twenty each year. When Kim first started at Samsung in 1999, the company
wasn’t even on the list.
—
SONY, MEANWHILE, WAS IN trouble for a deluge of reasons.
Four years after the death of Sony’s visionary co-founder, Akio Morita,
in 1999, Japanese firms were afflicted by the scourge of complacency and
“Not Invented Here” syndrome, as management expert Chang Sea-jin, a
business professor at the National University of Singapore, put it. Their
aging workforces clung to obsolete technologies that they had invented two
to three decades earlier. Too comfortable with their own success, they were
unwilling to engage in acts of “creative destruction” and start afresh.
It mirrored Samsung chairman Lee’s prophecy of “perpetual crisis.” In
2003 Sony president Kunitake Ando asked “for a report on what Samsung
is doing every week.” Its CEO, Nobuyuki Idei, admitted that Sony’s
revenues and profits were tumbling, forcing him to slash jobs and shut
down plants.
In the chaos of Sony’s decline, the Japanese rival was struggling with
unstable LCDs for its televisions, unable to make all the parts it needed on
its own. Samsung executives seized on this weakness. They approached
Sony in a bid to open a joint venture to manufacture LCDs, giving Sony
and Samsung a stable supply, but also giving Samsung a chance to learn
from Sony’s stellar operations.
In October 2003, CEO Nobuyuki Idei announced a move that would
have been unthinkable ten years earlier. Sony, he announced, would join
Samsung in a joint venture that was being named S-LCD. The plant was
opened in South Korea the following year, and Samsung was its majority
owner. Sony engineers continued to question the quality of Samsung’s
hardware on their visits to the new plant. But Samsung suddenly had the
upper hand.
In 2004 BusinessWeek declared Sony’s Idei one of its worst managers of
the year. It was a horrific fall from five years earlier, when the magazine
had named him one of the best.
Now Samsung just needed to drive a stake in the Sony brand.