The dubious Grand Prize honor goes to Kryptonite, the world's preeminent maker of high-end bike locks, which found out the hard (and expensive) way that most of the "tough" locks it had been making for the past 30 years could be opened in mere seconds with a Bic pen.
“In a competitive and fierce market where executives are fired, products fail and companies crumble on a daily basis”
On the opposite end of the spectrum, Business 2.0's inaugural "Smart List" profiles the bold thinkers, brilliant ideas and clever strategies that were essential in outfoxing the competition in 2004. The magazine's choice for smartest company is Toyota, which made intelligent moves in every corner of its operation, from product design and marketing to manufacturing and leadership.
"Why spill so much ink over bone-headed moves? It's no secret that you learn as much from others' mistakes as from their successes - and that there's a fine line between them," said Josh Quittner, editor of Business 2.0. "But, luckily, for the corporate world, moments of outright idiocy were also followed by shining examples of business genius. So, it seemed an ideal time to highlight the smartest alongside Business 2.0's annual '101 Dumbest Moments in Business' list."
The top 5 "dumbest moments" of 2004 according to this year's "101 Dumbest Moments in Business" are:
1. When bloggers post "how-to" videos, lock manufacturer Kryptonite learns its bike locks are faulty and can be opened with a Bic pen. After initially dragging its feet--and even going so far as to claim that the defective locks still provided "an effective deterrent against theft"--the company finally agrees to exchange the faulty locks for new ones at an estimated cost of more than $10 million.
2. Withdrawing arthritis medication Vioxx from the market, Merck sees its stock drop 39 percent, shaving $38 billion off the company's market cap. Responding to the crisis, Merck executes a bold plan - a "change in control separation of benefits plan" for 230 top executives. The plan gives them three years of guaranteed salary and benefits if they lose their jobs as a result of a merger or takeover of the beleaguered pharmaceutical giant.
3. James Joseph Minder, chairman of gunmaker Smith & Wesson, is forced to resign when newspaper reporters discover that before becoming a corporate executive, he'd spent 15 years behind bars for a string of armed robberies and a prison escape.
4. After joining the Bank of Ireland as CEO, Michael Soden issues the dictate: "No porn surfing on the job." His next dictate: The IT department will be outsourced to Hewlett-Packard. Shortly after the deal goes through, the IT staffers (now HP employees) find porn on Soden's computer. In the wake of the scandal, Soden resigns, leaving the bank and HP scrapping over who should pay his $5 million in severance.
5. Dumbest Quote: "Microsoft has had competitors in the past. It's a good thing we have museums to document this stuff." - Bill Gates, in a talk at the Computer History Museum in Mountain View, CA.
Other notable "dumb" moments include:
10. A clerk at The Fashion Bug store in Greenburg, PA, accepts a $200 bill - even though the bill is festooned with clues that it might not be a legal tender, including a picture of President George W. Bush and the serial number of DUBYA4U2001.
57. Attempting to invite its customers to a festive gathering at an industry trade show in Germany, cell-phone maker Nokia sends a text message that instantly disables hundreds of phones, damaging them so badly that they must be taken to Nokia service centers for repairs.
99. In late December, Walmart.com begins taking preorders for a new book, How Wal-Mart Is Destroying America and The World: And What You Can Do About It. After links to the product page are posted on popular blogs, Wal-Mart quickly yanks the book from its online catalog.
On the flip side, "The Smart List," a mixture of 25 companies, executives and products, profiles excellence and innovation. In addition to Toyota, others featured include: McDonalds (for mounting a brilliant turnaround), Procter & Gamble (for building reinvigorating aging brands), and Apple (for marrying the iPod to the rock band U2).
"In a competitive and fierce market where executives are fired, products fail and companies crumble on a daily basis," added Quittner, "the 'Smart List' represents the companies, products, and executives that have defeated the odds and risen to new levels of originality and innovation."
The January/February 2004 issue of Business 2.0 will be on newsstands on January 31. Business 2.0 editors are available for comment, and both lists are available in full upon request.
ABOUT BUSINESS 2.0
Business 2.0. explores the new ways smart companies - and the people who lead them - are using strategy, technology, and innovation to succeed. The magazine is published by the FORTUNE Group at Time Inc., a Time Warner company.
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