In the first edition of In Search of Stupidity: Over 20 Years of HighTech Marketing Disasters, I made a deliberate decision to avoid giving specific advice about how companies could avoid being stupid. At the time, I thought the process was fairly obvious; study the mistakes of the past, apply self-observation to your current behavior, and if you see yourself repeating a previous example of idiocy, stop and do something else. As I point out in Chapter 1, the claim that high-tech companies are constantly running into "new" and "unique" situations that they cannot possibly be expected to anticipate and intelligently resolve is demonstrably false (particularly if you read In Search of Stupidity). The truth is that technology companies are constantly repeating the same mistakes with wearying consistency (as this second edition makes even clearer), and many of the stupid things these companies do are completely avoidable.
But despite my fond expectations, many who read the first edition claimed they needed more guidance on avoiding stupid behavior and more detailed instructions on how to pump up the frontal lobes of the collective corporate brain. Thus, I've added helpful analyses and, where appropriate, checklists on specific actions you can take to both avoid acting stupidly and transform yourself into a marketing Einstein after suffering a brain hiccup similar to the one that afflicted Eric Schmidt in 2005 when he decided to go to war with the press after a member of the fourth estate demonstrated Google's potential to invade your privacy by googling "Eric Schmidt" (discussed in greater detail in Chapter 5). Although sometimes created in the spirit of tongue in cheek, the analyses and fundamental items in the lists will assist you in your quest to raise your marketing and sales IQ. Follow their sage advice, and you will find they offer you both redemption (good) and foresight (much, much better).
Another critique leveled at the first edition of In Search of Stupidity was its love of hindsight (also sometimes known as "history"). In the opinion of a fairly vocal minority, applying hindsight to the situations I wrote about was unfair; they believe I was picking on a band of dewy-eyed naifs wandering about a primordial high-tech Garden of Eden where original sin was unknown until introduced into paradise by Lucifer. (Prime candidates for the role of "Father of Lies" include Steve Jobs, Bill Gates, Larry Ellison, and a bevy of other industry movers and shakers from the period covered. The winner of the part depends on historical context and your personal opinion.)
For an overview of this viewpoint, I urge you to go to Amazon.com and read the In Search of Stupidity reviews, both good and bad, to see how people expressed themselves on the topic of hindsight. In my humble opinion, the words of Robert Hangsterfer "bob_hangsterfer" from Glendale, Wisconsin (two stars, "Rehashed stories, no guidance," May 10, 2005), best sum up the disdain of some for learning from the mistakes of the past: "The author berates the 'losers' of the PC software wars and laughs at their 'stupid decisions.' Yet, how were the executives supposed to know what decisions would lead to success or failure?" Bob calls plaintively from the virtual pages of Amazon.
Now, in all honesty, I don't regard this criticism as trenchant but rather somewhat tautological: "Nothing do I know; therefore I know nothing. So how can you expect me to act like I know?" But, the question deserves an answer. So, let's take Chapter 8 of In Search of Stupidity, which deals with Intel's $500 million+ meltdown over the Pentium's inability to properly handle floating-point math past four digits. How could Intel possibly have known the consequences of its actions? How could Intel have possibly predicted what would happen when a major brand is besmirched by a major (or at least a perceived major) flaw in a high-profile product? What clues existed that would have possibly informed poor, confused, lost little Intel that its course of attempting to cover up a flaw in its flagship microprocessor, refusing to acknowledge the impact of the problem, and not offering to make customers whole to the extent possible was a stupid path to take?
Well, Intel could have studied the 1982 example of Johnson & Johnson, when some cockroach slipped cyanide into capsules of Extra Strength Tylenol and murdered seven people. The poisoning immediately destroyed sales of the leading brand of acetaminophen, and most observers predicted that Tylenol was doomed. In the first days of the disaster, advertising guru Jerry Della Femina, author of the classic From Those Wonderful Folks Who Gave You Pearl Harbor (Simon & Schuster, 1970) and other tomes about the world of ads and admen, was quoted by the New York Times as saying that "I don't think they can ever sell another product under that name. There may be an advertising person who thinks he can solve this, and if they find him, I want to hire him, because then I want him to turn our water cooler into a wine cooler."
I assume that Jerry has drunk a lot of vino in the intervening 24 years because his prediction was dead wrong. Instead of shriveling away, Johnson & Johnson launched a PR campaign that by 1994, the year in which the Intel debacle occurred, had already become a model of what to do when circumstances damage a company's reputation or brand. The campaign included the following elements:
• An immediate press campaign by Johnson & Johnson informing the public about the poisoned capsules and warning them not to use any Tylenol product. Company executives were instructed to not obfuscate or deny the scope of the problem but instead cooperate with the media in getting the story out so as to ensure everyone heard about the poisoning.
