JoshOctober is the season for settling down with a cosy blanket, a hot drink, and a good horror story or two. While your business might not concern itself with the supernatural, this collection of bewitching business tales will make even the most experienced business owner cower in fear! Together with voluntary liquidation experts Business Rescue Expert, we explore some of the most famous and shocking business blunders – follow at your own risk!
Diamonds in decline
Back in the 1980’s Ratner Group dominated the jewellery industry and ran a successful business of more than 900 stores. The Ratner situation is testament to the fact that everything can change in a given moment, and the company’s CEO Gerald Ratner learned this the hard way.
Due to a few misguided comments in front of members of the news media and prominent business figures, he caused his business value to drop by over a hundred million pounds in under a minute. He spoke about how his company could sell items so cheaply, explaining that the price point was possible because the products were “total crap”. He added insult to injury, adding that his company sold earrings that were cheaper than a prawn sandwich from Marks and Spencer, but wouldn’t last as long.
As you may have guessed, journalists were quick to pick up on the comments, which were immortalised in print the next day. Ratners share price plunged after the story hit the press, almost 300 stores closed and Ratner resigned as CEO. The family name became a byword for calamity and the company had to undergo a full rebrand. The takeaway from this one is simply to be cautious and think before you speak, as it could land your business and your career in hot water!
Missed opportunities
As one of the most famous photography brands in the world, Kodak cameras have been around for over 100 years. Founded in New York in 1880, by the 1970s over 85% of the market for cameras and film was controlled firmly by Kodak. In 1975, Steven Sasson, a research and development employee was experimenting with a product called a charge-coupled device. He found that if he could translate light into binary code, he could produce a 100,000 pixel image — or 0.01 megapixels as we’d refer to it now. The employee in question essentially built the prototype for digital cameras, creating a device which used a memory card and compressed images.
The more conservative members of the business did not welcome the change, however, and opted to stick with more traditional methods. As a result, the device was never released out of the real fear that it would jeopardise the brand’s film sales. They eventually made the switch to digital in the late 1990s it was too late, and Kodak had to file for bankruptcy in 2012 as a result. The digital camera line was abandoned, and the brand now keeps its focus on the production of printer cartridges and motion picture film. Here, we’ve established that shouting about your innovation is important, but equally staying aware of what your competitors are doing will save you any potential embarrassment if something goes wrong somewhere along the line.
A spooky space mission
Back in 1999, The Mars Climate orbiter was lost forever in space due to a metric system mix-up. Engineers didn’t realise that European engineers working on the craft had worked in Imperial measurements and failed to convert them to metric. The internal software was given data which didn’t correspond to the same units so when the system which controlled the thrusters calculated the force required in pounds, another system was telling it that it was in Newtons.
This mathematical error caused one of the most expensive business disasters ever made. The orbiter cost a staggering $125 million to build, but it taught a remarkably invaluable lesson to all involved: the value of basic communication, and the need to verify even the simplest of protocols — check, and check again!
Is it the real thing?
Coca-Cola have enjoyed worldwide fame as a result of their iconic red coke can. Created by inventor John Pemberton in Atlanta, GA, in 1886, the original formula is an intensely guarded secret. When arch-rivals Pepsi made their presence known amongst the coveted teenage audience, Coca-Cola made a bold move to guard its market share from its key competitors. So, the taste was adapted slightly, making Coca-Cola slightly sweeter in order to make it taste closer to Pepsi.
The new product was unveiled in 1985 and was dubbed ‘New Coke’. Within days, there was a huge outcry from those loyal to the signature coke taste, with many loyal customers calling for the brand to reverse its decision. Their revised recipe had in fact alienated their traditional demographic, instead focusing on a smaller proportion who had chased for the sweeter alternative. This product was already available, and New Coke was simply a same-but-different choice.
It only took three months for supermarkets to drop New Coke from their shelves when it was replaced by Coca-Cola classic – the old and much-loved recipe. A huge lesson was learned, and if the course of events was any different then we might not have been as familiar with the powerhouse brand as we are today. Take heed from the old Russian proverb “Trust, but verify” and make sure your market research and development stages are fool proof.
Prideful mistakes
Meerkat was the very first streaming app to use social media channels such as Facebook and Twitter. Initially, it was a huge hit with users, as ordinary people and celebrities alike realised that they could live stream on both channels at the same time. However, Facebook and Twitter quickly clocked onto this, and developed their own streaming systems as a result — Facebook Live and Periscope. When they launched they also withdrew Meerkat’s access to their platforms.
From this point onwards, Meerkat never recovered. It could have attempted to move towards a new niche, but most of the financial investment had been used up on paying for endorsements from celebrities and other backers, as opposed to targeting it at the actual product. Many businesses get side-tracked by their initial fifteen minutes of fame, but it’s vital to avoid this and prepare for all eventualities in the meantime!