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

CASE STUDY DMI021

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

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DMI Case Studies This case study came from the Case Study Research and Development Program at the Design Management InstituteSM. The Institute conducts research and develops educational materials on the role of design and design management in business success. Case studies, the Design Management Review, reprints from the Review, and other educational materials are available from the Design Management Institute.Visit www.dmi.org to see a catalog of DMI publications. Publisher Design Management Institute 101 Tremont Street, Suite 300 Boston, MA 02108 USA Phone: 617-338-6380 Fax: 617-338-6570 Email: [email protected] Website: www.dmi.org Distributor Harvard Business School Publishing is the exclusive distributor of this publication. To order copies or to request permission to photocopy, please call 617-495-6117; in the US call 800-545-7685; or visit Harvard Business Online website: www.hbsp.com Authors Dr. Karen J. Freeze, Senior Research Fellow, Design Management Institute Dr. Kyung-won Chung, Professor, Department of Industrial Design, Korea Advanced Institute of Science and Technology (KAIST) Acknowledgements We would like to thank all the Samsung people who shared their insights, challenges, and pride with us. Only those who appear in the case, however, are listed in the Appendix. Unless otherwise noted, all quotes are from interviews carried out in 2006. Special recognition goes to two members of the design planning group of the design strategy team at the Corporate Design Center: Seung-Eun Erin Chung, manager, and Soo-Hyun Sean Cho, designer. They organized our visits, provided insight into design management at Samsung, and shepherded the case through company review processes. Dr. Yu-Jin Kim, Assistant Professor, Department of Media Image Art and Technology, Kongju National University, ably served as research assistant. Dr. Thomas Lockwood, president of DMI, provided valuable insights during the research and development of the case.

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DESIGN MANAGEMENT INSTITUTE CASE STUDY

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

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“ 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

hink about why I called this conference in Milan, 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 emotional walls in addition to functional and technical ones.”

class discussion. All exhibits are from company documents unless otherwise noted. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of

— Kun-Hee Lee, Chairman of Samsung 1 (14 April 2005, Milan, Italy)

effective or ineffective management.

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


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

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, KookHyun Chung. “We’ve attempted to balance our technology with more emotional content, 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 direction. 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 articulated the goals of designers in Seoul and engineers in Suwon. Everyone knew that Samsung intended to be a “tier-one company” and would dedicate all necessary resources to achieve that status. “If this year’s design awards mean anything, we’ve become a leading design company 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

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Samsung and that consumers can spontaneously 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 question, 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 typically slower broadband technologies. Mobile phone penetration was similarly high. Analysts described the country as a sophisticated 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 from World War II devastated 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 democratic 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 2. BusinessWeek, 1 August 2005.

© 2008 Design Management Institute



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 formulate 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 financial 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 singular identities. As their economy began to take off in the late 1980s, change came rapidly. Korean presence in universities in Europe

and the US increased dramatically and partnerships with Western organizations became more common. New influences and new selfconfidence resulted in strong growth and higher-quality products. Then, in 1997, disaster struck. In what became known worldwide as the Asian crisis and in Korea as the International Monetary Fund, or IMF, crisis, the South Korean economy collapsed and the government 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 companies, such as Samsung Electronics, LG, and Hyundai Motors, had achieved solid reputations worldwide and were expected to enter the ranks of premium global companies within a few years. (Exhibit 1 illustrates the Korean miracle.) 3. The EPB became the Ministry of Finance and Economy in 1998.

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



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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 company’s future. With the turn of the twentyfirst 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 SamsungNEC, established in 1969 and 1970 as units of Samsung, an already powerful conglomerate in the Korean economy that had originated 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 manufacturer 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 Telecommunications in 1980 and merged it with Korea Semiconductor, forming Samsung Semiconductor 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 engineeringdriven culture in Suwon. The New Management Philosophy When Byung-Chull Lee passed away in November 1987, his son, Kun-Hee Lee, became Samsung’s chairman. Having

