PHOTO ESSAY: Samsung Design
The office park in northern New Jersey hardly looks like a place that plays a role in cutting-edge design. Hard by a highway interchange, the two-story building is about as distinctive as white rice. But climb the stairs to the second floor, and you'll see designers from Samsung Electronics Co. studying in painstaking detail the American consumer psyche. There, engineer Lee Byung Moo watches from behind a two-way mirror as three women and two men stuff a stainless steel refrigerator with the contents of a half-dozen bags of groceries. After the five have finished and given their opinions on several potential configurations of drawers and compartments, Lee and two others rush into the room to take photographs and note exactly where the "shoppers" have put the ice cream, chicken, beer, milk, and other food. "We want to know the tastes of American customers because we need to develop products that fit their lifestyle," says Lee.
Half a world away, Choi Won Min sits in a windowless room on the ground floor of a Seoul skyscraper -- an equally unlikely spot to find the leading edge of design. He spends his days (and often his nights) in front of two piano keyboards, a phalanx of mixing consoles, and dozens of synthesizers. With his headphones on, he hits a note, listens intently, then tweaks a few settings and hits another key. His primary mission in the two-year-old lab: coming up with a suite of bells, boings, beeps, and buzzes for digital gadgets that will immediately say "Samsung" to users worldwide. In the past, "simple sounds seemed to be sufficient, but now we realize how important sounds are in user interfaces," Choi says.
Lee and Choi are foot soldiers in Samsung's continuing assault on the world of cool. In recent years, the South Korean company has begun gearing all it does, from financing to decision-making to training and labs, to make Samsung a finely tuned receptor of all the things that make its products must-haves in an increasingly competitive marketplace. Hundreds of millions of dollars have been spent spiffing up the look, feel, and function of everything from refrigerators and washing machines to cell phones and MP3 players. And the focus has been on research of the sort Lee and Choi are doing: finding out what's likely to sell before consumers even know they want it. The effort has paid off: Samsung has grown from a me-too producer of electronics and appliances into one of the world's leading brands -- in large part because of its focus on design. "We want to be the Mercedes (DCX) of home electronics," says Yun Jong Yong, Samsung's chief executive.
The way Samsung's moving, you'd think it wants to be the Ferrari. This year, Samsung won five awards in the Industrial Design Excellence Awards (IDEA) -- making it the first Asian company to win more awards than any European or American rival. (The competition is sponsored by BusinessWeek, which publishes the results, but the laureates are selected by the Industrial Designers Society.) And since 2000, Samsung has earned a total of 100 citations at top design contests in the U.S., Europe, and Asia. Brokerage Hyundai Securities expects Samsung to earn $10.3 billion on sales of $52.8 billion this year, up from profits of $5.2 billion and $39.8 billion in revenues last year. (Although much of that increase comes from the semiconductor division, the company's snazzy consumer products also helped.) "Samsung is the poster child for using design to increase brand value and market share," says Patrick Whitney, director of the Institute of Design at the Illinois Institute of Technology.
The change started in 1993, when Chairman Lee Kun Hee visited retailers in Los Angeles and saw that Samsung products were lost in the crowd, while those from Sony Corp. (SNE) and a few others stood out. So he ordered his managers to concentrate less on cost saving and more on coming up with unique products. The bottom line: Great design could catapult Samsung to the top ranks of global brands.
DECADE OF DETERMINATION
The boss spoke. Samsung listened. And the company's design push was under way. To attract better, younger designers, Samsung in 1994 moved its design center to Seoul from sleepy Suwon, a small city an hour south of the capital. That same year, Samsung hired U.S. design firm IDEO to help develop a computer monitor -- the first of many such collaborations with IDEO and other leading consultancies. Then in 1995, the company set up the Innovative Design Lab of Samsung (IDS), an in-house school where promising designers could study under experts from the Art Center College of Design in Pasadena, Calif., one of the top U.S. design schools. Samsung designers were dispatched to Egypt and India, Paris and Frankfurt, New York and Washington to tour museums, visit icons of modern architecture, and explore ruins.
