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The famous Darwin Awards (www.darwinawards.com) recognize those who have found ingenious ways to personally leave this earth. I believe a corporate version is needed to recognize institutional merit. That Darwin would commemorate corporate foul-ups and allow the greater business community to bid a fond farewell to these fiascos.
Though circumstances vary, companies Id nominate for awards tend to have one thing in common: They fell prey to faulty business metrics. In the last few years, the intoxication of the Internet boom encouraged firms to disregard basic business rules. Once off the sober path of wisdom, Darwin-ready firms abandoned profits for lesser goals such as branding, promotion, accelerated revenue growth and greater market share. Never mind that “eyeballs” dont equate to revenue, or that revenues dont necessarily equate to profits.
One recent poster child was Pets.com. The company spent nearly $29 million on advertising before managing to annihilate everything but the pooch. The promotions were outstanding, but Pets.com is toast.
Amazon.com has put revenue growth before profits. With great brand recognition and a fine online interface, Amazon has now extended its retail business to include everything from pots to PCs. That strategy seems to have postponed profitability indefinitely.
Last years union of Whittman-Hart and USWeb/CKS aimed to combine the systems expertise of Whittman with the Internet and marketing savvy at USWeb/ CKS. By forming the third entity MarchFirst both companies lost name recognition and loyal customers.
Many companies wont ever qualify for Darwins because they are simply too smart. For example, IT services generate roughly a third of IBMs revenues and half its profits. Still, as we enter a more challenging phase of the New/Old Economy, I expect many more companies will come to be nominated. Its easy to qualify: Just abandon good business practice for a little fiscal fantasy.
Mike Dewey is CEO of e-Built, Irvine, Calif. He can be reached at [email protected].