When it comes to innovation, Samsung is a very interesting company. In the very, very tough and competitive world of smartphones, they are about the only android brand that has established themselves as a legitimate competitor with the Apple iPhone. That is no small achievement given the number of other quality companies selling android-based smart phones.
Getting to where they are today has required major changes in the very fundamentals of Samsung. In a quality Harvard Business Review article titled How Samsung Became A Design Powerhouse the authors detail the remarkable transformation the company went through to become the competitor with Apple that they are today.
Back in the mid-1990s Samsung was a company that had competencies and values that were not going to make them successful in the smart phone and smart TV business. What they valued most was speed, scale, and reliability. Their engineers produced products capable of being sold at a specific price point and with certain predetermined performance capabilities. You will notice that so far I’ve not used the word design in talking about their competencies and values. That is because design was barely a consideration back in the mid-1990s.
In the mid-1990s low levels of innovation, innovation they needed if they were going to be a leading brand, frustrated the company’s chairman. He determined that the number one additional capability they needed was design.
Fast-forward to today and the company has over 1600 designers. In recent years, they have produced stunning designs in the smartphone and smart TV business. But I’m getting ahead of myself, so let’s take a look at how they got there.
In effect, they needed to change an engineering and cost focused culture to an innovation driven by design culture. As you may have heard me say in previous podcasts, changing company culture is never easy and never fast. Samsung was no exception to this statement.
Samsung leaders point to an early decision that made a big difference. Instead of outsourcing design, they made the decision to create an internal design capability. Anyone that has worked with engineers and designers knows that there can be almost an inherent different worldview between the two groups that can create tension and challenges. Among other differences, engineers can be very efficiency focused while designers do not want to be shackled by efficiency and cost in their effort to drive high levels of consumer satisfaction.
In bringing designers into the company, they wanted people who were capable of strategic thinking and navigating the existing culture. The design group utilized some tools and processes that are sometimes foreign to engineers. They brought a sense of empathy to the design process. Empathy enabled them to dive deep into the consumer experience with their products. They want to know both the dimensions of physical interaction and the emotional experiences customers had.
They also develop the ability to visualize new possibilities. Powered by empathy and driven by creativity, they were able to bring innovative thinking to a much higher level. Innovation was now far more customer driven then bottom-line driven. Empathy is also an internal value where people learn to appreciate the world of people who are very different than them – like the differences between designers and engineers.
They also realized they could learn through experimentation in the marketplace. While this may seem like common sense to many people listening to this podcast, you need to appreciate that an engineering, efficiency, and cost driven culture can often not value marketplace input before launching a product. For those of us using smartphones, this is a recipe for disaster – a disaster that Samsung was able to largely avoid.
Samsung now has multiple levels of designers deployed throughout their business. Designers working with business units develop new products with about a 12 month time horizon. Then another group works with arch type design. This group works both with business units and their corporate design center. They plan and design new products and user interfaces that are 18 – 24 months out. The next generation design group also works with their corporate design center and the business units helping senior executives define the near-term future, which is two – five years out. Lastly, they have a future design group which works from their corporate design center. Their focus is on developing entirely new business concepts that include a technology roadmap. They also look at future technology developments and user megatrends. Their business focus is five – 10 years out.
While most of my comments have focused on smartphones, many of the same observations, can be made about their television and smart television offerings. They have brought considerable innovation to the category that typically is focused primarily on visual quality, audio quality, usability, and physical shape.
Having said all this, Samsung has been remarkably competitive in a highly competitive smartphone business. But all has not been roses. At times in the last 10 years profits have been a roller coaster ride. They’ve had several product introductions that have underperformed expectations and some that have exceeded expectations. There has been a constant stream of more and more innovative products in both the smart phone and smart TV business.
I have admired Samsung from afar since I am a 100% Mac, iPhone, and iPad person. I have marveled at some of the capabilities they put into their smart phones. In many ways their phones have capabilities that the iPhone does not. The attraction of the Apple way of doing business is that you get a fully integrated system across multiple platforms – computers, tablets, and phones. The system has great integrity and ease-of-use.
Samsung recognizes this and is reportedly working on its own operating system and various service platforms said to include transportation, health, and payments.
When it comes to televisions, I am a Samsung fan. Their smart TVs bring new functionality to television in an easy to use and reliable platform.
So, what lessons can you take away from this that can help you?
First, fully recognize the challenges associated with making fundamental changes to the capabilities and culture of your business. Existing capabilities, processes, and values tend to resist change and in some cases even sabotage change. You need a plan for the new capabilities to gain empathy and appreciation for the existing world and for the existing people to both appreciate and want the new capabilities that will help make them even more successful. While this is easily said, do not underestimate how much time and effort it takes to bring this about. It takes a long-term, conscientious plan to accomplish this.
Second, if you’re business category or segment is going through rapid change driven by innovation both from within and without the existing group of companies, recognize you probably need new capabilities to effectively compete. Do not make this choice quickly. In Samsung’s case, they decided they needed some of the same capabilities that Apple has – great designers. Sometimes doing what a competitor has is the right solution, but sometimes you want to build a competitive advantage a different way with different capabilities. Making the right selection requires understanding who you are, who your competition is, and who your consumers are. Out of all the options available to you, you want to choose the one that has the best answers from these three perspectives.
You may walk away from this podcast saying that innovation is not easy. You are right. It is why only 25% of new products succeed and 75% fail. Having said that, by learning the innovation best practices in these podcasts, you greatly increase your chances to sell more and make more.