Samsung's Record Profits Can't Hide Future Challenges
Openings at the top prompt need for new leadership.
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Good morning.
It’s the start of a busy week on multiple fronts, and I’d like to share thoughts on two stories I’m following closely and find fascinating.
The first is the resignation late last week of Kwon Oh-hyun, the influential CEO of the semiconductor business of Samsung Electronics. Kwon is 64 and did a couple of unusual things on his way out the door. He stepped down unexpectedly, and he also fired a public warning shot across his own company’s bow, saying the company “needs a new leader more than ever,” given the imprisonment of third-generation scion Jay Y. Lee. Kwon also said: “We are hard-pressed to find new growth areas right now from reading the future trends.” This a shocking admission that even as Samsung racks up impressive profits based on its past innovations, one of its top leaders doesn’t think the company is well positioned for the future.
I interviewed Kwon two years ago at his office near some of Samsung’s massive semiconductor manufacturing facilities. He is a technocratic leader, an engineer who reveled in the technology he was producing while keeping a relatively low profile of someone who knew the difference between a hired hand like himself and Samsung’s founding Lee family.
The Samsung drama continues.
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The second is a long profile by veteran journalist Dexter Filkins of U.S. Secretary of State Rex Tillerson from The New Yorker that I feasted on over the weekend. All executives with global businesses will want to read it for its revealing details. Two stood out.
One is a passage that describes Tillerson’s meeting with President Trump, who is in a lather over “federal laws that prohibit American businesses from bribing officials overseas; the businesses, he said, were being unfairly penalized.” This, of course, is the U.S. Foreign and Corrupt Practices Act, a hallmark of ethical behavior and a chief commercial way the U.S. projects its values abroad. That any U.S. president would fulminate against it is startling.
The other is the assertion that “at least three hundred career diplomats have departed,” the State Department, “including most of the upper tier.” Few have been replaced. If this were a big company, it would be like driving out from executive-management ranks everyone who knew anything about how the organization works without hiring anyone to do their jobs.
This reminded me of the central thesis of David Halberstam’s epic Vietnam book, The Best and the Brightest, which because so many Asia experts had been chased from the State Department during the “Red Scare” of the 1950s, there weren’t sufficient numbers of diplomats to correctly analyze the complicated situation in Vietnam in the 1960s.
It’s no stretch to imagine what crises will be tough to figure out in years to come.
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