Top 10 Bad Corporate Decisions

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Everyone makes bad decisions in life. Fortunately for most of us, the bad decisions we make aren’t broadcast to the world.

When you’re a major corporation and you trip and fall flat on your face for all the world to see? Heck, even that isn’t as bad as all the money you may lose your shareholders.

Some decisions, such as Decca Records choosing to sign The Tremeloes instead of a little band from Liverpool named The Beatles, wasn’t premeditated, focus-grouped corporate decision so much as just a bad choice. OK, that one is considered probably the worst choice in the history of the music industry, but perhaps belongs in a class by itself and so isn’t on this list.

You’d think that with all the brain trust many corporations have, they’d be less likely to make bad decisions. But when they stumble, they stumble BIG.

Here’s a look at 10 of the worst corporate decisions ever:

Since it ain’t broke, let’s fix it.

new-coke

The decision: Take Coca-Cola, pretty much the undisputed king of colas, change the formula and rebrand it “New Coke.”

Why this was a bad idea: Did we mention Coca-Cola was pretty much the undisputed king of colas? Sure, upstart PepsiCo that was doing all these blind taste test commercials – the Pepsi Challenge, anyone? – and claiming superiority, but was still a distant second. Instead of fighting back and doing its own taste tests and focusing on the decades upon decades upon decades of satisfied Coca-Cola drinkers, the company trashed its vaunted special formula, pissed off every single one of its customers and offered up a cola that was arguably worse tasting than RC Cola.

Coca-Cola lovers hunted down the last six-packs, cans and bottles of the original formula, hoarding them. New Coke was an unmitigated disaster. Some have offered up the theory that New Coke was purposely awful so that Coke could still change the formula from sugar to corn syrup without alienating as many customers as it would have had it just made the change in one step (sugar is still used in the formula in most countries around the world).

Thing is, Coke’s brand was irreparably damaged during the New Coke debacle, and though it’s still No. 1 in the cola wars, Coca-Cola came out of the skirmish greatly weakened and looking as if its executives didn’t know what they were doing. Probably better to believe it was a misstep than purposely done. I mean, everyone makes mistakes.

We’re IBM! Who is this Bill Gates guy anyhow?

bill_gates

The decision: IBM paid Microsoft a one-time fee to develop PC-DOS rather than securing all rights to the system, allowing MS-DOS to be developed right alongside it.

Why this was a bad idea: Hardware is easy to clone, as has been proven over the years since 1987. Software, not as easy, though the open-source revolution in recent years has begun to challenge that belief. But back to the 1980s – IBM was synonymous with personal computers. Heck, IBM was synonymous with computers, period. Microsoft bet on the market changing, giving software developers the ability to sell the same programs to owners of all different brands of computers, clones of the IBM.

Guess who was right?

Of course, as mentioned, the open-source revolution that includes Linux, Firefox and Open Office now threatens Microsoft’s dominance in much the same way. It hasn’t happened yet, but might Microsoft fall victim to the same thing as IBM? Cheap (in this case, generally free) clones? Check back here in another 10 years or so.

Let’s annoy all our users!

microsoft-bob

The decision: Microsoft Bob.

Why this was a bad idea: Look, Microsoft gets trashed a lot simply because it’s the BMOC. When you have a virtual monopoly on the market, people are going to hate you, no matter what. So why give people more fodder for the hate mill? Microsoft Bob, which some have dubbed the “idiot cousin” to Windows, was supposed to be a user interface to simplify Windows 3.1 for computer novices.

It came out in … wait for it … 1995.

Bob makes it on to most “worst tech products of all time” lists and even though he was sort of lost in the shuffle surrounding Windows 95, some of his bits and pieces survived for way too long. Remember the totally obnoxious paper clip, Clippie, who popped up all the time when you tried to use Microsoft Office? Blame Bob.

If you’ve never heard of Bob, consider yourself lucky. But we bet you experienced Clippie – and wanted to smash your computer’s screen every time he popped up.

Clones? We don’t need no stinkin’ clones!

Apple chose Power Computing to build the Mac clones. PC distributed anti-Intel posters as part of their marketing campaign.

Apple chose Power Computing to build the Mac clones. PC distributed anti-Intel posters as part of their marketing campaign.

The decision: Walking out on talks with Gateway 2000 to license Mac OS sales.

Why this was a bad idea: Microsoft became the behemoth it is today in large part due to this misguided decision. Remember how IBM thought the future was all about hardware, not software? Apple didn’t completely believe this, thus the continually innovative and easy-to-use Apple operating systems.

But if Apple had been willing to charge a slightly smaller licensing fee for its OS to PC makers such as Gateway, it could have easily gained market share on Microsoft and made it a truly two-company battle.

Sure, Apple gave licensing to a few smaller clone makers, but none were truly mainstream and most people, when they buy a Mac, are going to spend the money for a Mac, not a clone, because the pricing isn’t different enough.

Perhaps Mac earns more profit more per computer than the Dells or Gateways of the world, but when it comes to volume, it’s a different story.

British Multicultural Airways

British-Airways-Ethnic-tailfin

The decision: Paint ethnically inspired designs on the tail fins of all its aircraft.

Why this was a bad idea: When the prime minister publicly disparages you for being unpatriotic and not painting the Union Jack on your airplanes, going so far as to cover a model with a handkerchief, chances are there are a lot of regular folks who are going to feel this way.

Sure, once upon a time, the sun never set on the British Empire. But when this happened, in 1997, there weren’t many remaining bits of Empire, and many citizens were rather xenophobic.

The decision to reflect the geographic/ethnic diversity of BA’s destinations went over like a fart in church. Two years later, BA stopped the practice, though the existing ethnic tailfins were not replaced. Fast-forward another two years, and those tailfins were painted over with the British flag.

