The League of Gentlemen’s Extraordinary Path to Innovation Vol.1 Jiseob Lee

-Opening the series-

To know the future, one must know the past. Therefore, to know future of Samsung Electronics, we must know what made the Samsung Electronics of today. That is what we would like to talk about.

We titled the series ‘The League of Gentlemen’s Extraordinary Path to Innovation’, because considering that Samsung is already 45 years old (founded in 1969), we thought it would be best to talk to some of the people who actually experienced the history firsthand and share their vivid stories.

There is a fellowship-advocating community called e-CLUB for retired board members, which consists of 670 active members. Organized in 1999, they have been sharing their stories about Samsung Electronics for decades. So, we’ve contacted them.

Over the course of the next four weeks, we will  share 4 members’ stories on the past, present and the future of Samsung. So here we go. 

▲ Executive Vice-president Jiseob Lee posing at the entrance of Min Natural History Research Center located in Sangdaewon-dong, Jungwon-gu, Seongnam-si, Gyeonggi-do. About 1,000 rare minerals collected by him in the past 30 years are displayed

 “Forget about the previous successes…  Focus on Consumer’s feeling. “Emotional management” is the Future.”

Former Samsung Electronics Executive Vice-president Jiseob Lee lived as a ”Samsung Man “for a full 36 years. Immediately after graduating from college, he joined the Samsung Group in 1974, retiring in 2010 at the age of 63.  Aside from the first 5 years at Cheil Industries, an affiliate of the Samsung Group, he worked for Samsung Electronics for 31 years. He is truly a living witness to the history of Samsung Electronics.

He was in the middle of it all. He entered the company when it was producing black and white TVs. He saw the first microwave. He witnessed the once obscure Asian company that produced OEM goods become a global electronics powerhouse. He was there when the computer business, once in danger of going bankrupt, was brought back. 

31 years among the 45-year history of Samsung Electronics

I met Lee, former vice-president, at Min Natural History Research Center located in Sangdaewon-dong, Jungwon-gu, Seongnam-si, Gyeonggi. Saying it has been a while since he was interviewed, he seemed excited and enthusiastic. Even before the interview, I could tell how detailoriented he was by watching him work with some documents. It was simply the habit he built over the 30 years of working as the director of the manufacturing scene in Samsung.

Min Natural History Research Center is his dream-come-true space as well as a museum full of all kinds of rare minerals and fossils. For the past 30 years, he collected minerals here and there whenever he was on a business trip, eventually collecting about 3,000 samples. The museum exhibits about 1,000 of them. The name of the research center came from the name of his second son ‘Min’ and the word ‘mineral’.

Those who imagined a small, private museum will stand in awe as soon as they pass through the entrance. There is no plain mineral. He picked out only the rarest minerals. The variety of colors in the mineral crystals is astonishingly beautiful, and it is hard to believe that they are natural. They are entirely different from the minerals seen at geological museums. The sea lilies fossil (3m in width and 2m in height) from the Paleozoic era and perfectly preserved crab, tortoise, and dinosaur egg fossils are so precious that even pictures of them are hard to find. His collection is a one of a kind.. He is the only Asian among 200 participants in the Mineral Collector Symposium, where rare mineral collectors from all over the world come together. Recently, he held a lecture titled ‘Design: Find the answer in the nature’ at Dongdaemun Design Plaza (DDP).

▲ The rare minerals found here are world-class. He is the only Asian member of Mineral Collector Symposium.

“In 1980, I saw rare minerals at the American Museum of Natural History and immediately fell in love. Since I studied Metal Engineering, I was quite knowledgeable about minerals compared with other people . But what I saw was just on a different level. They were glamourous and beautiful. My heart began to pound. I started to collect one by one, and after I retired I prepared to open this museum. It opened just recently. It is still a work-in-progress. I am thinking of its use. Many people tell me to open up a private museum, but I don’t think that’s the answer. I hope these minerals could be used for studying basic science. I think it would be good to cooperate with a state institution, a local government, or a big enterprise that owns a related foundation.”

Lee is also passionate about fostering younger scholars. It is his 7th semester teaching at Hoseo University. Making use of his experience while working at Samsung Electronics, he lectures about entrepreneurship and sometimes offers career counseling.

