Here’s the thing: if you are convinced there is no difference between bad business and stupid business, then chances are you’re in the wrong place.
But if you are willing to listen to hear the case of bad versus stupid, keep reading.
Because, here’s the basic premise: there are different kinds of mistakes made by business. All companies – even the best of them – make mistakes. And they make them all the time. We all know that.
But there are different kinds of mistakes. Some are well conceived, carefully planned and made with the best of intentions. And then for whatever reason, they turn out to be colossal disasters.
Here’s one of the best examples ever. Everyone points to the Ford Edsel as one of the greatest business blunders of all time and its name is now practically synonymous with failure. The car was a fiasco from virtually every criterion and in less than three years it was history…the kind you won’t find memorialized much in official Ford corporate archives.
But the Edsel was bad business, not stupid business.
During the development period for the car, Ford had several important goals it wanted to achieve. It was looking for another step-up brand to its core Ford unit and it positioned the Edsel division in exactly that slot. If successful, it would give Ford a broader assortment of brands, much closer to its arch-rival General Motors which based its corporate business model around the step-up strategy of from Chevy to Pontiac to Oldsmobile to Buick to Cadillac.
Ford wanted the car to be different from existing competitors, so it gave it bold styling and such unusual features as push button transmissions and revolving dial speedometers.
It wanted to have a distinct identity for the car and to honor current company president Henry Ford II’s father and so it chose his first name, Edsel. Certainly it was an unusual name but this was an industry quite accustomed to using family names for its products: Witness Chevrolet, Dodge, Chrysler, Studebaker and Ford itself, not to mention Ferrari and Rolls Royce.
Finally, it wanted to be aggressive during the boom years of the mid-1950s when the post-war middle class was buying cars, homes, washing machines and virtually every other big-ticket item that wasn’t nailed down.
It was the right plan.
And it was one big giant bomb.
By the time the Edsel reached market for the 1958-model year, the bottom had fallen out of the economy and the country was in a recession. Car sales tanked and step-up car sales tanked even worse. Customers in the market for a new car were trading down, not up.
But Ford could not have predicted a recession as it was gearing up development of the car…any more than economists correctly forecast the Great Recession of 2008-2009…et al.
Edsel’s styling was a disaster. The horse-collar shaped grill, the focal point of the car, was ridiculed and the outlandish three-tone paint jobs and the like were poorly received.
But in hindsight were Edsels any more outrageously styled than some of the other cars of the era? The big fins that Chrysler introduced in 1957 and GM jumped on, culminating in the 1959 Cadillac, were just as wild looking, maybe even more so. Yet they were successful and the Edsel was not.
The Edsel name and persona were indeed unique and while it’s now the textbook example of failure, it wasn’t so at the time.
But in fact after Edsel’s demise, the era of using given or family names for vehicles largely passed, replaced by alpha-numeric combinations, animal names and geographic locations. Only the occasional Delorean or Bricklin came to market and we know how those turned out
And while the economy eventually rebounded and the 1957-58 recession turned out to be relatively short and mild, the period marked a turning point for the American automobile industry. Once powerhouse brands such as Packard, Hudson and Nash all essentially ceased to exist around this time, even if their remnants hung on for a few more years. The car industry was looking at fewer brands, not more.
So, the Edsel went away and it went away quickly, living on only as a B-school case study, not to mention a painful reminder for Detroit.
Some people would consider the Edsel among the stupidest things ever done. But in fact Ford had carefully planned out the Edsel, it had given great thought to its positioning and its look and it had all been conceived in an economic period that would seemingly allow it to thrive.
The Edsel was bad business, not stupid business
You can make the same argument about many of the other classic business failures that are usually cited by the suits. New Coke certainly comes to mind, but there are lots of other examples out there.
Stupid business is different. It’s as much about what businesses don’t do as what they do. It’s about dumb assumptions and rotten execution, ridiculous plans and total ignorance of the marketplace – your own or others. Missed opportunities and bad judgment. It’s about being stupid in business, not bad.
The all-time classic example of stupid business is the railroad industry. Every Business 101 class teaches how the railroads thought they were in the train business, not the transportation business, so when the airline industry was being created, they didn’t do jack about getting a piece of the action. They repainted their locomotives or tried new routes, but they totally missed the point that there was going to be a new way for people and cargo to travel long distances that would eventually put them out of business. They blew it.
That was a case of stupid business at its stupidest and that’s what this site is all about.
It turns out there’s more than enough stupidity to go around for most everyone.
WarrensReport 