Racing to the market may have burned Samsung twice. First, a rush to beat the iPhone 7. With a technologically superior, the Galaxy Note7 might get the company into trouble. In the first place, by shipping out a phone. Still, no one realized it had the potential to explode. The problem has compounded with a failed recall, culminating in a second callback and the cessation of the Note7 altogether. According to a New York Times report, the company still doesn’t know why the phones are catching fire. Engineers could not duplicate the exploding phone issue, which was wrongly pegged on faulty batteries. Samsung recalled the originals and shipped replacements, then they started to explode. According to the report, Samsung’s corporate culture may have been part of the problem.

Two former employees, fearing retaliation from the company, were not to be named. But described the workplace as aggressive with the top-down approach. Where orders came from people above who needed to understand how product technologies worked.

Communications Offline

The report revealed that Samsung testers were to keep all communication offline to avoid lawsuits with subpoenas. If that extended to electronic record keeping, managing such a technologically complex engineering challenge would have been a nightmare. At this point, the main issue for Samsung is finding a solution to convince the public that future smartphones will be safe. Early next year, we’ll likely see a Galaxy S8, and the company will have to contend with a skeptical public that may have moved on to other phones.

Why this matters: This incident will be studied in business school for years. In rushing to market with the original recalled phone, Samsung clearly missed what turned out to be a catastrophic problem. Ending the Note 7 was the right move. Giving Samsung a chance to reset, diagnose the problem and try to reboot for future phones.