DMI021-PDF-EnG Design Strategy at Samsung Electronics Becoming a Company Top Tier

Distributed byHarvard Business School PublishingCustomer Service Department60 Harvard WayBoston, MA 02163www.hbsp.com

Design Strategy atSamsung Electronics:Becoming a Top-TierCompany

CASE STUDY

DMI021

DMI Case StudiesThis case study came from the Case StudyResearch and Development Program at theDesign Management InstituteSM. TheInstitute conducts research and developseducational materials on the role of designand design management in business suc-cess. Case studies, the Design ManagementReview, reprints from the Review, and othereducational materials are available from theDesign Management Institute.Visitwww.dmi.org to see a catalog of DMI pub-lications.

PublisherDesign Management Institute101 Tremont Street, Suite 300Boston, MA 02108 USAPhone: 617-338-6380Fax: 617-338-6570Email: [email protected]: www.dmi.org

DistributorHarvard Business School Publishing is theexclusive distributor of this publication.To order copies or to request permission tophotocopy, please call 617-495-6117;in the US call 800-545-7685; or visitHarvard Business Online website:www.hbsp.com

AuthorsDr. Karen J. Freeze, Senior Research Fellow,Design Management Institute

Dr. Kyung-won Chung, Professor,Department of Industrial Design, KoreaAdvanced Institute of Science andTechnology (KAIST)

AcknowledgementsWe would like to thank all the Samsungpeople who shared their insights, chal-lenges, and pride with us. Only those whoappear in the case, however, are listed in theAppendix. Unless otherwise noted, allquotes are from interviews carried out in2006. Special recognition goes to two mem-bers of the design planning group of thedesign strategy team at the CorporateDesign Center: Seung-Eun Erin Chung,manager, and Soo-Hyun Sean Cho, design-er. They organized our visits, providedinsight into design management atSamsung, and shepherded the case throughcompany review processes. Dr. Yu-Jin Kim,Assistant Professor, Department of MediaImage Art and Technology, Kongju NationalUniversity, ably served as research assistant.

Dr. Thomas Lockwood, president of DMI,provided valuable insights during theresearch and development of the case.

© Copyright 2008The Design Management InstituteAll rights reserved.

No part of this publication may be repro-duced without written permission. TheDesign Management Institute, DMI, andthe design mark are service marks of theDesign Management Institute.

“ hink about why I called this conference inMilan, of all places. Samsung’s products must

meet global premium standards. In order to do that,we must strengthen competitiveness in soft areas,such as design and brand, and leap over emotionalwalls in addition to functional and technical ones.”

— Kun-Hee Lee,Chairman of Samsung 1

(14 April 2005, Milan, Italy)

Design Strategy atSamsung Electronics:Becoming a Top-TierCompany

D E S I GN MANAG EMEN T I N S T I T U T EC A S E S T UDY

This Case Study was prepared by Dr. Karen J.

Freeze, senior research fellow at the Design

Management Institute, and Dr. Kyung-won

Chung, Professor, Department of Industrial

Design, Korea Advanced Institute of Science

and Technology (KAIST), solely as a basis for

class discussion. All exhibits are from compa-

ny documents unless otherwise noted. Cases

are not intended to serve as endorsements,

sources of primary data, or illustrations of

effective or ineffective management.

T

1. http://news.hankooki.com/lpage/economy/200803/h2008033103151421540.htm

On the fourteenth floor of the Corporate

Design Center in a red marble skyscraper in

Seoul, South Korea, Samsung Electronics’s

top two design officers were sipping ginseng

tea and taking stock of their new strategic

direction in preparation for a meeting with

key design managers. “It has been nine

months since Chairman Lee’s challenge and

our declaration of the Second Design

Revolution,” said Geesung Choi, chief design

officer, to his colleague and guest, senior vice

president and leader of the design strategy

team at the Corporate Design Center, Kook-

Hyun Chung. “We’ve attempted to balance

our technology with more emotional con-

tent, and we’ve launched a new campaign to

resonate with the emotional experience of

our products. But is it working? How far do

you think we’ve come? Have we made it over

those emotional walls?”

Ever since Samsung’s executives met in

Milan, designers and their leadership

throughout the company had been focusing

their energy and imagination on how to

implement the chairman’s strategic direc-

tion. It was the top priority for both Chung

and Choi, who was also president of

Samsung Electronics’s Digital Media

Business. At the same time, the challenge had

permeated the design organization at every

level. New buzzwords and phrases articulat-

ed the goals of designers in Seoul and engi-

neers in Suwon. Everyone knew that

Samsung intended to be a “tier-one compa-

ny” and would dedicate all necessary

resources to achieve that status.

“If this year’s design awards mean any-

thing, we’ve become a leading design compa-

ny already,” Chung offered. Samsung had

accumulated 62 awards in 2005 and had,

moreover, achieved a most coveted prize. It

had surpassed Sony and was now number 20

in Interbrand’s annual assessment of brand

value, while Sony was number 28.2

“We have come a long way indeed,” Choi

said, nodding, “but we haven’t arrived yet.

We need a product that can represent

Samsung and that consumers can sponta-

neously associate with us. An iconic product.

I think we need to figure out what it will take

to come up with something everyone in the

world must have. That would really mean we

were a premium global player.”

“This is an ongoing discussion, of course,

and it will be on the agenda of the upcoming

Global Design Advisory Board meeting,”

Chung noted pensively. “What is this elusive

thing anyway, an iconic product? Do we

need it to be a tier-one company? If so, how

do we achieve it?” It wasn’t the first time

Samsung’s management had asked this ques-

tion, but everyone looked forward to the

product that would signal the answer.

The Context: The Korean Miracle

In 2005, South Korea was one of the most

technologically advanced countries in the

world. It ranked first in broadband access,

with more than 80 percent of households

wired for high-speed Internet service (next

came The Netherlands at 60 percent), when

only 45 percent of Americans enjoyed typi-

cally slower broadband technologies. Mobile

phone penetration was similarly high.

Analysts described the country as a sophisti-

cated laboratory for consumer electronics

testing, which suited companies like

Samsung. Most striking was the speed at

which the country had achieved this position.

Occupied by Japan from 1910 to 1945,

Korea emerged fromWorld War II devastat-

ed and divided. Having scarcely begun to

recover, it was plunged into a conflict

between the communist North, backed by

China and the Soviet Union, and the demo-

cratic South, strongly supported by the

United States and 15 other members of the

United Nations. This war ended in 1953

with no permanent peace agreement and a

country divided just 50 km north of the

South Korean capital, Seoul. For another

decade, the country’s annual per capital

Samsung: Design Strategy at Samsung Electronics: Becoming a Top-Tier Company

4 © 2008 Design Management Institute

2. BusinessWeek, 1 August 2005.

income was less than $100; with that, South

Korea ranked among the most impoverished

nations of the world.

In 1961, the government established the

Economic Planning Board (EPB) to formu-

late consecutive five-year plans for economic

development.3 In addition to investing in

essential infrastructures, the Ministry of

Commerce, Industry, and Energy supported

specific industries by means of direct finan-

cial subsidies and trade advantages. During

the next 20 years, many companies had their

start, including Samsung Electronics (f.

1969) and Hyundai Motor Cars (f. 1967).

Their stories were not unlike those of the

Japanese companies of a generation earlier.

With government support and hard work,

companies such as Honda (f. 1945) and Sony

(f. 1946) had transformed themselves by the

mid-1970s from followers into world-class

brands.

In the 1960s and 1970s, many Korean

companies, including Samsung, took Japan

as their model, ramping up with imitative

and low-quality products, until they could

establish themselves as companies with sin-

gular identities. As their economy began to

take off in the late 1980s, change came rapid-

ly. Korean presence in universities in Europe

and the US increased dramatically and part-

nerships with Western organizations became

more common. New influences and new self-

confidence resulted in strong growth and

higher-quality products.

Then, in 1997, disaster struck. In what

became known worldwide as the Asian cri-

sis and in Korea as the International

Monetary Fund, or IMF, crisis, the South

Korean economy collapsed and the govern-

ment had to ask for a bail-out loan from the

IMF. Many companies went bankrupt and

others, including Samsung, took drastic

steps to survive. The government embarked

on several initiatives to build the country’s

technological infrastructure and to support

quality and exports, including company

restructuring and the opening of South

Korea to foreign investment. By the early

twenty-first century, leading Korean compa-

nies, such as Samsung Electronics, LG, and

Hyundai Motors, had achieved solid reputa-

tions worldwide and were expected to enter

the ranks of premium global companies

within a few years. (Exhibit 1 illustrates the

Korean miracle.)


© 2008 Design Management Institute 5

3. The EPB became the Ministry of Finance andEconomy in 1998.

Exhibit 1. The Korean miracle. Source of data: The Bank of Korea.