• An immediate recall of all Tylenol capsule products on store shelves (at a cost of more than $100 million to Johnson & Johnson).
• An offer to immediately swap out all Tylenol capsules with Tylenol tablets.
• A series of forthright statements by Tylenol upper management expressing their shock and pain over the deaths.
• After the completion of the recall, an extensive PR announcement of the introduction of new Tylenol products in tamper-proof packaging, coupled with an extensive series of promotional programs offering the new products at reduced prices via price discounts, coupons, and so on.
When you read Chapter 8 of this book, contrast these actions with the ones Intel actually took.
The result of Johnson & Johnson's classic (and much studied) campaign rescued the product from the marketing grave. During the crisis Tylenol had seen its share of the market drop from 37 percent to 0 percent.
A few months after the poisonings, Tylenol was back up to 24 percent market share and today still reigns as the leading brand of this popular painkiller.
So, there's your answer, Bob. That's how Intel could have known what to do. With a little study, a little history (hindsight), and a healthy dollop of common sense, we know how Intel could have saved itself a world of embarrassment and derision as well as a cool $500 million+.
(Oh, how do we know this? Because, Bob, amazingly enough, the second generation of Pentiums also suffered from math problems! But, Intel had learned its $500 million lesson. The company promptly offered to recall the "defective" processors and make dissatisfied customers whole. Since most customers didn't really know what a floating-point unit [FPU] chip was and even more probably no longer knew how to do long division, the public—offered the security of Intel's "guarantee blankie"—decided not to bother fixing a problem that wasn't bothering them, and no one paid any attention to the whole imbroglio except for a small cadre of picky math people and hardware-obsessed geeks who took their new chips home and went away happy.)
Now, in all fairness, it's not just high tech that suffers from a reluctance to learn from the mistakes of the past. For just a moment, let's step outside high technology and take a look at what is perhaps America's most seminal business, the automotive industry. As I've noted in Chapter 1, by the 1970s the U.S. car industry had raised the practice of building shoddy buggies to an art form. I particularly remember toward the end of the decade an abomination produced by Chrysler called the Cordoba, which was, we were assured by pitchman Ricardo Montalban, clad in "fine Corinthian leather." It is a virtual certainty that all that survives of these cars are the leather seats; the bodies long ago turned to rust. Chryslers of this era were matched in this respect only by the Chevy Vega, a car that began to disappear in a cloud of iron oxide particles from the moment it was driven out of the showroom. If that wasn't exciting enough, for more thrills one could always buy the "Immolator," the Ford Pinto with that amazing, mounted-above-the-rear-axle-so-it-was-guaranteed-to-explode-when-smacked-hard gas tank.
But by the second half of the 1980s, a turnaround seemed to have taken place. Ford, General Motors, and Chrysler all appeared to turn important quality corners. Although no American cars have ever reached the benchmark standards set by Japanese carmakers, the situation definitely improved. Instead of dissolving in a heap of nano particles by 60,000 miles, the fate suffered by the hapless Cordoba, American cars started to be put together so well that people began to expect their homegrown tin to hit the 100,000-mile mark. U.S. carmakers latched on to the Japanese discovery that people like to "live" in their cars, and soon American cars had caught up with their overseas rivals in respect to the number of cubbies and cup holders festooning their buggies; Chrysler in particular was so diligent in this regard that some people began referring to their minivans and sedans as Slurpeemobiles. Even more telling, while K cars such as the Dodge Aries and Plymouth Reliant were never state-of-the-art automotives, 20 years after their introduction versions of each could be seen still limping up the frozen, rust-inducing streets of New York, New England, and eastern Canada (where they were sometimes known as Toronto Taxis).
The cult of quality continued to spread across the American auto landscape during these years; at Ford, quality was "job one"; the sort of legendary Lee Iacocca, when he wasn't driving the development of such abortions as the revived Chrysler Imperial, a 1970s K car with a 1960s design that appealed to people in their 80s, proclaimed that "if you could find a better built car, buy it." Not to be outdone, General Motors started a new division, Saturn, designed to prove that if you stuck a group of Americans in a remote location in the backwoods of Tennessee with nothing better to do, they'd build a small, underpowered, but pretty reliable car just as good as the Japanese were doing in the 1980s.
