The 101 Dumbest Moments in Business

In a perfect world, a list like this would not exist. In a perfect world, businesses would be run with the utmost integrity and competence. But ours is, alas, an imperfect world, and if we must live in one where Enron, Geraldo Rivera, and Cottonelle Fresh Rollwipes exist, the least we can do is catalog the absurdities.

1. Houston, We Have a Problem, Part 1: Enron states billions of dollars in extra revenue through aggressive accounting and complicated off-the-books partnerships managed by its own executives, all the while ignoring warnings from its employees and enriching its top executives at the expense of its investors and workforce. And it assumes none of this will ever come to light.

2. A dozen Burger King marketing execs suffer first- and second-degree burns while walking over hot coals as part of a team-building retreat in October. One of the injured, a VP for product marketing aptly named Dana Frydman, tries to put a positive spin on having her feet flame-broiled like so much ground chuck. "It made you feel a sense of empowerment and that you can accomplish anything," she tells the Miami Herald.

3. Banana Republic co-founders Mel and Patricia Ziegler start ZoZa, an "athletic formalwear" retailer, in late 2000. Mel says he expects sales to reach $1 billion within seven years. Gary Rieschel of Softbank Venture Capital invests $16.5 million, telling BusinessWeek, "If you have guts and you have capital, how can you not be optimistic about the consumer market?" Here's how: ZoZa's designers revamp its spring 2001 line, intentionally making their dresses two sizes smaller than labeled. Even the svelte are outraged, and ZoZa's merchandise return rate soars to 80 percent. The company shuts down in May 2001, proving that, if the dress doesn't fit, you must, uh, quit.

4. Sept. 11 Inc., Rampant Greed Division: Gas stations nationwide exploit post-Sept. 11 fears of a fuel shortage by charging customers $4 and $5 per gallon. Among the worst offenders: a station in Jackson, Mich., that, according to Newsweek, hikes its price to $6.75 per gallon.

5. Proving the old business-school saw that "any idiot can sell a dollar for 80 cents," online-currency company Flooz.com in July launches a special offer whereby American Express platinum cardholders can buy $1,000 of Flooz currency for just $800.

6. A month later, Flooz.com ceases processing transactions. It declares bankruptcy in November, leaving those who bought Flooz currency stuck with worthless e-dollars.

7. Last May, Citizens Against Government Waste, a group that received funding from Microsoft (MSFT), is caught simulating a "grassroots" campaign to get state attorneys general to drop their antitrust suit against the software giant. One detail that gives the scheme away: Some of the letters supporting Microsoft are from people who have long since died.

8. After issuing his landmark antitrust decision against Microsoft, Judge Thomas Penfield Jackson lets reporters print comments from previously confidential interviews, in which he compares Bill Gates to Napoleon and Microsoft executives to gangland killers. In June an appeals court overturns Jackson's decision to break up the company, citing his remarks as evidence of his "rampant disregard for the judiciary's ethical obligations."

9. At a Microsoft employee event last summer, CEO Steve Ballmer apparently suffers a grand mal seizure. Or attempts to dance. One or the other. It's hard to tell. In any case, a video clip of his calisthenics starts making the rounds of the Internet.

10. With the slogan "Sometimes wetter is better," Kimberly-Clark (KMB) introduces Cottonelle Fresh Rollwipes premoistened toilet paper -- or, to put it another way, baby wipes for adults.

11. Houston, We Have a Problem, Part 2: Business 2.0 puts Enron CEO Jeffrey Skilling on the cover of its August/September issue as a symbol of the digital revolution. A week after the issue hits newsstands, Skilling resigns from his job. In retrospect, perhaps Skilling's pose on the cover should have provided a clue.

12. Houston, We Have a Problem, Part 3 (or, if Arthur Andersen Is Doing the Accounting, Part 1,000,000,003): In mid-October, Enron discloses that it has erroneously added $1 billion to its assets, despite the rigorous oversight of its auditors at Arthur Andersen. Enron takes a $1 billion charge against earnings, which prompts questions about how reliable the rest of its numbers are.

13. Having earned the enmity of the five major record labels as CEO of MP3.com, Michael Robertson takes on Microsoft by launching Lindows, a Linux-based operating system that runs Windows programs. Robertson says he isn't afraid of going up against the world's most notoriously competitive company. "There were five major record labels, and there's only one Microsoft," he says. "That's an 80 percent reduction."

14. Following in the footsteps of M.C. Hammer and a talking Chihuahua, Amazon.com CEO and Time magazine 1999 Person of the Year Jeff Bezos becomes a shill for Taco Bell in an ad that touts its chicken quesadilla as a "hot new handheld."

