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The Dumbest Moments in Business HistoryUseless Products, Ruinous Deals, Clueless Bosses, and Othersigns Ofunintelligent Life in the Workplace
By Adam Horowitz
PortfolioCopyright © 2005 Adam Horowitz
All right reserved.
Chapter OneRESEARCH AND DEVELOPMENT
A bad idea has to start somewhere. It's that old business maxim: You can't make a defective omelet without designing a really inefficient, expensive and dangerous way of breaking some eggs. Welcome to R&D.
Thanks, but We're Happy with the Double Entendres We Get in Beer Commercials. "If a cheerleader, for argument's sake, introduces a tight end ... there may be a little double entendre. Not unsavory, but things that are different from the NFL."
-World Wrestling Federation chairman Vince McMahon, explaining how research and development for the XFL, a supposed rival for the NFL created in collaboration with NBC, came up with a few new wrinkles for pro football. The league folded in 2001 after one season and a $100 million investment, but left its mark on television: one game broadcast was believed to be the lowest-rated prime-time program ever.
Hellbent for Pleather
The 1964-65 World's Fair was a veritable cavalcade of ingenuity. IBM was showing off the latest in mainframe computer technology. RCA wasbroadcasting TV shows-in color! NASA brought in a full-size, first-stage Saturn V rocket. Impressive stuff. Oh, and DuPont had a musical about Corfam. The Wonderful World of Chemistry was actually about all sorts of DuPont products. As smiley actors and actresses sang "The Happy Plastic Family," audience members sat in Antron-Fabrilite chairs on Nylon carpets, watching the performers in front of a Mylar curtain. But Corfam, a new synthetic leather, was the star of the show. Promoted as having the feel and durability of leather, Corfam shoes also were water-repellent and were supposed to never need shining-attributes that inspired DuPont to proclaim that soon 25 percent of America's footwear would be made of Corfam. But then the other shoe dropped: The plastic was so unyielding that you could never, ever, break in a pair of Corfam shoes. People hated 'em. After seven years, DuPont told its wonder shoe to take a walk, at a cost of $100 million.
Try Our New Cigarette: All the Foul Taste You Expect, Plus the Aroma of Squandered Millions.
"A new era for smoking is about to begin," announced RJ Reynolds Tobacco in an ad for its Premier cigarette in 1988. Yes, and the new era lasted, oh, about 16 weeks. Developed under the code name Project Spa (sounds refreshing, no?), the Premier was RJ Reynolds' attempt to create a "smokeless" cigarette, designed to shut up the worrywarts who were starting to make a nuisance of themselves with warnings about the dangers of secondhand smoke. Though the Premier would feature all of the lung-corroding toxins that generations of smokers had come to love, it was promoted as a "cleaner" cigarette. Development and promotional costs reached $68 million, enraging the company's board of directors, who hadn't been informed of the Premier's existence until spending already had run amok. There was scant evidence the product warranted the outlay. Even the company's own research reports didn't offer much support. The Premier might have looked out for the sensitivities of nonsmokers in the room, but it was hell on anyone who fired one up. Only 5 percent of smokers in an American focus group liked it. The smokeless cig even challenged the politeness of a Japanese test group, where one participant took a puff and reported, "This tastes like shit." There was another problem, referred to by RJ Reynolds execs (they might make coffin nails, but who says they don't have a sense of humor?) as the "hernia effect." The Premier's smokeless design was so user-unfriendly that you practically needed a Dirt Devil to suck out the yummy nicotine-and-tar ambrosia. Smokers, never known for their prodigious lung power anyway, decided the Premier was itself a huge drag. Four months after the Premier's premiere, with tens of millions of dollars up in flames, RJ Reynolds discontinued the product, making the world safe again for unsafe cigarettes.
At Last, Nike Gives Something Back to the Third World.
Great innovations often result from asking the question "What if?" The invention of the Kenyan ski team started that way, too.
Looking for that last cranny of the world that hadn't been swooshed by the late 1990s, Nike hit on a novel brand-extension opportunity for the 1998 Winter Olympics in Nagano, Japan: what if the athletic shoe and clothing manufacturer secretly funded a training program to turn some of Kenya's fabled long-distance runners into cross-country skiers? Sort of a kicky new twist on the whole Jamaican-bobsled-team thing.
