Many large companies have made mistakes in their decisions that have had significant consequences for their future. Here are some of the most emblematic cases:
Kodak and the Failure to Adapt to Digital
Kodak, a leader in the photography sector, failed to adapt to the advent of digital photography. Despite having the skills to innovate, the company chose to remain focused on traditional products, underestimating the importance of digital. This decision led to the decline and bankruptcy of the company in 2012.
Nokia and the Undervaluation of Smartphones
In the 2000s, Nokia dominated the mobile phone market. However, the company failed to foresee the growing importance of advanced smartphones. By continuing to focus on its traditional products and ignoring new trends, Nokia quickly lost market share, culminating in the sale of its mobile division to Microsoft in 2013.
Enron and Fraudulent Accounting Practices
Enron, a major US multinational energy company, collapsed in 2001 due to fraudulent accounting practices. The company manipulated its financial statements to hide losses and inflate profits, deceiving investors and employees. This scandal led to Enron’s bankruptcy and the loss of billions of dollars to shareholders and retirees.
Silicon Valley Bank and Risk Management
In March 2023, Silicon Valley Bank (SVB) collapsed due to poor management of interest rate risks. The bank had invested heavily in long-term bonds, which declined in value as interest rates rose. This, combined with a shortage of liquidity and a run on the bank by depositors, led to the bank’s failure.
Blockbuster and the Refusal to Buy Netflix
In 2000, Netflix offered Blockbuster the chance to buy its company for $50 million. Blockbuster CEO John Antioco turned down the offer, believing that the physical rental model was still dominant.
Blockbuster filed for bankruptcy in 2010, while Netflix is now worth hundreds of billions of dollars.
New Coke: Coca-Cola’s Flop
In an attempt to counter competition from Pepsi, Coca-Cola decided to change the recipe of its drink, launching New Coke. However, consumers reacted negatively and the new formula was quickly withdrawn.
Coca-Cola returned to the original recipe after just 79 days.
Yahoo and the Failed Purchase of Google and Facebook
In 1998, Yahoo could have bought Google for $1 million, but they thought it wasn’t worth it. In 2006, Yahoo had the opportunity to buy Facebook for $1 billion, but they lowered their offer and Mark Zuckerberg refused.
Today, Google and Facebook dominate the web, while Yahoo has lost relevance.
Ford Edsel: The Launch of the Wrong Model
Ford invested $250 million to launch the Ford Edsel, a new car that turned out to be a commercial disaster. The design and price did not meet the needs of consumers.
The model was withdrawn after three years, causing huge losses.
BlackBerry and the Resistance to Touchscreen Smartphones
In 2007, with the launch of the iPhone, the phone market changed dramatically. BlackBerry, however, underestimated the value of touchscreens and apps, remaining faithful to the physical keyboard.
BlackBerry lost its dominance in the mobile sector and was almost forgotten.
IBM and the Release of PC-DOS to Microsoft
In the 1980s, IBM decided to give Microsoft the operating system for its computers, allowing Bill Gates to retain the rights to MS-DOS. This led to Microsoft becoming a giant in the computer industry, while IBM lost control of the PC industry.
Microsoft became dominant in the operating system market, while IBM lost its leadership in personal computers.
Boeing and the 737 MAX Crisis
Boeing launched the 737 MAX with new software (MCAS) that proved to be flawed, causing two fatal plane crashes. The company initially tried to downplay the problem, but investigations revealed serious security lapses.
The 737 MAX was grounded globally for months, causing billions in losses and damage to Boeing’s reputation.
Sony and the Failure of Betamax
Sony developed Betamax, a high-quality videocassette format, but lost the battle against JVC’s VHS format.
VHS became the dominant format, and Sony missed a great opportunity in the home video industry.
MySpace and the Decline of Social Networking Pioneers
MySpace was the dominant social network before Facebook, but poor management caused it to fail. Lack of innovation, a terrible user experience, and too much invasive advertising.
Users migrated en masse to Facebook, and MySpace became irrelevant.
Microsoft and the Flop of Windows Vista
Windows Vista was launched with very high expectations, but it turned out to be a disaster due to compatibility issues, slowness and high hardware requirements.
Releasing an operating system that was not optimized, without listening to user feedback.
Many users remained loyal to Windows XP, and Microsoft had to quickly release Windows 7 to fix it.
Google Glass and the Flop of Augmented Reality
Google launched Google Glass, augmented reality glasses, but the product was a commercial failure.
Excessive price, unattractive design and privacy issues.
The product was withdrawn from the consumer market, becoming only a niche technology.
HP and the Failure of the TouchPad
In an attempt to compete with the iPad, HP launched the TouchPad with the WebOS system, but withdrew it from the market after only 49 days. Poor marketing strategy, poor app ecosystem and uncompetitive hardware.
HP abandoned the tablet market, while Apple consolidated its position with the iPad.
Apple and the iPhone 4 Antennagate
The iPhone 4 had a design flaw: if you held it a certain way, the signal would drop. Apple initially denied the problem, telling users to “hold it differently.”
After much criticism, Apple had to offer free cases to customers to mitigate the problem.
Samsung Galaxy Note 7 and the Explosive Battery Problem
The Galaxy Note 7 was recalled due to faulty batteries that caught fire.
Samsung lost billions of dollars and had to revise its entire quality control policy.
Fiat and the Failure in the US
Fiat entered the American market with unreliable cars and poor customer service. The brand gained a reputation for producing vehicles that were not durable.
Fiat withdrew from the US market for years.
Disney and the Failure of Euro Disney
When Euro Disney (now Disneyland Paris) opened, it was a financial disaster due to incorrect attendance forecasts and ignored cultural differences.
After heavy losses, Disney had to change its strategy to better adapt to the European audience.
JC Penney and the Rejection of Discounts
JC Penney’s new CEO eliminated all promotions and discounts, thinking that customers wanted lower fixed prices. In reality, customers loved the discounts and stopped buying.
JC Penney lost billions of dollars and the CEO was fired.
Uber and the Leadership Crisis
Uber grew rapidly, but toxic culture scandals, sexual harassment and mismanagement led to a leadership crisis and the resignation of CEO Travis Kalanick.
This is the importance of corporate culture and ethical governance.
Uber lost confidence and had to work hard to rebuild its reputation.
Quibi: The Failure of Mobile Streaming
Quibi, a streaming service for short-form content, launched with $1.75 billion in funding, closed after only 6 months.
To think that people would pay for short videos on smartphones when they already had YouTube and TikTok for free.
Quibi went out of business after losing almost all of its capital.
eBay and the Failed Acquisition of Skype
eBay bought Skype for $2.6 billion, hoping to use it to facilitate communication between buyers and sellers. However, the integration did not work out and eBay sold it in 2009 at a large loss.
Microsoft bought Skype in 2011 and successfully integrated it into its products.
These examples highlight the importance of thoughtful and adaptable business decisions. Failure to pay attention to market changes, inertia in the face of innovation, and poor management practices can have disastrous consequences for companies, regardless of their size or dominance in the industry.
Every company, of any size, makes several strategic and operational mistakes every year. For this reason, Decision-Making Process Optimization is essential to prevent errors, reduce their economic impact, and increase company competitiveness by strengthening their functioning.