What we need: Not ‘preservation’ but ‘reset’

Recently, there are concerns about the performance of Samsung Electronics, which some see as not as high as before. Some mention the crisis of Samsung Electronics. On this issue, Lee made a positive comment saying, “There is always a crisis. Samsung Electronics has overcome every time. I think optimistically for this risk as well.” To the question asking how to ‘preserve’ its status as the world’s top company, he first said it is incorrect to use the word ‘preserve’.

“Samsung Electronics’ achievements are great. However, it still has a long way to go. Therefore, it needs to ‘reset’ and not ‘preservation’. It needs to forget about the formula for success it has used until now. It cannot rest on its laurels. We were the first followers, but our juniors are first movers. Things will be tougher for them than they were for us. It is easy to catch up to the leader, but it is hard to be the leader who has to decide in which direction to go,” added Lee.

Emotional management was key in his affectionate advice. To emphasize the importance of emotional management, he set out a logical argument. On one side of emotional management is rationalism. Rationalism is necessary, but something new that this generation demands is ‘emotion’. 

▲ Before the well-preserved sea lilies from the Paleozoic Era (3m in width, 2m in height).

Flaw of Samsung Man: being too rational

“’Rationalism’ is one of the founding philosophies of Samsung Group along with ‘contribution to society with superior products and services’ and ‘people-first’. The philosophy of Samsung is condensed in these three ideas. Contribution to society takes into account the nation and mankind. Samsung does not exist simply to make profit. If the frame itself is big and noble, the desire for achievement and the success rate are high. No additional explanation is needed for ‘people-first’. Everything is done by people. Rationalism refers to the philosophy of keeping within boundaries and not overdoing. It acted as a compass in solving problems.

Qualifications  for first movers require a  pioneering spirit and creativity. And these two are already in the DNA of Samsung. Another value that needs to be added is ‘emotion’. The world is becoming wealthier. When people become more affluent, they go back to intrinsic values. And this value is emotion – analog.  If we are unable to read the emotions of the consumers, things will become difficult for us in the future.

Regarding ‘rationalism’, one of the founding philosophies of Samsung I’ve mentioned earlier, it is of course necessary. However, sometimes we easily forget about emotion, looking for something strictly rational and accurate. It is tough for those working for Samsung. I think the challenge for Samsung Electronics is to figure out how to lead emotional management.”

Appreciation plaque and letter from Immelt, GE Chairman

Lee was acknowledged as the guru of quality management. While working for Samsung Electronics, he was a part of different businesses such as microwave, computer, and LCD. And in the field of quality management and production efficiency improvement, he left noteworthy successful examples. These successes served as the foundation for Samsung’s breakthroughs. Before leaving the company in 2010, he wrote a book on his experience, Compete with Quality, for the next generation of employees. He wrote it voluntarily, not because someone ordered or recommended he do so. This 80-page book highlights the importance of quality from cover to cover. It talks about how to give feedback over faulty products and address blind spots in quality management and the blind spots in quality management. Let’s take a look at a few quotes from the book

 “The entire organization must have a clear organizational philosophy of creating masterpieces.”

“The key in manufacturing business is making quality products without waste to resources?.”

“The difference between  skilled and unskilled is not in the quality but in speed.”

“Focus not on effort but on values.”

Determination to make a perfect, Defect-free product even when making one, and everyone at work sharing this mindset. This was the spirit of manufacturing he emphasized as the head of quality management. His philosophy was proven through performance. While he was working as the director of Cheonan IT Center in 2005, TFT (Thin Film Transistor) LCD achieved the faulty rate of 0.01% in tests conducted by the client Toshiba. Considering the average faulty rate (1%), this is nearly a miracle.

After his tenure at Samsung’s microwave business unit in 1991, the chairman of GE Jeffrey Immelt sent an appreciation plaque with a card wishing Lee good luck as he transferred from the microwave business department to the computer business department. Immelt also wrote to the president of Samsung Electronics at the time, Kyung-pal Park, saying, “I am deeply impressed by the excellent achievement of Vice president Jiseob Lee. He has displayed an exceptional ability in the field of quality management.“

▲ Lee underwent all the events that Samsung Electronics went through in the process of becoming a globally prominent company, since the days of black and white TV production.

“Microwave manufacturing company after the US and Japan”

He learned the basics of quality management at Cheil Industries. “The quality management training I received at Cheil Industries was a big help. Samsung has been good at employee training since the 70s. Thanks to the training, the concept of production management, quality, and reliability were deeply embedded in my mind. Another thing was the book by Dr. Joseph M. Juran, which I read every night. The 800-page original edition is like a Holy Grailof quality management.”