Spending about $250,000, Nike introduced two Kenyan runners, Henry Bitok and Philip Boit, to the pleasures of XC-skiing. The duo showed up in Nagano representing their country and keeping Nike's backing quiet. Bitok failed to qualify, but Boit managed to stumble to a last-place finish, 20 minutes behind the gold-medalist. Still, it made for a cute feel-good story about perseverance-at least until word of Nike's patronage leaked. Sports journalists turned the episode into a biathlon, pulling out their rifles to mix a little target practice with the skiing. One writer called Bitok and Boit "marketing pawns financed by well-heeled publicity seekers." Another dubbed Nike's machinations "Orwell at the Olympics." "I can assure you that it is not a gimmick," said the chairman of the Kenyan National Olympic Committee. "You're going to hear a lot about Kenya and skiing." True enough. The water skiing near Mombasa is supposed to be terrific.
Great. That Means We'll Have to Pay Double for Light Switches, Too. "They're multipurpose-not only do they put the clips on, but they take them off."
-Pratt & Whitney spokesperson Robert G. H. Carroll III, in 1990, explaining why it charged the Air Force $999.20 for a pair of pliers
No, That's Love in the Air. It Only Smells Like Butane.
The trouble with cigarette lighters is that they just don't lend themselves to lavish, Humvee-ish consumption of petroleum products. Oh, there was a spike back in the 1970s whenever Bob Dylan would keep 'em begging for encores till their BICs melted. But otherwise, it's just flick-flick and back in the pocket.
Don't blame Ronson. The folks at the butane and cigarette lighter manufacturer took their shot at ramping up butane usage back in the 1960s, after looking over the sales numbers and deciding the fuel had so much more potential. The boys in R&D came back with a device guaranteed to burn off a hell of a lot more lighter fluid than a chain-smoker could use in a week: the Ronson Veraflame. Priced at $30 and made from brushed aluminum, the Veraflame was a candle for hipsters who'd had it with antiquated wax technology. This flame, the ads bragged, was adjustable: "Low for intimate dinners. Medium for dinner parties ... high for swinging soirees." But then, as now, Americans were generally satisfied with the performance of the candles they had always used when they weren't just relying on electricity. And when they did just have the lights on, most folks were familiar with the dimmer-switch concept. And so the Veraflame slowly, sensually, odoriferously guttered out.
Katie, Your Party's Only Going to Last Two and a Half Minutes This Year If We're Going to Tape It. So Choose One: Clown or Cake?
By all accounts, Edwin Land was a genius 99 percent of the time. Land revolutionized photography-and minted money in the process-with the invention of instant color photographs in the 1960s. As the head of Polaroid in the 1970s, he acquired a reputation for being allergic to market research. He often guessed right, but unfortunately one of his most cherished ideas popped up while the nongenius one-percent window was open.
Land seemed to have convinced himself that the only way he could top the invention of instant photos was to come up with the instant color movie. Proclaiming himself director of research on top of his CEO duties, Land approved $250 million in R&D funding to create his "living image system." He even plowed $68 million of his own cash into the project. The result was the Polavision, introduced in 1978. The $700 contraption created instant movies, yes-but they only lasted two and a half minutes, ran without sound and required a special viewing device if you actually wanted to watch them. Which precious few people did. Sales were so slow during the Christmas season that Polaroid offered to have a Santa Claus hand-deliver a Polavision to anybody who bought one. Only 3,000 people signed up. And half of those clueless early-adapters probably thought they were buying into a bird's-eye view of Santa's workshop called Polarvision.
... Including the Pompous, Short-Sighted Bureaucrat "Everything that can be invented has been invented."
-Federal Office of Patents commissioner Charles H. Duell, in 1899, declaring his job obsolete
But at Least They Canned the Ad with the Elephant and the Zookeeper. Here's a fact we'll bet you're glad you didn't know: 63 percent of Americans use moist wipes or wet toilet paper while ... well, let's put it this way, not while washing the car. Armed with this information, Kimberly-Clark thought it was sitting on a gold mine, sitting in the catbird seat, sitting pretty-well, we're almost certain that sitting or something that rhymes with it was involved. The company saw an enormous potential market of customers who at that point were improvising because nobody made the product they clearly yearned for. Dry toilet paper on a roll might have ruled the 20th century following its invention in 1890, but premoistened rolls would wipe up in the new century. The company poured $100 million into R&D, booked $35 million in advertising and in early 2001 proudly unfurled Cottonelle Fresh Rollwipes.
