During a hallway discussion, the topic of bad business decisions came up. Everyone knows that a business can make a bad decision if they don't consider the facts and look at the statistics for every decision. It's no surprise that things like statmodeling is getting advanced when it comes to helping businesses with decision making, as this is an important part of a business's success. Not every business bothers with this though, so when I was asked to relate the dumbest business decision that I had ever seen, it was very easy for me to tell my story. Because I do not wish to receive hate mail, I will not mention the name of the company who made this decision. Let's call them Brand X.
The story starts five years ago when the fiber-to-the-home business was still in its infancy. Today, millions of units per year of fiber-to-the-home products are being shipped, but back then maybe 100K per year were being shipped worldwide. There is a part that is used on most of these units. Brand X is a company a few blocks from where I work and they made an excellent version of this part. Unfortunately, they are focused on shipping to the military and aerospace market and my firm is commercial. I went over to their facility and had a discussion with them about their part and I ended up using their part in our design. The part was a little clunky in a commercial application because military RF systems typically operate at 50 and fiber-to-the-home systems run at 75. I told the management of Brand X that I will use their part for now, but that I need them to eventually make a 75 version of the part. Their engineers told me that the change was minor and could be done by one person over a couple of months. We agreed on a unit price of $5.
I ended up buying large numbers of Brand X parts, but eventually, I really needed to get a 75 version of this part. I made another trip over to Brand X and asked them again to make a 75 version of this part. Their response was interesting. They wanted me to pay $50K to cover their R&D costs. I was buying about $50K worth of product every few months at that point. I told them that I would not cover their R&D costs. Besides my volume, they could sell millions of units to other people in the fiber-to-the-home space besides me. I could easily go to other companies who would make the part for me with no up-front costs. The local company told me that their system was focused on the military and aerospace markets where R&D costs are paid for by the customers. Their system could not deal with investing money in order to make more money. I was floored.
After thinking about it for a long time, I still couldn't wrap my head around it. Isn't taking risks a big part of running a business? You may not achieve as much growth as you'd like to see if you abide by the rules all the time. My friend is all about investing money, and he tries absolutely anything and everything he can to make as much income as possible. So much so, he's even decided to look at how these best investment apps uk may be able to help him to earn more going forward, as he wants to be able to see some growth with his own personal finance. Good for him! That's why I struggle to come to terms with the fact that businesses, particularly this one, don't take a similar sort of route. I just want to be able to put some money into my Self Managed Super Funds account! I'm not the best when it comes to savings but I thought this business venture would help me due to the extra income involved. I guess it's a bit more slow-moving than I originally thought!
To make a long story short, I discussed this with the Brand X management numerous times and they insisted that they could not make the change without up-front money. I ended up talking to several brands, including WG Henschen and an Australian company who developed a 75 Ω version of the part for nothing and I ended up using their part. I dropped Brand X and will never use them again. This particular part has now become standard in the industry and millions of these units are now used every year in the fiber-to-the-home market. My company alone purchases over 100K units per year. The local firm continues to make small quantities for the military market. The best thing for their company and the local community would have been to make this simple change, but they could not see further than their current market. I hope that I never develop that level of nearsightedness.