10 Historically Bold Moves Made By Big Companies
Friday, February 07, 2014
“This was better than spending $4 million for a Super Bowl ad. They will get more publicity and their stock will be added to portfolios of those interested in socially conscious investments," said Edward M. Mazze, professor of business at the University of Rhode Island.
“The timing was great, the way they announced was great, I give the decision an A+”
Bold movies typically pay back in big dividends or big disappointments. Some of the best corporate ideas support consumers - such as putting rear view cameras in vehicles and safety caps on pill bottles.
"The best decisions are the ones that have an affect on consumer health and consumer safety. [These improvements] are part of the responsibility that corporations have to the communities they serve,” Mazze said.
One needs only to track the career of CVS Executive Vice President Helen B. Foulkes to see the corporate climate of bold moves and calculated risks. Foulkes, a Harvard-educated MBA, was working her way up the retail merchandising and buying sector at CVS in 1997 when her boss offered her a challenge: Create a loyalty program. This vague assignment eventually became the CVS card that is probably on your keychain as you read this. Foulkes developed the ExtraCare Loyalty Marketing Program, the first and largest retail loyalty program in the country, with over 70 million active cardholders nationwide.
A changing business model
"[CVS] made a short term decision to forego profit and a long term decision to establish themselves as a community conscious company," said Howard Anderson, professor of entrepreneurship at the MIT Sloan School of Management. He went on to point out that often times these decisions are made to align with a corporation's changing business model and their corporate ethics.
"When Walmart doesn't carry Playboy Magazine, its not about business, but ethics. It is an ethical decision first, business decision second," he added.
“What they're doing is eliminating a line of products that is exactly opposite to most of the other products they sell,” Mazze said.
“They were proactive, took a leadership decision, and quite frankly it was the right time to make this move.”
It's too early to tell exactly how this decision will impact the company's bottom line. CVS stands to lose $2 billion in tobacco sales when smokers go elsewhere for tobacco. But will smokers take their convenience shopping and pharmacy business with them as well?
A public relations victory
From a public relations perspective, however, it's already been a win for CVS. The company has received immediate and enthusiastic support from anti-smoking groups and healthcare advocates, such as Tobacco Free Rhode Island.
"CVS's decision not to sell tobacco products is a very positive statement of corporate responsibility," said economic expert Gary Sasse.
"As corporations chase profits they do not always act as good corporate citizens. CVS's decision reflects the highest standard of corporate citizenship and I am proud that they are a Rhode Island company. Good public policy over the long-run is good for the bottom line."
In the wake of the bold move by CVS to end tobacco sales by October, GoLocal decided to look back on some of the boldest moves in the history of big business.
Related Slideshow: 10 Historically Bold Moves Made By Big Companies
10. RJ Reynolds
The Smokeless Cigarette
In 1988, long after the American public wised up to the dangers of cigarettes, RJ Reynolds launched the Premier cigarette. They called it a “smokeless nicotine delivery mechanism that looks and feels like a premium cigarette.” It didn't. Smokers said it tasted like charcoal, and drug users quickly figured out how to use it to smoke crack. It has been reported that RJ Reynolds lost $1 billion on the product.
The alleged lobster roll – no one's sure there was ever any real lobster in there – from McDonald's was about as successful in New England as their McCrabcake was in Maryland. It looked bad, tasted worse, and was shunned by even the most die hard Golden Arches fans. (Unlike the McRib, which continues to have a bewildering trance on McDonald's fans.) The sandwich is still available in some Canadian franchises and occasionally in Maine.
Bans Employees From Working at Home
Enters the Auto Market with High End Electric
Fires Steve Jobs
One of the world's most famous college drop outs, Steve Jobs founded Apple, helped it grow into a billion-plus public company, and launched the Macintosh. He was also ousted by Apple's Board of Directors in 1985. The popular take is that the board was stupid to fire Jobs as the leader of the Mac division, because Apple would have more quickly become the company it is today. A new take on the decision posits that the then-30-year old Jobs was disruptive and incompetent in that role. After 12 years away from the company he founded, he learned the skills and discipline required for Apple's rebirth.
Takes on Sony + Nintendo in the Console Gaming Market
Microsoft has one person to thank for its console gaming success, and that person isn't even real. Master Chief is the hero of the insanely popular "Halo" franchise, which was first released was a launch title with the original Xbox. The game revolutionized First Person Shooters on consoles, and sold millions of consoles along the way. At the time, Microsoft was known as primarily a software company. They may have took a bath on those early consoles, but they now join Sony as one of the two major console makers left standing. (Sorry, Nintendo. The Wii U is going to sink you.)
Changes Pricing Plan
Netflix is back on top now, but it almost went under in 2011 when it mishandled its pricing changes and attempted to slice off it DVD business under the name Qwikster. As they did with the New Coke launch, customers responded with immediate anger, leading Netflix CEO Reed Hastings to apologize. The company reverted to its $7.99 streaming plan and has never looked back.
Opts out of Government Loans
After Detroit’s automakers went to Washington in 2008 asking for emergency loans to keep their enterprises afloat, the big bus oval was the only one to opt out of the bailout. Ford decided to mortgage all of its assets to raise operating funds instead. Taxpayers eventually spent $80 billion to rescue General Motors Corp. and Chrysler Corp. Ford focused on efficiency and increasing sales without using government bailout money - thus avoiding the federal tinkering that Chrysler and GM had to accept as a part of their deals. The company has since kept pace with GM, the country's largest automaker.
Perhaps the most famous brand misstep since Ford's Edsel, New Coke is the Titanic of corporate miscalculation. In the 1970s and early 80s, the soft drink giant faced increased competition from Pepsi and other products. To stay on top, Coke executives stopped production of the classic formula and introduced New Coke with tremendous fanfare. The public's responded with immediate outrage. Coca-Cola re-launched its original formula – called Coca-Cola Classic – almost immediately. Today, unopened cans of New Coke go for hundreds on eBay.
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- RI’s CVS Responds to Saturday Night Live Parody Sketch
- NEW: ACLU and CVS Settle Discrimination Lawsuit
- CVS Threatens Job Loss Because Of Chafee Tax Credit Cuts
- Statement: CVS Addresses Employment in RI
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