I read that the major mistake Coke made was that when they got focus group results that preferred the new formula to the old one, they figured that that must mean that those consumers wanted the new formula to replace the old one and didn’t inquire further. In a sense, they were a victim of their own efforts to make Coke an American institution; consumers tend to be quite conservative with those.
Much like Sears deciding in 1993 to discontinue their mail catalog in favor of their brick and motar stores, apparently not having much faith in the new fangled internet they might have transitioned their products by mail service into.
One of the worst decisions has a named effect:
In short, don’t announce that you have a next-gen product, much better than your current product, that’s coming soon. Especially if you aren’t actually sure that it’s coming soon.
Or more to the point, don’t announce your new next-gen product until you’re close to market saturation and sales for your current product have slowed.
I think an interesting corollary to this is the decision by Facebook to raise the price of their Oculus Quest 2* by $100 starting now, and the fact other hardware manufacturers may follow suit. Announcing you’re going to raise your price is not going to encourage anyone to buy your product, unless they’re already considering it and decide to buy before the price goes up. I strongly suspect it will encourage people to wait until new hardware comes out, which may actually be worth the increased price. In fact, it’s more than a bit surprising that this price increase wasn’t disguised as a “Oculus Quest 2 Pro” or something, with marginally better specs and a higher price tag while the loss-leader Quest 2 is quietly phased out.
-
- Facebook’s rebrand to Meta is another terrible business decision that we have yet to see the final result of.
The Studebaker-Packard merger seemed like a good idea at the time. Studebaker had a line of cars and trucks that were fairly popular in the lower-price ranges, Packard was a fading but still well regarded luxury brand. Studebaker had a stronger dealer network, Packard had a better executive team. And the Nash-Hudson merger that formed American Motors was working.
Somehow it all went wrong. Packard’s reputation was destroyed and the brand vanished a couple of years later. Studebaker got no entry into the luxury car market, and was stuck with Packard’s factory in Detroit. Studebaker couldn’t compete when Detroit’s Big 3 got into the compact car market, closed its U.S. plant in 1963, and Canadian operations in 1966.
It wasn’t exactly a practical product when they invented it in 1975.
That’s not completely true.
Kodak created the first digital SLR, and sold quite a few of them. They also made the QuickTake camera for Apple. But, they tried to keep feet in both Silver and Digital camps, and were soon overtaken by Japanese manufacturers.
When Jerry Siegel and Joe Shuster sold the rights to Superman for $130.
I don’t know what you mean by “until the bitter end”. By the mid-70s UofR had no Xerox or Kodak stock in its endowment fund anymore. They were fairly aggressive in investing in the next tech similar to how they hit it big on X and K.
One problem is that they just don’t have a decent pool of billionaire alum to milk. And in terms of local companies, it was basically just Xerox and Kodak and they weren’t in a position to give the Big Bucks. Even less so now.
The top 3 employers in Rochester area used to be Kodak, Xerox and UofR a distant 3rd. Now UofR is first despite being smaller, Xerox is 8th and Kodak is somewhere on the 2nd page.
Another mistake Kodak made was regarding it’s medical-chemistry division. It sold stuff for lab tests including the new automated machines. Once it was taking off they sold it. Look, dudes, you do not leave the health care business.
Tangential to the topic: I assume everyone knows that the whole “the Chevy Nova failed in Latin America because the name means doesn’t go in Spanish” story is a myth (one I learned in graduate school marketing), but I actually spent some time trying to find an origin/source for that nonsense. I found a 1969 version of the story in an industry magazine called “Steel” (I do admire the simplicity of that title), but I’m sure there are earlier versions out there.
Anyway, if you randomly see an earlier usage in the wild, please let me know. 
I have several. The worst one…well ok the worst, most easily understandable one is below.
There was a certain video lending retailer that had some market presence back around 20 years ago-ish.
They hired the company I worked for to do some analyses for them and I was tagged as the stat guy to work on the project.
Can’t remember what the product was about…but our research indicated a pent up demand for something that didn’t exist…mainly sending movies by mail. (Movie streaming was a far dream yet). I had not heard of this idea before and it sounded good (Netflix came along within a few years after this meeting)
We informed this retailer about this VERY clear demand after we had answered all the questions they directly hired us for in a meeting with their main executives. Crickets.
