It’s true that no one is perfect, and this shows itself in the business world as much as it does anywhere else.
While entrepreneurs strive to do their best, mistakes are sometimes unavoidable. However, we small business owners can take some comfort in the fact that we’re not at the helm of a massive corporation where a mistake can cost millions. As you’ll see, even CEOs of some of the world’s biggest corporations get it wrong sometimes.
Bill Gates: Ignore upcoming areas of your business at your peril
There’s no denying that Bill Gates is a visionary, founding Microsoft in 1975 and monopolizing the tech industry for decades. However, one area where he fell short was in ignoring the search engine market. While Microsoft introduced MSN Search in 1998, the site purely used an existing search engine, Inktomi, to gather results. It seems all Gates’ attention was focused on browsers, allowing Google to come along and become everyone’s search engine of choice. In 2009, Microsoft introduced Bing, but it has never measured up to the popularity of Google.
If we can learn anything from Gates’ mistake, it’s that you shouldn’t ignore your competitors or an upcoming area in your field, particularly in the technology sector. Technology is evolving all the time, and it’s in your best interests to keep up, adapt quickly, and stay one step ahead whenever possible.
Ronald Johnson: Know your customers, or face losing them
When Ronald Johnson took the helm of the failing J.C Penney corporation in November 2011, he received a warm welcome. Many were intrigued to see what the former head of retail at Apple would bring to the company.
Unfortunately, a series of bad judgments followed, including firing the company’s long-time ad agency, laying off 10% of its corporate staff and thousands of middle managers, and ridding the stores of sales and discounts. The company saw its revenue drop by 25% in 2012, and Johnson was unceremoniously ousted from his position in April 2013.
While Johnson’s radical changes may have worked elsewhere, in this instance it shows the importance of knowing your audience. Avoid making the same mistakes by carrying out focus groups, speaking with your customer base, and keeping communication open to see how your customers would react to big changes in the way you operate.
Richard Branson: Don’t underestimate your competitors
With over 100 companies under his “Virgin” brand, it’s not surprising that Richard Branson will have had a few failures along the way.
One of his biggest mistakes since starting his business came in 1994, in the form of Virgin Cola. Originally only available in Virgin cinemas and on their planes, the market shares for the drink peaked at only 0.5% in the three years it was on sale in the US, while the UK producers went bust in 2012. While Branson could afford to make such a big mistake, it’s unlikely the majority of businesses could. Branson said, “I’ll never again make the mistake of thinking that all large, dominant companies are sleepy!”
Branson’s mistake demonstrates the importance of never underestimating competitors, and shows that it’s vital to carry out detailed market research before releasing a new product into an already saturated market. However, perhaps the biggest lesson we can take from Branson is that we shouldn’t be afraid to take risks, but we should be aware that they might not pay off!
Steve Ballmer: Perform thorough market research before commissioning a new product
During his 14 years as head of Microsoft, Steve Ballmer was constantly coming up against Apple’s newest technology, and often falling behind. For example, the Zune, Microsoft’s answer to iTunes, came out five years too late and was widely panned.
However, the biggest mistake of Ballmer’s tenure is largely classed as being the Surface RT tablet. Unfortunately for Ballmer, the Surface didn’t sell and the company lost over $900 million on it.
Like some of the other CEOs in this list, Ballmer let his competitors get the jump on him. If you are releasing a product, make sure that it stands out from the ones produced by your rivals.
Tim Cook: Only launch a product once it’s truly ready
While Cook’s run as CEO of Apple was an overall success, he did run into a few problems along the way and made some mistakes, notably the Apple Maps fiasco.
In 2012, Apple launched its iOS 6 Maps, which was riddled with bugs, such as inaccurate location placement, mangled satellite imagery, and lack of basic points of interest in big cities, as well as the confusing replacement of native transit directions with third-party routing apps. While bugs are par for the course in the initial stages, launching the app in that state caused confusion for users and left many at Apple red-faced, with the blame ultimately falling on Cook.