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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 established 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 beginning, Lee emphasized the strategic importance 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 education 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 outstanding 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 communications devices, but not without problems. Embarrassed by defective cordless phones coming from the Gumi factory in southeastern 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 priority for investment. The First Design Revolution “An enterprise’s most vital assets lie in its design and other creative capabilities. I believe that the ultimate winners in the twenty-first century will be determined by these skills. I have designated 1996 as the Year of the Design Revolution for all Samsung products. Let us focus our strength in developing unique designs that reflect the Samsung philosophy and soul.” — Chairman Kun-Hee Lee, New Year’s Address, 1996 Now design received accelerated injections of support into personnel and facilities. Samsung hired university advisors and foreign consultants to stimulate thinking about the role of design and to develop partnerships in design activities. The company recruited designers worldwide and strengthened training programs for them. It organized 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 managers: Adopt a “designer’s mind” and broaden 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 sustaining 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 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

Exhibit 2a. Samsung Electronics, financial highlights, 2000–2005. Source: Samsung annual reports. 4. Approximately $15 million in 1995. See Michal Lev-ram, “Samsung’s Identity Crisis,” Monthly Business 2.0, 6 August 2007. 5. Information and quotes from Jong-Yong Yun are in Peter Lewis, “The Perpetual Crisis Machine,” Fortune 152:4 (5 September 2005), pp. 35-41. 6. See Ha-sang Hong, “An Equation of Samsung’s Success,” NikkeiBiztech, No. 3, October 2004, pp. 80127 (in Japanese), and Sunghong Kim and Inho Wu, Exhibit 2b. Percentage of sales by region, 2005. 10 Years of the Lee Kun-Hee Reformation, GimmSource: Samsung annual reports. Young Publishers, Inc., 2003, p. 59.



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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 instrumental 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, emerging from traditional Korean Harmony culture as represented in Taegeuk, the dual principle of yin and yang, of the company’s tone and manner and Feeling Reason design principles. The overar• Rational • Emotional • Intellectual • Adaptable ching theme was harmony, • Technological • Humanistic expressed by the phrase balance of reason and feeling. (See illustrations in Exhibits 3a and 3b.) Exhibit 3a. Design tone and manner at Samsung, 1996.

Reason

Feeling

Lifestyling

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

Innovative

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

Coherent

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

Harmonious

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

Intuitive

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

Interactive

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

Exhibit 3b. Design principles at Samsung, 1996.

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 contributed 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 commitment to innovation and design in business. His success in Korea and worldwide demonstrates how strong corporate leadership and design can be integrated to make a huge difference 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 7. For the full text of the award and Kun-Hee Lee’s speech, see http://www.hkdesigncentre.org/awards/dla2004.asp.

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.

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“As we approach the end of an era characterized by competitive structure, price, and quality considerations, design capability is emerging as a key determinant of future commercial success… Design is not simply a way to express identity, but rather must be seen as a communication channel between a business and its customers that is capable of drawing all of society closer together… Design must enable a business to take a further step toward the expression of its core philosophy and culture… Design is not simply the physical representation of the ‘face’ of the company, but rather personifies the spirit of those employees working within it.” — Chairman Lee’s thank-you address to the Hong Kong Design Center (November 2004) 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 establish 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 . . . recruiting more than 200 new experts in user interface.” 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, introducing 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 participation in software businesses. Defying the conventional 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 located worldwide. In 2005, the company reorganized into five businesses: Digital Media, Telecommunication Networks, Digital Appliances, Semiconductors, 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.) 8. The following information about this Milan meeting is from Dong-Hee Oh, “A Challenge to World-Class Premium 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 in the Joong Ang Ilbo, April 15, 2005.

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



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

Exhibit 6. Samsung’s YP-Z5 MP3 player.

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Digital Media Business Home of color TVs, audio and video equipment, and computers and computer peripherals, 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 recognized supplier of high-quality, if not exciting, devices. Because Samsung was the leading innovator in LCD panels, its media and telecommunications products enjoyed cutting-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 projection, and CRT. In 2004, Digital Media led in global market share in both TVs and DVD/VCRs, where its very close competitors were Philips and Sony. With a range that included flexible, portable two- and three-hinged models, it led in computer monitors; it was second 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 antenna-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 establishment of recycling centers for cell phones in Korea; the company also developed an environmentally friendly paint for cell phones, for which it won an iF Material Award in 2004. Digital convergence was the watchword, 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 7. Samsung’s Blue/Black slider late 2005.