Just as important, Samsung's designers have broken through the barriers of Korea's traditional Confucian hierarchies. Although Korea has loosened up as democracy has taken hold in the last 15 years, respect for elders and a reluctance to speak out of turn are still the norm. And Samsung as a whole still holds lots of meetings where Confucian order prevails. But the design center is different. Located several minutes' walk from company headquarters, it's a place with no dress code, where some younger staffers dye their hair green or pink, and where everyone is encouraged to speak up and challenge their superiors. Designers work in three- to five-person teams, with members from various specialty areas and levels of seniority -- all working as equals.
The wrenching departure from tradition has paid off. Virtually all of the 19 IDEA awards Samsung has won since 2000 are the fruit of such teams. Helped by its innovative designs and egalitarian approach, Samsung has emerged as the best-selling brand in high-end TVs in the U.S., and the world's largest LCD computer monitor producer, with 17% of the global market. And Samsung has sold more than 10 million SGH-E700s -- the first clamshell phone with a hidden antenna -- racking up some $1.2 billion in profits since its debut 14 months ago. "Good design is the most important way to differentiate ourselves from our competitors," says CEO Yun.
Many of the new design ideas are coming from outside. Last year, Samsung started sending designers abroad to spend a few months at fashion houses, cosmetics specialists, or design consultancies to stay current with what's happening in other industries. Lee Yun Jung, a senior designer who works on colors and finishes, spent last autumn in residence at a furniture designer in Italy. While she gathered plenty of ideas for product surfaces, the real eye-opener was the relaxed culture of the place. "A 23-year-old novice could interrupt the 60-year-old master," she marvels. Since returning, Lee has tried to be more open to ideas percolating up from the bottom of her department.
Today, Samsung knows it can't afford to let up. It's the first Asian company outside of Japan to use design to vault to the first tier of global companies. But in the Digital Age it's not too hard for strivers such as Lenovo of China and BenQ to make products that approach the quality of long-standing industry giants such as Sony, Panasonic, or Philips Electronics (PHG). Samsung, of course, was an upstart itself not long ago. It was the transition from analog to digital that gave the Korean company the opening it needed. "In the analog age, Samsung devoted most of its energy trying to catch up with Japanese leaders, but the arrival of digital put everybody on the same starting line," says Chin Dae Je, Korea's Information & Communication Minister and president of Samsung Electronics before joining the Cabinet last year.
These rivals -- whether newcomer or veteran -- aren't standing still. The newbies often hire U.S., Japanese, or Italian design consultancies to help them shape products that won't get lost in the crush of goods at Best Buy (BBY) or Circuit City Stores (CC). And those Asian upstarts are all looking to Samsung as a role model for their own transformation into global brands. The likes of Sony and Matsushita (MC), meanwhile, are also placing a renewed emphasis on creating stand-out products. "Sony has been losing some of its edge in design," says Makoto Kogure, head of the Japanese giant's TV division. "Now we're drastically changing and [creating a] Sony identity."
So Samsung must continue to reinvent itself. In the past four years, the company has doubled its design staff, to 470, adding 120 of those just in the past 12 months. And since 2000, its design budget has been increasing 20% to 30% annually. To keep an eye on trends in its most important markets, Samsung now has design centers in London, Los Angeles, San Francisco, and Tokyo, and this year it opened one in Shanghai. More important, Samsung is changing the processes and procedures in its design department and giving designers greater power to influence not just how products look but also what gets built. "Just as a lizard cuts off its own tail to move on, we will have to break with the past to move forward," says Chung Kook Hyun, the senior vice-president who runs design operations.
