Meet Samsung's Steve Jobs

Everyone knows Steve Jobs. The Apple (NASDAQ: AAPL  ) co-founder easily reached celebrity status by the time he died in 2011, uncommon for the CEO of a major tech company, particularly to the degree that the public exalted him. Jobs undeniably cemented his visionary status with a series of breakthrough products.

Along the way, Samsung emerged as the most credible threat to the Mac maker. The South Korean conglomerate's success in smartphones has been built on a multi-prong strategy involving product imitation, operational efficiency and agility, sheer size and scale, and a disproportionate marketing budget. Even though people may not know him as well as Steve Jobs, Samsung has a visionary leader of its own.

Source: AP.

Meet Samsung Chairman Lee Kun-hee.

A different kind of visionary
To be clear, Samsung's chairman is not a product visionary in the same way Jobs was. However, Lee is a corporate visionary in that he led the company's dramatic expansion over the past 25 years after becoming chairman, transforming Samsung into the largest electronics conglomerate in the world by total revenue. Samsung's total revenue has grown 39 times under his leadership.

Lee implemented the corporate culture of having Samsung in a perpetual state of crisis, even when it's succeeding. In this way, the company can fend off the tendency to become complacent and won't rest on its laurels. Six years after he took the helm, at a time when Samsung was a second-tier manufacturer, he held a famous corporate meeting in 1993 in a German hotel to unveil his grand transformational plan. It entailed learning an industry from the inside out by first becoming a supplier willing to devote capital expenditures to build up infrastructure, and then subsequently moving upmarket to compete. Smartphones and Apple are just the latest example; Samsung has previously executed the same strategy in LCD panels, TVs, flash memory, and hard drives, to name but a few.

He famously told Samsung executives to "change everything but your wife and children." The principles conveyed that day have been immortalized in a 200-page book that's given out to Samsung employees, and the company has transcribed more than 350 hours of Lee's lectures. Samsung even bought all the original furniture from the German hotel room to transplant it to South Korea. Recordings of Lee's teachings are played over loudspeakers.

That level of fanaticism is not unlike the loyalty that Steve Jobs inspired among Apple employees and customers.

Pardon me
Also like Jobs, Lee has run into his fair share of corporate scandals. Jobs was at the center of Apple's infamous options backdating scandal from the early 2000s, which the company ended up settling in 2010 for $16.5 million. However, that amount is paltry compared with some of Lee's alleged and proven transgressions.

Lee was convicted of embezzlement and tax evasion in 2008, with South Korean courts finding him guilty of skipping out on $39 million in taxes. Whistleblower Kim Yong-chul, Samsung's former chief legal counsel, also detailed how Samsung maintained a $200 million "slush fund" whose primary purpose was for bribing government officials and politicians. In a 2010 book Think Samsung, Kim alleged that Lee had embezzled more than $9 billion from Samsung and its subsidiaries.

At the height of the controversy, Lee resigned from Samsung shortly after his conviction. Lee would not serve any time in prison, though, as the following year South Korean President Lee Myung-bak would issue a pardon for Lee Kun-hee so that the executive could help lead a bid to host the 2018 Winter Olympics in the South Korean city of Pyeongchang. The move triggered even more controversy since critics viewed it as continued evidence of corruption. In January of this year, on his way out of office, President Lee pardoned 55 more people who were convicted of various charges.

Lee Kun-hee has also been embroiled in an inheritance dispute with his siblings over the family fortune. Siblings alleged that Lee hid assets to maintain control of various parts of the conglomerate. South Korean courts recently sided with Lee.

In 2010, Lee would return as Samsung's chairman, and he remains at the helm to this day. His only son, Lee Jae-yong, is next up to inherit the family business, much like how Lee Kun-hee inherited the role from his father, who founded the company in 1938 as just a trucking business.

Keeping it in the family
Samsung has become a global force to be reckoned with under Lee's leadership. While his tenure has been tarnished by numerous corporate scandals, it's also been marked by incredible growth.

In 2012, Samsung became No. 1 vendor of both smartphones and features phones by unit volumes, and it has played a large role in the proliferation of Google (NASDAQ: GOOGL  ) Android, particularly in emerging markets that Apple has historically had difficulty tapping into.