The Company: Samsung Electronics

Background

When Samsung Electronics hired two

designers in 1971 to develop models based

on advanced products, including Japanese

TVs, no one could have imagined the com-

pany’s future.With the turn of the twenty-

first century, the company would rapidly

become a powerful, design-driven leader in

the global electronics industry.

Origins

Samsung Electronics Company (SEC) had its

beginnings in Samsung-Sanyo and Samsung-

NEC, established in 1969 and 1970 as units

of Samsung, an already powerful conglomer-

ate in the Korean economy that had origi-

nated as a trading company founded in 1938

by Byung-Chull Lee. These alliances enabled

Samsung to acquire cathode ray tube and

other advanced television technologies. In

1972, Samsung Electronics started to make

black-and-white television sets for domestic

and original equipment manufacturer

(OEM) markets in its factory in Suwon, 40

km south of Seoul. In 1977, Samsung

acquired Korea Semiconductor and began

making memory chips. By the end of the

decade, Samsung was a successful manufac-

turer of television sets and home appliances

that sold under various labels.

In 1984, Samsung’s electronics businesses

consolidated into Samsung Electronics Co.,

Ltd. Samsung acquired Korea Telecommuni-

cations in 1980 and merged it with Korea

Semiconductor, forming Samsung Semicon-

ductor and Telecommunications, which then

merged with SEC in 1988. In the mid-1980s,

the small design function (about 10 people)

was divided into three product areas—

domestic appliances, telecommunications,

and computers—serving an engineering-

driven culture in Suwon.

The NewManagement Philosophy

When Byung-Chull Lee passed away in

November 1987, his son, Kun-Hee Lee,

became Samsung’s chairman. Having

worked in various capacities in Samsung

since 1966, the younger Lee soon began to

redirect the company strategically. In 1990,

an industrial design department was estab-

lished under Kook-Hyun Chung, who had

joined the company in 1977 as an industrial

designer. This and other measures became

known as the “new management.” The new

management philosophy was most notably

stated in the younger chairman Lee’s

Frankfurt Declaration of 1993, when he told

senior Samsung managers assembled in the

German city, “Change everything but your

family.” This revolution aimed at quality

first, without compromises. From the begin-

ning, Lee emphasized the strategic impor-

tance of design, along with R&D and

technological development. As part of the

new management’s emphasis on design, the

decision was quickly made to establish the

Product Planning and Design Center, with

Kook-Hyun Chung at its head; it soon

involved 160 employees. Several design edu-

cation initiatives (see below) were launched

during this period.

In 1994, the Product Planning and Design

Center moved from the Suwon factory to

Seoul, taking over a building near the Seoul

train station. The move attracted outstand-

ing designers and enhanced user-trend

research; the location facilitated travel

between the factory and headquarters. It

caused, however, a minor rebellion among

the division managers, who said they would

hire their own designers if design moved to

Seoul. Nevertheless, the design center

remained in the capital city.

In 1995, Samsung began to mass-produce

LCD displays for both computers and TV

sets, having developed expertise in this field

since 1991. Vertical integration of electronics

hardware, from chips to monitors, was

becoming a critical advantage. The company

also increased production of communica-

tions devices, but not without problems.

Embarrassed by defective cordless phones

coming from the Gumi factory in southeast-

ern Korea, Lee, Samsung’s chairman, deter-



mined to underline the seriousness of the

new management philosophy, ordered

phones and other products worth 15 billion

won4 burned as employees watched. News of

this incident traveled around the world,

demonstrating Samsung’s commitment to

uncompromising quality.

The First Design Revolution

In 1996, Lee announced the Year of the

Design Revolution, declaring that design

would be Samsung’s strategic edge and pri-

ority for investment.

Now design received accelerated injec-

tions of support into personnel and facilities.

Samsung hired university advisors and for-

eign consultants to stimulate thinking about

the role of design and to develop partner-

ships in design activities. The company

recruited designers worldwide and strength-

ened training programs for them. It organ-

ized a two-day course for some 200 people in

senior management to introduce them to

design and design management principles;

the course included a field trip to top design

companies in Japan. The message to man-

agers: Adopt a “designer’s mind” and broad-

en your concept of product development.

In December 1996, Samsung appointed

Jong-Yong Yun president and CEO of

Samsung Electronics. Yun had joined

Samsung in 1966 after earning his electronic

engineering degree from Seoul National

University. He rose to the top of the con-

sumer electronics business and was heading

Samsung’s operation in Japan when he was

called back to Seoul.5 In 2000, he was named

vice chairman.

The IMF Crisis and Recovery

This new quality and design trajectory was

temporarily thwarted by the IMF crisis of

1997, which brought Samsung to the brink

of bankruptcy. Samsung used the occasion to

sell off some 100 businesses and to downsize

the company’s workforce by 50,000 people.

Samsung Electronics alone lost about 27,000

employees.6 Analysts praised the move,

which signaled a cultural shift—no longer

would lifetime employment be a given at this

Korean conglomerate.

As part of SEC’s recovery, the business

units were decentralized under the global

business management (GBM) system.

Within a few years, the company was sus-

taining a sharp upward course on all fronts.

(Exhibits 2a and 2b show financial trends

since 2000.) It greatly accelerated R&D

investments, building a state-of-the-art

research and development laboratory in



The First Design Revolution

“An enterprise’s most vital assets lie in itsdesign and other creative capabilities. Ibelieve that the ultimate winners in thetwenty-first century will be determinedby these skills. I have designated 1996 asthe Year of the Design Revolution for allSamsung products. Let us focus ourstrength in developing unique designsthat reflect the Samsung philosophy andsoul.”

— Chairman Kun-Hee Lee,New Year’s Address, 1996

4. Approximately $15 million in 1995. See MichalLev-ram, “Samsung’s Identity Crisis,”MonthlyBusiness 2.0, 6 August 2007.

5. Information and quotes from Jong-Yong Yun arein Peter Lewis, “The Perpetual Crisis Machine,”Fortune 152:4 (5 September 2005), pp. 35-41.

6. See Ha-sang Hong, “An Equation of Samsung’sSuccess,”NikkeiBiztech, No. 3, October 2004, pp. 80-127 (in Japanese), and Sunghong Kim and InhoWu,10 Years of the Lee Kun-Hee Reformation, Gimm-Young Publishers, Inc., 2003, p. 59.

Exhibit 2b. Percentage of sales by region, 2005.Source: Samsung annual reports.

Exhibit 2a. Samsung Electronics, financial highlights, 2000–2005. Source: Samsung annual reports.

2000 2001 2002 2003 2004 2005

Consolidated Sales 34.6 35 48.7 54.1 78.5 79.5

Nonconsolidated Sales 27.2 24.4 33.3 35.4 55.2 56.7

Domestic 8.6 7.9 9.3 7.8 9.6 10.2

Exports 18.6 16.5 24 28.6 45.6 46.5

Net Income 4.8 2.2 5.9 5 10.3 7.5

R&D Expenditure 1.59 1.81 2.42 2.95 4.59 5.34

$ billion

Giheung. Once again, the business units

clamored unsuccessfully for their own design

departments back in Suwon, but design

remained firmly in Seoul, having moved

from marketing to GBM. As chair of the

newly established Corporate Design

Committee, Jong-Yong Yun was instrumen-

tal in increasing the size and influence of the

design department in Seoul and worldwide.

In 1998, Tom Hardy, an American, was

invited to help articulate Samsung’s design

values for internal education and common

goals. Hardy, formerly IBM’s chief designer,

had served as an advisor to Samsung since

1996 and worked with the company until

2003. The most enduring achievement of

this goals group was its visualization, emerg-

ing from traditional Korean

culture as represented in

Taegeuk, the dual principle of

yin and yang, of the compa-

ny’s tone and manner and

design principles. The overar-

ching theme was harmony,

expressed by the phrase bal-

ance of reason and feeling. (See

illustrations in Exhibits 3a

and 3b.)

Design Moves to the Top

At the end of 1999, the designers asked for a

management audit that would evaluate their

contributions to the company’s strategy. By

then, they had something to show and their

leader, Kook-Hyun Chung, complied in order

“to cope with the ongoing demands for

decentralizing the design function.”At this

point, the company employed about 175

designers. The audit not only legitimized

their new role and mission but also con-

tributed to a symbolically new environment.

In 2001, the designers moved downtown to a

corporate design center, a five-minute walk

from Samsung’s HQ. Chung, now a senior

vice president, drove design innovation as the

head of the design strategy team. He reported

to the newly appointed chief design officer,

who was succeeded in 2004 by Geesung Choi,

president of the Digital Media Business. Choi

reported directly to vice chairman and CEO

Yun.With Samsung for more than two

decades, Choi was well-situated to facilitate

communication between Suwon and Seoul—

two locations an hour apart by car, but much

further apart by culture.

