Everyone knows Steve Jobs. The Apple Inc. (NASDAQ:AAPL) co-founder easily reached celebrity status by the time he died in 2011, uncommon for the CEO of a major tech company, particularly to the degree that the public exalted him. Jobs undeniably cemented his visionary status with a series of breakthrough products.
Along the way, Samsung emerged as the most credible threat to the Mac maker. The South Korean conglomerate’s success in smartphones has been built on a multi-prong strategy involving product imitation, operational efficiency and agility, sheer size and scale, and a disproportionate marketing budget. Even though people may not know him as well as Steve Jobs, Samsung has a visionary leader of its own.
Meet Samsung Chairman Lee Kun-hee.
A different kind of visionary
To be clear, Samsung’s chairman is not a product visionary in the same way Jobs was. However, Lee is a corporate visionary in that he led the company’s dramatic expansion over the past 25 years after becoming chairman, transforming Samsung into the largest electronics conglomerate in the world by total revenue. Samsung’s total revenue has grown 39 times under his leadership.
Lee implemented the corporate culture of having Samsung in a perpetual state of crisis, even when it’s succeeding. In this way, the company can fend off the tendency to become complacent and won’t rest on its laurels. Six years after he took the helm, at a time when Samsung was a second-tier manufacturer, he held a famous corporate meeting in 1993 in a German hotel to unveil his grand transformational plan. It entailed learning an industry from the inside out by first becoming a supplier willing to devote capital expenditures to build up infrastructure, and then subsequently moving upmarket to compete. Smartphones and Apple Inc. (NASDAQ:AAPL) are just the latest example; Samsung has previously executed the same strategy in LCD panels, TVs, flash memory, and hard drives, to name but a few.
He famously told Samsung executives to “change everything but your wife and children.” The principles conveyed that day have been immortalized in a 200-page book that’s given out to Samsung employees, and the company has transcribed more than 350 hours of Lee’s lectures. Samsung even bought all the original furniture from the German hotel room to transplant it to South Korea. Recordings of Lee’s teachings are played over loudspeakers.
That level of fanaticism is not unlike the loyalty that Steve Jobs inspired among Apple Inc. (NASDAQ:AAPL) employees and customers.
Pardon me
Also like Jobs, Lee has run into his fair share of corporate scandals. Jobs was at the center of Apple Inc. (NASDAQ:AAPL)’s infamous options backdating scandal from the early 2000s, which the company ended up settling in 2010 for $16.5 million. However, that amount is paltry compared with some of Lee’s alleged and proven transgressions.
Lee was convicted of embezzlement and tax evasion in 2008, with South Korean courts finding him guilty of skipping out on $39 million in taxes. Whistleblower Kim Yong-chul, Samsung’s former chief legal counsel, also detailed how Samsung maintained a $200 million “slush fund” whose primary purpose was for bribing government officials and politicians. In a 2010 book Think Samsung, Kim alleged that Lee had embezzled more than $9 billion from Samsung and its subsidiaries.
At the height of the controversy, Lee resigned from Samsung shortly after his conviction. Lee would not serve any time in prison, though, as the following year South Korean President Lee Myung-bak would issue a pardon for Lee Kun-hee so that the executive could help lead a bid to host the 2018 Winter Olympics in the South Korean city of Pyeongchang. The move triggered even more controversy since critics viewed it as continued evidence of corruption. In January of this year, on his way out of office, President Lee pardoned 55 more people who were convicted of various charges.
Lee Kun-hee has also been embroiled in an inheritance dispute with his siblings over the family fortune. Siblings alleged that Lee hid assets to maintain control of various parts of the conglomerate. South Korean courts recently sided with Lee.
In 2010, Lee would return as Samsung’s chairman, and he remains at the helm to this day. His only son, Lee Jae-yong, is next up to inherit the family business, much like how Lee Kun-hee inherited the role from his father, who founded the company in 1938 as just a trucking business.
Keeping it in the family
Samsung has become a global force to be reckoned with under Lee’s leadership. While his tenure has been tarnished by numerous corporate scandals, it’s also been marked by incredible growth.
In 2012, Samsung became No. 1 vendor of both smartphones and features phones by unit volumes, and it has played a large role in the proliferation of Google Inc (NASDAQ:GOOG) Android, particularly in emerging markets that Apple Inc. (NASDAQ:AAPL) has historically had difficulty tapping into.
There’s no doubt that Lee Jae-yong will become Samsung’s next chairman, and he’ll have some big shoes to fill.
The article Meet Samsung’s Steve Jobs originally appeared on Fool.com and is written by Evan Niu, CFA.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google.
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