The result of all this attention to quality and reliability paid off; during the late 1980s and through much of the 1990s, American cars held their own against the Japanese and seriously dented the Europeans. But by the mid-to-late 1990s, American car companies had begun to backslide. Today, Toyota Camrys and Honda Accords routinely reach 150,000 and even 200,000 miles of reliable, trouble-free use while sporting ever more sophisticated designs, increased fuel economy, and more powerful engines. Doors and body panels on Japanese cars align with geometric precision; by contrast, the body panels of Chevys and Pontiacs often look like they've been attached to the car by assemblers suffering from problems with both depth perception and basic geometry. On European cars, interior plastic trim usually has a plush feel and pleasing patinas; on American cars, the plastic frequently appears as if it were made from recycled polyester double-knit leisure suits stored over from the 1970s. I've owned both a Pontiac Grand Am and a Bonneville over the past 10 years; both suffered from serious electrical problems before they hit 65,000 miles. (To add insult to injury, my 1999 Pontiac Bonneville in the course of 2 weeks underwent a transformation from transportation to tin at 69,000 miles when in quick succession the car's AC system ceased working and the engine's plastic(!) intake manifold cracked, drowning the buggy's innards in antifreeze.) By contrast, every electrical and mechanical component in my dispose-a-car Hyundai Elantra wagon still worked properly before I gave the thing away at 130,000 miles.
A Honda Accord's high-beam stick flicks over with a satisfying "snick"; by contrast, the action on a Pontiac Bonneville's light control stalk is equivalent to yanking on a stale stick of licorice. The Ford Focus, Lincoln LS, Pontiac Aztek, Chrysler 300m, and so on, and so on, have all been plagued with extensive quality complaints upon their initial introduction. Consumer Reports, the gold standard for objective auto ratings (yes, the magazine is not much fun to read, and it has that annoying left-wing, tree-hugger-life-was-better-in-the-19th-and-early-20th-centuries-when-choo-choo-trains-belched-smoke-into-the-air attitude, but it does buy its test vehicles and thus has no need to suck up to Detroit or Tokyo in the manner of publications such as Car and Driver and Road and Track) consistently accords Japanese cars with seas of little red bull's-eyes (top ranked) while American cars are awash in black dots (bottom of the barrel). This after 30 years of multiple opportunities to catch up and adjust to the new reality the Japanese had introduced to the market, namely, that well-engineered and highly reliable cars will be favored by buyers over cars that aren't.
Quality, reliability, and design issues had become such a problem in the U.S. auto industry that by 2006 General Motors and Ford bonds had been reduced to junk status; both companies were shedding plants, employees, and market share by the bucket load, and Ford scion William Ford had been reduced to making remarkably-just-like-the-ones-made-20-years-ago ads featuring smiling (presumably because they'd not been fired for making astoundingly unreliable first-year Ford Focuses) workers promising that Ford was (again) going to make reliable and well-built cars.
In defense of the indefensible, several auto-industry observers offered the feeble excuse that the reason for the reoccurrence of poor quality in
American cars was that Detroit had decided to focus on building big SUVs in its quest for profits and market domination. The problem with this theory is that while the Americans were pouring out tons of GMC Jimmies with front ends that wobbled like tops at about 60,000 miles and Eddie Bauer-version Ford Expeditions with body parts that tended to fly off the car's exterior at moderate velocities, the Japanese were turning out giant, global-warming-contributing and ice-cap-melting monstrosities that were also highly reliable and well made (as adjudged by Consumer Reports).
What possible justification can American cars (and I blame both the bosses and the workers for their failure to get it) offer to excuse their failure to at least match the Japanese in quality and reliability? Answer: there is no excuse. What we're dealing with is sheer idiocy and a failure to study the mistakes of the past (hindsight) so as to avoid doing the same stupid thing all over again.
I'm not quite sure why hindsight in general has developed a bad reputation amongst the high-tech cognoscenti, but I have several theories. One revolves around culture, specifically the culture of Silicon Valley, high technology's principal engine and driver since the late 1970s. Silicon Valley is located in California, a land of self-actualization and narcissism and home to some of the silliest cults to ever plague mankind. Take est, for example. Developed by former used-car salesman (of course!) "Werner Erhardt" (not his actual name, but who cares), est was built around the platitude of "What is, is." This was translated into a very profitable seminar program of how to arrive at "is" by getting "it."1 The series was highlighted by a series of exercises that took the attendees on a trip through a tomato, allowed est trainers to yell rude things at the attendees, encouraged acolytes to ignore most social niceties, and didn't allow them to go to the bathroom (very often) during the est seminars. The core of the est belief system revolved around a mantra that "your beliefs, feelings, and experiences were the only things that were truly valid."2
1 For a ribald but also highly informative look at est, I suggest you rent a copy of the 1977 film Semi-Tough. Possibly the best movie ever made by Burt Reynolds, its depiction of est (only thinly disguised in the movie) is both accurate and very funny.
