[Business Leaders X-File] “Chairman, It Won’t Get a Signal”: Lee Kun-hee Stung... He Overhauled Everything in a 50-Billion-Won ‘Pillar of Fire Show’

Scene 1. A Subzero Sports Field Where 2,000 People FrozeIn early spring 1995, at the Samsung Electronics factory sports field in Gumi, North Gyeongsang Province, around 2,000 employees stood in formation wearing red headbands. Four chilling characters were emblazoned on the headbands: “Quality Assurance.”
In the middle of the field lay a mountain of cordless phones and 150,000 mobile phones, enough to fill dozens of five-ton trucks. A banner hung above them: “Quality is my character and my pride.”
Soon, employees came out carrying hammers and began smashing the finished products, tears in their eyes. Then oil was poured over them, and flames shot up. It took just over two hours for products worth 50 billion won to turn to ashes. Beyond the flames hung the chairman Lee Kun-hee’s chilling silence.Scene 2. The Chairman’s Fury—The Real Reason: “A Defective Phone in My Gift?”It began at the end of 1994. When Samsung’s independently developed Korean-made mobile phone, the ‘SH-770’ (the predecessor to Anycall), came out, Chairman Lee Kun-hee was so pleased that he sent it as a year-end gift to thousands of VIPs in political and business circles.
But the feedback that came back was astounding: “Chairman Lee, the calls keep dropping?” “The call button won’t work.”
The defect rate reached a staggering 11.8%. In other words, at least one in every ten phones was defective. It had been a year and a half since the 1993 Frankfurt Declaration, in which he said, “Change everything except your wife and children.” The chairman’s anger erupted at the factory’s outdated mindset that still held that meeting production targets was all that mattered.
“Is this what you made for people to pay for? Collect every last one. Then burn them all.”Scene 3. An Unprecedented Shock Tactic from ‘Penny-Pinching Samsung’The collection and disposal costs alone came to 50 billion won in the money of the time. In effect, a single bonfire wiped out a substantial portion of Samsung Electronics’ annual net profit at the time. Executives and employees were aghast. They had burned every last product, even those that worked perfectly—it was enough to drive them mad.
But this ‘pillar of fire show’ was not simply an act of venting anger. In one fell swoop, it burned away the complacency lodged in the bones of workers and engineers: “We can always just fix it with after-sales service.”[X-File Findings Report]After the burning ceremony, the production lines at the Gumi plant were completely reorganized. That August, Anycall overtook Motorola—the global No. 1 and an undisputed powerhouse in the Korean market—to claim the top spot in domestic market share (51.5%).
If Chairman Lee Kun-hee had thought 50 billion won was too much to waste and simply patched things up with after-sales service, Samsung Electronics might have remained a subcontractor to Nokia or Motorola, let alone built today’s Samsung Galaxy legend.
[email protected] Moon Young-jin Reporter