20 Of The Worst Business Decisions Ever Made
Some things can seem like a good idea at the time, but in retrospect, it is a wonderful things. Having a business is all about making decisions. In business, you can’t expect to be perfect all the time. Some of your decisions will be great, and some will not. 🙂
Here are 20 of the worst business decisions ever made to illustrate that point, and we have added a mention of retail mistakes that came about due to the pandemic.
We’ve not these bad business decisions in a particular order; take a look:
1. Somebody Should Have Phoned Home
In 1981, Amblin Productions called Mars and had a proposition for them. They said they would use Mars’ M& M’s in their film to promote their movie on their packaging. Mars gave them a straight-up no, so the company used Reese’s Pieces instead.
The film was ET, which grossed nearly $800m en route to becoming one of the most influential films in history. Reese’s Pieces saw a 65% jump in sales months after ET was released as an upshot! Those contributions played a massive role in allowing the Hershey Company to grow from strength to strength. Over three decades, much of their success can still be attributed to this particular product placement.
Quite frankly, the deal can be considered out of this world! Still, M& Ms aren’t doing too badly despite the notable blunder.
2. NBC and CBS Pass On Monday Night Football
In the late 1960s, America loved baseball. However, football was fast becoming America’s passion. Commissioner Pete Rozelle approached NBC and CBS to see if they wanted to strike up a contract. He could see the value in the show Monday Night Football. Both networks rejected the chance to strike a deal, as they didn’t want to sacrifice popular shows like the Doris Day Show.
Monday Night Football became one of the longest-running, highest-rated TV shows. Nowadays, ESPN pays close to $2bn per year for NFL rights, with Monday Night Football placing itself as the gem in the crown. The broadcaster still manages to churn out such high profits from the weekly show underlines that NBC and CBS dropped the ball.
Conversely, CBS brought the Doris Day Show to an end in 1973.
3. Snoozing Motorola
Motorola used to be on top in the cell phone business; remember their Razr phone? However, they waited a little too long to release their smartphone version, allowing iPhone and Blackberry to become the new ones to watch.
Instead of focusing on customer experiences like they should have been, they focused on the phone’s aesthetic appearance. Consequently, the company’s shares fell by 90% between October 2006 and March 2009. This equated to company losses of over $4.3bn! By January 2011, the business had become defunct after over eight decades in the industry. “Hello, Moto” had become “Goodbye Motorola.”
These days, Motorola Mobility is owned by Lenovo following its purchase from Google in 2014. The Motorola brand is still hoping to one day reclaim the throne. Unfortunately, those dreams look very unlikely in a world dominated by Samsung and iPhone. They had the high ground while entering a golden era for cell phone technology. Failing to capitalize is one of the most significant business errors of the century.
4. ABC Says No To The Cosby Show
ABC was the network that decided to take on Monday Night Football. The weekly sports show was undoubtedly their most popular program by a considerable distance. Yet, they remained in third place in the network rankings and needed something else to help them win the rating war.
The Cosby Show was pitched to them, but the Entertainment Division President turned it down. They claimed Cosby didn’t have a pilot or a script to show (whether this is true or just an excuse, nobody knows). The program was a hit almost instantly, ranking number 3 in the Nielsen ratings and then taking the top spot for the next five seasons. This catapulted NBC, who accepted the show, to the number one spot among the other networks. The influence of their hit show could not be emphasized enough.
While ‘the Cos’ was drawing in up to 30 million per night, it’s fair to say ABC wasn’t. With the Cosby Show and (CBS show) Magnum P. In winning the war, their presence in the most valuable time slot became almost obsolete. The head of entertainment called comedy on network television dead at the time of rejection. Perhaps the ABC man should have gone back to school.
5. The Beatles Rejection
The Beatles auditioned at London’s Decca Records before they were big, hoping to secure a contract. The executive in charge of talent said their sound was no good. He declared that they sounded too much like ‘The Shadows,’ supposedly a popular band at the time.
