'Change everything but your wife and children': How the Samsung era began

Samsung, a conglomerate that accounts for 17 percent of South Korea's gross domestic product, is the most powerful electronics company in the world. But how did it all begin?

At a birthday party last week, people were talking about how they are 'over' the iPhone, and Apple in general. They don't like iTunes, they don't like how Apple forces them into a corner, they don't like not being able to customize their phones, they don't like how Apple wants to take control of their phones and their lives.

Yes, the iPad is great. But there are cooler, more chic tablets around. Yes, the iPhone 5 is good but iOS itself seems dated when compared to Android. Even Windows 8 'looks' cooler. The point being -- Apple wasn't cool in their eyes anymore. And the footnote of all these discussions was Samsung, a conglomerate that accounts for 17 percent of South Korea's gross domestic product.

One of the people present at the party simply said, 'Ditch Apple for Samsung.'

Samsung rules the world? Getty Images

Samsung rules the world? Getty Images

A few years back, a statement like that would have been unbelievable. Indeed, it would have been unthinkable. But now, it just seems right. Samsung's rise has been stunning.

"In 1991, Samsung started making LCD panels it sold to other television brands. In 1994 it started making flash memory for devices such as the iPod and smartphones," reports an article in the Business Week. "Samsung is now the No.?1 maker of LCD televisions and sells more flash memory and RAM chips than any other company in the world. And in 2012 it passed Nokia (NOK) to become the world's largest mobile-phone manufacturer."

It's easy to say that this isn't an indication of change. But then what is? The Business Week has a brilliant profile of the company and how it has risen to become one of the biggest conglomerates in the world.

Lee Kun Hee's father, Lee Byung Chull, founded Samsung in 1938. The name means "three stars," which was the company's logo for decades. Lee took over as chairman following his father's death in 1987. (Lee Kun Hee's son, Lee Jae Yong, is vice chairman and heir apparent.) The company immediately prospered under Lee Kun Hee's leadership. "Between 1988 and 1993, the company had grown two and a half times," says Shin Tae Gyun, Samsung's president of the Human Resources Development Center, "so executives thought things were working." Lee, however, didn't just want Samsung to be a successful Korean company. He wanted it to be a world player, something on the level of General Electric (GE), Procter & Gamble (PG), and IBM (IBM). He even set a deadline: the year 2000. "2000 was not that far away," says Shin. "At that growth rate, could we become a world-class company in time? The answer was no."

To see how his company was faring internationally, Lee embarked on a world tour in 1993. His findings were not encouraging: A visit in February to a Southern California electronics store revealed Sony and Panasonic (PC) TVs in the front window and Samsung TVs gathering dust on a low shelf in the back. Lee was not happy.

By June, he'd made it to Germany and was staying at the Falkenstein Grand Kempinski Hotel in Frankfurt. He summoned all of Samsung's executives-who numbered in the hundreds-to meet him there. "He did this at the drop of a hat, and they all gathered," says communications chief Lee. On June 7 the chairman delivered a speech that lasted three days (they adjourned in the evenings). The most famous quote to emerge from the address was, "Change everything but your wife and children," which has "Ask not what your country can do for you" levels of recognition at Samsung.

The event became known, formally, as the Frankfurt Declaration of 1993, with all the United Nations import the name suggests. The content of the Frankfurt Declaration is called New Management, its principles distilled into a 200-page book that's distributed to all Samsung employees. A stand-alone glossary was later published to define the terms laid out in the first book. Workers who weren't fully literate were given a cartoon version. Lee went around the globe, evangelizing his gospel to all corners of the Samsung empire. "He conducted a lot of lectures," recalls Shin. "It comes to 350 hours. We transcribed those events; it took 8,500 pages.

Read the entire Business Week piece HERE.

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