Then-Samsung Electronics Vice President Lee Jae-yong attends the ceremony to commemorate the 100-year birthday of the late Samsung Group founder Lee Byung-chull at Hoam Art Hall in Seoul, March, 2010. (Photo by Kim Jung-hyo)　　

Analysts say the third generation successor must overcome the formidable task of restructuring Samsung¡¯s strongly criticized management system

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Samsung Electronics standing advisor Lee Hak-soo, considered by some Samsung¡¯s most skilled executive in company history, was virtually driven from top management on Friday, indicating that the Lee Jae-yong era at Samsung Electronics has already arrived. The power of Lee, the only son of Samsung Electronics Chairman Lee Kun-hee, is certain to grow with his promotion to president within the year. Those within and outside of Samsung believe that the management of a third generation of the Lee family will begin in earnest.

¡°National service through enterprise¡± is Samsung¡¯s corporate management objective, as stated in the autobiography of the late Lee Byung-chull, Samsung¡¯s founder. His son, Lee Kun-hee, is a businessman in the age of political democratization. He is also a businessman at a time when the state-led economy is changing into a market-led economy.

The Lee Jae-yong Era, meanwhile, is - politically, socially and culturally -an ¡°era of communication,¡± and economically an ¡°era of uncertainty.¡± The rapid spread of smartphones is adding pace to these social trends. People are impatient to build relations with one another and communicate. Production and consumption and the success and failure of deals are determined by whether smooth communication has taken place. New corporate opportunities also open up through communication.

¡°An excuse nobody can believe.¡± This was part of a People¡¯s Solidarity for Participatory Democracy (PSPD) statement regarding a recent scandal implicating a Samsung executive in the leak of MBC¡¯s story information and news plans. This confirmedly took place through connecting a Samsung computer with the MBC internal information network. The statement showed a strong distrust of Samsung¡¯s official explanation that the leak was not an organized act.

¡¡This distrust by civic society is the negative legacy of Lee Byung-chull and Lee Kun-hee.

A former high-ranking Samsung official said, ¡°Samsung¡¯s communication method of the past was to hide things as much as possible, and squash stories if the company is caught red-handed.¡±

This communication style has been the source of constant controversy even within Samsung over the last two to three years. A typical example is the suspicions regarding leukemia at Samsung Electronics semiconductor plant.

A Samsung Electronics official said at the start of the year, at a closed-door presidents meeting, there was a split in opinion between those who believed the company needed to go public with necessary information, and those who thought the company should be more careful in what it says. He said the company could not announce there was a problem with the current workplace inspection system, and it was not a social environment that would accept an announcement that there was not a problem.

With Samsung turning smartphones, a symbol of communication, into a major product, Samsung itself is facing the high wall of communication with society. Samsung¡¯s no-union management is also counted as a symbol of Samsung-style ¡°no-communication management.¡±

Samsung¡¯s complex management system is also something Lee Kun-hee has been unable to resolve. The complicated investment structure that links Samsung¡¯s subsidiaries create doubts in civil society and amongst investors regarding Samsung¡¯s transparency.

It¡¯s a bizarre ownership structure in which the Lee family controls the entire group, worth 343 trillion Won ($305 billion), with just over 1 percent of the total shares. Other chaebols that had a similar ownership and management structure like LG, LS, Doosan and SK are finding their own solutions to making clear ownership rights and responsibilities through becoming holding companies.

A Samsung executive said, ¡°Becoming a holding company costs a huge amount of money, and the hardest task Lee Kun-hee is handing his son is how to improve the corporate management structure.¡±

Along the same lines, another task the youngest Lee faces is the restoration of the Strategic Planning Office (SPO), the group control tower, whose legal identity has grown blurry. If it becomes not an interim organization on the way to becoming a holding company, but rather a body that, like the strategic planning office of the past, even gets involved in the management of each subsidiary, it will necessarily meet criticism that Samsung is above the law.

It seems the Samsung Group¡¯s future depends on what Lee continues from his inheritance and what he casts away.

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