Your Nominees Wanted: Biggest Corporate Blunders

[tsipple]

I thought it might be fun on Halloween to look back on the biggest corporate blunders in history. Your nominees would be most welcome. Here are a few to get us started.

Baywatch. NBC canceled Baywatch after one season then sold the rights to David Hasselhoff, one of the stars of the show (and not a wealthy man at the time). Hasselhoff then revved up the bikinis. Baywatch holds the record for the most worldwide viewers of any television program, and it launched the careers of numerous actors, including Pamela Anderson.

Microsoft. IBM went to several companies, including Microsoft, in 1980-81 to obtain an operating system for its new IBM Personal Computer. Yet with all the lawyers at its disposal, IBM was outnegotiated by Bill Gates. IBM failed to get a nonexclusive license to DOS, and Microsoft retained ownership of the software. IBM compounded the error by not buying Microsoft outright at several opportunities. Microsoft is now the largest and most profitable technology company in the world with a market capitalization well in excess of IBM's.

Bhopal. In 1984, an accident at the Union Carbide plant in Bhopal, India, killed thousands of people immediately and made tens of thousands seriously and chronically ill. The plant now sits derelict and continues to poison the area.

WNBC New York. NBC got its start in radio of course, and WNBC was the company's flagship station. NBC hired an on-air personality by the name of Howard Stern, and he achieved new ratings records for the station. NBC management couldn't tolerate Stern's on-air views, so NBC fired Stern. WNBC, formerly a cash cow, almost immediately fell on hard times and, through a serious of ever-retreating corporate actions, NBC Radio is no more. Other companies such as Clear Channel and Stern's current employer Infinity (now part of Viacom-CBS) dominate the radio industry and reap all the profits.

Texas Instruments. TI was perhaps the first company to introduce a 16-bit microcomputer, the TI 99/4, at a time when 8-bit microcomputers were just getting popular. Yet, despite this technological advantage, the TI 99/4 which debuted at over $1000 per unit sunk to $99 within one year. Consumers were still not impressed, and TI exited the computer business.

Edsel. A classic corporate blunder.

That's a start. Anyone got some other good ones?

[flamingyouth]

1. New Coke

[On the Road]

2. Acquisitions Galore

Exxon Office Automation
IBM buying ROLN

and in sheer dollar volume:

AOL Time-Warner

[Deja Q]

3. I like the AT&T blunder

The idiot CEO was fired, but was given a $26 million severance package. (this happened in 2002, as I recall...)

Do note: $26 mil will support one human being from womb to the tomb and beyond.

Obviously, I don't use AT&T for anything anymore.

[happyslug]

4. Blunders?

I question that term in some of the cases you cited. Some of those decisions were bad do to bad luck, some were good decisions for the Corporations who did them (THrough looks like a bad decision now) and others Bludders were just made do a a belief that it would be better to invest in something else).

An Example of just bad luck is Edsel, if it had been introduced just two years before (or about 5 years after it was in 1959) it would have been a great hit. The Edsel's problem was that in the year it was introduced the worse recession between the Great Depression and Ronald Reagan's Presidency occurred. Large, high end cars do not sell that well (In the same year Nash introduced its small compact car and it was a great hit, small car, small costs to run and maintain and small price, perfect car for introduction in the middle of a recession). As the President of Nash Motors said at the time, the Nash Rambler was the perfect car for the time period, a product of very sharp people and a good bit of luck (i.e. the recession).



A example of a good decision to the Corporation which looks in hindsight to be a bad decision was IBM’s view to DOS and the whole concept of the personal computer. IBM was the greatest Computer company of the 1950s and 1960s (and from 1900 till 1960 the greatest non-computer business automation company). IBM dominated its market. IBM’s market was one of dealing with medium and large companies (for example very few IBM typewriters were sold to indivuduals in the 1950s and 1960s, Smith-Corona and Brothers dominated the Personal sales of Typewriters, while IBM dominated typewriters sales to Corporations). IBM’s salesmen were the best in IBM’s market and knew their product and their customers.

Apple had invented the concept of the personal computer in the early 1970s. By 1980 these personal computers were moving into business, mostly small businesses or as secondary computers in medium and large companies. IBM was not geared to exploit this new market and their new it. Their salesmen were NOT the type to go set up a computer and leave the people use it without service. IBM could not sell a computer and drop it off for the customer to assemble and use. IBM sold not only Computers by service of that computer and integration of that new computer into the customer’s Computer information needs. The personal computer was to small a market for IBM to be concerned about (and to small a profit margin for IBM). Thus IBM wanted to be part of the new emerging personal computer business, but did not want it to interfere with its main frame computer sales nor violate Anti-trust laws (A major concern with IBM given the attitude to IBM by the Government given its dominance of the Computer industry at that time).

