1. What leadership decisions has Samsung made in order to manage its innovation process?

2. What competitive strategies did leadership adopt to turn Samsung around? What challenges does Samsung face in the future?

On February 17, 2017 Lee Jae-yong, the vice chairman of Samsung, was arrested on bribery charges while trying to gain control of the firm. This came at a tough time for the company as it struggled to make changes in its rigid management approach to innovation – an approach that pushed its employees to meet demanding goals, sometimes only to prove themselves with short-term achievements, not long-term financial results.

Since 1998 Samsung Electronics had been undergoing a transformation. Under the leadership of Jong Yong Yun, CEO from 1996 to 2008, Samsung had emerged from being a company that earned modest profits on low-cost products based on competitor’s technology to a company producing cutting-edge hi-tech products that impressed consumers – what they called “wow products.” Yun had believed that developing products with attractive designs and advanced technology and features would enable Samsung to grow into a premium brand that would earn higher profits.

Under Yun’s leadership, Samsung increased its research and development department to make it faster and larger than any other electronics technology company. This resulted in Samsung’s ability to take more products from concept to rollout faster than any of their competitors, without sacrificing quality, as demonstrated by the numerous awards earned at top design contests throughout the world.

Although it made everything from televisions to handheld computers to home appliances, Samsung had been one of only two companies able to make profits in the highly competitive mobile phone industry, taking market share away from its closest rival, Apple. Unlike Apple, which contracted out the assembly of its products, Samsung had been able to develop capabilities in manufacturing, even supplying components to other firms such as Apple, Sony, and Hewlett-Packard.

However, by Samsung innovating in markets that were created by others, the firm had gotten the reputation of being a “fast follower,” that it was more imitative than innovative. Samsung needed to challenge this perception. One way to do that was to focus resources on the research and development process, tapping into the talents of its designers and engineers across its multiple lines of business, eventually making Samsung products – such as the television, handheld computers, phones and even appliances – the centerpiece of a digital home.

Yet the focus on trying to prove that it was more than this fast follower had pushed Samsung to release the Note 7 ahead of the Apple iPhone7, with disastrous results – the Note 7 developed a tendency to burst into flames! Samsung had to recall and eventually kill the product. Critics claimed that the firm maintained a culture in constant crisis, driving employees to work too hard and too fast. In an environment where technologies were continuously evolving, even leading to periodic revolutionary shifts, could Samsung continue to search for new opportunities, make the needed changes and still be considered an innovative leader?