Kun-hee's management philosophy is 'human-centered' and 'technology-centered,' practicing quality-oriented management based on 'New Management'

The core of the New Management philosophy is to have a clear understanding of reality and self-reflection, possess the will to change, and practice quality-oriented management to provide products and services with the highest quality and best competitiveness, thereby contributing to human society as a world-class company.

This is well reflected in Samsung's management ideology: "Contributing to the development of human society by creating the best products and services based on talented people and technology."

Chairman Lee instructed open personnel policies that eliminated unreasonable discrimination based on academic background, gender, or job type, and Samsung accepted this by declaring the abolition of academic restrictions in open recruitment. From then on, Samsung implemented a merit-based system instead of the seniority-based personnel system.

He recognized securing and nurturing talent as the most important task in corporate management and introduced regional experts and global MBA programs to enable Samsung employees to learn and experience diverse cultures worldwide, cultivating over 5,000 global talents.

Based on his philosophy of prioritizing talent, Chairman Lee also focused on securing and nurturing "creative core talents."

Along with talent development, Chairman Lee regarded technology as the core of competitiveness and expanded the technological base of the company and society by emphasizing technical personnel.

Chairman Lee Kun-hee of Samsung Electronics (second from the left) attended the groundbreaking ceremony for Samsung Electronics' 16-line semiconductor in May 2010. (Photo by Samsung)

◆Starting the semiconductor business in an environment akin to a barren land

In business, he judged that the semiconductor industry suited the cultural characteristics of Koreans and was essential for the future of Korea and the global economy, and in 1974, he started the semiconductor business in an environment akin to barren land.

Since then, through relentless technological development and bold investment, Samsung developed the 64-megabit DRAM in 1984 and maintained the world's number one market share in DRAM for 20 years after 1992, recording a 44.3% global market share in 2018.

The background of this market share includes technologies such as the world's first 4-gigabit DRAM developed in 2001, the world's first 64Gb NAND flash developed in 2007, the world's first 30-nanometer 4-gigabit DRAM developed and mass-produced in 2010, and the world's first 20-nanometer 4-gigabit DRAM mass production in 2012. It is also analyzed that this was possible due to Chairman Lee's belief that "technology can realize a prosperous digital society."

Chairman Lee regarded social contribution activities as another mission given to companies and made it a pillar of management. Samsung transcends borders and regions to help the socially vulnerable and supports relief funds at disaster sites worldwide.

These activities have been systematically carried out since the launch of the Samsung Social Volunteer Group in 1994. Notably, Samsung is the only company in the world to organize an emergency disaster rescue team equipped with advanced equipment, conducting relief activities at disaster sites domestically and abroad, and also engages in social contributions using animals such as guide dogs for the visually impaired.

Chairman Lee's unique management philosophy also influenced employees, with 500,000 people annually volunteering for 3 million hours at orphanages, nursing homes, and other disadvantaged facilities, as well as working hard to preserve the natural environment.

Meanwhile, as an IOC member, Chairman Lee recognized sports as an important catalyst contributing to international exchange and world peace, supporting the development of global sports by acting as an Olympic TOP sponsor since 1997.

In particular, Chairman Lee consistently engaged in sports diplomacy to help secure the 2018 Pyeongchang Winter Olympics, and it is evaluated that he greatly contributed to Pyeongchang being selected as the first Asian host city for the Winter Olympics at the IOC General Assembly held in Durban, South Africa, in 2011.