On Aug. 24, 2016, the world changed for customers and employees of Samsung Group of South Korea.
The first reported immolation of Samsung’s Galaxy Note 7 mobile phone shook the company to its core. The release of the Galaxy Note 7 to very positive reviews and press was to be a substantial part of the formidable business portfolio of Samsung, considered “too big to fail” and deeply embedded in South Korea’s economy. But in the public’s view, the phone has moved from a powerhouse profit engine to the source of eye-rolling and jokes each time a flight attendant announces that “Samsung Galaxy Note 7 phones are not allowed on commercial aircraft.”
This is more than a PR nightmare for the company. Samsung posted a 96 percent dive in earnings for the third quarter, and given that there were over 4.2 million of the Note 7s sold worldwide, this debacle will have lasting impact on the brand and the balance sheet.
The official findings of Samsung’s independently commissioned study are not due out until year-end. Samsung’s CEO, Kwon Oh-hyun, is delaying pointing a finger or assigning blame until after the results are in.
Based on public information at least, on Aug. 23, 2016, if there was anyone at Samsung who was concerned about the batteries or the handsets, they were not talking about it publicly. We may learn from the upcoming report that there were internal rumblings about the issues the phone had. But clearly no one anticipated the need for a global recall and refund, an emergency PR push, a plunge in profits and the need for an internal probe that would face scrutiny in both technical circles and the court of public opinion. On the night of Aug. 23 presumably everyone at Samsung slept well.
While few business leaders will face the kind of disaster that Samsung has had to navigate, as leaders approach the new year and lay out plans for a new product launch or geographic expansion, it may not be a bad idea to ask, “What’s MY Galaxy?”
Whether you lead a company with global ties or a small department at a local family business, the exercise of planning for a disaster is both useful and educational. Most IT and customer service organizations have at least a disaster recovery plan — and perhaps even a backup bare bones facility. But I encourage leaders to run the drill for an incoming torpedo below the financial waterline. Do you know what your “Galaxy” is? Think more broadly than a product flaw.
Perhaps your biggest two competitors merging? A single large customer defecting? An executive leaving and taking key people to a competitor or perhaps even a startup?
Back in my organizational and process change consulting days, we used to run an exercise in advance of any change rollout that we called “Invite the devil to dinner.” Step by step we went through everything we could imagine that could go wrong, planned for how we would deal with it and tested what our back-out plan would be if we hit an insurmountable wall. Many of my clients then were banks and trading houses that had to be up and operational when the markets opened the next day. Time was not our friend, especially in an overnight IT rollout.
I am glad to say that it was the rare occasion when we needed those plans, and having them at hand was a lifesaver when we did. Ruminating about all the bad things that could happen had its rewards as many of the ideas for mitigation and prevention eventually became profitable initiatives.
As you begin to put a fine point on plans and initiatives for the new year, I encourage you to take some time to figure out what your “Galaxy” might be and see what ideas come out of imagining the response. My bet is that you, like many other leaders, will find some new projects for the coming year — and likely sleep better for it.