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Analysis of Samsung’s Innovation Strategy

Article · February 2019

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Yiğit Aslan
Middle East Technical University
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MIDDLE EAST TECHNICAL UNIVERSITY

INNOVATION MANAGEMENT



INSTRUCTOR : BORA GÜNGÖREN

PREPARED BY : YİĞİT ASLAN

DORUK DİNÇ

MÜRYA DURSUN

ELVİN YALÇINKAYA

UMUT ÖZDEMİR
 Samsung is a South Korean multinational company which serves many areas such as

information and communications technology, construction, entertainment, and advertising. We

can mention that some of their products are electronic components, telecommunication.

Samsung's revenue was equal to 17% of South Korea's $1,082 billion GDP. Given that it was

a low-cost me-too manufacturer of imitations of Sharp’s microwaves in the 1970s this is a

huge achievement. Pivotal to Samsung Electronics’ success over the past decade or so has

been the way it has embraced design as the source of competition. Growing from 2 to 900, the

Samsung Electronics design team now consistently takes most awards at the prestigious

annual design events as the company’s products are time and time again seen as leading the

category in performance, quality, and value. The company has over the 500,000 employee

that proves the company is a multinational company. The current company’s chairman is Lee

Kun-hee and vice chairman is Lee Jae-Yong.

Company culture is very important in terms of innovation driver because it helps

shape up the productive community within the organization. Moreover, business culture is

also powerful to the company because it creates a behavior pattern inside the companies.

Samsung has a strong culture in their organization because, in order to become an innovative

company and world leader, their employees need to have the same understanding about their

business and also business direction. These business cultures not only make Samsung a

market leader, but they also teach lessons in struggle and success. One of the lessons thought

is that after the company’s world tour, Lee-Byung-Chull noticed that their product sales had

not met the expectation because the sale representative did not pay attention to their brand.

Moreover, Quality Management becomes the most important idea for their production.
#

To compete with other companies like Apple, they concentrated on the specific telephone

which is Galaxy S. So that they can continue to competition which was ordered by the top

management in March 2010. Samsung is not only responsible for the mobile technology but

also responsible for great global shipbuilders, a major presence in construction, indeed they

are involved in both advertising and game productions. As mentioned earlier, the main

purpose of this research is to understand how Samsung can change its innovation strategy
from 'fast follower' to 'leadership' for next communication systems, 5G technology. This

model that we mentioned involves four basic components which are effects their innovation

strategy.

Strategy

This is deals with the current strategy which includes targets, existing innovation

efforts, end the area where the strategy has to be done.

Resource: All the proper preferential and secured assets to innovate.

Capabilities

To lead and makable the sources to be reached and configured and reconfigured.

Processes: It refers all the innovations that lead to an outcome which is made up by the model,

innovation strategy means, how a company is improving and opens the resources, capabilities

and the corporate processes. For understanding Samsung’s future innovation strategy to transit

from follower to be leadership in 5G time, in the future, the gap investigations are fulfilled for

strategy, resources, even capabilities, and processes. This process has been an ongoing effort

for decades as Samsung has grown. It is difficult to accommodate the elements of both the

Japanese and American management styles into a single company which is unique to

Samsung company. Mostly, in Japan managements, concepts are characterized by market

share orientation, unrelated diversification, vertical integration, emphasis on manufacturing

competitiveness and operational efficiency, strict organizational discipline, emphasis on

employee loyalty, internal and seniority-based promotion and rewards, and participation of

both workers and shareholders in management. The American style management is more

focus on profits and revenues. Even, they likely to use outsource manufacturing or move

abroad to increase their brand marketing and their marketing capabilities. Samsung both

vertical and horizontal diversification, its mentions that manufacturing competitiveness and
product quality, being open to competitive recruitment for starting new level positions, careful

employee training to improve the standardized workforce, stiff organizational discipline, and

emphasis on the loyalty to the all the organizational resemble managerial process. In addition,

Samsung management style is similar to American-style management. Both of them care

about technology, brand, and design of the company's’ product. Also, talent requirement and

excellent performance are some of the important points of both management style. That's why

factors of both style and organically linked, and cannot easily be disassembled and grafted

onto the other. Both of these two styles within Samsung directly stems from the fact that it

runs a business with big strategic undetermined while maintaining the big amount of

manufacturing facilities. This flagship IT business is an industry were noted for sharp swings

in demand and fast advancing technologies, so required a high level of strategic foresight.