15. Two years after announcing its plan to build a state-of-the-art $400 million supply chain, Nike (NKE) cuts its earnings outlook for the current quarter by more than $50 million, citing problems caused by supply-chain software supplied by i2 (ITWO). Nike CEO Philip Knight tells analysts, "I guess my immediate reaction is 'This is what we get for $400 million?'" i2 counters that the problem was Nike's implementation of its system; meanwhile, i2 shareholders sue the company for failing to promptly disclose its Nike troubles.

16. "No one will deny that Sony is a world-class hardware company, and no one would deny that Microsoft is a world-class software company. Nintendo aspires to be neither one of those things." -- Peter Main, a Nintendo marketing executive, to the San Francisco Chronicle

17. Still Partying Like It's 1999, Part 1: Boasting a total of precisely one profitable quarter, Salesforce.com hosts its third annual Tibet-themed "Freedom From Software" bash in New York. Dinner at the Russian Tea Room is followed by a concert at Carnegie Hall featuring David Bowie, Philip Glass, the Kronos Quartet, and the monks from the Drepung Gomang Monastery. Making the linkage between "freedom from software" and "freedom from religious oppression" explicit, the invitation bears an image of Buddha and states that "the path to enlightenment requires no software."

18. CNN 1, Fox News 0: On her first day as a newsreader for CNN's Headline News, former NYPD Blue actress Andrea Thompson ingratiates herself to viewers by announcing, "I'm Andrea Thompson, and unless you've been living in a cave, you probably already know that."

19. CNN 1, Fox News 1: The Fox News Channel hires Geraldo Rivera. And sends him to Afghanistan. With a camera crew. And a return ticket.

20. The Gartner Group issues trading cards featuring its analysts.

21. NBC and the World Wrestling Federation plow $100 million into creating the XFL. The March 17 game between the Birmingham Thunderbolts and the Las Vegas Outlaws scores a 1.6 Nielsen rating, believed to be the lowest ever for any prime-time network program. The league folds after one season.

22. Sept. 11 Inc., Clueless as to the Content of Our Content Division: In the wake of the terrorist attacks, employees of radio conglomerate Clear Channel (CCU) begin circulating a list of songs inappropriate for airplay. Among the songs is "Imagine," John Lennon's plea for world peace, which is later performed by Neil Young during the "America: A Tribute to Heroes" fund-raiser for victims of the attacks. Clear Channel's management denies issuing or endorsing the list.

23. Italian jewelry company Bulgari pays British novelist Fay Weldon an undisclosed sum to extol Bulgari products in her next book. Weldon complies, offering descriptions of "white gold and pavé diamonds, cold metal intricately, beautifully worked, lain heavily against the cool, moist flesh of wrist and throat...." The book's title: The Bulgari Connection.

24. By faking the transactions that should have offset the risk in his portfolio, a trader named John Rusnak, working for a Baltimore subsidiary of Allied Irish Banks, loses $691.2 million before the bank discovers his misdeeds. After the bank and the federal government launch investigations, Rusnak is fired, denying him the chance to unseat Barings PLC's Nicholas Leeson -- who lost $1.4 billion and destroyed a 232-year-old company -- as the most inept rogue trader ever.

25. Houston, We Have a Problem, Part 4: As questions swirl around Enron's finances in mid-November, CEO Kenneth Lay reassures investors, "Everything we know, you know."

26. Houston, We Have a Problem, Part 5: In November, just as the scope of the financial improprieties at Enron becomes apparent, the James A. Baker III Institute gives out the Enron Prize, for distinguished public service. Its recipient: Alan Greenspan.

27. Mobile Office Enterprise unveils the Express Desk, which attaches a notebook computer to the steering wheel of a car. For use only while parked, of course.

28, 29, 30. Great Moments in Privacy

Part 1: In June 2001, the Georgia Student Finance Commission accidentally allows more than 18,000 scholarship applicants' personal information to be released onto the Internet.

Part 2: Not to be outdone, Eli Lilly sends a mass e-mail in July to users of its antidepressant Prozac but neglects to use the "bcc" header, further depressing its customers by disclosing their online identities to one another.

Part 3: Trumping Eli Lilly, in October a graduate student at the University of Montana accidentally posts to the school's website more than 400 documents relating to the psychiatric treatment of 62 children, including names, addresses, descriptions of sessions, and diagnoses.

Click on the link to see the rest of the 101ers...heh-heh-heh-heh-heh

Now, I wonder...could we give them something like, say, a Dickie Award? Named after Dick Rowe, once the chieftain of British Decca Records, who infamously told a certain Brian Epstein, in early 1962, "We don't like your boys' sound. Groups of guitars are on the way out." Subsequently signing the Rolling Stones couldn't save Dick Rowe from eternal ridicule for having turned down the Beatles with a line like that. It nearly erased the memory of the 20th Century Fox executive who insisted no one would bother watching a Civil War film - and rejected first crack at making Gone With The Wind...