Transferring to Samsung Electronics in 1979, he dug into every single principle and each product. At that time, Samsung Electronics was a small, nameless company that. The company mainly produced domestic goods, and exporting goods were for niche markets such as countries in the Middle East and Africa.

He chose ‘quick market entrance’ as the biggest key to success for Samsung. Samsung read the trend in the world market and jumped right in without hesitation. You cannot talk about Samsung’s success without talking about this. “It is only possible when the CEO has insight about the future. When there is a change in the environment, the leadership has to intervene appropriately yet boldly.”

The same story goes for microwave production. In the late 70s, Samsung was not equipped with the technology to manufacture microwaves. However it challenged itself and managed to produce them successfully. This was the starting point of Samsung’s entrance into the world market. A few years later, Korea was introduced overseas as a “microwave manufacturing country after the US and Japan.” And Lee was at the center of microwave production.

“In 1979, I was a general manager. We started from scratch. We recruited new employees to make microwaves. We studied other manufacturers’ products. We applied strict quality management from the very beginning. This was why the error rate was extremely low. JC Penney ordered 5,000 units, and the needle on the error measuring instrument barely moved. They doubted whether the measuring instrument was actually working.”

Once the word was on the street that JC Penney microwaves made by Samsung Electronics are of good quality and are inexpensive, they sold like hotcakes. A single model sold over one million units, which was considered unusual in the history of JC Penney. From that time on, big players like GE reached out to Samsung. The success of Samsung Electronics’ microwave was mentioned in Harvard Business Review (January 1989) as well. However, in all aspects, it was only as an OEM brand. Although Samsung produced 20% of the entire world microwave supply, it took a while until Samsung introduced products with its own label on it to the world market. 

Revival of the computer business

He encountered a number of crises when working in the computer business and the LCD business department. This is why he said “There is always a crisis,” without being anxious. Between 1992 and 1993, the computer business at Samsung was at risk of being abolished. During this period, he overcame risk by boosting the productivity by 3 times through an extensive innovation of the production line. While working as the head of the LCD business department in 1998, he halved the production cost, which was about 80% of costs, turning the company into the No.1 large panel manufacturer in the industry.

The crisis of the manufacturing industry is a crisis of all industries. The computer industry was facing a crisis in the early 90s. Overpowered by Taiwan and others, domestic manufacturers as well as other big manufacturers overseas closed down one by one. In the late 90s, the cheap STN (Super Twisted Nematic) came into the market, causing a hardship in the TFT LCD industry. However, Samsung Electronics managed to overcome every time, and even turned them into a stepping stone for a big leap. How could it be?

Lee pointed out ‘the sharing of vision among the members’ as one of the secrets. Every time there was a crisis, he gathered the members and held a thinking session to collect ideas and find a solution. It was not an ordinary meeting. They went back to square one and tried to shift their view point. “It sounds like a cliché, but nothing can compete against ‘working with unity.’ It is crucial to share ‘why you do it’ before ordering people what to do. There are two key things to talent management: motivation and ability maximization. Not all doctors are good workers. The ability is maximized when people voluntarily do what they like to do.”

This is why he changed the name of the ‘maintenance’ team to ‘production technology’ while working as the plant manager of Onyang Plant. He encouraged the high school graduate engineers to work with pride. When there was a chance to award, he went to the site, listened to their story, and gave them a big bonus. This contributed largely to creating an environment where the employees could enjoy working. 

▲ Lived as a Samsung Man for 36 years, he said he sees Samsung everywhere he goes. To Lee, Samsung Electronics is the other name for ‘passion’.

Excessive compliments, excessive rebukes are both poisonous.

I asked Lee, who lived as a “Samsung Man” for 36 years immediately after his college graduation, what Samsung Electronics means to him. He summed up in a single word – passion. Wherever he is and whatever he does, he sees the word Samsung. The cornerstones of Samsung Electronics were the employees like him with ownership and loyalty. “There is one thing I want to mention,” said Lee.

“The public is very interested in Samsung Electronics. When it’s doing well, they shower the company with compliments, but when the profit drops even only by a tiny bit, they worry like it’s going to collapse any minute. I understand such a reaction, as the influence Samsung Electronics has on the national economy is sizable. However, there is always a crisis, and Samsung will overcome. You can see an organization as a person. Excessive compliments and excessive rebukes are both poisonous. What it needs is heartfelt support.”