Samsung Note 7: How not to manage a crisis

A Samsung customer browses a web page showing a fire-damaged Samsung Galaxy Note 7 mobile phone at a Samsung store in a mall beneath the company's headquarters in the Gangnam district of Seoul on October 12, 2016. Samsung does not market its products as average. PHOTO | AFP

What you need to know:

  • Note that the patch does not fix the problem or eliminate the risk. It apparently only reduces the risk of setting you alight. Hardly a comforting thought.
  • Effective reputation management in any crisis involves demonstrating leadership and taking control of the message.

When Samsung released the Note 7 mobile phone in August ahead of arch rival Apple’s iPhone 7, the South Korean giant hoped to blaze a trail as the most innovative smartphone maker.

Instead, the safety procedure on a flight now advises you to put on your safety belt, demonstrates the use of oxygen masks, shows you the nearest emergency exit, and tells you to keep your Samsung Galaxy Note 7 off for the duration of the flight.

Images of the self-combusting phone have gone viral since its release.

In an era of hyper transparency, citizen journalism, and almost permanent surveillance, it was impossible for the Note 7’s potentially harmful defects to go unnoticed.

As the criticism mounted, Samsung finally moved to initially recall the phone globally, then offered a replacement, then a software patch, and finally terminated sales and production of the product.

However, critics have argued that Samsung’s recall fell short of expectations.

The initial recall did not fully guide consumers on the nature of the problem or what to do next.

In South Africa, for instance, Samsung’s statement refers to “battery cell challenges” as though customers should not be aware of the real danger the phone poses.

In the same statement it refers to a software patch that “reduces the risk of incidents”.

Note that the patch does not fix the problem or eliminate the risk. It apparently only reduces the risk of setting you alight. Hardly a comforting thought.
Some have argued that Samsung followed industry practice for the recall.

That might be so, but if you want to differentiate your brand from competitors, customers expect more than industry benchmarks.

Samsung does not market its products as average; their efforts to retain their customers’ trust should also know no bounds.

It is a small price to pay in the face of potential reputation damage. A brand’s personality and values should shine through in times of crisis.

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Key stakeholders have not held back. In a report filed on October 9, 2016, the BBC’s North America technology reporter, Dave Lee grimly said that Samsung is now facing a “full-blown crisis”, adding that the latest news raises “serious questions over its obligation to protect the public”.

The markets have responded equally unfavourably, with the South Korean electronics giant losing 7 per cent of its share capital as Apple’s share price continues to soar.

Having worked on product recalls, I can appreciate how difficult this has been for Samsung.

Multi-national product recalls are not easy. However, Samsung has scored a number of needless own goals.

Some of their public statements will surely feature in case studies on how not to manage a crisis.

The tech giant’s response to the Note 7 crisis in each region should be to proactively inform its customers, one, whether the Note 7 has/has not been released in the said country, two, highlight that the product has been recalled, and three, due to incidents of the phone battery catching alight, assure customers that the rest of Samsung’s products are safe and that customers will be informed about further developments.

Yes, there may be legal implications, but customers should come first; they are the reason the company trades.

Any and all advertisements of the current Note 7 should have been put on ice. A recall and an investigation into a serious problem are under way.

It is hardly the time to be punting the wonderful features of the phone when customers are concerned about the risk to life.

People consume information differently in a crisis. The trick is to keep it simple.

It is possible to strengthen customers’ relationship with your brand by providing them with a clear narrative that answers their questions about the crisis, helps them to bear the trauma, and shows empathy.

AVOID CRISIS
Effective reputation management in any crisis involves demonstrating leadership and taking control of the message.

This includes acknowledging the issue, addressing it with all key stakeholders, keeping channels of communication open, and assuming responsibility.

The key to crisis communication is to tell the truth, tell it first, and tell it all.

Samsung did not do that until it finally agreed to stop sales, distribution, and production of the Galaxy Note 7.

Crisis preparedness can help institutions anticipate potential issues, build crisis management capacity, prevent crises, and influence the outcome.

It is often said that the best way to manage a crisis is not to have one at all.

The writer is a founding partner of Hewers Pty Ltd, based in Cape Town, South Africa. [email protected].