Executives went as far as to say that groups were out, especially four-piece groups with guitars. He signed a local act from London instead; Brian Poole and The Tremeloes. Meanwhile, the Beatles were signed by Brian Epstein and went on to become the best-selling band in history. Moreover, the Fab Four started a revolution that changed pop culture forever.
Billions of Beatles albums have since sold worldwide, and they continue to sell to this day. Meanwhile, I had to Google Brian Poole and the Tremeloes to find out their best song was Twist and Shout. Unfortunately, the best version is by the band that Decca Records rejected.
6. The ‘Novelty’ Telephone
In 1876, Western Union boasted the telegraph, the most advanced communication tech available. The company president, William Orton, was offered the patent on the telephone for $100,00 (the equivalent of around $2 million right now). He didn’t only reject it; he dismissed it completely.
He thought it was ridiculous and wrote personally to Alexander Bell, asking what they could do with an electrical novelty toy. He also said it had no commercial possibilities. It took only two years for the telephone to take off, and Orton spent the rest of his life unsuccessfully trying to challenge Bell’s patents.
As for the novelty toy, it changed global communications forever.
7. NEW Coke
We all know what Coke tastes like. Many people have an almost emotional relationship with the drink and the brand. Coke had a centennial anniversary in 1985, and to celebrate, they came up with ‘New Coke.’ Most of the formula was the same, but there must have been a notable change in taste as the sales dropped by 20%.
Many customers were perplexed by the change, mainly as the company had already established itself as a global giant. It didn’t take long before Coke realized its error and returned to the formula and taste people love and know best. They even slapped ‘Classic’ on the can, which many believe saved the brand. The Coca-Cola Company defiantly continued to produce the new version for some years before admitting defeat in 2002.
Thank God they did; otherwise, we could all be drinking Pepsi.
8. Greedy Fox
Although merchandising wasn’t very big at the Star Wars release, 20th Century Fox still made a huge mistake. Worse still, they have been paying for it ever since. They got George Lucas to take a pay cut of $20,000 in exchange for all of the merchandising rights to Star Wars and all of the sequels after that.
Since then, Star Wars has become the most iconic film franchise ever. The initial trilogy has grossed billions, while the ninth blockbuster film is currently in production. Meanwhile, merchandise sales have earned billions more, making Lucas worth a reported $5.2bn himself.
Fox missed out on a commercial phenomenon for the sake of twenty grand.
9. Blockbuster Would Rather Not Netflix and Chill
In 2000, Netflix co-founder Reed Hastings asked Blockbuster executives to publicize it in their stores. Netflix proposed that they would help Blockbuster to sell their brand online too. This essentially equated to Blockbuster being offered Netflix for a mere $50 million. Blockbuster was quick to say no and slam the door in Hasting’s face. Bad move.
Less than a decade later, in 2010, Blockbuster filed for Chapter 11 bankruptcy protection. In a cruel twist of fate, the popularity of Netflix had been the main contributing factor. Nowadays, Netflix has over 90 million users worldwide and boasts assets worth over $13.5bn.
Blockbuster, meanwhile, has closed operations in most major territories. The once colossal brand is now resigned to appearing in internet memes about life in the 80s and 90s.
10. That’s NOT A Kodak Moment
When was the last time you spotted somebody with a Kodak camera? If Kodak had more urgency about them, we could all be using Kodak smartphones right now.
The company has the credit for being the first to hold a digital technology patent (which also has much to do with the smartphone) in 1975. But the camera giant decided to sit on their hands instead. They finally decided to pursue digital photography when it was too late, leaving far too much ground to make up. They filed for bankruptcy in January 2012.
At least we have some pictures to remember them by. If they’d pursued the digital tech they invented, they’d still be at the top of the photography pyramid.
