CHICAGO—Writing off the Beatles as “finished” before they ever started. Dismissing the telephone (and doing it again a century later). The squirrel-zapping bird feeder.
All are examples of bad decision-making in business. In honor of Thanksgiving, CUToday.info offers this salute to business and management “turkeys.”
Below is a look at some of the worst ideas in management as identified by Forbes, which studied bad decision-making and concluded the gaffes, blunders and outright disasters have all stemmed from one of three factors: the decision-maker 1) didn’t bother to get all the relevant facts; 2) made invalid assumptions based on ego, wishful thinking, or fear; and/or 3) didn’t trust the input of their own advisors.
Here’s a list of management turkeys assembled by Forbes that your credit union or company will not want to join.
How Many Zeros?
In 1977, the senior execs at 20th Century Fox made an “astonishingly short-sighted decision.” They signed over all product merchandising rights for any and all Star Wars films to George Lucas – in exchange for a mere $20,000 cut in Lucas’ studio paycheck. The combined revenue from merchandising is estimated to have exceeded $3-billion dollars, and continues to grow annually, making it the most lucrative deal ever struck between an individual and a corporate studio in entertainment history.
And We Don’t Like The Haircuts, Either
In 1962, the Beatles auditioned at the London office of Decca Records. The executive in charge of talent rejected them: he thought they sounded too much like a currently popular group called The Shadows (who?). In an entry to the Bad Prediction Hall of Fame, the exec told Brian Epstein, the Beatles’ manager, “We don’t like your boys’ sound. Groups are out; four-piece groups with guitars particularly are finished.”
It’s Just a ‘Novelty’
In 1876, William Orten was president of Wetern Union, which Forbes noted had a monopoly on the most advanced communications technology available, the telegraph. Orten was offered the patent on a new invention, the telephone, for $100,000 (worth about $2 million in current dollars). He considered the whole idea ridiculous, and wrote directly to Alexander Graham Bell, saying, “After careful consideration of your invention, while it is a very interesting novelty, we have come to the conclusion that it has no commercial possibilities… What use could this company make of an electrical toy?”
A (Forgettable) Kodak Moment
The Eastman Kodak Co. developed the first digital camera in 1975, then proceeded to sit on it (and the core technology for the cellphone, as well). The company opted not to develop it because they were afraid it would cannibalize their film business (at one point they had a 90% share of the U.S. film market.)
Not A Gold Medal Decision
In the early 1980s, Fuji entered the U.S. film marketplace with lower-priced film and supplies, but Kodak management believed that U.S. consumers would never abandon their homegrown brand. As Forbes reported, in 1984, Kodak passed on the chance to be the official film of the 1984 Los Angeles Olympics, and instead Fuji won the rights, which gave them the strong foothold they needed to catalyze their growth in the U.S. marketplace.
Kodak never fully recovered from these and other poor decisions; in 2012 the company filed for Chapter 11 bankruptcy.
Idiot, Phone Home
In 1981 Amblin Productions called the Mars Company and offered a simple cross-promotional opportunity: How about if we use M&Ms in our new film, giving you free publicity, and in return, you can promote our film in your packaging? The advertising and marketing folks at Mars said “No.” The film was ET, the Extra-Terrestrial. So Reese’s Pieces, the not-nearly-as-well-known M&M competitor, jumped at the opportunity, and saw sales jump 65% in the months after the film was released featuring their product.
You’ve Got Mail. Unhappy Mail
In 2000, Gerald Levin, the chairman of Time Warner, was so confident in the deal he had made to merge with America Online, that he decided to forego placing a collar on the transaction. A collar enables the seller—in this case Time Warner—to revisit the terms of the transaction if the buyer’s stock falls below a certain price. Almost as soon as the merger was announced, and before it was completed, the Internet bubble burst and AOL shares plunged 50%. Without a collar, Time Warner wouldn’t be able to renegotiate the deal. Time Warner execs urged Levin to re-think the deal, but he didn’t. The rest is history, and Time Warner shareholders are still paying for his stubbornness.
And More Turkeys
Still looking for more turkeys? The Huffington Post and 24/7 Wall Street have compiled a look at companies that managed to earn a place in the Fortune 500 for at least 10 years, before falling out completely.
“We looked for the companies that made a single identifiable decision that cost them significant revenue and ultimately led to their decline,” Huffington Post and 24/7 Wall Street said, before identifying eight companies that qualified. More on those can be found here.
All Time Worst Shark Tank Pitches
And while the big companies become best known for big blunders, they don’t have a monopoly on bad ideas. Here’s a list of the 10 Worst Ideas Ever Pitched On Shark Tank, including the bird feeder that zaps squirrels, the “man candle,” and the alarm clock that awakens people with the smell of cooking bacon.