2 Outrageous Betrayal by Steven Pressman (St. Martin's Press, 1993)
est had its competitors, as you'd expect. At MicroPro, for example, many in upper management's inner circle were "graduates" of something called "The Laughing Men." This was an offshoot of est that taught, according to what I was told at the time, pretty much the same thing. (I assumed the reason the men were laughing was that they were allowed to go to the bathroom.) At Ashton-Tate, Scientology was very popular, with the company's founder, George Tate, being a practitioner.
est and its imitators were quite the thing in the 1970s and early 1980s and created large cadres of sociopaths3 who felt they were immune from such interpersonal obligations as saying they were sorry when they misbehaved and totally focused on gratifying their every last whim and desire (which, come to think of it, characterizes much of upper management at many high-tech companies today). Some est graduates finally snapped out of it (often after receiving the divorce papers or a punch in the nose), and one day Werner Erhardt bailed out of the business and moved to Europe. But an examination of the current Zeitgeist indicates est's solipsistic message of relying only on your experiences to "create your own reality" has taken hold in much of high tech (as well as in other industries), and there's probably not much of a market for teaching something everyone already believes in. And while you're busy tending to your own reality, you tend to not have much time for worrying about others' realities, particularly unsuccessful ones, since your reality will obviously not include their failures.
Another theory focuses on the underlying nature of engineers and programmers, many of whom continue to create new and innovative companies that they often then destroy by repeating past stupidity. The best programmers and engineers are usually "world creators," people who like to "live" in their work and are happiest when they have complete control over every aspect of the tools, techniques, and technologies they use to create products. The frequently written about "not invented here" (NIH) syndrome is a direct result of this ethos, and the damage it can wreak on a company is illustrated in Chapter 4, which discusses how a key programming group at MicroPro finally destroyed the company over the issue of product control. A corollary to NIH is
3 I speak about this from personal experience, having had close acquaintances who went through the training and who remained unbearable for years.
DTMNBICTCAYD, or "Don't tell me nothing, because I created this company and you didn't," an affliction that also frequently leads to history repeating itself.
Again, it's not just high tech that suffers from these syndromes. In 1908, Henry Ford created the Model T, the car that allowed Ford to transform the face of America and become for more than 20 years the largest automotive company in the world. By the standards of the day, the T was high tech, well built, easy to maintain, reliable, and cheap. But car technology was rapidly changing, and in 1912, while Ford was away on a trip, several of his engineers built a prototype of a new Model T, an "upgrade" that incorporated improvements such as a smoother ride and more stable wheelbase. Ford's response to this attempt to improve "his" car without his exercising direct control over the process was to smash and vandalize the prototype while the shocked engineers watched.4
Now, in all fairness, some businesses insist on using hindsight to study past failures: the airline industry is a good example of this. After a crash or major flight faux pas, NTSB investigations do not normally follow these lines:
NTSB investigator: "Uh, captain, I note you've just flown your airplane straight into that mountain and killed all your passengers."
Airplane captain: By Jove, with the benefit of 20/20 hindsight, we can all see you're right! But, you know, I just had to experience catastrophic aerial failure for myself to truly comprehend it. Having lived through the disaster, I've absorbed on a deeply personal level just how bad crashing my plane and killing all my passengers can be and will in the future understand intuitively why it's an experience to be avoided in the first place!
Instead, after a crash or serious operating mistake by a flight crew, the circumstances are analyzed, broken into their constituent parts, and then programmed into a flight simulator, which can be thought of as an electronic box stuffed full of hindsight. After this, flight crews from all over the world are periodically summoned to attend simulator classes so they can directly learn from all this hindsight until their instructors are satisfied they are unlikely to repeat another's mistake.
4 The Reckoning by David Halberstam (William Morrow, 1986)
But, enough preaching. If you're one of those sturdy types who march to their own drummer, who seeks to squeeze the juice of life from sources pure of the carping calls of second guessing, and who desires to personally experience every emotion directly so as to live a life unadulterated by the pallid personas of those cowards who shrink from the whip of disaster and scourge of financial failure, let me salute you and bid you good luck and Godspeed!
Just do me one favor. At some point, send me your e-mail address and a description of what you're up to. I'll need some good material for the third edition of In Search of Stupidity.
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