Otherwise, enjoy! Nothing like a round of foul-ups, bleeps, and blunders to lighten the load around here...

2. A dozen Burger King marketing execs suffer first- and second-degree burns while walking over hot coals as part of a team-building retreat in October.

I wonder what went wrong. I've done firewalking before and it wasn't dangerous.

Haven't finished reading it, but here's my favorite so far:

40. The Newspaper Association of America names Kmart its "Retailer of the Year" on Jan. 21, 2002, one day before the company files for bankruptcy protection under Chapter 11.

Newspaper people and the guys that hired Rosie ODonut and Penny Marshall to sell their clothing!!! This has to be the dumbest combination so far.

Here's how: ZoZa's designers revamp its spring 2001 line, intentionally making their dresses two sizes smaller than labeled. Even the svelte are outraged, and ZoZa's merchandise return rate soars to 80 percent. The company shuts down in May 2001, proving that, if the dress doesn't fit, you must, uh, quit.

How dumb is that? The way to appeal to customers is to do just the opposite -- if a size 12 can fit into a size 8 dress, then that company has gained a loyal customer. Nobody who's a size 12 wants to wear a size 16!

It nearly erased the memory of the 20th Century Fox executive who insisted no one would bother watching a Civil War film - and rejected first crack at making Gone With The Wind...

I strongly suspect this is an urban legend. Gone with the Wind was by far the biggest publishing event of the 1930s, and everybody in America was eagerly anticipating the movie.

"New Coke" should have been in there somewhere.

It would have been, if this list was covering the 20th Century. Unfortunately, this list covers 2001, and the year it became Coke Are It was 1985...

My own rating would have put New Coke number one among the dumbest 20th Century business moves. But if I had to make a list of the 20th Century's smartest business moves, I'd be hard pressed not to make number one Coke's own almost-accidentally clever resurrection of the old Coke just a few months later, when the company actually did react to the outcry over the original drink's disappearance with a press conference that turned the century's biggest business blunder into the greatest bonanza in the history of the soft drink industry: To those of you who are enjoying Coca-Cola with its great new taste, we thank you. But we understand that many others feel very powerfully about the drink they used to know. And to those people, we want to say...we have heard you. If ever a company snatched genius from the jaws of stupidity, Coke was it. With that one conference, Coke even managed to bury the masterstroke their original stupidity inspired at Pepsi, when chairman Roger Enrico's famous "the other guy just blinked" memo became public knowledge and the biggest advertising hit Pepsi had had in several years...

I strongly suspect this is an urban legend. Gone with the Wind was by far the biggest publishing event of the 1930s, and everybody in America was eagerly anticipating the movie.

To my knowledge, it's not an urban legend, it's a fact. Fox did reject Gone With The Wind despite the book's popularity, believing strongly that a best-selling Civil War novel was one thing but a hit Civil War film was something entirely different and unlikely to happen; they may also have thought the success of Gone With The Wind as a novel was nothing more than a fad that might well die by the time a movie could get made. Eager anticipation doesn't always mean box-office bingo. They wouldn't have been the first filmmakers to say no to a huge hit. And they won't be the last.

"the 20th Century Fox executive who insisted no one would bother watching a Civil War film - and rejected first crack at making Gone With The Wind"

Sounds like the record producer who passed on the Beatles, as he said "guitar bands are on the way out".

I first learned about Fox rejecting Wind in, of all places, a 1968-69 biography of the Beatles - it was mentioned in a chapter that described how British music reporters got the word about Dick Rowe at Decca rejecting them as I described above, and how they made sport enough of comparing that to the Fox rejection of Wind that Dick Rowe became the laughingstock of the British music industry.

They'd hardly be the first major entertainment figures to be dead wrong about something's prospective appeal, the very thing of it being a crap-shoot. It no further killed Fox after they turned down Gone With The Wind than did Jackie Gleason suffer when he refused to book Elvis Presley onto his hugely popular variety show, when he was one of the first to have the opportunity, saying, "I tell you, this kid can't make it." (Steve Allen and Ed Sullivan, of course, booked the kid and the rest was history.)

90. Houston, We Have a Problem, Part 12: In his testimony before Congress, Jeffrey Skilling claims that he is unable to recall a board of directors committee meeting in which records show that he had approved several partnership deals, in part because "the room was dark, quite frankly, and people were walking in and out of the meeting."

He should have said he was drinking iced tea and had to go to the bathroom a lot.

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