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 supply its local market. “Home appliance products are rooted in the lifestyles of each country,” explained Jeongmin Kim, a manager 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 appliances were big and heavy and therefore the company had to consider shipping costs to distant markets, or decentralized manufacturing. Or, in Samsung’s case, to aim for the premium market segment. Technically advanced and designed with consumer preferences in mind, including environmentally safe materials and energy efficiency, Samsung’s high-end SBS refrigerators were

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

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 introduce 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 aggressively focusing on digital, rather than analog, technology. Company spokespersons suggested 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 panels 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.



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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 competitive 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 possibilities. 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 engineering-driven organization whose engineers were seldom allowed to demonstrate their creative abilities. Their task was to manufacture commodity TVs and home appliances, and they were rarely challenged to innovate—except as a way of lowering costs. Until the early 1990s, engineers made all the decisions, 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 companies 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-

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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, however, as senior engineer Hyeonjoo Lee of Digital Media explained. “Return on investment (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 pushes 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 mechanical engineers can solve the problem. The question is cost.” Wooyoung Kan, a principal engineer in digital media, suggested that if engineers continually learned new skills, had self-confidence, 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-theart facilities in such plants as the new seventh-generation LCD plant, built in 2004 in cooperation with Sony. Samsung’s manufacturing 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 marketers 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 recognized 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 (pointof-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 banners fluttering from light poles and Samsung ads covering buses and trams. By 2004, Samsung’s marketing department had greatly expanded and was no longer dominated by engineers but by people with marketing and other business experience. 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 connection with our customers. The only limit is their imagination.”9 Design By 2005, Samsung was clearly a design-driven 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.



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Design at Samsung Electronics Since its founding in 2001, Samsung’s Corporate Design Center had been the incubator for numerous winners in the competitive 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, senior vice president, managed the design strategy 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 organizational 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 tradition 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) winners from 2001 to 2005 (Apple was second with 17). Yet these achievements were essentially the result of investments made since 1993 and major changes in the company’s priorities only since 2001. Senior vice president 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 understanding 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.” KookHyun Chung filled in the details: “The primary advantage of having design together is that the designers can have common experiences. 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.

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agreed: “When the design team was at the factory site, we tried to understand the manufacturing 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 program (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 environment for developing a design capability to meet corporate objectives.” As a nondesigner, 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 graduates entered Samsung Electronics; by 2005, 80 percent joined the company. In 1995, Samsung founded the Samsung Art and Design Institute (SADI) to introduce Western-style undergraduate design education, focusing on fashion and communication 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 YoungChun (Rich) Park, professor of the Foundation Department since 1995. Park had an engineering degree from Korea and an industrial design degree from Philadelphia 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 emphasized a ‘foundation’ program, which other design programs did not have”; one foundational 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 graduates joined various Samsung companies or other Korean enterprises. In 2005, the institute 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 graduates for entry-level jobs. Graduates could still study abroad, as well. According to SungHan Kim, a designer with 10 years’ experience 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 students can come here too.” In 2005, some 250 students were enrolled in the three-year program—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 outstanding 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 professors to Korea. One of them, Gordon Bruce,



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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, approximately 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 realized by engineering.” This approach resulted in designs that translated into profits in the market—and that won the designers respect and coopera-

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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 discovering 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 markets, 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 commendation from the International Ergonomics Association for innovations in the workplace.




Cultivating an International Presence Samsung Design recognized early the importance of international input into design decisions. 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 department in 1990 and proposed a design center in Tokyo, which took shape in 1992. The following 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 cultural 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 provide 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 designers 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 talent—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 competitors. “To get free from that is a difficult process. You have to understand trends, of course—but not see the competitors’ solutions. 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.”



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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 specific solutions in a way that would be accessible to the whole design organization, providing links to the design bank systems supported at the business level. Also, crossfertilization would occur as the designers at the CDC rotated, taking experience from one division to another.

Design-Initiated Product Development at Samsung Electronics Since 2001, Samsung has been a design-driven company, but in practice the classic conflicts between engineering and design and between marketing and design took years to work out. The company introduced a multidisciplinary 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

Exhibit 10. The L7 TV.

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years had represented the high-end standard in picture quality and fidelity. But as technologies 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 competitive 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 competitors as the king of TVs, Sony. Nonetheless, Yunje Kang, a senior manager 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 identical, 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 finding 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, conference 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 engineering, 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 display], 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.”