There's no doubt that Lee Jae-yong will become Samsung's next chairman, and he'll have some big shoes to fill.

Investors are dying to know whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (8) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 07, 2013, at 9:42 PM, yaovk wrote:

    I failed to see Samsung's chairman as the Steve Job because I have never seen Samsung coming out with an original product, from smarphone to tablet. Please don't promote copy cats to Steve Job's legacy.

  • Report this Comment On April 07, 2013, at 10:13 PM, mdl00 wrote:

    This article makes me sick to my stomach. It should be pulled immediately. You are showing disrespect for such a brilliant man who is no longer with us by comparing him to the low lives at Samdung. They may have cash, but they acquired that by ripping off consumers and other companies' designs. You really should pull this article or do some major editing.

  • Report this Comment On April 07, 2013, at 11:56 PM, imoutofnames wrote:

    Steve Jobs was nothing but a salesman. He wasn't a visionary. He received so much unwarranted credit just because he was the face.

    Woz was the real brains.

    Jobs was not brilliant as "mdl00" suggests. He was merely a salesman. I mean Dennis Ritchie died within days of Jobs and while Jobs is recognized as some amazing mind in the tech field by everyone, Ritchie, who created C and unix, gets ignored.

    It makes me sick.

  • Report this Comment On April 08, 2013, at 1:15 AM, AnonymousWizard wrote:

    " It entailed learning an industry from the inside out by first becoming a supplier willing to devote capital expenditures to build up infrastructure, and then subsequently moving upmarket to compete. Smartphones and Apple are just the latest example; Samsung has previously executed the same strategy in LCD panels, TVs, flash memory, and hard drives, to name but a few."

    Translation: Embark on a continuous mission of infiltrating all profitable businesses and then copy them, steal their ideas and trade secrets and trick them into thinking Samsung is their bonafide partner. This is no Steve Jobs. This is a thief, a scumbag, a non-innovator. He wrote the playbook on copying and stealing as his record demonstrates and thus the culture of Samsung. Only fools support and defend Samsung.

  • Report this Comment On April 08, 2013, at 7:52 AM, Jjkiam wrote:

    Agree that Samsung really has a culture of cloning competitor's devices. What is more dismaying is the criminal activities at the very top which apparently the chairman has gotten away with by bribing the President of South Korea to get pardoned. How people hold themselves up as fans of this kind of company amazes me!

  • Report this Comment On April 08, 2013, at 11:26 AM, inn8 wrote:

    What a ludicrous basis for an article, even one designed as click bait.

    Steve Jobs was a visionary and a creator, of concepts, devices and markets. No, he didn't "invent" all the technology or maybe even any of the technology necessary to making the stuff he dreamt of real. He brought together people who assembled and often times created the means to turn what many considered science fiction into reality. What makes Steve Jobs memorable is that he didn't just refute the reality most of his contemporaries unquestioningly accepted, but changed that reality such that his reality became ours.

    Samsung and Lee Kun-hee achieve success by destroying others, not by creating totally new products or markets. Neither have *created* anything even remotely comparable to what Apple and Jobs have. If Samsung and Lee Kun-hee are to be remembered for anything, it will be the cunning and craftiness with which they steal other people's breakfast, lunch and supper and never having to worry about making their own.

    The only hope Lee Kun-hee ever has of being remembered in the same way as Steve Jobs is to continue spending billions in marketing and public relations in order to influence the impressionable through articles like the one presented to us by the likes of Evan Niu.

    ... not to mention that Lee Kun-hee would have to die at an early age in order to be remembered as "Samsung's Steve Jobs".

  • Report this Comment On April 08, 2013, at 1:27 PM, Darwood11 wrote:

    If it weren't for the Samsung, PCs would have been set back by years.

    Why? TI bowed out of RAM manufacturing and Toshiba took over. As a consequence, 16MB of RAM cost the PC user $635 a few decades ago.

    I'll let that sink in. I bought one of the first credible 286 laptops in the 1980s and it cost over $4,000. I've still got it!

    Back in the late 1980s CPU capacity was accelerating as predicted by Moore's Law, and yet the PC as a whole was constrained because of memory cost issues.

  • Report this Comment On April 08, 2013, at 2:10 PM, hiddenflem wrote:

    Lee Kun-Cop-hee (you forgot his middle name).

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