Samsung (SSNLF) is about to officially release the findings of its internal investigation of the potential causes for the Note 7 thermal runaway issues. Although the results of these tests have been widely reported elsewhere, the findings are still under publication embargo, so I’m not going to specifically confirm or deny anything in this writing that might be considered confidential or embargoed information. Instead, I want to explore a key takeaway from the analysis and emphasize a significant managerial flaw that is all too common in innovative organizations.

Background

When it was released in mid-August 2016, the Note 7 was the best handheld device Samsung had ever made. Unfortunately, soon after the release date, there were reports of Note 7s spontaneously exploding or catching fire. Samsung immediately issued a recall for the suspect phones and rushed replacement Note 7s to market. Importantly, the second batch of Note 7s contained batteries designed and built by a different battery supplier (Supplier B).

Almost unbelievably, within days of the replacement Note 7s hitting the market, reports of the replacement phones exploding or catching fire started to surface. These were new Note 7s with new batteries from Supplier B. In response, the FAA banned Samsung Note 7 devices on all airline flights, and Samsung had a public relations nightmare on its hands.

Samsung’s Response

Samsung’s initial responses to the issue are well documented elsewhere, so I won’t recap them here. Suffice it to say, the company went above and beyond to recall and get back every Note 7 it could. And then, management did what good management does: they launched a massive investigation to figure out what went wrong with the goal of preventing it from ever happening again. Which brings us to the present day.

Samsung built a remarkable facility to test tens of thousands of Note 7s and batteries from both battery suppliers. It hired three independent testing companies (UL, Exponent and TUVRhineland) and convened a battery advisory board whose members include Dr. Clare Grey, Professor of Chemistry, University of Cambridge; Dr. Gerbrand Ceder, Professor of Materials Science and Engineering, UC Berkeley; and Dr. Yi Cui, Professor of Materials Science and Engineering, Stanford University.

The official results of the investigation will be published on Monday, January 23, 2017. The conclusions will cite battery design and manufacturing issues (caused, at least in part, by process) as the main reason for the thermal runaways (explosions and fires).

(When available, I will link to official results here. In the meantime, if you want to know how lithium-ion batteries work, or if you are specifically interested in what might have happened, you can read When Phones Explode for a quick overview.)

Innovate or Die!

These days, consumers expect flagship mobile devices to feature super-fast, state-of-the-art processors; thinner, waterproof cases with smaller bezels; bigger, brighter, higher-resolution screens; longer battery life with inductive charging capabilities; and anything else that can help differentiate one high-end product from another. Samsung, Apple and every other mobile manufacturer are locked in a powerful innovation vortex from which there is no escape. Innovate or die. It’s that simple.

So it should surprise no one that Samsung asked its battery suppliers to make a super-small, super-powerful battery that could outlast an iPhone, best other Android-based devices and propel Samsung to the top of the smartphone world.

This required pushing the capabilities of lithium-ion battery technology to its limits, and it relied on a set of manufacturing protocols and processes that had been in place for years. Two trusted battery suppliers that had each delivered literally billions of batteries to specification were asked to push the envelope for the Note 7. What could possibly go wrong?

Relentless Product Innovation Requires Equally Relentless Process Innovation

Unfortunately for Samsung, the pressure to innovate its products did not allow it time to innovate its processes. This is the lesson Samsung learned that you can apply to your business.

If you are committed to a culture of innovation or if you are forced by market pressure continuously to improve your products, you must also innovate and continuously improve your business processes.

How are component parts specified, ordered, quality controlled, product tested, consumer tested, revised? What systems are in place from ten years ago (when every single supplier was going to not only fight for your business but also fight to keep it) that should be adapted to the way business is done today?

No matter what the product or service, the idea of partnering or outsourcing or vendor managing is more prevalent today than ever before. Was Samsung right to trust a “time tested” process with two different suppliers that had always delivered on time, on budget and to specification? Should Samsung have known there was a risk?

I don’t have enough information to answer those questions for Samsung, but I do have enough information to answer them for the processes we use at our company, and you have enough information to answer them for yours.

Thanks, Samsung, for showing us how expert management can quickly adapt an organization (even the size of Samsung’s Mobile Communications Business) to the relentless pace of change while innovating at the highest level. And for reminding us that in every aspect of every business, “the process is the product.”