CBS & NBC fumble the ball

MondayNightFootballTurf

The decision: To reject the right to broadcast Monday Night Football.

Why this was a bad idea: Sure, in 1969, football wasn’t the ratings juggernaut it is today. But it was gaining in popularity.

First broadcast in 1970, Monday Night Football is the second-longest running show in prime time television, with only 60 Minutes surpassing it. It’s also incredibly popular, and for years, CBS and NBC virtually gave up their Monday night programming against the ABC broadcast because it was unbeatable. The show has since moved on to ESPN, but cemented ABC Sports as a top player and gave the youngest of the (then-three) broadcast networks a solid ratings base.

Western Union doesn’t pick up the phone

Bell-Speaking-Telephone

The decision: To brush off Alexander Graham Bell’s telephone invention and pursue its own version, in 1876.

Why it was a bad idea: Do you have a telephone? When was the last time you used Western Union?
There are zillions of stories out there on the Internet quoting Western Union exec William Orton as saying, “What use could this company make of an electrical toy?” and just blowing off Alexander Graham Bell. But it’s not quite as simple as that.

First, a tiny bit of history: Western Union owned the network of telegraph wires and machines across the nation, and telegraphs were, really, the first means of instant communication over thousands of miles. We all know how that turned out – Western Union became the primary way people wired money across the country and lost out as a means of communication and now we all have telephones in our homes and/or our pockets.

But though Orton may have said that, or something similar, in a letter to Bell, it more likely was a means to hide the fact that they were trying to do the same thing – or would try to do the same thing. Western Electric, the company that provided the electricity for the telegraph network, developed a working telephonic instrument about the same time as Bell, and Western Union and Bell dived into a years-long patent battle with Bell, as you know, emerging victorious.

Don’t call us, we’ll call you


The decision: M&Ms could not be featured prominently in Stephen Spielberg’s cute little alien movie, E.T.

Why this was a bad idea: Hardly anyone heard of a new snack, Reese’s Pieces, before the smash hit was released. In the months afterward, M&M’s were in danger of being outsold by the candy-coated peanut butter bits.

Hershey’s helped promote the film, but probably got more out of it, by being able to market the snack as “E.T.’s favorite candy.”

Look! It’s a phone. It’s game system. It’s a failed product.

Nokia-N-Gage

The decision: Release the N-Gage, a mobile phone/handheld game system, in 2003.

Why this was a bad idea: The buttons were designed for phone functionality, the device itself, for gaming. So it was hard to play games on it and uncomfortable to use as a phone. Way to go!

The device was Nokia’s attempt at gaining market share from Game Boy Advance players – giving them an Advance-like device that you could call your friends on. After less than two years, Nokia said the games would be moved to a series of smartphones, which finally came out in 2007. The N-Gage application came out the next year and on Oct. 30 of this year, it was announced there would be no more N-Gage games produced. The service will cease completely at the end of next year.

What are you gonna do? Start your own network?

yes-network

The decision: Not to pay a gazillion (approximate figure) dollars to George Steinbrenner and the Yankees for the rights to broadcast the Bronx Bombers in perpetuity.

Why this was a bad idea: Granted, a lot of people outside of New York City, especially if they’re not sports fans, may not be aware of this corporate decision. But it had a much wider-ranging effect than just how baseball fans in the Big Apple could watch their favorite (or least-favorite, as the case may be) team.

When MSG, which stood to still make a great deal of cash on the deal, turned down the offer, Steinbrenner figured he’d just start his own network. The YES Network was born, and has proved to be profitable. That, in turn, has revolutionized sports television, convincing many other sports franchises to develop their own networks, alone or in conjunction with other teams in their cities (the NY Mets now have their own cable network, as do the Cleveland Indians). Thing is, MSG and Steinbrenner already had revolutionized the business of sports when the Yankees became he first major-league team to sell cable TV rights, back in 1988.

Written by Amy Vernon


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9 Comments

  1. I watched years ago on the History Channel the story of the Coca-Cola Company. At one point when the Pepsi Company wasn’t doing well they approached Coca-Cola to see if they wanted to buy them. Coca-Cola wasn’t interested. I also believe that the inventor of the copy machine went to the Eastman Kodak Company to see if they would be interested in his invention,Kodak said no & Xerox was born.

    • Actually Xerox people approached IBM and IBM said no. IBM at the time was rolling in cash. The whole thing of the acquisition manager rejecting Xerox was filmed (yes filmed) and claimed that the market would be quickly saturated at around 5000 machines and implode / fade away or remain as a niche market. Xerox then found enough cash and went ahead and did it themselves.

      Then their awesome Xerox R&D came up with what is now know as the windowing OS (used in Macs and PCs) but fail to patent it and Apple stole it right out.

      Kodak screwed up by not inventing in the digital transition and trying to force film to save the film business.

  2. This is one entertaining, life-changing, up in your face article. It's so clear, I can see it

    for miles and it's so cute and quippy, I was never bored. It was so rich and dense with

    facts that I couldn't help but smile.

    Can I use this article in my copywriting class, with the author's bio, of course.

    Congrats, it's just too hot. One cliche deserves another. "I wish I had written it."

    Martha Tucker

  3. Know anyone that plays World of Warcraft?

    In 1995 Bobby Kotick called Davidson & Associates crazy for paying $7 million for Blizzard, saying they were nothing more than a "contract developer".

    In 2007 Bobby Kotick bought Blizzard for roughly $7 BILLION.

  4. Great list. I would also add the British Airways’ decision to rebrand in 1997 right at the top. They spent a fortune repainting tails after 2 years!

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