Some of the World's Biggest Business Blunders
Think you’ve had a bad day? From missed opportunities to outright blunders, some of the world’s largest businesses have fielded some embarrassingly avoidable catastrophes.
With damages ranging from millions of dollars to a few hundred billion, let’s review some of the most embarrassing business blunders so we learn a little something from their mistakes.
As smartphones were first passing their litmus test with the public, Motorola was in on the ground floor. The thin and stylish Razr phone dominated 2006 with a market share of 22%. However, the tide changed quickly, and by the time Motorola released its first update to the Razr, iPhone and BlackBerry had taken over as market leaders.
The company’s lack of innovation caused shares to fall more than 90% from $107 to $13 between October of 2006 and March of 2009. Google currently owns Motorola, and it will be interesting to see if the search engine giant can help the company reclaim its throne.
In 2011, CEO Reed Hastings planned to split the Netflix DVD-by-mail business into a separate company called “Qwikster.” He tried to force customers into using a new website and paying a separate monthly fee, a change that was not well received.
After receiving howling responses from customers, he retreated and withdrew the plan just three weeks after the announcement. He commented on Facebook, “I think I might need a food taster.”
At the time of the housing bubble, Lehman Brothers leaped into the market with the intent to gain a bigger piece of the pie. The company increased the amount it borrowed to buy more mortgage-backed securities and real estate. By 2007, the company borrowed $31 for every $1 in equity.
However, after the housing bubble burst, the firm was unable to deliver those assets into the market. Falling home and commercial real estate prices led to unmanageable losses. The 15th of September marks the anniversary of the Lehman Brothers bankruptcy, which was part of the financial crisis of 2008.
In celebration of their centennial anniversary in 1985, Coca-Cola changed its fabled secret formula and introduced the new taste as the “New Coke.”
It turns out customers did not want a New Coke. They wanted the old coke, the taste they’d come to know and love. Sales dropped by 20%, and the company returned to the old formula soon after.
Does anyone “say cheese” to a Kodak camera in 2014? Once Kodak stood top among its contenders, even being the first to hold a patent for digital photography in 1975. This should have given the company an edge, but Kodak did not pursue a future involving digital photography until it was much too late.
Fuji came bursting into the U.S. film market with its low-priced film and supplies. Kodak management thought that U.S. consumers would never leave their home-based brand, but Kodak ultimately filed for bankruptcy in January 2012.
In 1999, Excite passed the opportunity to buy Google for $750,000. Larry Page and Sergey Brin, the founders of Google, allegedly wanted to sell their company to Excite for $1 million, and then sweetened the deal by dropping the price to $750,000.
Excite CEO George Bell turned down the offer. The company that was not considered to be worth $750,000 is currently valued at $395 billion.
No contemporary company is acknowledged more than Apple for both brilliance and blunders. Its blunder claim to fame may just be the 2012 original release of Apple Maps, an iPhone app that displaced milestones such as the Washington Monument, lacked public transit directions and mostly failed to get users to their destinations.
To add more, it became a huge PR disaster when the iPhone allowed its users to share screenshots of distorted and incomplete maps with the entire world.
In 2000, Netflix co-founder Reed Hastings asked Blockbuster to buy the struggling online video rental company. Blockbuster declined, shutting the door on cash-strapped Netflix and instead signing a deal with another company.
After a failed attempt to go online, the struggling Blockbuster experienced such a terrible change of fortune that they filed for Chapter 11 bankruptcy protection in 2010, and all remaining stores ended up in closing by 2013. Who knew their decision to pass on purchasing Netflix for $50 million would eventually come back to haunt them.
Electronic Data Systems
Back in 1979, 23-year-old Bill Gates was asking $40-to-$60 million for Microsoft. Ross Perot and his company Electronic Data Systems, which valued at around $1 billion, deemed the price too steep, and he was not the only one.
Persevering through cash-strapped times, Gates never did sell, and he is now considered one of the richest men in the world with an estimated net worth of $76 billion. Certainly Perot sees this as a missed opportunity, tagging himself as the very best of losers.
While everyone makes mistakes, these business blunders are on a scale that is rather hard to compete with.