As of this morning, the U.S. product safety officials announced a recall affecting 2.8 million Samsung washing machines, across 34 top-loading Samsung models sold at various stores starting in 2011. There have been more than 700 reports of incidents and nine reports of injuries including a broken jaw, the agency said Friday. There is also a class action lawsuit underway.
This in addition to the recall of 2.5 million of their Samsung Galaxy Note 7 phone, who have also had a problem with exploding phones. For those of us who have been traveling the past few weeks, you will notice that the Samsung phones are being banned on most flights for fear of explosions.
Earlier this month, Samsung had already warned that it would take a more than $5 billion hit to operating profit from the third quarter of 2016 up to the first quarter of 2017. Samsung had slashed its operating profit guidance, with final results on Thursday coming in line with expectations. The South Korean electronics giant now said that it aims to boost fourth-quarter earnings through its flagship Galaxy S7 smartphone as well as lower-tier models. Investors were expecting the third quarter to be the bottom for Samsung, but this most recent announcement might be one more plunge for the company.
Will Samsung get out in front of this?
So far, there has been a lack of communication coming from the leaders of Samsung. Typically, the Samsung senior management team operates with a very secretive approach. Nothing goes public. Yet for a crisis like this, especially as it is impacting the US market so dramatically, Samsung should take a more active public stance. The consumers need to hear from you.
For the Smart Phones, I was suggesting that Samsung should use a “True Innovation brings risks” which fits with their position of being at the forefront of innovation. They should look to make quick fixes to their processes to ensure it does not happen again, ensuring their next phone launch has been tested like no other smart phone in the industry. They can also utilize their main competitor–Apple–who is not currently taking risks with their death by incrementalism approach to the iPhone 5-6-7 offering catch up technology at best. This type of message would have fit perfectly with the Galaxy target audience, who are true innovators and love new product technology rather than the slick sales pitch of Apple.
However, for a smart phone to truly win, it must move beyond the niche of the innovators and capture the mass market. That’s the concern this washing machine recall will cause. It is also the concern I have for the brand when every flight attendant tells people to turn off their Samsung phones. This concern will make your average homeowner have serious doubts about the quality of the Samsung brand name. They will wonder how safe the next models will be. They will start to doubt whether to get their 13-year-old a Samsung phone, or even whether the family 54 inch LED TV will be safe?
Brand Turnaround 101
As the leader you need to change the business direction with new people, new plan, new ideas, new attitude. Before even creating the plan, you need to get the right leadership talent in place. Start with talent, motivation and alignment. Look to close leaks on the Brand by using brand funnel to assess and then our leaky bucket tool to close leaks. I always say cut the fat and re-invest. This is a great opportunity to go through every investment decision, investing only in programs that give you an early break through win. I always create a 3-stage plan turnaround plan. In stage 1, find early/obvious win, halts slide, helps motivation. In stage 2, invest behind new positioning/new plan, focused decisions, take risks. In stage 3, make adjustments to plan, build innovation behind new ideas that fit plan. As a leader, it is crucial to motivate a potentially demotivated team. Losing can be contagious to a culture an a team. Recognize wins to fuel performance driven culture. They may doubt you until they start to see some early wins.
Samsung better do something, or else.
All is quiet in the Samsung world this morning. What would you do if you were Samsung?
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