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An old leopard tries to change its spots. It could be painful - and messy


via Flickr © Jami3.org (CC BY-ND 2.0)

  • Samsung Electronics will try to transform itself into a lithe and nimble company with "a start-up mentality"
  • Will face many challenges both cultural and organisational
  • Rigid structures and systems will be hard to dismantle and resistance will be hard to overcome
  • But change is needed and will come, but perhaps more slowly than planned

Samsung's CEO has told his staff that he wants to transform the company into a lithe and agile organisation with a "a start-up mentality". It is an enormous gamble that will face massive resistance from the many layers of vested and entrenched interests within the organisation that could ensure the proposed change is, ultimately, little more than a disorienting exercise in futility. The fact is that, in general, Korean industry is infamous for its prescriptive rigidity, tram-line thinking and time-serving 'yes-men' executives and, hitherto, Samsung has been no exception. Staff there have worked in regimented and rigid silos for donkeys years - and most of them are contentedly institutionalised and inured to the status quo.

Samsung has grown into the gargantuan conglomerate it is today by following a management style and system based on militaristic mentality and discipline, patriarchy and dead men's shoes. The single-minded approach has made Samsung a powerful global player in high-tech, electronics, telecoms and mobile but times are changing and the company, by virtue of its size and structures, is slow-moving, bureaucratic and highly hierarchical with an authoritarian layer of senior management which cascades down the entire organisation to the extent that the man at the bottom of the pile can only vent his frustration by kicking the boiler-house cat.

This state of affairs, is, no doubt a melange of Korean social norms and mores built up over millennia combined with the much more recent history of ongoing conflict with North Korea and the national military ethos and service that it has engendered. This attitude translates, fully formed, into the running of big businesses. However, such a system is inimical to corporate agility and innovation. Processes and systems, long in place and infrequently questioned or revised, must be followed at all times and at all costs (literal and metaphorical) and this stifles rather than encourages innovative thinking.

Despite the infamous culture of after-work hours and late-night drinking that characterises so much of Korean business (as well as those in Japan, Taiwan and, increasingly, mainland China) during the long, long working days many Korean companies are suffocatingly formal environments where dissent is not tolerated and communication between management layers is both poor and circumscribed and where inter-departmental links are often almost non-existent.

This inevitably results in the creation of a 'yes man' culture whereby staff feel so compelled to make a constantly favourable impression to their superiors that they subordinate and suppress real opinions and honest feedback for the sake of appearing to be loyal to the team and superiors and aware of their place in the overall greater scheme of things.

Deliberate disequilibrium

But now, Samsung, or at least its CEO, has decided that if it is to be a long long-term player in an ever-evolving global market it will have to change.

Thus, says the company in a written statement, "Samsung will stay away from top-down structures and build bottom-up structures, while the company will put more focus on improving efficiency by introducing programmes to self-motivate employees." To start the ball rolling the company is to scrap its traditional adamantine management pyramid and replace it with "a flatter hierarchy of simplified ranking systems to foster innovation and speed decision- making."

Currently, and for generations past, Samsung has had five distinct employee ranks below the heady reaches of 'higher-executive' status. They are sawon, daeri, gwajang, chajang and bujang. A newcomer to the company, almost invariably a 30-something-year-old graduate in his or her first job rather than the twenty-one year-olds common in the west, will be 'sawon' for year upon year on end. Progress up management's greasy pole is incredibly slow and it usually takes at least 20 years for anyone to reach VP status and then that is achieved only by dint of keeping the head down and not attracting too much attention by exhibiting iconoclastic tendencies.

Now though, "Samsung will cut the steps in the ranking system and we will promote more employees if they prove their management capability or demonstrate outstanding performance." Although quite how this is to be achieved is as yet unclear, apart from the boast that "Samsung's top management plans to kill unnecessary internal meetings and require executives to end the rigidity of internal reporting systems, which we believe is a legacy from decades ago." Samsung's eternal internal meetings are the stuff of industry legend.

Changing corporate mentality is  a laudable aim but, over the past 25 years or so Samsung has been able to transform itself from a low-cost OEM equipment into a world leader in R&D, marketing, and design, with a brand more valuable than Pepsi, Nike and American Express, because of its focus on iron discipline and top-down management. Deliberately to introduce disequilibrium now may well be to tempt fate, but the tightly integrated business system that has worked to date is showing its age and limitations as nimble upstarts and start-ups make further inroads onto the turf of 'traditional' comms companies.

The buzzword de notre jours is "transformation" and this doesn't just apply to comms networks but also to corporations. The world is changing and big, established enterprises are finding that they must transform too if they are to survive. This must mean they must reinvent themselves in ways that may seem contradictory. And then when they reach new plateaus, they will have to transform again, and again. It is an uncomfortable and often troubling process but Samsung (or at least its senior management) are determined to grasp the nettle. It remains to be seen how badly they will be stung.

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