In the early 2000s, Samsung’s design

awards began accumulating rapidly. In

November 2004, topping off a good year,

Kun-Hee Lee, chairman of Samsung, won

the Design Leadership Award of the Hong

Kong Design Centre “for his strong commit-

ment to innovation and design in business.

His success in Korea and worldwide demon-

strates how strong corporate leadership and

design can be integrated to make a huge dif-

ference to a growing international enterprise

in a fiercely competitive business world.”7

The Second Design Revolution

In April 2005, at the opening of Samsung’s

sixth global design center in Milan,

Chairman Lee gathered his chief executives



Harmony

Reason Feeling• Rational• Intellectual• Technological

• Emotional• Adaptable• Humanistic

Exhibit 3a. Design tone and manner at Samsung, 1996.

Reason

Feeling

Comprehend Lifestyle Needs:Problems, Trends, Behavior,Values, Unmet needs

Innovative

Coherent

Lifestyling

Stay One Step Ahead:Differentiation, Fresh, Inspiring, Clever, Unique ideas

Balance Consistency and Variety:Identifiable, Unified, Market-sensitive, Integral

Harmonious

Intuitive

Interactive

Harmonize with Environment:Systems, Safety, Green, Appropriateness, Accord

Convey Agreeable Use and Meaning:Instinctive, Direct, Friendly, Simple

Design for the Experience:Exciting, Fun, Sensible, Cool, Satisfying

Exhibit 3b. Design principles at Samsung, 1996.

Source: Tom Hardy, with Kook Hyun Chung and Shin T. So, “Strategic Realization: Building Fundamental Design Values, “Design Management Journal 11:1 (Winter 2000), p. 67.

7. For the full text of the award and Kun-Hee Lee’s speech,see http://www.hkdesigncentre.org/awards/dla2004.asp.

and addressed them with directives that

inspired the Second Design Revolution not

only in name, but in action.8 Samsung would

now (1) create remarkable designs and estab-

lish a user interface (UI) identity; (2) recruit

and secure the world’s best designers; (3)

nurture a creative corporate environment;

and (4) reinforce its molding technology

infrastructure. The presidents of all three

consumer product businesses responded

immediately with full support and specific

goals. As president of the Digital Media

Business, Choi promised to “do our best to

establish an original identity for Samsung

and to recruit world-class designers to

achieve this.” Ki-Tae Lee, president of the

Telecommunication Network Business,

intended to upgrade Samsung’s mobile

phones into world-class premium products

by focusing on user interface issues. “We will

improve the user environment by . . . recruit-

ing more than 200 new experts in user inter-

face.” President Hyun-Bong Lee of the

Digital Appliances Business was determined

to focus on cutting-edge molding technology

by doubling the size of its design molding

group, with the goal of “concentrating our

capabilities to establish a premium brand.”

Concurrent with these design goals, by

the end of the year Samsung had revealed

technical prowess in several domains, intro-

ducing world firsts in the memory, mobile

phone, and TV businesses.

Business,Markets, Competitors

In 2005, Samsung Electronics, unlike its key

competitors, remained a vertically integrated

hardware company that eschewed participa-

tion in software businesses. Defying the con-

ventional wisdom that “software is where the

money is,” Samsung pointed to Sony and

other companies for whom media had not

proven as profitable as expected. To maintain

manufacturing as a critical competency, it

kept production in-house, in factories locat-

ed worldwide.

In 2005, the company reorganized into

five businesses: Digital Media, Telecommuni-

cation Networks, Digital Appliances, Semi-

conductors, and LCDs. Many of its products

enjoyed the leading market share worldwide.

(Exhibit 4 shows market shares of the three

top competitors in selected categories.)



“As we approach the end of an era charac-terized by competitive structure, price, andquality considerations, design capability isemerging as a key determinant of futurecommercial success… Design is not simplya way to express identity, but rather mustbe seen as a communication channelbetween a business and its customers thatis capable of drawing all of society closertogether… Design must enable a businessto take a further step toward the expressionof its core philosophy and culture… Designis not simply the physical representation ofthe ‘face’ of the company, but rather per-sonifies the spirit of those employees work-ing within it.”

— Chairman Lee’s thank-you addressto the Hong Kong Design Center(November 2004)

8. The following information about this Milan meetingis from Dong-Hee Oh, “A Challenge to World-ClassPremium Products: Crossing the ‘Wall of Emotion,’”Digital Times, April 15, 2005, and Ha-sang Hong,Lee Kun-Hee, Seeking for World-Class Talents, Bookfolio,2006, p. 178. See also the article by Lee Hyun-Sang inthe Joong Ang Ilbo, April 15, 2005.

Exhibit 4. Samsung market shares 2004, selected categories, top three competitors. Source: Company document.

Digital Media Business

Home of color TVs, audio and video equip-

ment, and computers and computer periph-

erals, Digital Media was the first business to

be associated worldwide with the Samsung

brand. Starting as a mass-producer of OEM

products, by 2000 it had become a recog-

nized supplier of high-quality, if not exciting,

devices. Because Samsung was the leading

innovator in LCD panels, its media and

telecommunications products enjoyed cut-

ting-edge technology in this field. By 2004, it

was winning awards for TV set designs with

different types of screens and associated

technologies, such as LCD, plasma, DLP pro-

jection, and CRT.

In 2004, Digital Media led in global mar-

ket share in both TVs and DVD/VCRs,

where its very close competi-

tors were Philips and Sony.

With a range that included

flexible, portable two- and

three-hinged models, it led in

computer monitors; it was sec-

ond to Hewlett Packard in

mono laser printers. (Exhibit

5 shows an ergonomic hinged

monitor.) Digital Media also

planned an ambitious market

strategy to differentiate its

MP3 player from the iPod,

which had a secure hold on

the MP3 player market.

(Exhibit 6 shows a Samsung

MP3 player in January 2006.)

Telecommunication Network

Business

The TNB could be said to be

Samsung’s ambassador to the

wired generation. In 2003,

Samsung pioneered the anten-

na-less clamshell cell phone

that was widely distributed

through wireless service

providers. More recently, it

offered such innovations as a

phone with a screen that

swiveled to a landscape view.

More than 16 million of its BlueBlack slider

phones, introduced in 2004, had been sold by

the end of 2005 (see the slider in Exhibit 7).

Having formidable in-house strengths,

including displays and memory chips,

Samsung accelerated its research and design

efforts in this category, where it reckoned the

product lifecycle was less than six months.

Aware of the implications of this for the

environment, Samsung led in the establish-

ment of recycling centers for cell phones in

Korea; the company also developed an envi-

ronmentally friendly paint for cell phones,

for which it won an iF Material Award in

2004. Digital convergence was the watch-

word, and Samsung aspired to be the first to

combine technologies and functions for

ever-multiplying consumer applications.

Digital Appliances Business

In this sector, slower moving than cell

phones because of the longer life of these

appliances, Samsung’s main products were

refrigerators, air conditioners, washing

machines, microwave ovens, and vacuum

cleaners. These were key players in Korea,



Exhibit 5. Three-hinged, flat-folding monitor.

Exhibit 7. Samsung’s Blue/Black slider late 2005.Exhibit 6. Samsung’s YP-Z5 MP3 player.

where Samsung’s major local competitor

was LG.Worldwide, Whirlpool (US) was its

principal competitor, with Haier (China)

creeping up in the sales rankings. Samsung

led the market in side-by-side refrigerators

in 32 countries.

Yet these large domestic appliances were a

tricky business for a company that wished,

since the turn of the twenty-first century, to

compete globally rather than merely to sup-

ply its local market. “Home appliance prod-

ucts are rooted in the lifestyles of each

country,” explained Jeongmin Kim, a manag-

er in the system appliances design group, “so

we need to understand them if we are to go

into global markets.” Other criteria were

salient, as well—for instance, these appli-

ances were big and heavy and therefore the

company had to consider shipping costs to

distant markets, or decentralized manufac-

turing. Or, in Samsung’s case, to aim for the

premium market segment. Technically

advanced and designed with consumer pref-

erences in mind, including environmentally

safe materials and energy efficiency,

Samsung’s high-end SBS refrigerators were

available in Korea, the US, Europe, Latin

America, the Middle East, and China. All but

US customers could choose striking colors,

such as cranberry, cobalt blue, black, and

bronze, which could be changed through a

clever, inexpensive replaceable panel system

(see Exhibit 8).

Semiconductor Business

Samsung made its first memory chip in

1977, and by 1992, less than two decades

later, it was the world’s leading manufacturer.

In 2004, it led in market share by a large

margin in several categories, including

DRAM, SRAM, Flash, and MCP or DDI

products, and in 2005 it continued to intro-

duce world firsts. As the leading supplier

worldwide, the company put “a little bit of

Samsung” into many competitors’ products.

