Some mistakes can haunt businesses long after the mistake is made. Here are some of the worst mistakes that hindered prominent companies:
Kodak’s Refusal to Go Digital
In the mid-1970s, Steven Sasson, an engineer for Kodak, created the first portable digital camera. Kodak’s research concluded digital adoption to be insignificant. However, the company’s failure to recognize digital photography as a disruptive technology, its lack of proactive behavior in the market and the absence of transitional planning, caused Kodak to later fall short. Ultimately, according to Forbes, these factors led Kodak to file for bankruptcy protection in 2012.
Excite’s Turn Down of Google
Excite was a prominent search engine in the 90s. In 1999, the company received an extremely tempting offer—to purchase a newer search engine, Google (named BackRub at the time), for just $750,000. Shockingly, the company declined. Why? As part of the deal, Excite’s CEO was asked to remove all of their technology and replace the technology with Google’s, which was a cultural disruption that Excite was not willing to take. Google’s technology proved to surpass Excite’s and now Google has a brand value of over $300 billion today.
Enron’s Major Mismanagement
Enron, a natural gas company that later started trading electricity, was once considered an innovative and successful company. By the late 1990s and early 2000s, however, it was clear that something wasn’t right with Enron’s financial statements. The company had been using their partnerships to displace debt obligations and rearrange revenues in selling contracts to themselves. Enron later decided to post major losses and reduce equity. What made matters worse, according to MaryAnn Monforte, professor of accounting practice at Syracuse University’s Martin J. Whitman School of Management, was that the auditors went along with the fraud and falsely stated that their financial statements were in accordance with generally accepted accounting principles. The U.S. Securities and Exchange Commission soon opened an investigation, and in the following months, Enron spiraled into bankruptcy. As a result, the Sarbanes-Oxley Act was passed in 2002.
Volkswagen’s Emissions Scandal
In 2015, Volkswagen (VW) launched several marketing efforts to sell its low-emission vehicles in America. However, the Environmental Protection Agency found that VW cars sold in the U.S. at the time contained special software in the engines. The software recognized when the cars were being tested and adjusted exhaust levels to produce less emissions than normal to meet emissions standards. Volkswagen had no choice but to admit to cheating on the emissions tests. The device had been put in about 11 million cars around the world. As a result, Volkswagen paid about 26 billion euros in fines and reported a net loss for the year. While the company is earning profits again, it continues to face lawsuits from thousands of car consumers across Europe.
Wells Fargo’s Trust Breaches
Wells Fargo has been involved in various incidents throughout the years, including accusations of creating 1.5 million fake deposit accounts and 500,000 false credit cards (and later creating another 3.5 million), improperly repossessing cars, failing “living will” and community lending tests, overcharging small retailers, discriminating borrowers and altering business information. Most recently, in Aug. 2018, Wells Fargo was accused of misrepresenting mortgages, and agreed to pay a $2.1 million fine. In addition, a computer glitch foreclosed hundreds of houses. Scandals have certainly taken a toll on Wells Fargo. The company is now heavily restricted in its ability to grow, is down nearly 860 advisors and makes about $232 million less in profits as compared to before the scandals.