The Ratner effect
In the 1980s, Ratners Group jewelers was a common sight on high streets across the UK; a family-ran business which spawned into a 900-strong store count during its peak. The Ratner situation is testament to the fact that everything can change in a given moment, and the company’s CEO, Gerald Ratner, learned this the hard way.
A couple of misjudged remarks in front of a room full of journalists and business figures prompted a precipitous drop in revenue, as Ratner lost more than a hundred million pounds in less than a minute after his remarks had proliferated around the room and then the country.
He spoke about how his company could sell items so cheaply, explaining that the price point was possible because the products were “total crap”. He added insult to injury, adding that his company sold earrings that were cheaper than a prawn sandwich from Marks and Spencer, but wouldn’t last as long.
Naturally, journalists were ready to splash their headlines off the back of Ratner’s offhand comments. Ratners share price plunged after the story hit the press, almost 300 stores closed and Ratner resigned as CEO. The family name became a byword for calamity and the company had to undergo a full rebrand. The takeaway from this one is simply to be cautious and think before you speak, as it could land your business and your career in hot water!
The New Coke calamity
The iconic red can became a cultural symbol, and Coca-Cola have reveled in this stardom. Created by inventor John Pemberton in Atlanta, GA, in 1886, the original formula is an intensely guarded secret.
When arch-rivals Pepsi made their presence known amongst the coveted teenage audience, Coca-Cola made a bold move to guard its market share from its key competitors. So, the taste was adapted slightly, making Coca-Cola slightly sweeter in order to make it taste more like Pepsi.
The rehashed product was named as New Coke, and it was unveiled in 1985. Within days, there was a huge outcry from those loyal to the signature coke taste, with many customers calling for the brand to reverse its decision.
Their revised recipe had in fact alienated their traditional demographic, instead focusing on a smaller proportion who had chased the sweeter alternative. This product was already available, and New Coke was simply a same-but-different choice.
In a matter of three months, New Coke was ditched from supermarket shelves to be replaced by Coca--Cola classic. A huge lesson was learned, but if the course of events had been any different then we might not be as familiar with the powerhouse brand as we are today. Take heed from the old Russian proverb “Trust, but verify” and make sure your market research and development stages are fool proof.
NASA's mixed-up measurements
George Bernard Shaw said “The United States and Great Britain are two countries separated by a common language” and it’s the same for numbers too.
In 1999, NASA’s Mars Climate Orbiter fell victim to not only the vast expanse of the vacuum we call space, but it also combusted as a result of the metric measurement system. Engineers didn’t realize that European engineers working on the craft had worked in Imperial measurements and failed to convert them to metric. The internal software was given data which didn’t correspond to the same units so when the system which controlled the thrusters calculated the force required in pounds, another system was telling it that it was in Newtons.
This Mars mission ended unceremoniously due to a simple mathematical miscommunication, and it was a costly lesson to learn. The orbiter cost a staggering $125 million to build, but it taught a remarkably invaluable lesson to all involved: the value of basic communication, and the need to verify even the simplest of protocols — check, and check again!
Kodak’s multi-billion $ mistake
Kodak has been synonymous with photography for more than 100 years, from the era of box-brownie and pinhole cameras to disposable units, the brand had seen it all.
Founded in New York in 1880, by the 1970s over 85% of the market for cameras and film was controlled by Kodak. In 1975, Steven Sasson, a research and development employee was experimenting with a product called a charge-coupled device. He found that if he could translate light into binary code, he could produce a 100,000 pixel image — or 0.01 megapixels as we’d refer to it now. He essentially built the prototype for digital cameras, creating a device which used a memory card and compressed images.
The idea wasn’t warmly welcomed by the more conservative forces from within the business though, favoring the traditional markets of film and paper where it held a lot of industry authorities. As a result, the device was never released out of fear that it would jeopardize the brand’s sales. They eventually made the switch to digital in the late 1990s but it was too late, and Kodak had to file for bankruptcy in 2012 as a result. The digital camera line was abandoned, and the brand now keeps its focus on the production of printer cartridges and motion picture film.
Here, we’ve established that shouting about your innovation is important, but equally staying aware of what your competitors are doing will save you any potential embarrassment if something goes wrong somewhere along the line.
Meerkat’s failure to adapt
Launched in 2015, Meerkat was the first live video streaming app to utilize platforms such as Facebook and Twitter.
Initially, it was a huge hit with users, as ordinary people and celebrities alike realized they could live stream on both channels at the same time. However, Facebook and Twitter quickly clocked onto this, and developed their own streaming systems as a result; Facebook Live and Periscope. When they launched they also withdrew Meerkat’s access to their platforms.
Meerkat never recovered from this. It could have attempted to move towards a new niche, but most of the financial investment had been used up paying for endorsements from celebrities and other backers, as opposed to focusing on the actual product.
Many businesses get side-tracked by their initial fifteen minutes of fame, but it’s vital to avoid this and prepare for all eventualities in the meantime!
As we’ve discovered, it’s never always plain sailing in business, and there are certainly some chilling tales to be told! Should your business encounter any misfortune or bigger threats such as a winding up petition, get experts on board.