The Year in Corporate Screw-Ups

by , Dec 21, 2012, 11:04 AM
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Here’s a year-end puzzle for you: are companies making more major screw-ups than before, or are we just more likely to hear about them because social media allows consumers to voice their dissatisfaction? Or maybe it’s both?

It’s been a fruitful year for big corporate mistakes, resulting in red-face apologies and very visible public backtracking. In the latest fiasco, Instagram is beating a hasty retreat from its attempt to revise its terms of service, after the new TOS infuriated users by appearing to suggest the company could sell their photos without compensation or permission. Co-founder Kevin Systrom wrote in a note to users: “I want to be really clear: Instagram has no intention of selling your photos, and we never did. We don’t own your photos -- you do.”

Instagram has plenty of company in the customer service doghouse. Tech titan Apple, usually the beloved of stock markets and tech geeks, was buried in a landslide of negative buzz when the maps on its latest iPhone turned out to be defective -- with out-of-date business information, geographic oddities, and plain putting stuff in the wrong place (including an entire town in central Australia, endangering users who got lost in the outback). In a now-classic pattern, complaints which surfaced on social media were quickly picked up by the mainstream news media in an online-traditional snowball effect, and Apple ended up recommending users turn to -- the shame -- Google Maps instead of their own product. No doubt many hot, burning tears of frustration wet the pillows of Apple execs during those difficult weeks; also they fired the maps guy.

Okay, so technically Netflix was last year, but it still stands out as an example of how not to introduce major changes to your product or service. Netflix CEO Reed Hastings abruptly introduced a new subscription plan which would make it more expensive for users to receive movies via the mail and over the Internet, and also unveiled an entirely unnecessary rebranding of the movies by mail business as Qwikster. Leaving aside the fact that the @qwikster Twitter handle was already owned by a profane yob, indicating a general lack of planning for the rebranding, the price hikes and new name were not well-received by Netflix’s customer base, resulting in a public apology from Hastings and the decision to drop Qwikster.

There’s a common element in all three cases, which took place in new, competitive industries where the pace of change is extremely rapid. Hastings was focused on making sure Netflix transitioned successfully to online video-on-demand delivery; Apple was hurrying to get their new phone out while fencing Google out of their playground; and Instagram was (and still is) trying to figure out how to make money.

So what do you think: are companies screwing up more than before, because they are cracking under the pressure of competition and the accelerating pace of change? Or has that always been the case -- and we’re just hearing about it more because of the rise of social media?  Or is it both?

And while we’re at it, what are some of your favorite corporate screw-ups from the last year (or couple years)? Don’t be shy, it’s the holidays -- time for some schadenfreude!

2 comments on "The Year in Corporate Screw-Ups".

  1. Ric Dragon from DragonSearch
    commented on: December 21, 2012 at 11:20 a.m.
    Oh, I thought the KitchenAide tweet was going to make the cut. Funny how we in the profession get gleeful when these things happen.
  2. Alex Luken from Humana
    commented on: December 21, 2012 at 2:19 p.m.
    Can we go ahead and add Facebook's decision to enable individuals not on your Friends list to message you without your consent if the pay Facebook $1? The ability for the user to block this feature is buried at a location described in the notification only as "Other>Preferences". Even though this doesn't go into effect until 2013, this may be the worst decision since the introduction of New Coke.

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