5 famous business blunders
In the world of business, fortune often favours the brave. However, the history of commerce is full of missed opportunities, lost fortunes, and, let’s face it, plain stupidity.
So what are some of the most costly business blunders ever made? Here’s our rundown of the top five.
Saying ‘no’ to Harry Potter
JK Rowling, author of the Harry Potter series, currently sits on a fortune reported to be in the region of one billion US dollars. However, it may not have come to be if it wasn’t for the intervention of an eight-year-old girl named Alice.
Rowling’s original manuscript for the first Harry Potter novel was turned down by 12 publishing houses, a few of them even telling her: ‘don’t give up your day job’. It was only when eight-year-old Alice, the daughter of a Bloomsbury editor, got hold of the first two pages of ‘Harry Potter and the Philosopher’s Stone’ and subsequently demanded to read the rest of the book, that people started to think maybe Rowling was onto something big.
We all know what happened next. The Harry Potter series quickly became a publishing sensation, selling over 450 million books worldwide and catapulting JK Rowling from struggling single mother to literary sensation and global icon almost overnight.
The business lesson: sometimes, children know best!
Blockbuster laughs at Netflix, and lives to regret it
Those of us over the age of twenty probably remember what Saturday night movie-watching involved. No ‘click and download’ for us! Throughout the 80s and 90s, a trip to the local video store was a mainstay of our weekend plans, and Blockbuster was the undisputed market leader in video rental.
So it must have come as a shock to the company when, in 2000, a confident young group of entrepreneurs walked into a meeting with Blockbuster’s decision-makers and announced that video rental was dead - and the online steaming of movies directly to peoples’ homes was the future of the industry.
Those entrepreneurs had just founded a small company called Netflix, and they offered to help Blockbuster develop a brand-new movie steaming service to work in tandem with the company’s existing in-store business model.
Well, in the words of Netflix CFO Barry McCarthy, "They just about laughed us out of their office."
Oops. We all know what happened next. Netflix went on to dominate the online movie industry, while the Blockbuster franchise is now just a distant memory.
The business lesson: don’t assume that your current business model is future-proof.
Excite gets the chance to buy Google for $250,000 – says ‘no thanks’
Perhaps one of the most famous financial blunders of all time happened in 1999 when two young programmers, Larry Page and Sergey Brin, walked into the office of George Bell, CEO of Excite, at that time the world’s most popular search engine, and asked him to buy their new company, Google, for $1 million.
When Bell turned down their offer, they reportedly lowered their price to a quarter of a million dollars, but Bell still wasn’t tempted.
Soon after, Excite’s stock price took a nosedive, and the company was eventually taken over by the search engine AskJeeves.
Google, on the other hand, quickly grew into the global powerhouse we all know today, and is currently valued at over $340 billion.
The business lesson: keep your friends close, but keep your competitors closer.
Coco Cola gets a new, sweeter flavour, but leaves a sour taste in our mouths
In 1985, having been the most successful soft drink in the world for more than a century, Coca-Cola got a taste-makeover. The story goes back to an advertising campaign run by Coke’s biggest competitor, Pepsi, in the early 80s. The ‘Pepsi taste test’ ads featured a number of blindfolded participants who were asked to sample both brands and identify which one they preferred. Pepsi came out on top every time (well, it was a Pepsi ad after all).
At the time, this campaign made Coca-Cola’s executive’s panic, and within months the company was committed to changing its world-famous formula to create a sweeter flavour.
What the company didn’t forsee, however, was the customer backlash that soon erupted, with many people even taking to the streets with banners proclaiming, ‘Give me back my Coke!’
It seems that the issue here was not so much the new flavour, but the fact that loyal Coca-Cola consumers saw the change as the company tampering with an ‘American icon’.
Within months, Coca-Cola back-tracked and launched a new product ‘Coca-Cola Classic’, based on the original formula, and from 1992 ‘New Coke’ was slowly swept under the carpet.
Lucky for Coca-Cola that they are a global giant with enough money in the coffers to cover such an almighty business blunder.
The business lesson: if it ain’t broke, don’t fix it!
And finally, one from the history books, but with a lesson that still rings true today. In 1626, Native Americans from the Canarsie tribe entered into a potentially lucrative real estate deal – selling Manhattan Island to Dutch settlers.
The Canarsies can be forgiven for not realising that four centuries later their 23-square-mile plot would be estimated at a value of more than one trillion dollars. However, their asking price at the time, a handful of trinkets worth less than 30 dollars, still seems somewhat short-sighted, to say the least.
But this story has a sting in the tail. The Dutch settlers who purchased Manhattan later discovered they had been hoodwinked – the Carnasie tribe didn’t actually own the land that they were selling.
The business lesson: always read the small print!
If you want to avoid making basic mistakes in business, you might want to consider studying an online certificate or diploma programme online, where you’ll get the skills and expertise you need make the right decision – everytime!