Review: Book examines significant business blunders

As evidence, he cites the success of the magazine’s annual list of “101 Dumbest Moments in Business” – a frontrunner to this book.

This book is chock-full of interesting stories about situations in everything from research and development to information technology that didn’t go quite as planned.

The book notes that for a “dumb” moment to be put into the book, there are three basic rules. First, no one gets killed as a result of what happened. Second, the stories must have a specific moment of foolishness, rather than what it calls “a slowly festering brainlessness.” Third, when some form of business foolishness is chronic, happening to more than one entity or official, the editors picked their favorite example.

Dumb developments

In research and development, perhaps a clear lesson for entrepreneurs and businesses of all sizes is that when there’s a new idea on the table, check carefully on the potential of future sales and customer use.

Consider Edwin Land, who in the 1960s revolutionized photography with the invention of color pictures, and in the ‘70s was the head of Polaroid, with a purported “allergy” to research and development, relying more on his instinct. Even so, most of his ideas panned out, but there was one – Polavision – that didn’t. Land used $250 million of company funds, and $68 million out of his own pocket, to develop Polavision, a device that was introduced in 1978 with a price tag of $700 and promised to create instant movies. Polavision did what it was supposed to, except that the movies were only two-and-a-half minutes long, had no sound and required a special viewing device. It turned out that not many consumers were interested. Sales were so slow during the Christmas season that Polaroid offered to have Santa deliver the Polavision to anyone who bought it. Only 3,000 people were interested.

Some other ideas that didn’t pan out after the R&D phase:

• Chrysler’s attempt in the mid-1950s to sell his-and-hers automobiles, Le Compte and La Comtesse, the latter by 1955 featuring everything from a pink steering wheel, a two-tone pink body and accessories including a pink leather purse, pink raincoat and matching boots. When the pink didn’t work, the company in 1956 tried lavender, but after two years and only about 1,000 sales, the company scrapped the project.

• Kimberly-Clark’s Cottonelle Fresh Rollwipes, debuted in 2001 as an alternative to dry toilet paper. Who knew that after $100 million in R&D costs and a $35 million advertising campaign featuring the tagline “wetter is better,” the product would languish for two years in test marketing and never take off as expected?

Employee humiliation

In the chapter on human resources, there’s a clear anecdote of poor practices that sunk the company. Retailer W.T. Grant, a department store pioneer of the 1920s and the largest retailer in the country by the 1960s, decided that its new revenue stream in the 1970s would be credit cards. Managers who didn’t get enough customer applications would face punishments of having to push peanuts across the floor with their noses, being forced to wear diapers or taking a pie to the face. The tactic worked. But in 1974, store officials learned a hard lesson: A promise to pay isn’t the same as actually handing over the money. The company had to write off $94 million in unpaid charges, and the company declared bankruptcy a year later. By early 1976, W.T. Grant and its 980 stores no longer existed.

Careful consideration

Other chapters in the book cover production, sales and marketing, accounting and legal blunders.

Key tidbits include:

• There’s a lot to be said for careful consideration. Consider the breakneck pace at which Atari developed a video game themed to Steven Spielberg’s “E.T. the Extra-Terrestrial.” The company paid $21 million for the right to do so, but in the rush to finish the game by Christmas, Atari ended up with a game considered by many the worst ever made.

• Giving credibility to the adage “Don’t fix it, if it ain’t broke” is Coca-Cola’s failed 1985 “New Coke” attempt. A new, sweeter formula did not go over well, leading to as many as 1,500 angry calls to the company’s Atlanta headquarters, and a 15 percent decline in shipments. The promotion caved after just months, and Coca-Cola Classic returned to shelves.

Some of the anecdotes in this book are laugh-out-loud funny. Others caused head-scratching.[[In-content Ad]]