These are stirring times in the mobile phone market. Samsung's long-awaited Galaxy Note 7, called by some a "phablet" because of its larger size and expanded capabilities that compare with some tablet devices, was launched in many markets only a few weeks ago. Apple is shortly to launch the iPhone 7 in hopes of reviving its flagging presence in the mobile phone business. And just last Friday (Sept. 2), Samsung announced that it was recalling all Galaxy Note 7s sold in many markets because of reports of exploding batteries.
The high-tech consumer-product business today is competitive, fast-paced, and exquisitely sensitive to customer attitudes. So when a serious and potentially hazardous problem crops up in a consumer product, a company's response can make or break the product, and even the company itself.
Samsung is facing a major challenge, in that the exploding batteries could hardly come at a worse time. New product releases are what consumer-hardware firms like Samsung survive on, and today's gotta-have-the-latest-and-greatest consumers demand them as often as advancing research and development can supply them. But every new design is fraught with potential risks: new suppliers, new technologies, and unexplored pushes on the design envelope. As power-hungry processors in consumer devices demand more energy, the batteries have to keep up. And while lithium batteries (presumably the type in the Samsung Galaxy 7) are by now entitled to be called a mature technology, they have a stubborn habit of reverting to the spoiled-bratdom of spectacular fiery failures, which according to Samsung has happened in at least 35 cases, though apparently no one has been killed or injured as a result.
So far, Samsung appears to have handled this crisis in an exemplary way. Here are three things they have done right:
1) Samsung acted quickly. The phone rollout was still taking place in many countries, and began only a few weeks ago in others, in late August. So it's likely that no consumer on the planet has had one for more than a few weeks. When the fires began, Samsung evidently has an efficient reporting system, perhaps using direct-to-consumer complaint lines and investigative teams, that got the bad news straight to the top of the firm fast. And upper management didn't hem and haw and try to deny things at first. They were the first to announce roughly how many known failures there were (around 35, out of several million sold so far), even before social media and other outlets had much of a chance to report the incidents independently. And they announced their actions in response to the problem simultaneously with admitting there was a problem.
2) Samsung acted decisively. They halted sales worldwide of the affected models. (Apparently the ones sold in China use a different battery that has so far shown no problems, so that market is unaffected.) And they promised that anyone who has bought a new Galaxy 7 with the problem battery will get a new one in exchange. Period. These are costly measures—they involve lost revenue from the hoped-for successful launch of the expensive phones (which retail in the US for about $700 each), and the hassle of exchanging suspect phones for new ones. Samsung will probably be setting up a massive recycling operation in the coming weeks to replace bad batteries with good ones, or at least to recover usable parts from the returned phones. At any rate, the recall is a headache of huge proportions. But Samsung's management decided it had to be done.
3) Samsung told the truth. As far as we know, Samsung has been entirely transparent and forthcoming about the nature of the problem. As I pointed out, their list of 35 battery failures is longer than any investigative reporter's list. Their information-gathering processes allowed management to get all the relevant facts quickly and report them to the public along with their actions in response. This is refreshing corporate behavior when compared to the way some firms have handled recall problems. The worst recent example is that of Volkswagen, which knowingly tampered with emissions-control software in its diesel-engined cars to fool government inspectors while polluting much more than the regulations allowed, and then denied anything was wrong for months before independent investigators contradicted the company's claims.
Samsung still faces a rocky road in the coming weeks. Apple is soon to release its iPhone 7, and if Samsung can't supply the market for Galaxy 7s fast enough it may lose some of its leading market share to Apple. But that is the nature of the consumer-market game. It's like a horserace that never ends, with this horse nosing out that horse for a while, and new horses coming in and old ones falling by the wayside.
In the midst of such fierce competition, it's easy to lose track of underlying priorities and, if you'll pardon the expression, eternal truths. Engineering tends to encourage compartmentalized thinking among some people. Engineers are usually pretty organized types, and it's easy to think of one's life as sorted neatly into work, play, personal life, and a little dusty box in the corner labeled "morality."
But engineering ethics doesn't work if it's treated as just one more specialized topic like Laplace transforms. When you need to do a Laplace transform, you haul out the tables or the software and do it, and the rest of the time you don't have to think about them. But ethics isn't like that. In the best case, one's ethics is the outgrowth of one's character, of deeply-ingrained habits of thought and behavior that guide actions.
In the case of a large corporation, the question of ethics is even more complicated. A firm's culture is like an individual's character. In a company with an ethical culture (not to be confused with the quasi-religion called Ethical Culture), certain acts are the kind of thing that will cause people to say, "We don't do that here." I don't know much about Samsung, although they do have a facility in Austin and we have sent several graduates of our Texas State University engineering program to work there, apparently with good results. But to judge by Samsung's actions in response to the exploding Galaxy 7 phones, the firm has done the right thing so far, and I hope it keeps up the good work when the next crisis comes along.
