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  • Posts Tagged ‘Samsung Electronics’

    Samsung Electronics – Silicon Valley “innovation centers” (6 Things to Know)

    February 12th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    (The questions below are partially based on a related interview today with a local Korean broadcaster)
     
    1) What is the motivation behind Samsung’s innovation centers?
     
    By creating innovation centers–Samsung Strategy and Innovation Center (SSIC), which includes a $100 million Samsung Catalyst Fund–Samsung’s objective is to secure the best talent in Silicon Valley. This may say signal increased confidence that it has the ways and means to go head-to-head with the likes of Apple right in Apple’s own backyard.
     
    2) Will Samsung earn a title, “an innovator,” by creating innovation centers? How soon would it happen?
     
    Samsung has publicly stated that its aspiration is not to be a game-changing “innovator.” Instead, it believes that its best strategy is to be a “fast follower.” This means, first, canvassing existing market demand and micro/mega-trends from region to region, and second, adapting technology to in essence “wrap around” such existing market demand. Steve Jobs, Apple’s former CEO, famously stated that “It’s not the customer’s job to know what they want.” Samsung has a polar opposite view–that it’s Samsung’s job to give the customer what they know they want. So far, both have been effective, with the momentum favoring Samsung than Apple in recent weeks, based on Apple’s falling share prices.
     
    3) Why is Samsung looking to create them outside Korea (in Silicon Valley) and not Korea?
     
    Samsung could be creating innovation centers outside of Korea for one of two reasons. First, it could be simply adding to its already existing creative capital as an offensive strategy. Or second, Samsung could be seeking creative talent that it views as lacking onshore in South Korea as a defensive strategy. What is sure is that South Korea’s human capital, and the education of such domestic human capital, does not promote or incentivize thinking outside the box (as of this writing, although efforts and trends may change going forward). As one example, Apple’s “think different” acclaimed marketing slogan in the U.S. cultural context is viewed as a potential good thing, but in South Korea, it is viewed generally as a net negative.
     
    4) Does this mean that Korea lacks creative class talent?
     
    This could certainly be the case. An added consideration is that the corporate culture of South Korea generally has a “do as you’re told” modus operandi. That is, to do your assignment, but not to question it. This is a bit ironic given the nature of the industry, high tech, which has generally been predicated on questioning the status quo and creating and thinking in an unorthodox and different way. One could say that such approach is a Western-Socratic mindset, not entirely fitting of South Korea. Only time and results will tell.
     
    5) Why does Samsung plan to increase investment in the U.S.?
     
    Samsung is essentially trying to maximize it’s ROI (return on investment) by creating a fund for future tech start-ups in the U.S. Silicon Valley has a population of approximately 3 million, whereby 17,000 new start-ups are created every year, which are then followed by 12,000 failures of such start-ups. Samsung may now be understanding that, much like many Silicon Valley VCs, it may take both a good eye of the next big thing, patience, mentoring, and a “wait for the mega home run” mindset by trying to find the next Facebook (although the next big thing most likely is a known unknown start-up that may appear at any given moment).
     
    6) What does this say about Samsung’s global strategy?
     
    Samsung is asserting itself on the global stage through its aggressive Silicon Valley strategy. But according to one source from the KITA, Samsung Electronics and other similarly situated firms have only a few years before it loses its competitive advantage to Chinese firms (which will, in essence, be the next wave of dominant high tech firms).