A Sure-Fire Formula for Creating Business Flops

Flops are a fact of business life. Exhibit A is the box-office nosedive that Disney’s "John Carter" took last month, forcing the studio to take a $200 million hit on its balance sheet. Though they are more common in the entertainment business, which lives and dies on the whims of a fickle public, no industry is immune from flops. Is there a secret sauce that guarantees failure? The Economist suggests there is.

In fact, the publication's Schumpeter column says there are three principle rules that have proved particularly effective over the years for ensuring humiliating failure.

First: slaughter a sacred cow.

[Why Your Business Should Embrace Failure]

"The most spectacular slaughter, of course, was Coca-Cola's decision to kill off the drink that gave it life," the publication wrote.

The new Coke was greeted with hoots of derision from angry Coke loyalists who were unswayed by the alleged improvement in taste. Recognizing that they were only custodians of the brand rather than its owners, Coca-Cola executives did a swift about-face less than three months after their marketing pratfall and reintroduced Coca-Cola Classic. That move revived what had been a fading brand.

The second ingredient in the formula for failure is to mix oil with water, an ill-conceived mashup gone terribly wrong.

"Theatrical impresarios are the masters of this—over the years they have tried, unwisely, to turn Hamlet, Lolita and Ernest Hemingway's drunken last days into musicals," the Economist said.

Their corporate counterparts have been no slouches in this area. Witness McDonald's $100 million launch of the Arch Deluxe in a bid to capture upmarket customers. The fatal flaw was that customers who are looking for gourmet dining don't patronize the Golden Arches.

The third rule that can seal the deal with failure is the most obvious one — produce a genuinely awful product. The Economist offers as examples the Ford Pinto (frequently went up in flames when hit from behind), Microsoft's Vista operating system and the Yugo, a car so flawed that it inspired jokes such as this: "What comes with every Yugo's owner's manual?" Answer: "A bus schedule."

But, the publication warns, excessive caution is no antidote for failure.

"Still, the surest way to guarantee failure in the long term is to be so paralyzed by the fear of it that you don't try anything new. The line that separates a hit from a flop is thin," the Economist said.

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.