A 34-year veteran of a staid South Korean chaebol hardly seems the person to pull off a radical transformation. Yet since taking the helm of Samsung Electronics in 1997, soft-spoken Yun Jong Yong has done just that--managing to reverse many of the inefficient practices that have long characterized the chaebol. The result: a sleeker and more profitable company.
Earnings were in a slump at Samsung when Yun became chief executive--just as the Asia crisis began. He quickly pushed for change, knowing that boosting profits depended on ending the company's decades-old practice of growing fast at any cost.
Carrying months of unsold inventory had devastated the company's balance sheet. So, among other initiatives, Yun ordered home-appliance factories shut for weeks, until orders were in hand and profitability was assured. Overall, he instituted tighter inventory controls that slashed costs by $2.7 billion.
Yun then cut the workforce by more than a third to 54,000, sold or spun off dozens of noncore companies, and trimmed debt down to 78% of equity from three times equity when he took over. "The crisis jolted the mindset among employees that changes are inevitable," says Yun, 56, an electronics engineer educated at Seoul National University.
The numbers say it all. In the first quarter of 2000, aftertax profits increased more than fourfold, to $1.4 billion from a year earlier. Market cap has quadrupled to $49 billion over the past year.
Yun helped make Samsung Electronics into a global VCR powerhouse in the 1980s. Today, the company is also one of the world's largest and most profitable chipmakers, with a growing strength in display panels and cell phones.
Yet Yun won't be content until Samsung Electronics ranks right up there with the consumer-electronics giants of Japan and Europe. This is not a man to rest on his achievements. "You must maintain a sense of crisis to stay competitive," he says. That's advice his Korean competitors would be well advised to consider.