34 Worst Decisions Made By Large Companies That Nearly, Or Did, Shut Them Down
Article created by: Vėja Elkimavičiūtė
Leaving your mark on the business world is no easy feat. As an entrepreneur, you have to have a clear vision and proper values. Meanwhile, you have to make a profit while also ensuring that you leave behind a legacy you can be proud of!
However, business owners aren’t infallible. Strategic mistakes can and do happen. Some of them can radically alter the course of the company’s future… for the worse. The r/AskReddit online community shared some of the most well-known examples of companies getting wrecked because of a single miscalculation. You’ll find their stories as you scroll down.
Bored Panda wanted to learn about how business leaders can make good strategic decisions and what common mistakes they ought to avoid, so we got in touch with Matt Johnson, Ph.D., a marketing psychology speaker and the host of the branding and human nature blogs. Johnson shed some light on the topic and you’ll find his expert insights below.
Sears hired an Ayn Rand loving ultra-capitalist that hated the idea of a planned economy so much that he made the internal departments at Sears compete with each other, and it completely destroyed the company. Let me say that again: He made different departments of the same company compete with each other and it DESTROYED a 120 year old company. His name is Eddie Lampert, he also destroyed K-Mart, and he is studied for just how stupid of a CEO he is. Everyone should read about him
The venerable Encyclopedia Britannica had ample warning that the world was going digital, but they didn’t want to cannibalise sales of the print encyclopedia, so when they finally and reluctantly offered the encyclopedia on CDs, they charged $1500 for it and made the brilliant decision to make it text-only. I worked with the guy who made that decision. Everyone hated him.
Pyrex letting whoever wants to slap their name on something as long as it is lowercase pyrex do so seems to have tanked the business hard. Basically made their brand unreliable because the lowercase p stuff is usually not heat resistant like uppercase P stuff is.
Rubbermaid. Walmart made them lower their prices so much they went bankrupt. Someone bought the trademark. I believe Walmart is the reason lots of smaller companies went under in the late 90’s early 2000’s.
Circuit City when they decided to fire 3400 seasoned employees and replace them with high school kids (who will work for less) thinking it was a smart business move.
Netscape is a great example of why you don’t just rewrite software from scratch. Was the most popular web browser and they decided the code was ugly and messy so they should rewrite it. After the rewrite, they realized the reason it was so ugly and messy before was because of all the bug fixes. The new release was buggy and the rest is history, now hardly anyone even remembers the name.
I bring this up every time a software engineer wants to rewrite from scratch, because as ugly as code can be, it is usually on account of all the issues that have been fixed along the way.
When Photobucket decided to take the whole internet hostage by asking for 400$ a year for what was previously a free image storage solution. The move broke years of forums posting and erased a significant portion of the web collective knowledge.
I have to think about Toys R Us. They outsourced their online store to Amazon, who turned into their competitor.
Borders Books – I was in the meeting when they decided the way to solve their terrible online sales was to outsource it to Amazon. They were gone inside of 30 months.
Radio Shack trying to compete with Best Buy in bigger ticket consumer electronics rather than sticking to what they did best. I worked there in the early/mid 00s and you could feel the downfall as it was happening.
Holden Day. Law firm in Toronto. Every year, one of the partners would show the new articling students how strong the exterior glass was on their office tower by hurling himself against the floor to ceiling windows in a boardroom. It was a stunt that he thought would break the ice or something. One year, the glass gave way and he fell 30 storeys to his death. The firm never recovered, and wound down shortly after that.
Bethlehem Steel..CEO threw lavish parties from workers’ pensions. That was the beginning of the end for a once great company. My grandfather was one of many hardworking steel workers that lost his pension due to a bad CEO and a board that didn’t care. Seeing the cement hq being taken down in one glorious implosion was a true sight after it stood like the tower of Sauron in the middle of a forest for decades
Hoover UK offering two free flights to the US (worth £600) to anyone buying £100 of Hoover products in 1992. They were relying on people spending a lot more than the minimum and a tedious application process putting off most people. Customers just saw it as £100 flights to the US with a free vacuum cleaner. They tried to re-neg on the deal but were forced to carry on under the threat of lawsuits. It crippled the company financially, they never recovered and were eventually sold off to a competitor.
A radio station i used to listen to recently changed their format from 80% music, 20% talk show to 100% talk show. Then they were like “oh you can still listen to the music but it’s only going to be on our app.”
Sears refused to expand into e-commerce despite them fully having the capacity to do so in the early 2000s. Same could also be said of Blockbuster and their refusal to embrace streaming video.
Schlitz beer once tried to increase their bottom line by using cheaper ingredients.
