Rising from the Ashes – Samsung’s (should be) Plan for the Best
Crisis Management 101: The process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public.
I’m not sure why I fretted over over the Galaxy Note7 inflight announcement last week during the short flight from Victoria to Vancouver. After all, as an airline passenger service agent I had been making the same announcement at Victoria Airport’s Gate 6 ever since Transport Canada made it a federal offence for passengers to carry the smartphones on their person or to pack them in their luggage.
It may have been my seatmate’s sideways glance at the Galaxy Note3 that I was tucking into my purse, or my response to him, an almost guilty assurance that my device was an older and non-incendiary version of the combustible one.
But beyond feeling the need to explain, it was the realization of how quickly things can change. In a literal flash, Korean technology giant, Samsung, the darling of breakthrough technologies, had gone from mobile phone innovator and market leader to a suspect producer of dangerous products. In public relations circles, this “thinking” is called general acceptance, which is not a good thing, and I had to wonder if Samsung’s reputation would ever recover from the PR nightmare.
Organizations do recover from disaster. Johnson & Johnson, the makers of pain medicine Tylenol, did it brilliantly in 1982. Seven people died after ingesting cyanide laced Tylenol capsules. While the tampering was a rogue, criminal act that J & J were not responsible for and could not have anticipated, they took full responsibility. In short order J & J halted Tylenol capsule production and initiated a media campaign to warn the public of further possible poisonings. They compensated affected families, set up a 1-800 information hot line and offered a $100,000 reward to find the killer. They became product safety champions, creating the tamper-free packaging seen on all over-the-counter drugs today. All this to keep their customers safe, and, in turn, kept their sales afloat and their reputation intact. One year after the disaster, Tylenol’s market share had all but recovered, and in 2016 they continue to be sales leaders.
Other organizations boast similar recoveries and their success is no accident. Those that have incorporated crisis management strategies into their business plans understand that swift, transparent and accurate communications are the keys to speedy and effective reputation recovery. They’ve done their homework: they’ve considered the most probable risks, have strong starting points and understand it’s impossible to predict everything.
Surprising then is the number of organizations that haven’t developed such plans. According to the Institute for Crisis Management, only 54 per cent in the USA and UK have them in place. The excuses are always about time and money.
While it is virtually impossible to determine whether Samsung was one of the 46 per cent that fell into the “no plan” category, it is now mid-December and three months have passed since word of Samsung’s exploding phones hit the media. According to Samsung’s October 2016 earnings release, sales from their mobile division have plummeted by15% in both year over year and quarter over quarter figures. Airlines are still announcing that it is illegal to pack or carry the Galaxy Note7 on board, and the company has done little to foster trust or offer incentives on its other products as reported by a number of industry journals including Gizmodo UK .
So how did things get this bad?
Samsung made a number of critical errors; impatience was clearly one of them. While expediency is paramount, Samsung ignored another equally important principle of successful crisis communications – accuracy. They were quick to recall the faulty mobiles, but replaced the incendiary devices with other flammable ones. Also in the rush, Samsung burned relationships with the US government by ignoring critical consumer product recall guidelines, and lastly, they released statements to Hong Kong customers assuring them that their phones were safe because their batteries were different. The following day, however, Samsung had to retract those statements when Galaxy Note7’s in Hong Kong went up in smoke.
Can Samsung restore its reputation?
The Galaxy Note7 is a goner. End of story. But even if the next series, the Galaxy S8, is the prettiest, the slickest, and most technically savvy mobile to hit the market, will consumers rush purchase them?
In reality, can the general public distinguish the Note7 from the Note3 the S8 or J3? Will Samsung’s numbered product lines always be associated with the model that bursts into flames? Will all Samsung products be forever equated with Samsung’s sloppy response? Will the debacle be forgotten? Forgiven?
Time heals all (or so they say), but to restore trust and increase sales before it’s literally too late, Samsung must to do more than issue a letter of apology to select newspapers. If I were Samsung’s president and CEO Gregory Lee, here’s what I would do:
Fire the public relations manager and hire a professional who is expert at building trust and fostering relationships. Have that person and their teams seek partnerships with government agencies, universities and other technology specialists whose expertise, networks and resources can be shared. Become the industry leader: initiate programs and invite competitors (yes, competitors) to form product safety standards that all cell phone producers must meet. In short, do good things. Make friends, show goodwill and take responsibility.
Fire the person in charge of communications and insert a team that understands the importance of ongoing and credible information – even if there is nothing to report – be present. Be sure this team touches company stakeholders often, and most importantly, not only get to know them, but learn the best ways to reach them. It stands to reason that mobile customers will use…yup, you guessed it…mobile mediums to get their news. Don’t just take out big, expensive ads in newspapers. Use social media, the cornerstone of the company's business, to build community.
Fire the person in charge of marketing and hire an expert who understands brand power or better yet, the opposite. Brands with bad reputations need to be extinguished. Re-name and re-market the numbered series of phones, and then provide generous incentives to distributers and customers. Money talks.
Fire the person in charge of strategic planning and find someone who is expert at crisis management. Have that expert either dust off the old plans or create a new strategy to anticipate, plan for, and react to any disaster that burns down the pipe.
The world is looking at you Samsung. Get tough and get busy. It's time to rise from the ashes.