*NEWS*THE 10 DUMBEST MOMENTS IN BUSINESS
*NEWS*THE 10 DUMBEST MOMENTS IN BUSINESS
2005-02-02 at 9:40:00 am #10016The 10 Dumbest Moments in Business
Our fifth annual review of the most shameful, dishonest, and just plain stupid moments of the past year.1 Defrauding investors is sooooooo 2002. These days it’s all about hosing your customers.
When you’re a bike-lock maker whose slogan is “Tough World, Tough Locks,” it doesn’t get much tougher than finding out that most of the locks you’ve been making for the last 30 years can be picked with a Bic pen. That, sadly, is what happens to Ingersoll-Rand subsidiary Kryptonite in September, after bloggers begin posting videos showing just how easy it is to pop open the company’s ubiquitous U-shaped locks. Still in denial four days after the hullabaloo begins, spokeswoman Donna Tocci says that the locks nonetheless provide “an effective deterrent against theft” and that Kryptonite will speed up deliveries of new, Bic-proof locks to stores. Unsatisfied, bloggers continue to rail at the company until it finally agrees to exchange the old locks for new ones, at an estimated cost of $10 million. Um … make that at least $10 million: In December the company explains that the process of manufacturing and shipping the 100,000 replacement locks is taking longer than expected. In the meantime, many dealers receive no shipments of new locks, costing Kryptonite as much as $6 million in sales.
2 Now that’s pain relief.
Withdrawing arthritis medication Vioxx from the market because of concerns that it raises the risk of heart attacks, Merck sees its stock drop 39 percent, shaving $38 billion off the company’s market cap. Responding to the crisis, Merck management executes a bold, daring plan—a “change in control separation benefits plan” for 230 of its top executives. The plan gives them up to three years of guaranteed salary and benefits if they lose their jobs as the result of a merger or takeover.
3 What’s the problem? We love a guy who stands behind his product.
James Joseph Minder, chairman of gunmaker Smith & Wesson, is forced to resign when newspaper reporters discover that, before becoming a corporate exec, he’d spent 15 years behind bars for a string of armed robberies and an attempted prison escape.
4 Do as I say, not as I…hey, get a load of those!
After joining the Bank of Ireland as CEO, Michael Soden issues a dictate: No porn surfing on the job. His next dictate: The IT department is to be outsourced to Hewlett-Packard. Shortly after the outsourcing deal goes through, IT staffers, now employed by HP, discover porn on Soden’s computer. Soden resigns, leaving the bank and HP scrapping over who should pay his severance, estimated at $5 million.
5 For more nostalgia, you can always check out your legal bills from the DOJ antitrust lawsuit.
“Microsoft has had competitors in the past. It’s a good thing we have museums to document this stuff.”—Bill Gates, in a talk at the Computer History Museum in Mountain View, Calif.
6 The family that colludes together, stays together.
New York State attorney general Eliot Spitzer files a lawsuit in October against insurance broker Marsh & McLennan, charging that the firm rigged bids by having insurers give artificially high quotes, thus deceiving customers into thinking their insurance policies received competitive prices. Marsh also allegedly received payments above and beyond the normal commissions for steering business to certain insurers. CEO Jeffrey Greenberg resigns, and the company vows to stop the practices, costing it $800 million in “commission” revenue. Finally, Spitzer also reveals that insurance giant AIG, headed by Greenberg’s father, Hank, and Bermuda-based insurer ACE, headed by brother Evan, were among the firms that participated in the bid rigging.
7-9 If you can’t beat ‘em, join ‘em.
In April, RealNetworks CEO Rob Glaser—seeing his online music store struggling to compete with Apple’s iTunes because it’s not compatible with the iPod—e-mails Steve Jobs suggesting that he open the iPod to other purveyors of digital music. The e-mail is immediately leaked to the New York Times, which interviews a surprised Glaser. “Steve is showing a high level of fear,” he says.
If you can’t beat ‘em, and you can’t join ‘em, encourage people to whine about ‘em.Still peeved that Apple won’t allow the iPod to play downloads from his online music store, Glaser launches an online petition urging Apple to open up. He quickly pulls the petition offline when he discovers that most of the signers have left strident pro-Apple comments.
If you can’t beat ‘em, and you can’t join ‘em, and you can’t get people to whine about ‘em…put out some half-baked software that forever alienates potential customers?Not backing down, Glaser offers a software hack that allows iPods to play songs purchased from Real. Apple blasts its rival for exhibiting “the ethics of a hacker” and warns iPod users that future updates to its software will render the Real songs unplayable. But it turns out that if Real is acting like a hacker, it’s not a particularly talented one: Several Real customers report that the software fills their screens with ads and crashes their computers. In November an Apple software update blocks the hack.
10 In fairness, though, they did turn away the $300 with Dennis Kucinich.
A clerk at the Fashion Bug store in Greensburg, Pa., accepts a $200 bill—and gives the customer $100.58 in change—even though the bill is festooned with clues that it might not be legal tender, including a picture of President George W. Bush and the serial number DUBYA4U2001.