Its ownership of this sector enhanced its

time-to-market in such volatile fields as

mobile phones.

LCD Business

The thin film transistor liquid crystal display

business (TFT-LCD), launched in 1995, was

emblematic of Samsung’s success in aggres-

sively focusing on digital, rather than analog,

technology. Company spokespersons suggest-

ed that as a relative newcomer (compared

with Sony and other Japanese companies),

Samsung was not so invested in the older

technology and could more easily make the

switch to digital products. Samsung’s LCD

technology went directly into the company’s

own computer monitors, notebook PCs, LCD

TVs, and mobile phones, as well as to outside

customers.

By 2004, Samsung’s lead in LCD displays

was such that Sony bid to get in on the

ground floor of the next factory. The result

was a 50-50 joint venture between Samsung

and Sony. Called the S-LCD Corporation, it

owned and operated Line 7-1, the world’s first

seventh-generation LCD plant producing pan-

els exclusively for televisions. This enterprise

pushed Samsung’s quality still further and

ensured a customer for half its output from

the new factory, which opened in July 2004.



Exhibit 8. Samsung’s side-by-side refrigerator, January 2006.

A Structure for Global Competitiveness

As a global company, Samsung Electronics

did not hold its business disciplines within

Korea, but decentralized them, locating them

throughout the world.

Research & Development

As early as 1987, Samsung had determined

that basic research was critical to its compet-

itive capability. R&D investment grew from

$1.81 billion in 2001 to $5.34 billion in

2005—9.4 percent of sales.With some

32,000 researchers (25 percent of SEC’s

workforce) in 16 research centers (6 in

Korea), Samsung had one of the largest R&D

organizations in the world. In 2005, alone, it

registered 1,641 US patents, ranking fifth at

the US Patent Office.

The heart of Samsung’s R&D was the

Samsung Advanced Institute of Technology,

SAIT, opened in Giheung, near Suwon, in

1987.With a mission to “make the world

better,” it engaged in activities in support of

both current core businesses and future pos-

sibilities. It sought to “bolster the synergy of

the various Samsung units” and sponsored

specialized initiatives, such as an eco-group

and an energy group.

Engineering

For a quarter century, Samsung was an engi-

neering-driven organization whose engineers

were seldom allowed to demonstrate their

creative abilities. Their task was to manufac-

ture commodity TVs and home appliances,

and they were rarely challenged to inno-

vate—except as a way of lowering costs. Until

the early 1990s, engineers made all the deci-

sions, and designers reported to them. For

example, noted YoungJun Kim, vice president

of the Design Research Lab and head of the

visual display design group, “Global compa-

nies in the 1980s were already design-led and

were making camcorders small; at Samsung,

the engineers made them big!”

The Frankfurt Declaration of 1993

nudged Samsung’s culture in a new direc-

tion. Beginning in 1996 with the First Design

Revolution, engineers became acquainted

with industrial design as something other

than superficial form and a nice color.

Engineering’s continued resistance to

design’s wishes had reasonable origins, how-

ever, as senior engineer Hyeonjoo Lee of

Digital Media explained. “Return on invest-

ment (ROI) comes from small inputs that

cause large outputs. To increase ROI, rules

and regulations ask us to standardize and use

the same devices. Any innovation that push-

es a product in a new direction goes against

these rules.”Yet, as Hyeonjoo Lee pointed

out, “It doesn’t matter how difficult the

design is, the circuit engineers and mechani-

cal engineers can solve the problem. The

question is cost.”

Wooyoung Kan, a principal engineer in

digital media, suggested that if engineers con-

tinually learned new skills, had self-confi-

dence, and exercised creativity, they would

earn the respect of all other team members,

including designers. He valued designers such

as Yunje Kang, his partner in an innovative

TV project, who was willing to change and

adapt. “Designers like him ‘feed’ engineers

and help them do their jobs well,” he said.

In 2005, to celebrate the continually

improving relationship between design and

engineering, the company instituted the

MacGyver Awards to honor engineers who

developed creative technological solutions to

the challenges inherent in innovative designs.

Wooyoung Kan received the first honor.

Manufacturing

Samsung operated some 27 manufacturing

plants in 13 countries across the globe. In

Korea, the company maintained state-of-the-

art facilities in such plants as the new sev-

enth-generation LCD plant, built in 2004 in

cooperation with Sony. Samsung’s manufac-

turing was characterized by flexibility,

according to Choi: “We [digital media] can

change our products any time we want.We

have a human-oriented production system



with cell lines, not conveyor belts.We get

more productivity that way, and we can

adjust inventories faster.We don’t know

which products consumers will buy, so we

have to respond quickly.”

Marketing

As an engineering-driven company for more

than two decades, Samsung had not given

priority to either marketing or design. They

were add-ons—the company’s engineers had

assumed that if their products were good

enough, they would sell. In fact, most mar-

keters had been engineers. Although

Samsung had successfully positioned itself as

a leading brand within South Korea, its

brand power remained weak internationally

until the mid-1990s, and it was seen as an

OEM or low-price brand that provided

mediocre products.

Lacking a marketing strategy to change

global brand perceptions, Samsung could

not overcome this perception. That began to

change quickly with the First Design

Revolution of 1996, as Chairman Lee recog-

nized the importance of developing a global

brand strategy and empowered Samsung’s

PR team to do so. In 1997, after a year of

intense discussion and research, the team

announced Samsung’s global brand strategy.

First, it would focus on promoting a single

Samsung brand for Samsung Electronics,

with emphasis on mobile phones and digital

TVs; second, marketing communications

would be unified globally; third, the global

brand campaign would focus initially on

already developed markets; and finally,

Samsung would utilize sports marketing as a

key brand awareness tool.

In the next few years, these principles

were implemented globally. For example, the

company established a sports marketing

team in 1998 that launched Samsung’s

involvement as a major sponsor of the

Olympic Games, resulting in high exposure

for Samsung mobile phones.

In late 1999, Samsung redefined its brand

platform with the goal of positioning itself as

the leader in the digital convergence era.

Under the new global brand campaign—

Samsung DigitAll, Everyone’s Invited—

Samsung redefined itself as an inclusive

provider of digital products. In 2000,

Samsung consolidated its advertising under

one agency, which helped the company to

execute holistic marketing campaigns with a

consistent look and feel across traditional

media, outdoor advertisements, POP (point-

of-purchase), and exhibitions. The company

also promoted name recognition beyond the

sports arenas; in 2005, people could not walk

anywhere in major Central and Eastern

European cities, such as Prague and Moscow,

without seeing blue and white Samsung ban-

ners fluttering from light poles and Samsung

ads covering buses and trams.

By 2004, Samsung’s marketing depart-

ment had greatly expanded and was no

longer dominated by engineers but by people

with marketing and other business experi-

ence. Late in the year, the company hired

Gregory Lee as senior vice president and

head of marketing. Lee was a Korean

American who had worked at major US

companies, including Kellogg, Johnson &

Johnson, and Procter & Gamble. In 2005, the

company launched a new marketing and

advertising campaign, Imagine. As Gregory

Lee explained, “With this new campaign, our

aim is to expand on this [name] recognition

to build a warmer, more emotional connec-

tion with our customers. The only limit is

their imagination.”9

Design

By 2005, Samsung was clearly a design-driv-

en company with worldwide ambitions and a

basketful of awards that proved its viability at

the top of the game. A look at the design

organization more closely illuminates its

challenges.



9. Samsung press release, 9 June 2005.

Design at Samsung Electronics

Since its founding in 2001, Samsung’s

Corporate Design Center had been the incu-

bator for numerous winners in the competi-

tive markets of the company’s three

consumer businesses. Located in downtown

Seoul, in a historic red marble skyscraper

named after the city’s major daily newspaper,

the Joong Ang Ilbo, the CDC employed 600

people. As formal head of the CDC, chief

design officer Choi reported directly to vice

chairman and CEO of Samsung Electronics,

Jong-Yong Yun, who chaired the Corporate

Design Committee. Kook-Hyun Chung, sen-

ior vice president, managed the design strat-

egy team, the operating institution of the

CDC, which also supervised the Global

Design Centers and three working groups:

design planning, design innovation, and

user-interface strategy. (See the organization-

al chart in Exhibit 9.) The CDC also housed

the Design Research Lab, headed by vice

president Young Jun Kim. It was responsible

for advanced design and “user-sensing,” or

strategic in-depth research into consumer

behavior for future forecasting and other

critical projects.

Given the CDC’s achievements over the

past four years, it seemed to new recruits

and others that design must have a long tra-

dition at Samsung. The company’s 62 design

prizes in 2005 included 3 from the US

(IDEA), 35 from Germany (iF and Red

Dot), 20 from Japan (G-Mark), and 4 from

China (Design for Asia Award, iF China). It

ranked first (with 19 prizes) among IDEA

(Industrial Design Excellence Award) win-

ners from 2001 to 2005 (Apple was second

with 17). Yet these achievements were essen-

tially the result of investments made since

1993 and major changes in the company’s

priorities only since 2001. Senior vice presi-

dent Kook-Hyun Chung noted wryly,

“Young designers think design has been

important at Samsung for a long time. They

don’t know what we went through!”