Samsung's designers these days no longer have to find a way to put their boxes around the devices that engineers cook up. Instead, they often give concepts to engineers, who must then build the machine inside the box dreamed up by the designers. James Choe, for instance, recently studied research showing that consumers prefer printers in which the paper lies flat rather than feeding in vertically. Engineers working on the same project, however, preferred a vertical model because it would cut the production cost of a $110 printer by about 10%. Before Choe started at Samsung three years ago, the engineers might have won. But when the desktop laser printer rolled out last year, Choe's design had prevailed. "The engineers didn't like it, but in the end management listened to us," he says.
Sometimes the designers come up with entirely new product categories. Kang Yun Je thought Samsung could do better than its rivals with a sleek, silver, rear-projection TV sporting a curved back and superthin edges, so that when viewed from an angle it looks as thin as an LCD TV. "When we first came up with the design, we had no guarantee it could be made," says Kang, a shaggy 36-year-old who sports a goatee and wears his shirt untucked. "So I went to the head of engineering, and he said that if I could give him some time and resources, he'd try to do it."
Where to get the resources? To make sure designers get heard, Samsung has created the post of chief design officer -- something few other companies have bothered to do. And to make sure top execs stay attuned to the importance of the issue, CEO Yun holds quarterly design meetings where the chiefs of all the business units review new products and evaluate their designs. So Kang was able to simply call Choi Gee Sung, head of Samsung's TV, computer, and audio businesses and chief design officer since January, to secure backing for the TV project. A few years ago, Kang says, a designer at his level would have had to go through the marketing department and midlevel execs before reaching top management. Choi liked what he saw and gave Kang the go-ahead on the TV. Smart move: The TV, code-named L7, won a silver prize in the IDEA competition this year and is expected to be a big seller.
Samsung's design focus goes well beyond just the look and feel of its products. The company is working to improve the way people use and control gadgets, and two years ago it opened what it calls a "usability laboratory" in downtown Seoul. There, across the hall from where Choi Won Min taps away at his synthesizers in search of the perfect sound, engineers and consumers alike test everything from getting products out of the box to the icons and menus on screens. "In the past, physical design was the focal point," says Chief Design Officer Choi (no relation to the sound designer). "In the future, the user interface will be emphasized more."
The usability lab was built to provide a lifelike forum for tests. It looks like a typical living room, with a kitchen in the corner for testing cooking appliances. Entering the room, designers and engineers kick off their shoes just as they do in a Korean home. On a recent fall day, one engineer padded around in her slippers making rice in a Samsung steamer, another checked out a washing machine, and a third played with the controls on a computer monitor. Behind a two-way mirror, an engineer controlled four high-definition cameras that can zoom in on any corner of the room to record the sessions and save them for later study.
It's that commitment to research that has given Samsung its edge. Many designers sit in on focus groups and watch closely as potential customers provide feedback on their new models. And each foreign lab has a researcher on site -- unusual in the industry. Hwang Chang Hwan, Samsung's principal mobile-phone designer, faced complaints about the SPH-S2300, a three-megapixel camera phone. Techies and camera aficionados liked the optical zoom lens -- a first in a camera phone -- but other consumers didn't like the thickness of the lens. Most of all, young users hated the clumsy keypad, which was laid out in two rows of six keys along the bottom of the screen in order to keep the phone short enough to fit in a pocket. So when it came time to upgrade the phone, Samsung's designers listened. The new, five-megapixel successor sports a smaller lens that allows for a slimmer body, and it slides open, exposing a larger screen but leaving room for the traditional layout of three keys by four.
Can Samsung stay on top of its design game? Some skeptics say the company still doesn't have the breadth and depth in design of Sony, or the ingrained design culture of Apple Computer Corp (AAPL). "Samsung has improved, but I don't see an identity in their design that really speaks to consumers," says Jim Wicks, Motorola Inc.'s (MOT) vice-president in charge of designing cell phones. Still, few would deny that Samsung has managed to inject the importance of design into its corporate DNA. In this era of cutthroat competition, that may be just what it takes to create a lasting advantage.
By David Rocks and Moon Ihlwan