Recent changes at the top of Samsung have been widely seen in the context of the South Korean conglomerate’s economic woes – profits were down 60% in the third quarter – but they are also about the 46-year-old Lee Jae-yong stamping his identity on the business.
Lee’s father Lee Kun-hee has been in hospital and is not expected to return to the company. Indeed, Samsung’s recent $23bn flotation of SDS, an IT services company of which it owned about 19%, was seen as an attempt to raise cash for an expected $5bn inheritance tax bill.
It’s not surprising that Lee wants to shake up Samsung’s phones division, which is under fierce competition from low-cost smartphone makers in China and India. It is equally predictable that he would want to clean up the messy triple-CEO structure that the business has had since March 2013.
But the third-generation head of the family-controlled business also needs to change its direction for another reason: to make the business founded by his grandfather truly his.
How will he do that? Tellingly, Lee is expected to appoint BK Yoon, who is currently in charge of the appliances, fridge and television arm of the business, to take over the phones division.
He should be the perfect person to work on the the new incarnation of Samsung. In August it bought American company SmartThings, a “smart home platform” that allows you to control the electronics in your home via a mobile phone.
If Lee, who was so close to Steve Jobs that he was invited to this funeral, wants to turn Samsung from a me-too company to an Apple-style visionary one he will have to move fast. The rest of the business is so sprawling – indeed, big enough to justify three CEOs – that dealing with its complicated legacy could swamp its third-generation head.
For the sake of his own pride, and the survival of the company’s reputation as an innovator, the new Lee needs a big win, quickly.