The second design innovation toward a distinctive Samsung identity in the TV market 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 developed 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 products. “Statues of the Buddha may be very different, 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

Exhibit 11a. The Gyeongbokgung Palace, Seoul.

“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 furniture,” 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 proposal: “thin” and “glossy” in an organic design that made the TV seem to be of one piece—front, back, and stand. When CDO

Exhibit 11b. The Rome TV with its “Buddha spot.”



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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 finishing the design, a young marketer, Joshua Kim, was assigned to develop a product concept 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 special 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 settled into the VIP center for a period of three

Exhibit 12a. The Bordeaux: Initial sketches.

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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 concept 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 multimedia.” 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 slimmer by taking out the middle section, and created a unified look by using a glossy finish throughout. The thin front piece was connected with the larger, heavier back piece in a seamless, single-finish design, considered by the engineers to be “impossible to produce.” Hyeonjoo Lee, senior engineer on the project, explained the problem: “I was surprised, since it was so different from previous 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.”




At first, the mechanical engineers, unable to influence circuit design, ignored the design specifications, which called for a thickness of only 83mm. Their first mockup, although two-pieced, was half again as thick: 120mm. This generated a new story for the annals of Samsung product development 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 further 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 circuit 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 directions.” 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 quality, since less sound was lost than in the traditional speaker cover. How to get a glossy finish within cost specifications was the next hurdle. Said engineer Lee, “High gloss is very expensive if you

spray paint and polish. So we had to solve the problem through a new injection molding technique that required no further finishing. 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 concepts—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 advertisement in Exhibit 12c.) Exhibit 12b. The Bordeaux: Evolution of a profile.

Exhibit 12c. The Bordeaux: A proposed advertisement.



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Regardless of the outcome, the Bordeaux team had already set new standards and influenced new systems for Samsung’s product 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’ complaints anymore, because we know they can solve any problem!” Toward the goal of closer 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, engineers, 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 the Kitchen and the Function of Food Storage 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 follow developed countries or leading manufacturers,” he said. In 1997, Jung recalled, “We said that we must make a two-door refrigerator, but engineering and marketing were against it. We insisted, and now the side-byside (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 company employees. We have to be willing to make a tier-one product.”

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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 proposing designs for a four-door premium refrigerator 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 number 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 summer 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 accumulated 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 marketing 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 understand.” In effect, added Jeongmin Kim: “we practice concurrent engineering. Of course, there are always restrictions on the technology. We try to understand each other, and even though the designers push, they are not just doing design for design’s sake. We continuously discuss and compromise with engineers in order to maintain the original design until the final production is complete. Ever since 2000 to 2001, with the task force system, 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 engineers 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 customer 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 and Well-Heeled The mobile phone was surely the most ubiquitous 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 mastered 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 challenged 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 content, 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 support: “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 interface, and other factors.” Samsung was also devoting resources to phones for the elderly. These featured larger, ergonomic handsets with enhanced sound quality and larger buttons. In addition, the company was developing an emergency set that would have 911 and other programmable emergency buttons. The concepts of simplicity and universal access were considered pertinent to other markets, as well. Almost ready for launch was the SPH-A110/120, Exhibit 13. The Quatro in late 2005.



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which would be available with either an ultra-simplified layout or a normal layout. Both had large buttons and adaptations for hearing-impaired users.

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

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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 session 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 innovative 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 verifying 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 innovation 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 problems, 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 conference 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:




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 concept 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?



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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.

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.

Chung SungJae, PhD, Manager, UI Strategy Group, Design Strategy Team, Corporate Design Center.

Lee Hyeonjoo, Senior Engineer, Mechanical Development Group, Visual Display Division, Digital Media Business; Chief Engineer on Bordeaux project.

Hardy, Tom, American, former head of design at IBM and design advisor to Samsung from 1996 to 2003.

Lee Ki-Tae, President, Telecommunications Networks Business.

Jung Sanguk, Vice President, Design Group, System Appliances Division, Digital Appliance Business. Kan Wooyoung, 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.

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Kim Eric, Senior Vice President and Marketing Director, 2000-2004.

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.



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

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