Bold risk-taking, securing core talent, strong performance-based incentives, creative

organizational culture, and high speed are some core elements which adopted by Samsung

itself to survive in such an environment. By this time, Samsung ambitiously strives to reject

costs mainly on the huge manufacturing facilities it has constructed around the world. These

efforts are powered by the Japanese management style that Samsung built for decades before

New Management. Results from these, Samsung’s strategic planning, focused on its top

managers such as CEO system, now generally uses American practices, while its operations

mostly depend on Japanese management practices.

Some examples of Samsung company product service and social innovations are:

Samsung currently revealed new curved television which called SUHD TV which is unique

for the point that provides their users to make the beautiful view from every angle. Samsung’s

2016 SUHD TVs feature the world’s only cadmium-free, tender the most true-to-life picture

quality, with amazing shining exceptional contrast and the most beautiful colors which is ever
offered by Samsung. Considering that most viewers watch TV in a lighted room, Samsung has

designed its new SUHD TVs to offer the best viewing experience, regardless of the lighting

environment. With the help of New Ultra Black Technology, we can significantly reduce light

reflection. The Samsung AddWash Washing Machine has one of a kind access door that

makes it convenient to add any item, likewise a piece of forgotten laundry, without causing to

drain the washer in order to release washer door mid-cycle which allows us to add hand-

washed items for rinsing, or additional softener anytime during the cycle. It is very good for

time-saving and washing performance, the AddWash Washing Machine comes with a

superspeed feature that makes it possible to be done with a normal wash in less than an hour

without compromising washing performance.

What does innovation mean to Samsung?

Samsung has developed a New Concept Development (NCD) process that all business

units can implement while renewing and innovating new products and services. Innovation

Process of the Samsung team has emerged out of the need to have an incubator team to study

and work with every business unit to provide more market insight.

Innovation approaches of Samsung:

What is the PIT?

PIT’s aim is to develop production and solution concepts using consumer opinion,

market-driven technologies, and innovation for commercialization. They do this working

directly with the product planning groups at the same time for each business unit. There are

four main stages PIT’s specifically concentrated:

Stage 1

The first stage is understanding which means that innovation is to understand what

trends are exploding in the world. To achieve this, PIT conducts field research and collects
data, ideas, and information to gain opinion into the user’s perspective. The team also

examines the market and keeps track of who and what is making the most noise.

Stage 2

The second stage is to indicate in the further step of NCD, founders and designers

generalize and dispute the ideas by analyzing and evaluating the data collected from field

search, at heart brainstorming tens or hundreds of ideas that can supply innovation or solution

to the task at hand.

Stage 3

The third stage is concept development. The team applies all the information they have

been covered. The business strategy, the research, and then the ideas they’ve generated. They

take up a treasure of knowledge and make it a single concept that defines it. The concept then

became a solid business case for business units.

The 4. and the last stage is the Concept of Finalization, in this stage, PIT employees with

business units to finish and end the product concepts depends on the market and consumer

requirements.

Radical/Disruptive ideas for your company

Although They are the market leader in their areas, Samsung always learns from their

competitor to improve both their product and their technology. Also, they continuously try to

produce their products quicker and with more variety design in terms of the market demand

faster and better prices to have the advantage in the market competition. In the early time of

the feature phone business, Samsung always used to follow the low- end market leader, which

is Nokia. The company always try to keep the trend by differentiating its products, with

design, function, and feature. In the 2012 days, while Samsung was launching Nokia to

become the market leader, Nokia tried to turn its portfolios into a smartphone market.
Samsung not only follows the leads of the market leader. They are also followed at the market

environment and other competitors. So that when Nokia had faced with the problems,

Samsung had caught up in other areas such as the smartphone market.

 References
R. K., J. H., & R. K. (2014). Samsung’s Innovation Strategy in Smart Phones Market.
Retrieved February, 2014, from https://www.researchgate.net/publication/
319585333_Samsung's_Innovation_Strategy_in_Smart_Phones_Market.

S. (2014). What is the Samsung Way? Retrieved August 12, 2014, from https://
www.industryweek.com/companies-executives/what-samsung-way.

Samsung Newsroom (2016). Samsung Electronics Unveils Transformative Innovations for

Smarter Living at the Southeast Asia Forum 2016. Retrieved February 1, 2016, from
https://news.samsung.com/global/samsung-electronics-unveils-transformative-innovations-
for-smarter-living-at-the-southeast-asia-forum-2016.

Samsung Newsroom (2013). SKIP TO CONTENT Samsung’s Product Innovation Team: How
Ideas Becomes Streamlined. Retrieved February 2013, from https://news.samsung.com/
global/samsungs-product-innovation-team-how-ideas-becomes-streamlined.

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