11. They Should Have Asked Google What To Do
By 1999, Google was already fast establishing itself as one of the major search engines. With the internet increasing around the turn of the century, it didn’t take a genius to realize a $750,000 investment would pay dividends. Sadly for Excite, they still passed up that golden opportunity.
Google is one of the biggest companies on the internet. It’s the second most valuable brand on the planet and is worth close to $200bn. Meanwhile, the operation continues to buy out smaller ventures and grows yearly.
Ironically, only a quick Google search confirmed that Excite still exists. Considering it was once one of the leading operations in early internet technologies, its limited success is astonishing. The fact it still hasn’t discontinued its search engine is almost a parody of its errors. On the flip side, it’s a good content aggregator. Not everyone wants to use one service, so Excite is an alternative.
12. Microsoft Deemed Too Steep
In 1979, Bill Gates was a fresh-faced 23-year-old set to achieve the status of a billionaire. Ross Perot, whose electronic data systems were worth $1bn, was offered to buy Microsoft for $40-$60m. Despite viewing the company as an attractive prospect, the entrepreneur refused to meet those prices. He said it was too steep, especially as the company had not yet reached its peak.
Perot was right. Microsoft hadn’t reached its peak. According to Forbes Magazine, the computer giant currently has a market capitalization of around $343 billion. It is widely accepted as one of the most influential brands on the planet.
Ross Perot has since been quoted saying it is one of the worst business decisions he ever made. Cheers, Ross; we couldn’t have worked that one out ourselves.
13. J.C. Penney Gets Rid Of Their Fake Pricing
The pricing tactic of J.C. Penney can be frowned upon, but it certainly helps them sell clothing. They used to make sure their items were all marked down from a higher price, although the item would never have been sold at that price in the first place. This made customers believe they were getting a real bargain instead of cheap clothing.
The New CEO in 2012, Ron Johnson, decided to make J.C. Penney look ‘less desperate’ by starting a new, more honest pricing system. This didn’t go down well with J.C. Penney fans, who complained over the internet. This harmed sales figures and brand reputation in one fell swoop.
Johnson was fired after 17 months, and J.C. Penney brought back their fake pricing system. Perhaps honesty isn’t always the best policy.
14. The Death Of MySpace
Before Facebook, Twitter, Instagram, and all of the popular networks, there was MySpace. The network went mainstream in 2004, with 1 million users just one month after it was launched. Tom Anderson was their first-ever social friend for internet users of a certain age. Moreover, his goofy profile pic haunts are to this day.
Rupert Murdoch, News Corp Billionaire, bought it and attempted to make it too profitable too quickly. Essentially, over-saturating the site with annoying ads would be its downfall. The year 2008 was Myspace’s peak, with 75.9 million unique visitors. But it just couldn’t survive following the launch of Facebook, especially as the ads alienated users.
Murdoch sold Myspace in 2011 for just $35 million after buying it for years for $580 million. The tycoon has made many significant decisions in his time; this was not one of them.
15. Edwin Drake Fails To Patent His Oil Drill
You may not know Edwin Drake’s name, but in 1858 he could have been one of the wealthiest men in America. He was determined to find a way to get to the oil that everybody wanted. So he partnered up with a blacksmith from the area, and together they made a drill that did just that.
It took them weeks to develop the perfect design, which eventually helped them get to the black gold they desperately wanted. There was just one major problem; Drake hadn’t secured a patent. Despite his success, he was later fired and then lost all his money on Wall Street.
Failing to secure a patent on his drill has cost Drake and his family millions. Meanwhile, the oil industries are worth billions, partly thanks to the Drake legacy.
16. Schlitz Beer Goes To…Schlitz
In the 1970s, Schlitz was one of the biggest beer manufacturers. They came second only to Budweiser and boasted a rich history stretching back over a century. Robert Uihlein, Jr decided to use cheaper ingredients to increase production speeds to meet growing demands. Sounds good on paper.
