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In this new digital world, LG has a distinct advantage in its ultrawired South Korean home base. The demanding Korean market, where an amazing 84% of households using the Internet have high-speed access, propels LG to develop more advanced products and provides a testing ground for new technologies. LG has outpaced Nokia and Motorola in cramming the hottest new features into its mobile phones. Its latest model, the SC8000, which came out in Korea in April, combines a PDA, an MP3 player, a digital camera and a camcorder. The advantage is paying off. In May, LG launched a new mobile phone in Korea with a 2-megapixel color screen simultaneously with Samsung. In the past, LG lagged at least several months behind its competitor's phone launches, missing out on higher prices and margins. LG became the largest supplier of mobile phones last year to service provider Verizon Communications.
It may seem odd that at this crucial time LG has turned over its top job to a farm boy from a tiny village in eastern South Korea. Kim Ssang Su spent his childhood knee-deep in the family's rice paddies. Even now, Kim is a bit of a fish out of water. He took over from the debonair John Koo, a senior member of LG's prestigious founding family. Kim has never worked outside Korea or, before becoming CEO, even at LG's glitzy Seoul headquarters, known locally as the "twin towers." He had spent his entire career buried in LG's stuffy bureaucracy at the company's main appliance factory in the industrial city of Changwon. He admits to being more comfortable in the field visiting factory floors and design centers than in his spacious office overlooking Seoul's Han River.
It would be wrong, though, to underestimate Kim, who has become near legend in Seoul for the turnaround he engineered at LG's appliance business. When he took over in 1996, LG was making washing machines and refrigerators that seemed little more than cannon fodder for low-cost Chinese companies like Haier. Kim sliced costs by moving production of low-end products to China. He proved there is room for innovation in basic white goods, introducing, for example, appliances like air conditioners that can be controlled from the Internet. The result: sales reached $4.7 billion last year, more than twice the number when Kim took control.
Kim is infusing LG's other businesses with the same vigor. Called a "commander in the field" by executives, he storms about LG's factories and offices poring over details, issuing commands and spurring on the staff by giving them what he terms "stretch goals," or aggressive targets. Awake at 5:30 each morning for a brisk walk, he openly prefers "morning people" and holds 7 a.m. breakfast meetings with top executives. "I don't like the expression 'nice,'" Kim says. "I don't want LG to be perceived as nice. None of the great companies in the world are nice." Kim's relentless nature has put some executives on the defensive. "He likes to be heavily involved," complains a top manager. "I would prefer that he delegate a bit more."