43 Times Corporations Failed So Hard, People Just Had To Shame Them Online (New Pics)

Here is the uncomfortable truth about big companies. They are not run by one all knowing genius armed with a perfect spreadsheet. They are run by crowds of humans, and crowds of humans have a remarkable talent for talking themselves into terrible ideas. Add a few layers of management, a looming deadline and a conference room full of stale pastries, and you have the perfect recipe for a decision that looks brilliant on a slide and baffling everywhere else.

Start with the habit of agreeing way too fast. Psychologists call it groupthink, and it kicks in when a team cares more about keeping the peace than about asking whether the plan actually makes sense. Nobody wants to be the person who politely raises a hand to point out that the new mascot looks suspiciously like a potato. So the room nods, the idea sails through, and the only honest feedback happens later in the parking lot.

Then there is the question of who gets to make the call. The Peter principle is the cheeky idea that people keep getting promoted for doing well until they land in a role they are not actually good at, and then they stay there. Whether or not that is entirely fair, plenty of office veterans will tell you it explains a lot about the decisions that land on their desks.

And then come the meetings, which are where common sense goes to take a long nap. The law of triviality says groups spend the most time on the smallest issues, because everybody has an opinion about a bike shed but very few understand a nuclear power plant. In office terms, that means a committee can wave through a multimillion dollar project in ten minutes and then argue for an entire afternoon about the color of the kitchen sponges.

Even good data can lead a company astray. When Coke introduced New Coke in 1985, the sweeter recipe had won plenty of blind taste tests, so the decision seemed bulletproof. What the tests could not measure was how fiercely people loved the original. Customers revolted, and the classic formula was back on shelves after just 79 days. Turns out a quick sip is not the same thing as a relationship.

Past success is another sneaky trap. A Kodak engineer named Steven Sasson built an early digital camera in 1975, but the company, understandably protective of its film empire, was slow to run with it. Kodak filed for bankruptcy in 2012. Blockbuster, meanwhile, reportedly had the chance to buy Netflix for 50 million dollars in 2000 and politely declined, then filed for bankruptcy in 2010. Nothing says confidence like being overtaken by a DVD mailing startup

Hype is powerful stuff too. Juicero raised roughly 120 million dollars to sell a pricey juice press, until reporters discovered that squeezing the juice packs by hand worked just fine. The Fyre Festival promised a luxury island getaway and delivered soggy tents and a lonely cheese sandwich. When enough excited people are chanting the same thing, it gets very hard to ask where the actual product is.

Then there is the stubborn refusal to quit. The sunk cost fallacy is the urge to keep pouring money into a failing project simply because so much has already been spent, as in “we are already three years late, so what is another year?” When a company does finally change course, it sometimes panics in the opposite direction. In 2011, Netflix decided to split its DVD rental business into a separate service called Qwikster, and customers reacted so badly that the plan was scrapped within weeks.

And sometimes the bad decision is simply a joke that should have stayed in the speaker’s head. In 1991, British jeweler Gerald Ratner told a room of business leaders that one of his earrings cost less than a prawn sandwich and would probably not last as long. His company’s value reportedly dropped by around 500 million pounds and he was eventually forced out of the business.

Put all of that together and the mystery fades. Companies are not magical machines of logic. They are collections of busy, hopeful people running on coffee and deadlines, and every one of them can fall for a good presentation. The good news is that this makes for fantastic entertainment. The bad news is that somewhere right now, a meeting invite titled “quick sync” is about to produce the next entry on this list.