Samsung Sacrificed the Note 7 to Save the Company

Samsung has killed the Galaxy Note 7. It is writing off $2.3 billion in the third quarter due to the cancellation of the highly touted phone. From my perspective, it was a smart, wise and cost-effective decision. Samsung sacrificed the Note 7 to save the company. The decision was not about the Note 7 itself, but about the brand and the company’s relationship with its customers. It is bigger than one product.

A company’s brand is the promise it makes to the customer. The depth and resilience of the brand is how it keeps that promise. We know that every brand makes mistakes. It’s how a company chooses to deal with those mistakes that can maintain — or demolish — its credibility.

Samsung is a huge, multinational company with products, programs, and services across many market segments. It rolled out the Galaxy Note 7 with much hype and fanfare, only to quickly find out it had a problem. Some of the phones caught fire or exploded. That was not the sizzling type of launch it was seeking. Early on it thought it was a simple issue of a battery vendors which delivered an inferior product. Simple fix, right? Not so, because the replacement phones with the new battery had the same problem. It was then made clear that Samsung didn’t know the root of the problem.