Thus IBM had a problem, Simply it was as follows:

1. IBM’s customers wanted personal computers,
2. IBM did not want to look like its was trying to stop the growth of Personal Computers (Antitrust threats and wanted to keep its customers happy).
3. IBM knew that the market for Personal computers would be a small profit margin market, a type of market IBM had traditionally stayed out of.
4. Integration of the Personal Computer with main frames (as opposed to the sales of the personal Computers themselves) would provide more of the traditional service (and profit) IBM had provided for large and medium size companies since its foundation around 1900.

Thus IBM did not want to get in the personal computer market (except as part of its sale of larger computers) but felt it had to keep its customers happy. Thus IBM’s decision on the original PC and PC jr and its decision to keep DOS open format (To avoid both Anti-trust action AND to encourage as many small companies that wanted to enter into providing programs for DOS computers). Thus open format for DOS and permitting anyone to write for a IBM personal computer became the policy of IBM. This both increased the sales of DOS computers at the expense of Apple, AND encourage people to buy IBM compatibles for their were integrateable into IBM larger computer systems.

Looking back at that decision form 2003 it looks like a bad decision, but in 1980 it was a good decision. IBM could NOT have expanded personal computer use as much as personal computers did expand in the 1980s if IBM had NOT done want it did. IBM’s decision probably expanded Computer use by 4-5 years (Unlike Microsoft’s activities in the early 1980s to delay the Internet till Microsoft was ready to exploit the net, activities that delayed the spread of the net about 1-2 years). IBM corporate culture of 1980 could NOT expand the use of Personal computers. If IBM had tried to do so, only Apple would have been expanding personal computer use (and at prices that would have delayed people buying a computer). Thus the decision was a good one for IBM in 1980, even through it looks bad from the year 2003. Given the Corporate Culture of IBM of 1980 NOT entering the Personal computer niche was one of the best decisions ever made by IBM.


Now as to a decision that was made because a Corporation thought investing in something else would have been better you do not give an example. I will. General Electric’s decision in 1967 to invest into a lease/buy back company instead of buying the right to consumer video tapes.

Ampex (an American Company) had invented the Video Tape in 1958. The Tape quicky dominated the American Television industry. Almost anything you saw on Television from 1958 till today is on Ampex Video Tapes (Through I see DVDs slowly replacing them even for Television Companies in the next few years). In 1967 Ampex approached GE about marketing the Tapes to Consumers. Ampex was a small company and knew it did not have the financial resources to develop the Consumer market for Video Tapes, thus it approached GE about doing so. GE said no, why would someone want to tape programs from Television? GE decided to use the funds to buy a leasing company (Which GE sold at a lost the year Sony came out with its Beta Tape. A year after Ampex’s patent had expired).

[TrogL]

5. Apple not encouraging clones

If Apple had allowed knockoffs and licenced the finder, they could have given Windoze a run for the money.

[TrogL]

6. Apple didn't have a plan B

if they lost the Windoze lawsuit.

[happyslug]

7. VW and its "Thing" in the mid-1970s

In 1973 VW decided to introduced into the American Market its updated version of VW's WWII Kubelwagen. The Kubelwagen was a two wheel drive off road vehicle used by the German Army during WWII and in the 1950s and 1960s. It was built on the same assebly line as the VW Bug.

VW started with a great Ad campaign, that just drove up interest in the Vehicle and than failed to deliver. People waited months for one, and than decided to go buy a Jeep instead.

The Ad Campaign was one of the greatest Ad campaign ever for A new Car, but the Failure to provide the product killed the Vehicle. Do to this failure the "Thing" was only imported for two years. Great two wheel drive car, unique looking and culd take a beating, but you still have to have a produce to sell the product.

http://home.ptd.net/~peyer/faq.html

http://www.frontiernet.net/~dooda/thing.htm

[swinney]

8. One Federal Judge did much damage

He broke up AT&T.

[Lydia Leftcoast]

9. The VCR

RCA actually invented the VCR in the late 1960s, but it was the size of a suitcase,cost $2000, and recorded only 30 minutes of tape. After it failed in the marketplace (can't figure out why), RCA decided it wasn't worth developing any further.

Sony then acquired the technology and made the VCR smaller, cheaper, and able to record on longer tapes.

Unfortunately, Sony then made its own corporate blunder by not licensing its Betamax technology to other companies, and eventually, VHS won out.

[depakid]

10. Digital Equipment Corporation

failed to anticipate and capitalize on the potential of the personal computer - I mean these guys could have been MICROSOFT and IBM combined, had they played their cards right. Instead, DEC sold what was left of its assets to Compaq in "97.

Classic Quote:

"There is no reason anyone would want a computer in their home." -- Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977