We thought we weren’t clear and tried again and the head guy responded that they understood us but thought the demand wasn’t as high as we were saying. Plus, it would impact their current business model. He then added a sentence at the end that eliminated any sympathy I had for them. He said…and I quote… “Besides, we have a great corporate culture. Going the way you suggest would mean bringing in geeks and we don’t want those f****** geeks coming in and ruining our culture”.
I am not kidding or embellishing.
That company went down the tubes pretty fast. They tried to fight the end but it was always ‘too little, too late’ and then they had the disastrous campaign of ‘No late fees’ when there was essentially late fees under a different name and it was rejected venomously by the customers juuuussstttt like we advised them it would.
I found on a 1993 paper on the endowment fund history.
University of Rochester’s Endowment Fund Review
Herbert W. Tripp managed it from 1941-1970, its glory days. Starting in 1971, it went through a series of managers that dropped its performance significantly. Believe it or not, they were believers in market timing. VCs can afford one hit on every 50 misses. University endowments can’t.
You’re right that included dumping Xerox and Kodak in favor of small stocks. They were gone by 1982. The next years of an all small stocks portfolio were disasters and the policy changed again in 1987. By 1992 the endowment slid from 4th to 20th.
Overall, the destruction of the portfolio was certainly a horrible business decision, or, better, a long series of them. But I was wrong about the details.
Here is a remarkable example of how to destroy a thriving business simply by making a speech.
Gerald Ratner ran a very successful business selling jewelry in the 1980s and in 1991 he was invited to make a speech to the Institute of Directors in London. This speech to the movers and shakers of the business world…well he wanted to make an impression with a few jocular observations about the quality of the merchandise he was selling in his shops. Sadly, though the audience enjoyed the speech, when it leaked to the press the next day the tabloid newshounds scented blood.
Ratner had made a catastrophic mistake and in one speech destroyed his entire business. His words were interpreted to suggest he had contempt for his customers and sold, in his words ‘crap’ of questionable taste and quality to his unsophisticated customers and made a profitable business out it. Almost overnight he lost his entire customer base.
Hubris begetting nemesis. He lost everything and it was all in the glare of the national publicity.
Here he is 30 years later, an older, wiser and somewhat greyer man, reflecting on his big mistake. To his credit, after some lost years, he managed to bounce back.
Seeing a Brit makes me wonder.
Wasn’t Brexit the worst business decision of all time?
Regarding the era when X/K were gone I was guesstimating from working backwards so I said mid-70s and it could well have been a few years later.
Back in 2007/2008 or so I started a custom chip design for Research in Motion (Blackberry). This design was the audio chip for the new Blackberry Torch (the phone that had a screen that could slide up to reveal a keyboard).
I remember sitting in the first meeting when they were outlining their requirements. When it was pointed out that Apple was putting higher quality audio in the new iPhones than RIM was specifying, the RIM VP of new product development said:
“We don’t feel like the iPhone is a serious competitor in the business smartphone market.”
Oops…
There seems to be a fairly strong inverse relationship between being a good inventor and a good businessman. There are some exceptions, of course–Cyrus McCormick being one.
I have several. First is DEC. Around 1979, founder Ken Olsen said he could not imagine any reason why someone would want a computer in their home. Oops. When, around five years later, DEC did come out with a PC, it used diskettes that you could buy only from DEC. There was no formatting program that allowed you to format your own. I don’t know where they ended up but they missed the PC market completely.
The story about Burpee reminds me of what happened to a local garden supply business, W.H.Perron. They had a beautiful business and sold superb quality plants. I probably bought a couple hundred dollars worth every year. Lettuce, tomatoes, basil, whatever. Then a company from Ontario bought them. I went once. In a flat of a dozen basil plants (we made a lot of pesto sauce), maybe 3 were already dead and the rest didn’t look too healthy. Same with the tomatoes. I never went back and within a year they were out of business.
Finally, my own story. I spent the month of Feb., 1997 at Stanford, visiting the CS department. While there, there was a talk by Sergey Brin and his (and I guess Larry Page’s) idea for a new web search engine. After I came home, I told my wife, “You know, if he starts a company, I ought to put $10,000 into it.” He did and I didn’t.
If I remember correctly that should be “exec” singular. One guy made the decision.