Maybe Kimberly-Clark thought the advantages of Rollwipes were self-evident and a grateful populace-nearly two-thirds of the country!-would reach for them instinctively. Otherwise, getting the word out was going to be tricky. One ad simply showed people happily splashing in a pool with the tagline "Sometimes wetter is better." Given that sort of vagueness, Cottonelle Fresh Rollwipes could've been a new kind of toilet paper or the worst-named water park in history. With sales sluggish, a later print ad tiptoed toward frankness. It featured a sumo wrestler, shown from behind, with the wetter-better tagline. In an act of desperation, the company sent a van on the road with a restroom attached so that folks could privately test-drive Rollwipes. That's when Kimberly-Clark learned that people won't use PortaPotties unless somebody's sticking a gastrointestinal gun in their backs. Clearly, toilet paper of any variety just isn't meant for blockbuster rollouts. After two years, Rollwipes was still languishing in test marketing and had a negligible impact on the company's (ahem) bottom line.
The Day Steve Jobs Went for a Stroll in the PARC and Ate Xerox's Lunch
Its official name was the Xerox Palo Alto Research Center, but it was more familiarly known simply as PARC. Nestled near the Stanford University campus and home to some of the most brilliant minds in technology research, Xerox PARC was the place where great ideas were invented-and then blithely given away. Created in 1971, Xerox PARC was the copier company's attempt to work on technology transfer-birthing new innovations and bringing them to market. And by 1973 it had come up with some fascinating stuff. There was the Graphical User Interface (GUI), the computer mouse and the Ethernet to connect computers. But by 1979, Xerox still wasn't doing anything with these extremely cool ideas. That same year, a 24-year-old Steve Jobs, fresh from the success of his Apple 2 computer, visited the PARC complex. Jobs, gawking at the GUI, begged his hosts to let him bring some Apple staffers back to check it out. A PARC administrator warned Xerox higher-ups that showing off the GUI would risk a tremendous asset, but his bosses said, in effect, "Oh, let Jobs ogle your little point-and-click OS toy all he wants ... we're busy making copiers here." In the course of an hour-long demonstration to the Apple crew, Xerox successfully transferred their technology into the fertile minds of Jobs and his team. As Jobs later said, Xerox "could have owned the entire computer industry." Or was that what Bill Gates said about Steve Jobs?
Our Sexy New Shampoo, "Corporate Spy"-Now with the Scent of Half-Eaten Tuna Sandwiches!
Competing for market share can be a messy business, but some Procter & Gamble employees didn't get the memo explaining that they shouldn't take this idea too literally. In April 2001, P&G CEO John Pepper discovered that some staffers in his marketing department were too eagerly investigating the hair-care products of rival Unilever, going so far as to rifle through the garbage outside the company's Chicago offices. The Dumpster diving-or, as the corporate espionage folks call it, "waste archeology"-was part of a $3 million spying program that P&G initiated in the fall of 2000. As R&D goes, the research was an unfortunate development. Though Pepper informed Unilever about his underlings' activities, P&G still had to pay out a reported $10 million to settle the matter. Three overzealous employees were fired, giving the garbage pickers the chance to spend some quality time in the tub testing the difference between P&G's Oil of Olay Moisturizing Body Wash and Nature's Breeze Body Wash, brought to you by Unilever.
Mr. Keely's Dynamic Turnkey Technology Solution
It's tempting to believe that the contemporary plague of mind-numbing corporate jargon is a novel form of mental illness that will fade away when people admit that burbling words such as disintermediation and instantiation just sounds silly. But, if history is any guide, polysyllabic claptrap will be with us as long as suckers are still regularly emerging from the delivery room.
Witness one John E. W. Keely, who in 1872 began exhibiting on the second floor of his Philadelphia home a curious device he'd developed. Having recently discovered a way to tap into the "inter-molecular vibrations of ether," Keely told onlookers, he had invented a "hydro-pneumatic-pulsating vacue" device that converted a quart of water into a fuel that offered a nearly endless supply of energy. In other, shorter words, Keely was saying he'd developed a perpetual-motion machine. Investors, not looking into the part of Keely's risumi that read "carnival barker," were eager to invest. With the help of four businessmen-and $1 million-Keely organized the Keely Motor Company.
Excerpted from The Dumbest Moments in Business History by Adam Horowitz Copyright © 2005 by Adam Horowitz. Excerpted by permission.
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