Unfortunately, even a drunk person couldn’t handle the resulting product. The beer started forming floaties in the bottom, which would then conge into thick mucus. Schlitz didn’t recall these beers, even after realizing the terrible mistake. They eventually gave in, but not before 10 million cans had been shipped. By this time, the damage had been done.
The company and its assets were sold as profits sank to the bottom of the barrel. Considering the gains to be had by some beer manufacturing giants, the Milwaukee company had a shocker.
17. Atari Doesn’t Like Apples
Nowadays, Apple is the biggest brand on the planet. But once upon a time, the operation was completed from a garage. During those humble beginnings, Steve Jobs and Steve Wozniak wanted to sell their personal computers to Atari. However, the then-computing giant rejected the offer.
The two Steve’s said Atari could have the computer built from their parts and asked to work for Atari instead. They still said no. After some rocky moments during the first 20 years, Apple became the biggest computing and consumer electronics brand. Atari, meanwhile, is still best known for Pong.
Atari is still in existence, but it never truly recovered from the video gaming crash of 1983. If only they’d branched out by taking the Apple.
18. The M*A*S*H Drop Out
In 1972, M*A*S*H was a surprise hit for 20th Century Fox. However, a few big stars dropped out after a couple of seasons, which made Fox panic. They decided the show wouldn’t live much longer and sold rights to the old seasons to various local TV stations for $25 million.
The show’s popularity didn’t fade, and the show continued for a total of nine years and 251 episodes. Television stations raked in $1m per episode, while Fox Television didn’t see any revenues. Moreover, reruns of M*A*S*H are still broadcast even to this day.
In fairness, though, at least the production company provided great episodes until the end.
19. Quaker Oats Buys Snapple
Buying out a company for $1.7bn is a brave call at any time. Doing it when it’s reportedly worth less than that figure is even more heroic. However, when the brand in question is already in free fall, it crosses the bravery line into stupidity. That’s precisely what Quaker did with Snapple.
The food company couldn’t save the floundering Snapple brand. They messed up the branding and couldn’t persuade distributors to keep Snapple despite their offers and to stockpile. This led to it entering dollar stores while vast quantities ended up in landfills.
Snapple was being given away on the street for free as sales still plummeted in 1996. Eventually, Quaker sold the brand to Triarc for $300 million. That’s $1.4 billion less than they paid for it 28 months previously.
20. The K-Mart Wal-Mart War
The war between K-Mart and Wal-Mart embodies the importance of customer service perfectly. As the two companies went head to head in the 1980s, K-Mart went for an aggressive publicity campaign to raise awareness of their store. Meanwhile, Wal-Mart (not having the cash to do the same) focused on their stocked shelf efficiency and quick checkouts instead.
Wal-Mart won the war, and K-Mart hasn’t been able to keep up since. Today, Walmart is far superior, with over 11,000 stores and 2.3 million worldwide employees. Despite losses in recent times, it generates nearly $500bn in revenue. In comparison, K-Mart draws in around $25bn from 735 scores.
K-Mart had all the assets to win the war but was let down by poor tactics. Subsequently, they couldn’t find a way through the Wal.
No one can expect to make the right decision all the time. However, it shows that a bit of curiosity, open-mindedness, and a little less rigidity and stubbornness could take you places! These decisions may have been some of the worst ever made by some entrepreneurs, but they turned out to be pretty good for others!
2020 – what a year for the retail sector!
Business mistakes are not always due to incompetence; sometimes life happens, as has been the case with the Coronavirus pandemic. Events like COVID-19 may become more prevalent now, and as such, business owners can mitigate the risk. However, a year ago, very few businesses in the retail sector were fully prepared for what happened with lockdowns and restrictive trade. Retaildive has written a post on five of the worst decisions in the retail industry due to the pandemic, and on the list is Sephora’s 100 new stores and four more errors that were due to the pandemic.
Suggested Next Read:
The man who destroyed his multimillion-dollar company in 10 seconds
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