The Apple Maps fiasco shows the importance of thorough testing of new products before release and the damage that can be done to a brand should it ignore that stage. Fortunately for Apple, the damage was not long lasting, but that’s not to say that other brands would be forgiven quite so easily.
Philip Clarke: Honesty is the best policy
While Philip Clarke was CEO of Tesco, he made many mistakes, the most notable of which were financial. In September of 2014, news broke that the supermarket chain had overestimated its half-year profits by £264 million.
The chain of errors that resulted in the overstating of the company’s profit are now under investigation, with Tesco’s credit rating under review, their shares slumping, and the possibility of executives having to face MPs over the mistake.
As is generally the case, Clarke proves that honesty is the best policy. His mistakes attest the importance of accountability—not to mention accounting! Finally, don’t try to pull the wool over your stakeholders’ or customers’ eyes, it’ll only come back to bite you.
Mike Jeffries: Think before you speak—remember, you are representing your brand
Abercrombie & Fitch’s CEO Mike Jeffries’ words came back to haunt him when an interview he gave stating the store only wanted “thin and beautiful people” to shop with them resurfaced.
The original interview from 2006 re-appeared online in 2013 and caused outrage among the public and celebrities alike. The company—and Jeffries in particular—came under fire for the comments which stated the shop was “exclusionary,” with its target market being only thin people.
Jeffries later issued an apology for his comments via the company’s Facebook page. His behavior highlights the importance of thinking before you speak; a CEO doesn’t just represent themselves, but also an entire company. In this internet age, your words can come back to haunt you—so think before you speak.
Tony Hayward: Be accountable—hold your hands up when things go wrong
Tony Hayward, Chief Executive of BP, had a lot to deal with when an explosion at the Deepwater Horizon oil rig sent over 130 million gallons of oil spilling into the Gulf of Mexico.
While it might not have been Hayward’s “mistake” as such, the way he dealt with the aftermath most definitely was. The CEO referred to the BP oil spill as “relatively tiny” compared with the “very big ocean,” a statement which was met by disapproval from environmentalists everywhere. The blast in April 2010 killed 11 people and cost BP more than $40 billion; by July of that year Hayward was out of a job.
If Hayward’s actions can teach us anything, it’s to accept responsibility for mistakes and don’t try to downplay them. We all make mistakes from time to time, and while you might not be able to change the situation, you can control how you deal with it.
David Petraeus: Mix business with pleasure and risk irreparable damage to your reputation
While serving as Director of the CIA, Petraeus began an affair with his biographer Paula Broadwell; for a man whose job was all about secrets, he didn’t do a very good job of concealing his own. To communicate covertly, the pair shared a Gmail account where they would write emails to one another, but would only ever save them as drafts rather than sending them.
While this might have seemed like a cunning plan, it wasn’t cunning enough—the affair was uncovered by the FBI. The ensuing FBI investigation resulted in the end of Petraeus’ career as head of the CIA and the affair became a full-blown scandal. Petraeus’ situation proved that it’s not a good idea to mix business with pleasure—it’s as simple as that!
Reed Hastings: Don’t ignore the user—they can make or break your brand
Reed Hastings, CEO and cofounder of Netflix, felt the public’s wrath in September 2011, when he announced that the DVD section of US Netflix would become separate from the streaming service and renamed Qwikster.
While the website was pitched as a way to make it more convenient for users to access DVDs, customers felt it had the opposite effect. Fortunately for Netflix users, the ill-advised decision was short lived, and by early October of the same year Qwikster was no more.
CEOs should see Hastings’ mistake as a warning not to ignore your customer. As with many of these situations, it’s important to thoroughly research changes to your business model that will significantly impact your customers. Don’t ignore your user base and think that brand loyalty alone will see you through major upheaval.
What can you learn from their mistakes?
The mistakes made by these CEOs often stem from an error in judgement—from dismissing competitors to thinking they’re above suspicion. While you will make mistakes as CEO, heed any warnings, be sure to thoroughly research new product ideas, keep an eye on competitors, and never underestimate the general public—they have the power to make or break a brand!
Read more: http://articles.bplans.com/10-ceos-who-made-huge-mistakes/#ixzz3Yxtu1VhS
