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3 Companies that Failed to Listen

by Jennifer Beever on December 20, 2013

Don't Listen 2 600 wBusinesses that have experienced high-growth can get myopic and full of themselves. Some make the big mistake of failing to listen to the marketplace.

I recently read an email newsletter by Seena Sharp of Sharp Market Intelligence. Seena wrote “Playing the Blame Game,” about leaders and companies who ignored market and customer signals and blamed external factors for their product or business problems. This made me think of three fairly recent examples that we’ve been discussing in the marketing classes that I teach.

The #1 Fastest Growing Company in 2009 Fails to Follow Market Signals

Blackberry, which just reported a $4.4 billion loss and a 56 percent revenue decline for its fiscal third quarter, believes it knew better what consumers wanted in smart phones. As a result, it took Blackberry six years to come out with a phone that better fit the growing demand for cheaper phones with apps and more powerful operating systems – a market being served by Apple and manufacturers of Android devices. An article in The Globe and Mail quoted an unnamed Blackberry stakeholder:

“The problem wasn’t that we stopped listening to customers,” said one former RIM insider. “We believed we knew better what customers needed long term than they did.”

So, Blackberry “listened” to what customers said and ignored the information. Isn’t that the same as not listening?

Lululemon Founder Chip Wilson Blames Overweight Women in Very Public Gaffe

This example is egregious, because the founder of the company blamed overweight women’s thights for problems with. It’s a shame because apparently the brand had great growth and potential. When asked about the problem in an interview on Bloomberg TV (as quoted in the Huffington Post), Wilson said the following:

“They don’t work for some women’s bodies,” Wilson said…. “It’s really about the rubbing through the thighs, how much pressure is there over a period of time, how much they use it.”

The CEO of Lululemon and Wilson have since stepped down from the company.

Sriracha Maker Fails to Respond to Community Complaints and Lawsuit

In response to community complaints that a new manufacturing plant was emitting extremely strong odors, the Huy Fong Foods company said it would look into the problem, yet failed to act. The company, which relies on a small window in which it processes fresh chiles into its #1-selling Sriracha sauce, has now been ordered to stop processing for 30 days by state health officials. As an example of the company attitude toward consumers, the founder said this in an interview with CBS News:

“If you don’t like my product, what happened with you? Something wrong,” he said. “We do the fresh one, the best one, the cheapest one.”

In a growing market (top chefs specify Sriracha sauce in their recipes, people write Sriracha cookbooks, people share their Sriracha videos and stories on social media), the founder of the leading brand is risking losing out. There are already many imitators of the Sriracha signature brand with the green cap and rooster on the bottle that threaten Huy Fong Foods market leadership.

Blackberry’s failure to listen is tragic, as it resulted in the decline of a top brand and the loss of jobs for thousands of people. Lululemon’s attempt to blame overweight women for product problems may be poor judgment on the part of its founder. Huy Fong Foods appeared to be unprepared for any contact with the media. They had little publicity in the past and didn’t appear prepared for the kind of attention they’ve received.

Listening is more important than ever, since social sharing accelerates consumer sentiment for your brand. Listen to what your customers are saying. Don’t ignore what you learn. Don’t explain it away or blame something or someone else – especially the customer!

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{ 1 comment… read it below or add one }

Jeff Lincoln July 10, 2017 at 7:52 pm

RIM comment sounds a lot like something Steve Jobs once said, “The market doesn’t know what it wants because we haven’t told it what it wants.”

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