Managing a Centralized Institution

By 2005, opposition to a central design

organization had receded, mostly due to

increased collaboration and better under-

standing among engineers and designers.

Yunje Kang, a principal designer in the visual

display design group, emphasized that “the

balance between design and engineering

cannot be well maintained in Suwon.We

have to be close to the consumers—to their

lifestyles. So we have to be in Seoul.” Kook-

Hyun Chung filled in the details: “The pri-

mary advantage of having design together is

that the designers can have common experi-

ences. As they share their experiences here,

their skills improve dramatically.” Sanguk

Jung, vice president and head of the design

group in the Digital Appliance Business,



Exhibit 9. Organization chart of the Corporate Design Center, January 2006. Source: Company document.

agreed: “When the design team was at the

factory site, we tried to understand the man-

ufacturing process. But this also limited our

creativity. After we came to Seoul, we could

develop this creativity—here we can think

more things.” This facilitated recruitment, as

well—more talented designers wanted to

work in Seoul than in Suwon. The task force

system, which brought cross-disciplinary

teams together in the value innovation pro-

gram (VIP) for developing new products,

had improved the ability of all players to

understand each other.

Geesung Choi, chief design officer and

president of the Digital Media Business,

noted that “we try to motivate designers to

come to Suwon often by providing a good

working environment, with materials, colors,

tools, new engineering ideas; wonderful

products can’t come out without engineering

support.” Up in Seoul, as CDO, Choi saw his

responsibility as “providing a favorable envi-

ronment for developing a design capability

to meet corporate objectives.” As a non-

designer, he wondered about this function:

“Sometimes I’m touching areas beyond my

capabilities—I even have to give comments

on kitchen products!”

Building Foundations: Design Education

In the early 1990s, Samsung launched the

first of several design education initiatives

that provided highly trained designers not

only for the company, but for all of South

Korea. A Design Membership program

(1993) took some 50 top university students

each year from all over Korea and put them

through one- to three-year design training

programs. At first, only about half the gradu-

ates entered Samsung Electronics; by 2005,

80 percent joined the company.

In 1995, Samsung founded the Samsung

Art and Design Institute (SADI) to intro-

duce Western-style undergraduate design

education, focusing on fashion and commu-

nication design. “We adapted a curriculum

from Parsons [the New School of Design, in

New York City] to come up with an appro-

priate program for Korea,” explained Young-

Chun (Rich) Park, professor of the

Foundation Department since 1995. Park

had an engineering degree from Korea and

an industrial design degree from Philadel-

phia College of Art; he was teaching at

Parsons when he was recruited to SADI.

Since most of the students were just out of

high school, Park explained, “We empha-

sized a ‘foundation’ program, which other

design programs did not have”; one founda-

tional area was visual intellectuality.

After two years in Seoul, SADI students

spent two years at partner colleges abroad,

such as Parsons, Carnegie Mellon, or other

American and British schools. SADI gradu-

ates joined various Samsung companies or

other Korean enterprises. In 2005, the insti-

tute added industrial (product) design to the

curriculum; chaired by Young-Chun Park, it

accepted mostly master’s-level students. At

the same time, SADI also changed the 2 + 2

program to a three-year program in Seoul,

which offered a certificate qualifying gradu-

ates for entry-level jobs. Graduates could still

study abroad, as well. According to Sung-

Han Kim, a designer with 10 years’ experi-

ence at SEC and an MS from the Illinois

Institute of Technology (through Samsung’s

Design Power program—see below), “We

plan to keep the exchange program with the

foreign schools via summer schools, visiting

faculty, and practical experience. Their stu-

dents can come here too.” In 2005, some 250

students were enrolled in the three-year pro-

gram—approximately 40 in each class in

fashion and communications, plus 20 in

first-year product design.

Also in 1996, Samsung established the

Innovative Design Lab of Samsung (IDS), as a

think-tank of Samsung design educating out-

standing in-house designers at the global

level.When Samsung initiated the program,

Art Center College of Design (Pasadena,

California) collaborated by helping to develop

the curriculum and dispatching its own pro-

fessors to Korea. One of them, Gordon Bruce,



served as a professor of IDS from August

1995 to July 1998.

Finally, to provide high-level continuing

education for in-house designers, Samsung

inaugurated the Design Power program in

2003. It provided the company’s best and

most promising designers with opportunities

to study and work abroad. Each year, approx-

imately 20 designers with eight to ten years of

service enjoyed six-month visits, and four

who had more than ten years’ experience at

Samsung could be away for up to two years.

Getting Close to the Consumer:

Design Research

“The difference between marketing research

and design research,” explained Young Jun

Kim, vice president of the Design Research

Lab, “is that marketing research is focused on

the current situation—market share, and so

forth. Design research is focused on user

behavior and user experience.” Samsung

designers visited people in their homes to see

how they actually used products. “With this

kind of research,” Kim continued, “we can

persuade the marketing team what will

work, for example, in the North American

market. To understand users, the Design

Research Lab also carries out trend research

on home interiors, furniture, fashion, and so

on—trying to apply those trends to product

development.” As Soo-Hyun Sean Cho, a

researcher in the design strategy team at the

Corporate Design Center, explained: “By

bringing to the CDC advanced product and

user research capabilities, looking as much as

5 to 10 years ahead of today’s market

research, we can reverse the typical product

development process, which begins with

product planning and ends with design.

Instead, designers will often initiate concepts

that are adopted by marketing and then real-

ized by engineering.”

This approach resulted in designs that

translated into profits in the market—and

that won the designers respect and coopera-

tion from the engineers and marketers.

“Now, as the designers’ concepts and ideas

are clearly connected to business success,

even marketing listens to the designers’

ideas,”Young Jun Kim added. This was not

always easy. He went on: “The most difficult

task of the design manager is to find the next

breakthrough idea. It is not possible except

by inspiration. But the key to that is discov-

ering and using clues that Samsung can work

with. It is extremely difficult to find the key

criteria, the core evidence for the future. The

three factors are market trends, competitors,

and technology, so we undertake research on

market trends and competitors twice a year,

and analyze the market four times a year.We

also analyze technological development in

the spring and fall. Above all, we must learn

to understand design as business. Design and

designers are closest to users and the mar-

kets, so they should put their knowledge

together with business objectives.”

At the strategic level, Kook-Hyun Chung

emphasized the importance of design-based

research by considering what it would mean

if it were unnecessary: “If we could somehow

capture all user information on a chip, to

which everyone had access, then designers

would have nothing left to do but be stylists.

But that, obviously, is unlikely to happen.”

User-Centered Design Lab

Part of Samsung’s user research took place

in the User-Centered Design (UCD)

Laboratory, a short walk from the CDC. Led

by SungJae Chung, PhD, manager of the

user interface strategy group, it simulated

familiar living environments in which users

could try out Samsung products. Behind a

one-way mirror, researchers could observe

and video-record how the products were

actually used. This led to user-friendly forms

and features; in 2003, Samsung won a com-

mendation from the International

Ergonomics Association for innovations in

the workplace.



Cultivating an International Presence

Samsung Design recognized early the impor-

tance of international input into design deci-

sions. In the 1980s, designer and future SVP

Chung studied at Chiba University in Japan,

receiving his MS in design in 1988. He

became head of the incipient design depart-

ment in 1990 and proposed a design center in

Tokyo, which took shape in 1992. The follow-

ing year, the company opened a similar office

in Germany, which closed because of the IMF

crisis in 1997. In 2000, Samsung set up

Global Design Centers in San Francisco and

London to drive global design strategy. The

following year, the company established a lab

in Los Angeles that specialized in mobile

design. It capped these with new GDCs in a

major business center in their potentially

biggest market (Shanghai, China, 2004) and

in a European city symbolic of design and

cultural heritage (Milan, Italy, 2005).

These six design centers were Samsung’s

windows on global markets. As Choi

explained, “We use design centers overseas to

learn about lifestyle trends, then when we are

deciding on a product, we collect those

inputs.We also let the overseas design labs

design their own concepts from their own

understanding of the tastes of their market.”

Indeed, each center brings a different cultur-

al insight to Samsung Design, Choi noted:

“The English are strong in engineering, the

Japanese in fine finishes, the Italians in

shapes, and the Americans in pragmatism.”

As part of the small team that managed and

coordinated these centers, Erin Chung, a

manager in the design planning group of the

design strategy team, suggested that the only

drawback to these rich resources was the

time-zone problem: “Since I’m working

closely with the global design centers, the

time difference means my working hours

aren’t exactly regular!”

