The Confucian Cowboy

By John Burton

I find the rivalry between Samsung Electronics and Apple fascinating because of their contrasting management styles as they compete to see who will come out on top. It is tempting to say that Samsung’s consensus-driven management is Confucian, while the entrepreneurial Apple model represents the cowboy ways of America.

Those categories are not quite so neat. There are plenty of hierarchy-heavy firms in the technology sector in the U.S. such as Hewlett Packard and Microsoft. But it is also true that there are no big innovative cowboy-style companies in Korea, where the cultural default mode favors the group over the individual.

A compelling argument that can be made that Korea’s Confucian values played a crucial role in the country’s rapid industrialization as it did in Japan and China. Confucian-based organizations lend themselves to having a dictator at top, which means that decisions can be made quickly and forcefully. Moreover, the group orientation results in the mass mobilization of workers to tackle a challenge successfully despite sometime incompetent management.

But the Confucian advantage is starting to become a disadvantage as Korea faces a future where manufacturing becomes less important and creativity in terms of design and marketing is becoming more vital. Samsung’s current troubles, particularly in smartphones, are a case in point.

Samsung appears to be have become boxed in by its engineer-dominated management mindset. Its recipe for success was perfecting the manufacturing process and efficiently churning out hundreds of product variations for every price range.

Contrast that with Apple. It too had a dictator founder — Steve Jobs. But his focus was on creating enticing and easy-to-use features and exquisite designs rather than the manufacturing process, which was outsourced to other companies.

Apple spent years to perfect its designs and it offers only a limited range of products, which carry hefty profit margins (nearly 40 percent for the iPhone 6). Consumers have come to view Apple products as luxury goods and are willing to pay top dollar.

Samsung favored taking short cuts in coming up with a constant stream of new smartphones by piling on different features, many of which were not welcomed by consumers who complained about “bloated software.”

John Sculley, the former Apple CEO who famously fired Steve Jobs in the 1980s, recently told CNET, the U.S. tech website, that Samsung can never match Apple in terms of marketing power no matter how much money it spends because of Apple’s cult status and strong emotional appeal to consumers. He noted that “part of Samsung's problem is that it's still not thinking of the consumer when it's building products, but instead it includes technology features just because it can. Apple is more thoughtful when creating products.”

Samsung’s rigid management structure is largely to blame as ground-making innovations have difficulty in being accepted since managers at Samsung--as well as other big Korean companies ― are mainly judged on cost savings. It is a mentality instilled by a corporate strategy based on high volumes and low prices.

The main challenge is whether Samsung can transform itself into the Confucian Cowboy--able to retain both its manufacturing chops while offering cutting-edge consumer experiences.

The mantra at many Korean companies is “build it and they will come” in belief that good product quality alone will attract consumers. As a result, senior management pays little attention to such intangibles as product design, marketing, advertising or public relations and these areas are among the weakest in the Korean corporate toolkit.

One way to solve this problem is to use external consultants. In the U.S., consultants are hired because companies are genuinely interested in learning from them. But in Korea, the prevalent view is that consultants are there to do what they are told to do within previously set parameters, while their advice is largely ignored.

Samsung, for example, has a poor reputation for working with outside design consultants despite spending millions of dollars because executives are seen as not being receptive to new ideas since they are risk-adverse. It is safer to make incremental changes to old products because returns are more predictable than gambling on a paradigm-shattering product that could fail.

But such an attitude has now placed Samsung in a dangerous situation. Even if Samsung now wants to add snazzy new features to its latest smartphone models such as dual curved screens, it will increase the price of the product when Samsung lacks the luxury cachet of an Apple to justify the cost to consumers.

Meanwhile, new producers, such as China’s Xiaomi, are undermining Samsung sales by making competitive hardware at lower prices.

Samsung’s failure to strike a balance in product development that values both cultural innovation and profits — becoming the Confucian Cowboy--could ultimately condemn it to returning to its roots as a mass producer of electronics components such as semiconductors.

John Burton, a former Korea correspondent for

the Financial Times, is now a Seoul-based independent

journalist and media consultant. He can

be reached at john. burton@insightcomms.com.