The Big Question
Q: What was the worst business decision ever made?
Peter Stearns, provost, George Mason University
The early-18th-century British South Sea Bubble led to loss or ruin for most involved. Parliament pondered a resolution to tie the bankers up in snake-filled bags, while Isaac Newton, who’d lost money, noted that he could chart the course of stars but not the “madness of men.”
Walt Mossberg, co–executive editor, Re/code
Apple’s firing of Steve Jobs in 1985 set the company back for a dozen years and drove it to near-bankruptcy. Apple only saved itself by rehiring him in 1997, at which point he went on to make Apple the most financially valuable—and influential—tech company in the world.
Peter Thiel, partner, Founders Fund, and co-founder, Mithril Capital Management
After Apple forced out Steve Jobs, the company’s creativity ground to a halt. When he returned, Jobs transformed Apple into the biggest company on Earth, proving how a founder’s grand vision is typically underestimated but impossible to replicate.
Gretchen Morgenson, assistant business and financial editor, The New York Times
In 2008, Bank of America purchased Countrywide Financial, an aggressive and abusive subprime-mortgage lender, for $4 billion, but the real costs came after the mortgage bubble burst. Between fines, penalties, and legal settlements, the deal has cost Bank of America an additional $40 billion.
Daniel Pink, author, To Sell Is Human: The Surprising Truth About Moving Others
In the mid-1970s, a young engineer named Steve Sasson invented the world’s first digital camera. He secured a patent for it on behalf of his employer, then pitched his bosses on a new business model based on the invention. They passed. Today, digital cameras are ubiquitous—-and Sasson’s company, Kodak, is emerging from bankruptcy.
David Wessel, director, Hutchins Center on Fiscal and Monetary Policy, Brookings Institution
Few bad calls have had more-devastating consequences than the Federal Reserve’s moves to raise rates and tighten credit between December 1927 and July 1928, which produced the Great Depression.
Melissa Lee, host, CNBC’s Fast Money and Options Action
In 1983, Coca-Cola launched New Coke, a weapon in its losing market-share battle with Pepsi. But consumers boycotted, and just three months later, Coke brought back Coca-Cola Classic. By 1986, Coke was back on top, and some alleged it was all a marketing scheme!
Derek Thompson, senior editor, The Atlantic
Napoleon was a brilliant general but a horrible businessman. Selling Louisiana was a wartime necessity for him, but he got swindled by Thomas Jefferson, who bought the most fertile slice of the contiguous United States—and opened the door for westward expansion—at today’s equivalent of about 63 cents an acre.
Robert Shiller, economics professor, Yale University
Just before the time of Christ, a regulatory decision effectively shut down the ancient Roman stock market. New restrictions limited the Roman corporation to only one line of business: collecting taxes for the government. Stock markets did not again feed the liveliness of a vibrant economy for well over 1,000 years.
Adi Ignatius, editor in chief, Harvard Business Review
Lehman Brothers’ big bet on subprime-mortgage assets bankrupted a 158-year-old firm and nearly brought down the global financial system.
Donald Trump, chairman and president, Trump Organization
The takeover of the long-established Time Warner by AOL was an all-time classic in stupidity.
Jim Cramer, host, CNBC’s Mad Money, and co-anchor, Squawk on the Street
McDonald’s decision to sell Chipotle in 2006. What were they thinking? We know what they weren’t thinking: that Americans are losing faith in the food chain that McDonald’s exploits and instead want healthy fare.
Tyler Winklevoss, co-founder, Winklevoss Capital
The Canarsee American Indians’ 1626 sale of Manhattan Island to the Dutchman Peter Minuit for goods worth 60 guilders—about $1,000 today.
Cameron Winklevoss, co-founder, Winklevoss Capital
Fox’s signing over the rights to all Star Wars licensing and merchandise to George Lucas. On the flip side, Lucas’s taking a $500,000 pay cut for these rights was the best business decision ever.
Jeremy Rifkin, author, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism
The U.S. energy industry’s decision to push shale gas and tar sands, locking America into the polluting fossil fuels of a dying second industrial revolution.
Margaret Heffernan, author, A Bigger Prize: How We Can Do Better Than the Competition
When John Browne bought and merged oil companies to make BP a super-major, he created the conditions for the Texas City and Deepwater Horizon disasters. Mergers incur debt that causes cost cutting, which eliminates safety. Supersizing always incurs a cost, because competitive instincts don’t stop until they fail.
Tony Hsieh, CEO, Zappos
If you add up the cost of all the bad hires we’ve made, the cost of the bad decisions those people made, the cost of the additional bad hires that those people made, and the cost of those additional bad hires’ bad decisions, I would estimate a cumulative cost of well over $100 million.
This is an expanded version of May 2014’s Big Question. Readers have been sharing their answers on Twitter—here are some of our favorites.
@lmower3 Was any blunder bigger or had more impact than credit-default swaps?
@jackgoodson12 The NBA agreeing to buy out the Spirits by giving its owners future TV money from ABA teams that joined the NBA.
@geekpondering HP passing on Wozniak’s offer to buy the Apple I.
@bobbyo1967 "New Coke"
@BecklerMardi GM's decision not to recall cars over a $1 part. Loss of life & incredible liability for stupid decision.