In 2004, the CDC, with the approval of

Yun, established a Global Design Advisory

Board, consisting of six members from five

countries. The council meets three to five

times per year, and individual members pro-

vide reports, lectures, and consulting services

as needed by the Corporate Design Center.

Bringing it All Together: Challenges of the

CDC in 2006

Over the past year and a half since his

appointment as CDO, Geesung Choi has

evaluated the modus operandi of the CDC.

He found that “designers design each product

separately. There is no corporate identity even

within a category. I have tried to scrutinize

that and to group the designs. Some design-

ers are very creative, and others are talented

materializers who can implement, based on a

given idea. There aren’t many really creative

designers; they should be saved from the

daily, minor tasks and used for concepts,

which others can follow. They shouldn’t

design every day—no quantum leaps can be

made if they do. It’s a waste of design tal-

ent—they are exhausted and can’t make

breakthroughs.”

On the other hand, Choi was concerned

that these creative designers “tend to do their

own thing, so every product is different. But

we want people to start saying, ‘This is

Samsung.’”

Turning to Samsung’s design history, Choi

explained how difficult it was for older

designers to free themselves from the legacy

of the past—that is, from imitating competi-

tors. “To get free from that is a difficult

process. You have to understand trends, of

course—but not see the competitors’ solu-

tions. If a design proves to be an imitation, it

is immediately put to waste.”

Some designers believed the potential of

Samsung design had not yet been reached.

Sanguk Jung, vice president and head of the

digital appliances design group, observed

that the “interdivisional synergy is not so

good because there is no time to work with

other divisions’ products. If the advanced

digital technology and white goods [home

appliances] were integrated, the synergy

would be enhanced.”



SVP Chung described an initiative that

could help such cross-fertilization: “We are

working on a design intelligence index,

which involves using information technology

to create a method of sharing information

among the design units.” The system would

incorporate both core design values and spe-

cific solutions in a way that would be accessi-

ble to the whole design organization,

providing links to the design bank systems

supported at the business level. Also, cross-

fertilization would occur as the designers at

the CDC rotated, taking experience from one

division to another.

Design-Initiated Product Developmentat Samsung Electronics

Since 2001, Samsung has been a design-driv-

en company, but in practice the classic con-

flicts between engineering and design and

between marketing and design took years to

work out. The company introduced a multi-

disciplinary task-force system and a dedicated

value innovation program (VIP) residential

facility that now bore fruit.

Digital Media Business: Televisions Sets

for Style-Conscious Consumers

By 2005, television technology was so mature

that analysts noted very little difference

between brands. Earlier, Sony had thrived

with its Trinitron color TV (1968), which for

years had represented the high-end standard

in picture quality and fidelity. But as tech-

nologies competing with the cathode ray

tube (CRT) began to emerge at price points

appealing to consumers, the competitive

environment changed. As a manufacturer of

LCD displays, Samsung enjoyed a competi-

tive advantage in this new environment and

an opportunity to distinguish itself in a

hugely popular market.

After its design revolution of 1996,

Samsung began to improve the quality and

value of all its products rapidly, aiming for

distinctive designs that could rival such com-

petitors as the king of TVs, Sony.

Nonetheless, Yunje Kang, a senior manag-

er in the design group of the visual display

division, recalled a galvanizing moment in

2003: “About three years ago, we took the

logos off Samsung and other TVs and then

tried to identify them. They were all identi-

cal, especially the flat panels. All silver.With

this test, we realized that the TV (in fact, the

A/V cluster) needed a brand identity that

would make a strong impression.”

The exercise resulted in some bold,

award-winning designs on the road to find-

ing a Samsung identity in this sector. The

distinctive L7, a large-screen digital light

processing (DLP) projection TV, stood on its

“engine,” a slim, vertical pedestal, forming a

T that fit sleekly into a large office, confer-

ence room, or home entertainment room.

(See Exhibit 10.) Introduced in May 2004,

the startling L7 generated excitement about

new thinking in the TV world. Nonetheless,

despite major new developments in circuit,

optical, and mechanical design and engineer-

ing, it was still projection-based, and that

meant its lifespan was limited. As the chief

engineer on the project,Wooyoung Kan,

noted, “The trend in the market is toward

PDP [plasma] and LCD [liquid crystal dis-

play], and the prices are decreasing vis-à-vis

projection TVs in the large-screen category.

And many people think that thin means a

better picture, even though the L7’s picture is

as good as any.”



Exhibit 10. The L7 TV.

The second design innovation toward a

distinctive Samsung identity in the TV mar-

ket was the shallow V-shape on the bottom

of the screen “box.” This design, inspired by

the soaring lines of the main building of the

Gyeongbokgung Palace in Seoul, emerged in

2002 (see Exhibit 11a). It was applied to the

Rome TV in 2003, as Kang and his A/V

design team sought to express the lightness

of the LCD flat-screen TV, and further devel-

oped in the Milan model, in connection with

the effort to hide the speakers so that only

the screen itself remained—presenting an

even lighter form. At the same time, Kang

was looking for an iconic identifier that

would say, “This is Samsung,” and could be

applied to all Samsung digital display prod-

ucts. “Statues of the Buddha may be very dif-

ferent, but all have Urna, a circular spot that

identifies them as a Buddha.We borrowed

this concept, and many of our TVs have a

circular spot that identifies them as a

Samsung product.” (See Exhibit 11b.)

Even before market results were available

for the Rome and Milan TVs, CDO Choi

asked the advanced design team to innovate

even more radically in order to differentiate

Samsung’s flat-screen TVs from those of

major competitors.

Classy Ambiance: The Bordeaux Project

Design

Several proposals emerged from this charge

to make a unique LCD TV for the premium

end of the mass market, one that would

“make a strong impression.” Seung-ho Lee, a

young designer who had worked in

Samsung’s visual display division for six

years, most recently on the Rome and Milan

models, recalled the challenges, still very

fresh in his memory. “The TV is a difficult

product with which to be innovative. If it’s

too innovative, it’s not accepted by ordinary

users,” he said. “It’s hard to find a middle

point.”Moreover, “traditionally, people treat

the TV just as an electronic product, looking

first into specs, price, and brand.When they

buy furniture, on the other hand, they look

first at design. If they like it, they buy it,

regardless of the price (if they can afford it).”

In other words, they exhibit “an emotional

purchasing pattern when they buy furniture.”

Lee wanted to design a TV that “people were

willing to buy just like a piece of nice furni-

ture,” rather than as a box of electronics.

In striving for this attractive, compelling

piece of furniture, Yunje Kang and his

advanced design team (which included

designer Seung-ho Lee) could not rely on

traditional market research, based as it was

on consumer preferences revealed by the

performance of previous products in the

marketplace. They brainstormed, strolled

downtown Seoul, observed users, and

explored other sources of fresh ideas, such as

furniture shops and other lifestyle-related

places. In the end, they went for Lee’s pro-

posal: “thin” and “glossy” in an organic

design that made the TV seem to be of one

piece—front, back, and stand.When CDO



Exhibit 11a. The Gyeongbokgung Palace, Seoul. Exhibit 11b. The Rome TV with its “Buddha spot.”

Choi saw it, he exclaimed, “It looks like a

wine glass!” (See sketches in Exhibit 12a.)

Hence, the name of the project—Bordeaux.

The next step was to communicate this

idea to the other disciplines. Senior manager

Kang sent Seung-ho Lee to Suwon. Lee

explained, “After meeting with marketers and

engineers in Suwon, we brought them up to

Seoul to learn what designers experience and

how we work. But we also had a chance to

experience what they care about and what

they feel.We visited retail shops to learn

about marketing challenges, and engineers

visited high-end stores of various kinds to

catch design trends. That helped develop a

favorable environment for collaboration in

development and marketing solutions.”

Marketing

As Lee and the rest of Kang’s team were fin-

ishing the design, a young marketer, Joshua

Kim, was assigned to develop a product con-

cept and marketing plan for the new TV. He

too faced challenges: “Even though Bordeaux

is a new concept, it’s not a new technology.

The TV industry is mature, so there’s no spe-

cial sales point differentiating one TV from

the other. Just thinner is not enough—the

only way is to make a new concept.” An

MBA with excellent English from a year’s

stay in the US, Kim energetically explained

his approach.With a small task force, he set-

tled into the VIP center for a period of three

weeks. “Mr. [Seung-ho] Lee and I had not

communicated about the product concept at

the beginning; they finished the design first,

and then I delivered a new concept based on

that design,” he said. “Lee only later joined

the task force at the VIP center as the con-

cept was being developed.”Although as a

marketer Kim believed “it should work the

other way around,” he had to go with the

program.