Result: poorer quality (including a slimy mucus at the bottom of the bottles), which in turn caused sales to drop hard. They reversed back to the old ingredients, but the customer base never trusted them again, and Schlitz died off.
Smile Direct Club was pretty recent. Essentially from my understanding, an employee accidentally received an email of all the salaries in the company who then decided to forward it to the rest of the company. A lot of people realized they were getting underpaid and screwed over and essentially mutinied and quit.
A lot of shady stuff started to get leaked as well and lawsuits were just piling up. They didn’t have enough workers to meet demand to overcome expenses and they just shut down a few weeks ago.
Not shut down but special consideration should be given to Xerox.
They are the originators of both the mouse and the GUI interface every PC has been based on for almost 30 years. Both Jobs and Gates stole this technology.
Quiznos over franchised their stores and screwed over their own franchisees.
KMart for investing in more real estate instead of store and technology upgrades.
Still admire the slow burn nationwide closures.
I’ve never seen a corporation drag it out for that long.
Yellow trucking bought out a bunch of smaller companies, and never bothered to consolidate them into a single entity (each one would operate independently as a subsidiary). Not only did this force them to take on loads of debt, but it also put them at odds with the Teamsters, who had active agreements with each company prior to the buyouts.
They never recovered from this move, and relied heavily on the Teamsters to negotiate pay/benefit cuts for its members for the next decade and a half. When the union rejected the latest concession proposal earlier this year, the company shut down and blamed the union for it’s own incompetence.
Canadians will remember this one
Eaton’s.
They were such a great place to shop and their catalogue was great. They connected people in very rural areas with the same merchandise they could get in the cities. They had such gorgeous stores that were well stocked and well staffed. You can still see the Eaton’s letter outlines on the former store here.
Poor management cost a once great company. I’m sure Timothy Eaton is still spinning in his grave.
I miss that company a lot.
Blitz USA Inc – they made gas cans, car ramps, that sort of thing. They refused to add a simple screen to their gas cans that would prevent flash over, even after multiple lawsuits. Even after not being able to use their own fuel containers on their own production floors due to OSHA regs. Now they don’t exist. It’s almost a case of corporate suicide.
I used to work for one of the biggest book distributors in the United States, called Pacific Pipeline. They decided to have our computer systems for the entire operation, redone right before the Christmas season. The system was full of flaws and messed up so many orders, which lost of tons of business. The bad decision was to let the people who installed the system, try to fix what they did, before trying to sue them. They never fixed it, and that was the end of that. Probably should have hired another company to do it when they failed originally. Or better yet, wait until after the holiday rush was over.
Sun Microsystems not embracing Linux until it was too late.
I worked there at the time, and Linux was seen as kind of a toy operating system with little margin. Just cheap small boxes.
Well, it turned out, cheap small boxes are now what runs in datacenters and Linux is everywhere.
Sun was making money hand over fist selling really high margin servers – and knew it would cannibalize its own sales. And since no exec was willing to sacrifice their own revenue (and bonuses) to help for a future where they may not be there (lots of Sun Execs /VPs left for more lucrative positions), it was a tough sell.
I know it was tough to disrupt the server business. I worked on the software side, and they would include our software to boost hardware sales (when in reality, every other company in the world viewed hardware as a commodity and software as the value add).
Once upon a time I worked at a Barkers department store. It was a lower mid level discount store chain a’la Kmart, occupying the mid-Atlantic states. They went under in the mid 80’s or so, but in 1978 I could read the writing on the wall. I think they failed to catch the bus in not adopting some sort of scanning technology when everyone else was going there. They used a 9 digit inventory control system, compartmented by department number. This meant front cashiers had to punch in ELEVEN numbers before the price. This was an extraordinarily SLOW checkout process. I can remember standing at the register, fingers flying, sweating bullets with a line going back into the store with impatient people. I was one of the fastest on the register line. Ticked off customers along with the common mistakes of mis- entered (or purposeful mis-entering for speed) inventory numbers I’m sure had great deal to do with Barkers demise .
Barings Bank was around from the 1700s until the 1990s when some kid in Singapore made a trade that cost them >1 billion USD. I think that’s my best example that comes to mind.
Someone in IT decided to deploy untested software. Knight Capital Group loses $445 million in 45 minutes. Knight Capital Group had to sell itself to another firm at a discounted price, and several of its top executives were fired
MySpace… whatever they did with the servers that had all our old profiles, pics, and chats.
Not quite dead, but Miku released a bad firmware for their baby monitor which destroyed the onboard storage. They did the right thing and replaced all monitors out in the market, but then went bankrupt and recently got purchased and brought back to life with nearly every feature that used to be free now behind a paywall. I wonder how the QA/Engineer(s) working on that product feel about missing that bug…
