Big, Bad Decisions from Great Companies
“I have not failed. I’ve just found 10,000 ways that won’t work.” – Thomas Edison
If only every business had the freedom to try 10,000 ways that didn’t work. In corporate strategy, one wrong turn can be the last turn. Whether it be circumstances that are outside your control or a simple mental hiccup at the worst possible time – no one is immune from potential disaster. Looking back on decisions with clearly bad outcomes is one way to reduce your chances of repeating the same mistake. These are just a few of the companies who didn’t see it coming…
Nokia – The Slow Decline
While there are many examples of ‘innovate or die,’ Nokia’s fall from grace tends to be a bit more mysterious than similar stories (see Kodak, Blockbuster, Western Union). In the late 1990s to early 2000s, the Finnish company was the number one mobile maker. In the third quarter of 2007, Nokia’s market share was 48.7 percent. By the second quarter of 2013 the company’s market share had slipped to just 3.1 percent. Near the end, the company with the most beloved, innovative phones, didn’t even own their own headquarters anymore. It’s easy to say the iPhone crushed them, but Nokia was a historically adaptive and innovative company. Their decline was multi-faceted: short-sighted management, refusal to shift strategies, complete reliance on past strengths…the list goes on. One mistake after another slowly chipped away at the company until there was nothing left to fix.
What we can learn: Don’t let your mistakes build up.
Firestone – One Big One
Firestone is a story of risky decisions and ignoring warnings. In 1972, Firestone began making tires using a new technique to get the tires to market faster than any of their competitors. The new tire was already in production when an internal report found the rubber came off the wire when the tire was in use. However, demand from customers like General Motors was high and so Firestone continued to produce the new tire throughout the 70s. By 1978, safety concerns from the government and consumer advocacy groups forced the company to recall 10 million tires. Firestone placed the blame on consumers, citing the cause for the defect as poor maintenance. A 1980 investigation revealed the initial warnings from 1972 and the resulting lawsuits and negative publicity significantly impacted sales. Bridgestone bought them out in 1988.
What we can learn: Own your mistakes, and own them quickly.
RCA – Focus, Focus, Focus
The consumer electronics manufacturer was the first to sell electronic televisions to a wide market. In fact, RCA was responsible for the development of a multitude of innovations and key technology – color television, the electron microscope, Liquid Crystal Displays (LCDs) and direct broadcast television, just to name a few. The company’s downfall is easy to track. In 1966, they acquired Random House, the book publisher. In 1967 RCA acquired a golf gear line and a car rental company. The following years saw the acquisition of a communications company, a frozen-food company, a carpet manufacturer, a real estate services company and more. It’s a stretch to see the relevance of any of these companies to RCA’s original strategy. In less than five years, the acquisition spree more than tripled the company’s debt. During this time RCA also pulled back on research and development for its core product line. They tried to return focus to their original product line, but rising competition led to the sale of RCA to General Electric Co. in 1986.
What can we learn: Don’t lose sight of the goal.
Mistakes can’t always be avoided, so in the case that such a situation has arisen, it’s important to know what to do next. Step one: take ownership and don’t waste energy on excuses. Next, move on. In business, you need to move yourself and the company forward; now is not the time for quiet contemplation. Focus on the actions needed to resolve your issue with the best possible outcome. Afterwards look at the root cause and the actions that led to the issue. What information could have changed your decision for the better? How can you get that information before you make future similar decisions?
Of course, it’s easy to see the errors and missteps in retrospect and no one can make the right decision every single time. However, in being open to a mistake on the horizon the companies above might have had different stories.