Recent market research had shown that

most consumers thought of content, “not the

TV itself,” when asked about television, and

most manufacturers treated the TV “as a

device that can receive a signal and play mul-

timedia.” But, Kim noted, “the TV is already

part of the living space, and the flat-screen

TV is part of the room decoration, an item

of emotional pride.” Since most TVs on the

market are of similar quality, Kim continued,

“customers aren’t so concerned about

whether our TV is better in picture and

sound quality; something else has to appeal.

So we decided to try an objet strategy.We

weren’t going to talk about technology, but

rather about emotion and lifestyle.”

Engineering

Despite all the efforts at communication

with engineers, the design and the marketing

strategy proved extremely challenging,

because both the form and the finish

embodied entirely new concepts. The

Bordeaux’s design made the TV body slim-

mer by taking out the middle section, and

created a unified look by using a glossy finish

throughout. The thin front piece was con-

nected with the larger, heavier back piece in

a seamless, single-finish design, considered

by the engineers to be “impossible to pro-

duce.” Hyeonjoo Lee, senior engineer on the

project, explained the problem: “I was sur-

prised, since it was so different from previ-

ous TVs. Usually, the face of a TV is

important, not the back, so when I saw the

call for a glossy finish in both front and

back, I was reluctant to accept it, but I had

to—it’s my job.”



Exhibit 12a. The Bordeaux: Initial sketches.

At first, the mechanical engineers, unable

to influence circuit design, ignored the

design specifications, which called for a

thickness of only 83mm. Their first mock-

up, although two-pieced, was half again as

thick: 120mm. This generated a new story

for the annals of Samsung product develop-

ment and design management.

“One day,”Wooyoung Kan (the engineer

from the L7 project) reported, “Mr. Choi

called all of us together and showed us two

mock-ups, from design and engineering. He

told us, ‘I found 30 differences between these

two.’ Everyone was nervous—it was a tense,

weird atmosphere.” In an email, Choi wrote,

“The design appears to be by designers from

Milan, but the engineering by engineers in

China.” Engineer Hyeonjoo Lee remembered

the confrontation more pointedly: “Mr. Choi

said, ‘You ruined the design!’”Without fur-

ther comment, Choi sent the engineers back

to their computers.

At this point, engineer Lee explained, the

other technical departments rallied to the

cause and volunteered to help reduce the

thickness of the new TV. “The printed cir-

cuit boards were key, and both circuit and

sound engineers took up the challenge,

looking for ways to narrow the profile.” The

effort took an extra 20 days, but “it was a

turning point for understanding the power

of collaboration for identifying new direc-

tions.” The result was a profile even slimmer

than the design specification, at only 79.6

mm. (Exhibit 12b shows the evolution of

the mock-up in cross-section.)

Another innovation was to mold the

speaker holes directly into the frame, rather

than attaching the typical sieve piece with

thousands of tiny holes. Hidden under the

front panel were larger, oblong holes that

both cost less and enhanced the sound quali-

ty, since less sound was lost than in the tradi-

tional speaker cover.

How to get a glossy finish within cost

specifications was the next hurdle. Said engi-

neer Lee, “High gloss is very expensive if you

spray paint and polish. So we had to solve

the problem through a new injection mold-

ing technique that required no further fin-

ishing. The front panel was easy because the

width is narrow, but the back cover was very

difficult at first.” In the end, however, the cost

of the two-piece TV shell was less than that

of the traditional three-piece unit.

Results

Bordeaux’s launch was set for spring 2006,

and all participants in the project were keen

to learn the market’s verdict. Bordeaux was

the TV’s internal name. Choi’s wine-glass

insight influenced early marketing con-

cepts—the new TV as an

elegant accompaniment

to an elegant lifestyle.

Designer Lee pointed out

the launch advertisements

still under development:

“We’ve made emotional

ads, trying new things,

such as displaying the

product in new places, for

example, in a wine

gallery, a fitness center,

museums, fashion stores.”

(See a proposed adver-

tisement in Exhibit 12c.)



Exhibit 12b. The Bordeaux: Evolution of a profile.

Exhibit 12c. The Bordeaux: A proposed advertisement.

Regardless of the outcome, the Bordeaux

team had already set new standards and

influenced new systems for Samsung’s prod-

uct development process. Specifically, the

project confirmed that, as Choi put it, “If

designers don’t have support from engineers,

they can’t realize their visions. To get this

support, they have to compromise, but the

engineers need to make innovations too.”

Designer Seungho Lee noted with a smile

that “no one will listen to engineers’ com-

plaints anymore, because we know they can

solve any problem!” Toward the goal of clos-

er collaboration, by late 2005, all major new

programs brought design, engineering, and

marketing together from the beginning.

Designer Lee summed up the feelings of

those involved: “The biggest achievement is

the fact that all the people—marketers, engi-

neers, salespeople—are emotionally attached

to this design and feel ownership of it. I

believe they will think about this experience

when they work with other projects.”

Digital Appliances: The Face of theKitchen and the Function of FoodStorage

Until 1988, according to Sanguk Jung, vice

president of the DAB design group, Samsung

had benchmarked and followed the Japanese

producers, but after the Frankfurt

Declaration of 1993, it accelerated its efforts

to do its own market research and its own

designs. “Designers, of course, think new and

create new, but for managers it’s safer to fol-

low developed countries or leading manufac-

turers,” he said. In 1997, Jung recalled, “We

said that we must make a two-door refriger-

ator, but engineering and marketing were

against it. We insisted, and now the side-by-

side (SBS) is our most important model.”

Given global competition, however, Samsung

wanted to change its positioning with yet

another innovative, premium product. But

what should it be? Jung: “To make a good

product, we have to think like top-tier com-

pany employees.We have to be willing to

make a tier-one product.”

Technology and Style: The Quatro Project

“A long time ago, we determined the need to

control the temperature and humidity in

each space for each kind of food, and our

engineers developed the technology to

achieve it. But we weren’t sure it would work

in the marketplace,” explained Jung.

Beginning in 2003, the group began propos-

ing designs for a four-door premium refrig-

erator that would be unique in the sector.

“Many people reviewed our designs and

decided not to do it,” recalled Jeongmin Kim,

an industrial designer, manager in the DAB

design group, and lead designer for the SBS

refrigerator. “This happened three times! The

key issue was the four-door concept. No one

else had so many compartments, so how

could we know consumers would use them?

Then we held focus groups in the US, and

that settled it.” The research revealed a num-

ber of trends that could create demand for

customized food storage. The design vision

was an ultimately flexible refrigerator with

freezer sections convertible to refrigerators

and four completely separate cooling units

that could be dialed to various temperature

and humidity levels. “It’s not one refrigerator

with four compartments,” Jung emphasized,

“but four refrigerators (separate evaporators)

combined into one unit—or Quatro.”

The Development Process

After the US focus group research in sum-

mer 2004, the DAB task force finally received

permission to build a mock-up and proceed

with design development. They did not

begin from scratch, however. “Ideas do not

come from zero,” Jung explained. “When we

develop products, we put ideas into a design

bank—an idea bank.We collect the ideas,

then categorize them by item and several

other criteria.We also refer to the design

banks to make a project bank. The Quatro

came from this bank process, from accumu-

lated knowledge.”

The Quatro also came from the task force

system, which brought together people from

engineering, design, marketing, and sales.

Jung observed: “Just good design doesn’t



make a good product. To realize design as a

product, you have to collaborate with mar-

keting and engineering from the beginning

of the process—that is the key to managing

design.” To achieve this, he added, “designers

have to know the technologies well enough

so that we can talk with engineers about our

ideas in a way that is easy for them to under-

stand.” In effect, added Jeongmin Kim: “we

practice concurrent engineering. Of course,

there are always restrictions on the technolo-

gy. We try to understand each other, and

even though the designers push, they are not

just doing design for design’s sake.We con-

tinuously discuss and compromise with engi-

neers in order to maintain the original design

until the final production is complete. Ever

since 2000 to 2001, with the task force sys-

tem, designers try to consider manufacturing

issues and engineers try to consider aesthetic

issues.With the four-door, however, everyone

knew it had to be innovative, and the engi-

neers wanted to make an innovation too.”

Besides the four separate and adjustable

cooling compartments and the convertibility

feature, the Quatro featured a customizable

interior and a trim kit that permitted the cus-

tomer to change the color of the refrigerator’s

façade. This kit, made of glass and aluminum,

was designed with recycling in mind.

Results

The Quatro was launched abroad in October

2005, at a $2,999 price point in the US, and

quickly rolled out worldwide. Its fate would

influence Samsung’s next move in the global

home appliance business (see Exhibit 13).

Telecommunications Networks:

Attracting the Hip andWell-Heeled

The mobile phone was surely the most ubiq-

uitous of products, whatever the brand.

