hankyoreh

Lee Won-jae, Head of The Hankyoreh Economic Research Institute

“ ‘Creative Management’ doesn’t fit at Samsung,” lamented a high-ranking Samsung executive. “The culture of the organization doesn’t allow for creativity.” He said this shortly after the group’s chairman, Lee Kun-hee, talked about the need for creativity in the group’s way of doing things. It was a time when everyone working for Samsung was uneasy because of the “creativity syndrome.”

Samsung has always been about management, about administering itself. Its management capabilities have earned it the nickname the “academy for Korean corporate personnel.” Since it is widely expected that people who have worked for Samsung are knowledgeable about how to manage an office, they have long been welcomed at small and medium sized companies, which often lack that kind of know-how. People that have worked in Samsung’s various offices of personnel management, and therefore know how to manage people, and people who are from the group’s various financial affairs offices, and therefore know how to manage money, have always been welcomed even more in the rest of the country’s labor market.

Samsung places a lot of importance on management, and cannot stand conflict. The existence of labor unions can give rise to conflict, and Samsung’s “no union policy” does not permit the formation of one. You see the culture in the group thorough “diligence management,” which considers being late to work more serious than a failed business project. Not too long ago people were talking about a video that had surfaced of newly-hired Samsung employees at a training camp doing a flashy “card section” where they held and turned cards to pre-set formations. They were new recruits who had met only days earlier but their performance was world class. It was a demonstration of the essence of the group’s thoroughly managed, organizational power. Back when Samsung started in semiconductors there was a legend about how employees marched 64 kilometers to pledge their resolve before producing 64 Dram, and it gave you a peek at how Samsung has succeeded.

These days Samsung is busy talking about creative ways of doing business, called “creative management.” But are having things managed and creative ways of running a company compatible? Can the “managed Samsung” be a pioneer in creative business?

Sure enough, no sooner had the word “creativity” left the chairman’s mouth than did Samsung begin managing the creativity. The thinkers who surround the chairman busily set about creating theory. The presidents of each of the group’s subsidiaries began singing the praises of creative business like parrots. It was a “creative business” craze that was not at all creative.

The issue at hand has actually arrived at an appropriate time. Harvard University professor Michael Porter, a globally recognized scholar of business, says that in business strategy theory a company’s competitiveness originates from cost dominance or differentiation. Korea can no longer compete in terms of cost because wages have risen, so Korean companies are at the point where it will have to compete through differentiation. The thing is, the most important factor in differentiation is creativity. You cannot be different from others if you cannot come up with something new. Now is the time when you have to create to grow.

It has been half a year now since Samsung began talking about creativity. Is the group busy building a new growth model that is creative? Or is it spending time away while having that creativity managed? Creativity is not something you can manage or administer. Creativity is something that can only be creative. If Samsung wants to go the way of creative management it has to shed its “well-managed” skin. It has to be able to put up with a company that gets large numbers of free spirits excited about things and quarrels among themselves and allows itself to move forward in that way.

Samsung under current chairman Lee Kun-hee has undergone two major transformations. The first was in the Frankfurt Declaration of 1993, when the company told employees to “change everything but your wives and children.” The second was the massive restructuring that came after the Asian financial crisis of 1997. You hear talk these days about things like major acquisitions and mergers overseas, changing upper level management, and more massive restructuring, and it gives you the feeling Samsung is again plotting a big transformation for itself. It makes you curious. Is “the brand that represents Korea” going to be a company that is rough around the edges, but that is home to free spirits that have room to breathe? Or is it going to remain a business group that has a clean and organized image? What route is it going to choose for its third transformation?

Please direct questions or comments to [timelast@hani.co.kr]