The Samsung Way ..

Business schools around the world spend a lot of time discussing the Apple model of growth, its focus on innovation, excellence etc. But more often than not, we forget the second number player. This time it is Samsung of South Korea. What makes Samsung a global powerhouse of industrial product design and high quality and performance industrial  and fast-moving-consumer-goods, including white goods and products ?

Samsung from South Korea is the second largest global electronics company (after Apple) and the 15th largest global business entity with an annual turnover of $200 billion, (2 x Tata sons) and annual profits of $20 billion. (click here for Global Fortune 500 link)

It has more profits than the combined profits of the top five Japanese electronics companies which once upon a time dominated global electronics industry. ..

What helped Samsung reach this indomitable position among global corporates ? What is the  Samsung Way ?  

It was very interesting to read an article from Industry week (click here) on Samsung based on the book Samsung Way by J Song and K Lee. 

The notable points in the book as well as the article are the following

1. Focus on developing internal Industrial Product Design expertise, in whuich they succeeded. Presently they have almost 1600 product designers.
2. Focus on credible partnerships that bring value - Initial tie ups with major global companies like IBM, HP etc for technical collaboration and later with design expertise and numerous patents to its credit, ability to negotiate with these industrial giants and carve out markets for quality products around the world

   

   Credit Industry week, August 2014.
   

   
   
3. Focus on high spending on Research and Development.
4. Focus on CHANGE. In fact Chairman Lee, even went to the extent of stressing, change everything in your life except your wife and children.
5. Focus on hybrid management style (combining the good points of Japanese and US management styles) - while Japanese companies focus on improving efficiency and competitiveness and developing in-house talent, American companies are more centralised, focus on outsourcing of production, getting profits and performance, frequently restructuring business and products.
6. Focus on improving product and process competitiveness and product quality
7. Focus on frequent restructuring, performance based compensation, high quality talent recruitment resembling US corporations in managing human resources
8. Focus on cost reduction by deploying Japanese management principles of Lean and waste reduction besides improving output and quality
9. Samsung Human Resource DevElopment Centre (SHRDC) spends a lot of money annually to train all their staff with special emphasis on senior promoted faculty with latest management principles from US examples to develop a high performance culture
10. Focus on effective demand management and supply chain management helping Samsung's massive 37 global production plants supply demand coming from the 63 global marketing offices ultimately helping meet the the market and customer needs.
11. Focus on meeting production targets within the stipulated time thereby improving product acceptability among dealers and customers
12. Focus on adapting production to changing customer demands by deploying Flexible Manufacturing Systems and Cellular Manufacturing, one person cell assembling complex products single-handedly, led to improvement of many skills in-house.

Click here for an HBR article on How Samsung became a global design powerhouse in HBR Sept '15.

Thus we can say it was the attempt by the Samsung management to take the best from both Japanese and AmerIcan management styles, while at the same time, avoiding the poor practices Helped Samsung scale greater heights and conquer new global markets and become the mighty global electronics market leader it is today.