Consumers who owned neither TV nor

refrigerator would likely have a cell phone,

and millions of those were Samsung phones,

fewer only than the Nokias and Motorolas

around the world. Most companies had mas-

tered the basics, and the top sellers, including

Samsung, had by 2005 conquered reliability

and durability. (“A one-ton truck can roll

over our phones” was the mantra often heard

at Samsung.) So in a product with such

established functions, how do you come up

with something new? That question chal-

lenged the mobile phone designers at

Samsung and its competitors every day.

Among the most difficult challenges was

conflicting consumer demands, said Nammi

Kim, a senior designer in the mobile phone

design team. “People want a small phone, yet

a large LCD for watching multimedia con-

tent, and big keypads. Thus we need to trade

off portability and a big screen when we

design phones,” she said. Comprehensive

research was critical. Geehong Yoon, a senior

vice president in the mobile design team,

emphasized that user research to identify the

essential needs, as well as the demands, of

mobile phone users was as important as

research into the phone’s critical parts, such

as batteries and LCD displays.

The designers weren’t isolated in making

final product decisions; Kim praised the

president of the Telecommunications

Networks Business, Ki-Tae Lee, for his sup-

port: “In order to make the right decision, he

often takes a week by himself

to analyze design mock-ups

in detail, including the sense

of grip, usability, user inter-

face, and other factors.”

Samsung was also devot-

ing resources to phones for

the elderly. These featured

larger, ergonomic handsets

with enhanced sound quality

and larger buttons. In addi-

tion, the company was devel-

oping an emergency set that

would have 911 and other

programmable emergency

buttons. The concepts of

simplicity and universal

access were considered perti-

nent to other markets, as

well. Almost ready for launch

was the SPH-A110/120,



Exhibit 13. The Quatro in late 2005.

which would be available with either an

ultra-simplified layout or a normal layout.

Both had large buttons and adaptations for

hearing-impaired users.

Fashion and Function:

The Twist Mobile Phone Project

Nammi Kim had come to work for Samsung

in 1989; in 1998, she moved to the coveted

mobile phone group. In April 2004, Kim was

trying to find a “wow” factor to differentiate

Samsung’s mobile phones in this volatile

global market. During a brainstorming ses-

sion with her team, the idea of placing the

screen in the landscape mode came up. The

objective was to make it easier for people to

watch TV programs on their mobile phones.

How to do it? Figure out how to twist the

screen 90 degrees from the standard phone

position to a horizontal one. After making a

mock-up, Kim reported to Ki-Tae Lee. He

was, Kim recalled, “very excited at this inno-

vative design concept,” and within two

hours, he had appointed a task force and

brought them together to discuss “how to

materialize this tricky design.”

“When the engineers saw it, they were

surprised,” Kim remembered. “At first, they

were reluctant, but fortunately, we had a

good, positive person in the engineer

assigned to the project. The process of verify-

ing parts and trying various mock-ups of the

twisting screen took three or four months

[twice as long as the usual phone]. Then we

did reliability tests three or four times, and

then got further mockups. The key issue was

enough space to twist the screen when the

clamshell was closed.” (Exhibit 14 shows the

first model of the twist phone.)

Results

Launched in September 2004, with premium

packaging to enhance its prestige, the

Horizontal Instinct Phone won the

Presidential Prize at the 2004 Good Design

Exhibition, which was held jointly by the

Ministry of Commerce, Industry, and Energy

and the Korea Institute of Design

Promotion. It also won one of grand prizes

from the Korea Industrial Design Awards

organized by the Korea Association of

Industrial Designers. Several models had

evolved on the original platform, and a new

variation that could receive TV on the move

was about to be launched in January 2006.

Samsung’s Next Act

“To become a premier global company, we

have to go into uncharted territory and define

for ourselves what we need to do and how we

need to do it.”— Jong-Yong Yun, Samsung Electronics

Annual Report, 2005

Buzzwords and phrases surrounding the

concept of emotional design—emotional

quality innovation, emotional messages,

empathic design, experience design—were

driving Samsung toward the articulation of a

new design strategy that would embody

efforts to develop an iconic brand. Samsoo

Ahn, a senior manager in the design innova-

tion group of the design strategy team, noted

that the old guidelines (the three I’s of visual

innovation, usability innovation, functional

innovation) were “for getting rid of prob-

lems, not for enhancing new products. They

aren’t proactive, so they don’t promote

breakthroughs. That’s why we need a new

strategy.”

Coming up in March was a two-day con-

ference on emotional quality with the global

design advisors and Samsung designers and

design managers. In preparation for this

conference, Kook-Hyun Chung had asked

the design innovation group to prepare a

draft agenda, incorporating input from the

design strategy team. In a memorandum to

the members of the DST, he wrote:



Exhibit 14. The Twist phone, first model,September 2004.

21 January 2006

MEMORANDUM

In order to inform our global design advisors about our expectations for the Emotional

Quality Conference, the design innovation group will assemble a draft agenda, with

input from the design strategy team. Please consider the following questions and any

others that concern you and the designers in your area, and get back to me by the end of

next week.

Thank you very much.Kook-Hyun Chung

• To what extent has the Milan emphasis on emotional design permeated the minds of

the designers in your area? How can we make this happen? What are the obstacles?

• What do you think are the key factors in emotional quality? What do you want/need to

learn about this that would help you in your work? What is confusing about this con-

cept to you or the designers in your area?

• What are the key characteristics of a successful product in your area, and how were

they achieved? What did you learn from this project that you are transferring to new

projects?

• In which ways is emotional quality important to developing an iconic product in your

area? What do you need to achieve such a product? How does your group define what

it means to be iconic?

• What key questions would you like to ask the global design advisors?

• What do you personally hope to gain from this conference? What would

you like to be able to communicate to your area?



Appendix

People in the Story of Samsung Design,as of January 2006

Note: Korean names are normally written, as

below, with the surname (family) name first.

To avoid confusion for Western readers, we

have adopted in the case study text itself a

common publishing convention for Western

languages, reversing the Korean practice by

putting the family name last.We hope this

will not cause confusion for our readers.

Ahn Samsoo, Senior Manager, Design

Innovation Group, Design Strategy Team,

Corporate Design Center.

Cho Soo-Hyun (Sean) (Ms.), Designer,

Design Planning Group, Design Strategy

Team, Corporate Design Center.

Choi Geesung, Chief Design Officer;

President, Digital Media Business.

Chung Kook-Hyun, Senior Vice President,

Corporate Design Center; Chair, Design

Strategy Team.

Chung Seung-Eun (Erin) (Ms.).Manager,

Design Planning Group, Design Strategy

Team, Corporate Design Center.

Chung SungJae, PhD, Manager, UI Strategy

Group, Design Strategy Team, Corporate

Design Center.

Hardy, Tom, American, former head of design

at IBM and design advisor to Samsung from

1996 to 2003.

Jung Sanguk, Vice President, Design Group,

System Appliances Division, Digital Appliance

Business.

KanWooyoung, Principal Engineer,

Mechanical Development Group, Visual

Display Division, Digital Media Business;

Chief Engineer on L7 project.

Kang Yunje, Principal Designer, Design

Group, Visual Display Division, Digital Media

Business; Designer, L-7 TV.



Kim Eric, Senior Vice President and

Marketing Director, 2000-2004.

Kim Jeongmin, Senior Designer, Manager,

Design Group, System Appliance Division,

Digital Appliance Business.

Kim Minsuk (Joshua), Assistant Manager,

LCD TV Product Planning Group, Visual

Display Division, Digital Media Business;

Marketer, Bordeaux project.

Kim Nammi (Ms.), Senior Designer, Design

Team, Mobile Communication Division,

Telecommunication Network Business.

Kim Sung-Han, Senior Designer, Design

Research Team, Corporate Design Center and

SADI.

Kim YoungJun, Vice President, Design

Research Team, Digital Media Research,

Corporate Design Center.

Lee Byung-Chull, Late Founder of Samsung.

Lee Gregory, Senior Vice President and

Marketing Director.

Lee Hyeonjoo, Senior Engineer, Mechanical

Development Group, Visual Display Division,

Digital Media Business; Chief Engineer on

Bordeaux project.

Lee Ki-Tae, President, Telecommunications

Networks Business.

Lee Kun-Hee, Chairman of Samsung.

Lee Seung-ho, Assistant Designer, Design

Group, Visual Display Division, Digital Media

Business; Designer of Bordeaux TV.

Park Young-Chun (Rich), Professor and

Chair, Industrial Design Department, SADI.

Yun Jong-Yong, Vice Chairman and CEO of

Samsung Electronics.

Yoon Geehong, Senior Vice President, Design

Team, Mobile Communication Division,

Telecommunication Network Business.

DMI021-PDF-EnG Design Strategy at Samsung Electronics Becoming a Company Top Tier

Documents

Transcript of DMI021-PDF-EnG Design Strategy at Samsung Electronics Becoming a Company Top Tier