Lee Will Be Powerful as Ever

Since taking over as Samsung Group chairman in 1987, following the death of his father and Samsung founder Lee Byung-chull, Lee Kun-hee led Korea’s largest business group for more than two decades and was credited for its growth as a global mega company. Returning as the chairman of Samsung Electronics, after a two-year hiatus forced by an ethics scandal, Lee is looking to reinstall old management systems in his attempt to guide the company in a toughening business environment. / Korea Times File

Will Old Solutions Become the New Problems for Samsung?

By Kim Yoo-chul
Staff Reporter

Lee Kun-hee is back at the helm of Samsung Electronics, after nearly two years out in the cold due to an ethics scandal.

And in his much-anticipated sequel, the 68-year-old business icon will be given enough power to either push the company's rebuilding process forward or derail it.

In recent years, Samsung Electronics, the world's largest electronics company and undisputed kingpin of Korea Inc., went through a series of restructurings to give business units greater autonomy.

However, it remains to be seen whether such efforts could remain consistent, with industry watchers expecting Lee's comeback to signal a return to the company's old, centralized management structure where the chairman gets to call all the shots.

Old systems will call for old hands, according to some Samsung insiders, who expect the return of Lee's longtime lieutenants, including Lee Hak-soo, the former head of Samsung's strategic planning office, which acted as the central management tool for the chairman.

It appears that everyone at Samsung Electronics, and Samsung Group as a whole for that matter, accepts that Lee will be as assertive as ever.

Whether the company needs Lee's brand of leadership at its current stage, however, is a subject for debate.

A senior Samsung executive, who didn't want to be named, admitted that the company could opt for introducing a management vehicle similar to the old strategic planning office, and some of Lee's old right-hand men will be called up to back their boss again.

"More responsibility will be given to our administration, communications and legal affairs units. The realignment process won't take a long time," he said.

"We need to set up a new control tower to handle the strategic investments and guide other key decisions."

Lee Hak-soo is almost certain to join the chairman's new central management unit, according to another Samsung source.

Rhee In-yong, Samsung Electronics' chief for media relations, admitted that the group is "seriously" considering the possibilities of establishing a unit to succeed the strategic planning service.

A more centralized structure for business decisions is needed to allow Samsung Electronics and its parent, Samsung Group, to make bolder investments and pursue new revenue sources, he said.

The strategic planning office was dismantled after Lee’s resignation in 2008.

Stalling Momentum

Critics would ridicule that the return of Lee, and the possible reviving of the strategic planning office, under that name or another, would count as an "ancient regime."

However, Samsung officials claim that Samsung Electronics and other key affiliates need to be guided by a stronger sense of direction, as they continue to lose their reputations as fast-moving, innovative companies.

Samsung Electronics is the world-leader in memory chips and flat-screen televisions, but the gap with its competitors has been narrowing.

The company is also criticized for lagging out of the gate in market-changing products such as smartphones and three-dimensional (3D) televisions.

Samsung Electronics' struggle in the smartphone market is alarming, as mobile-phones had been to the company what the Walkman was for Sony.

Analysts are questioning Samsung Electronics' ability to adjust to the market that is becoming more about software than hardware, and the company's lack of a developer network has many wondering whether it will ever be able to create a product to compete with the iPhones and BlackBerries of the world.

Samsung Electronics also has interest in health, biotechnology and renewable energy-related businesses, but has yet to yield visible results.

"Software capability has been one of our key problems, and we know we have a long way to go," said another Samsung official.

"There are concerns that our competitors could be eating our lunch in our main markets and there was a consensus that we needed a more powerful, responsible top executive to lead the way."

Jae-yong Gets More Time

Lee's return means that his son, Jae-yong, will get more time to be groomed as Samsung Group's third-generation leader.

The younger Lee made headlines last year when he was named as the chief operating officer (COO) at Samsung Electronics.

At the time, some industry watchers believed that Jae-yong was on the fast-track to the top, with the company's chief executive Choi Gee-sung doubling as a mentor and seat-warmer.

However, the elder Lee's return would mean that the younger Lee won't be rushed into the big role. Lee's two daughters also hold executive positions in the group's hotel and clothing units.

"When people buy Samsung products, they don't see Lee Kun-hee in them. However, Samsung will always remain as the little dynasty of the Lee family," said another industry official.

yckim@koreatimes.co.kr