[ED] Samsung's new start - The Korea Times

Control change should engender radical management shift

Critics of Samsung Group have long warned that its top-down system, the erstwhile secret of its success, could turn into a poisoned chalice that would bring down the corporate dynamo.

The nucleus of that cultural beast was put away as Korea’s top family-oriented conglomerate announced the disbanding of its Future Strategy Office, the control tower coordinating operations of 59 Samsung affiliates that employ half a million people in total with aggregated sales of $400 billion.

The disbanding came at a time when the group’s de facto leader, Lee Jae-yong, was imprisoned for allegedly buying President Park Geun-hye’s influence in an inter-affiliate merger to consolidate his group-wide control. Lee has acted on his promise to dismantle it, which he made during a National Assembly hearing three months ago.

It was the right move, although there are some concerns and caveats.

The dismantled office started as group founder Lee Byung-chull’s secretariat. It was then renamed as the “Restructuring Headquarters” and “Future Strategy Office” under his son, Lee Kun-hee, now bedridden for three years, and his heir, Vice Chairman Lee. For the 60 years of its existence, it served as the coordinator for a growing number of affiliates to make Samsung’s exponential growth possible. It is also undeniable that it also looked out for the owner family’s interests and ensured their control of the group.

This dark legacy has taken the junior Lee to jail, as the office was allegedly used to channel billions of won to Choi Soon-sil, President Park’s confidant, and buy her equestrian competitor daughter expensive horses. Choi was arrested and Park has been impeached over this corruption scandal. Also 17 Samsung officials have been including Lee and office chief Choi Gee-sung, vice chairman and chief of the office, and Choi’s deputy Chang Choong-ki.

Now, some compare Samsung to a big ship entering unchartered waters without a skipper. This is a wrong comparison. First of all, there has been no tumble in Samsung Electronics’ share price since Lee’s arrest. Rather, over the following week, it rose 3.8 percent. Of course, there are risks of slow decision-making that can dent the company’s outlook in the tech world where cutthroat competition rules. But in the case of SK Group, the share price of its semiconductor maker Hynix more than doubled during Chairman Chey Tae-won’s time in prison, showing professional managers more competent than generally given credit for.

Plus, Samsung has been moving to regroup around a holding firm so the worries of chaos from the office disbanding are somewhat misplaced.

Rather, worrisome is the possibility that Samsung may revert back to its central control system under a different name after the current crisis is over.

Samsung shouldn’t miss this opportunity to become more transparent and wean itself from one man’s absolute control. When the junior Lee said he was ready to hand management over to a professional manager, he knew that Samsung would grow far bigger for it. Some skeptics may be ready to be taken by surprise.