Boss Blunders: When CEO slip-ups damage their brands

At the start of February, Chris Kempczinski posted a video to Instagram, where he taste-tested a new burger.

There's no doubt he hoped to draw in a few eyeballs with his post - and he certainly succeeded on that front.

At the time of writing, the post has been shared through Instagram almost 330,000 times, it has 284,000 likes and more than 34,000 comments. That compares to the hundreds, and sometimes only tens, of comments his videos usually get.

However the kind of attention the post has gotten is unlikely to be what he had hoped for.

Kempczinski is the CEO of fast food chain McDonalds', and his video was an attempt to promote its Big Arch burger, which has been available in Europe for months, but is only hitting US shores now.

Clearly he - or someone on his team - thought it would make for good PR to have the company's big boss trying this new creation out. What better way to let people know that this was a tasty burger… or 'product', as he refers to it in the clip.

And it's that language that helped make his post go viral.

Viewers picked up on his very business-like attitude towards the food, as well as the suspiciously small bite he eventually took out of the burger (which was followed by a less-than-convincing "that is so good").

All of this combined into what has become a viral moment.

People felt that, contrary to giving their new burger his seal of approval, the video gave the impression that the boss of McDonalds' was somewhat reluctant to eat his own company’s food.

(In a previous Instagram video, Kempczinski said that he eats McDonalds' three or four times a week, so we'll take his word on that).

It's too early to saw what impact, if any, the video had on McDonalds' sales, or the success of the Big Arch.

At the very least, the video did offer McDonalds' rivals a PR opportunity of their own, with the CEOs of Burger King, Wendy's and others posting videos of them eating their own food, and looking like they actually enjoyed doing so.

Google searches around the burger - and the CEO - did spike in early March, though that isn't necessarily a positive (or negative) indicator of sales.

Even if it did hurt the 'product' it's safe to say that this was more of a PR misstep than a total marketing disaster.

The same can't be said for some of the PR gaffes made by other bosses.

The Osborne Effect

You know it’s a bad sign when a business misstep gets named after you or your company.

That’s the case with 'The Osborne Effect', which refers to Adam Osborne and his Osborne Computer Company.

It was one of the pioneers of the personal computer, and in its early years would have been a rival to the likes of Apple and IBM.

Its first computer was a so-called portable computer called the Osborne 1, though you'd be reluctant to carry it around too much given that it weighed over 11kg. It didn't include a battery - it needed to be plugged in to work - but it did boast a 5" monochrome screen and dual floppy disk drives. Cutting edge stuff for the time.

And despite it costing almost $1,700 at launch in 1981 it sold quite well.

The company had expected to sell 10,000 machines in total, but ended up selling 11,000 in its first eight months. At its peak it was selling 10,000 a month and couldn't keep up with demand, which meant it had tens of thousands of back-orders in its early life.

And with millions of dollars of revenue rolling in, the company grew rapidly, and started to develop next generation products. They were to be called the Osborne Executive and the Osborne Vixen.

But the mistake Adam Osborne made was to start telling customers all about these great new products that were going to launch in the future. Hearing that something better was around the corner, customers opted to cancel their Osborne 1 orders, and revenues started to dry up.

The problem was, that was the revenue which was vital to fund the production and launch of the next phase of products.

Osborne tried to reverse the slide by slashing the price of the Osborne 1, but it didn't make a difference. Allegedly it got to the point where the company was going months without any sales whatsoever.

Eventually, in April 1983, they officially announced the Executive, but within a year the company entered bankruptcy. It did emerge from that in 1984, launching the Vixen in an attempt to regain its early momentum, but it was too little, too late. The company completely collapsed in 1985.

Some have argued that Osborne's demise wasn't purely down to it pre-announcing its next big thing, it was also facing stiff competition from other firms and meanwhile was wasting resources trying to build and sell old computer hardware.

But still it's the inspiration for The Osborne Effect, which is a mistake that other big companies have been accused of making in more recent history.

Sega didn't wait long enough after launching its Saturn console to start talking about its successor, what would become the Dreamcast.

The Dreamcast also happened to be the last home console it ever made.

Meanwhile Nokia announced its plan to abandon its own phone software system in favour of Microsoft's, but it did so many months before it was able to bring those new products to market. That meant there was a period of time where it continued to sell products running on its soon-to-be-retired software.

The Ratner Effect

Another cautionary tale from the world of business shows the importance of thinking before you speak.

Gerald Ratner was the boss of what was then called the Ratner Group - which owned a number of well-known, high street jewellery brands including Ratners, H Samuel, Ernest Jones and Kay Jewelers in the US.

It gained great success by being extremely aggressive on price, making it a far more affordable option compared to other jewellers. It also wasn't afraid to abandon the staid approach of traditional jewellers, using bargain basement marketing tactics like neon lights and eye-catching 'sale' signage to drum up sales.

By the early 1990s it had grown to become a huge player in the market. In its 1991 annual results, it had a profit of more than £112m.

That's around £260m in today’s money.

But in April 1991, Gerald gave a speech to the Institute of Directors in the Royal Albert Hall, and his business empire almost immediately lost its sheen.

In his speech about the success of The Ratner Group, Gerald highlighted a sherry decanter set they sold - which included six glasses and a silver-plated tray - which was priced at less than £5.

"People say 'how can you sell this for such a low price?'," - he told the audience – "I say, 'because it's total crap'."

As if that wasn't enough, he then went on to point out that his company was selling a set of earrings that cost less than a Marks & Spencer prawn sandwich, before adding that the sandwich would probably last longer.

His remarks were immediately picked up by the press and, needless to say, they did not go down well.

The next day he went onto Terry Wogan’s TV chat show to try to do a bit of damage control. He said it was a joke that wasn't meant to be taken seriously and he claimed that some of what he said was taken out of context and suggested it was being deliberately misconstrued by the media.

But it wasn't enough to reverse the situation.

Having made a £112m profit in the previous year, the company reported a £122m loss in its 1992 results.

The company did suggest some of that was down to the recession that had hit the UK and the US in the early 90s - which was precipitated by the oil price shock - but it did also admit that the "adverse publicity" from Gerald's comments didn't help, particularly at its Ratners-branded shops.

In the end, in an attempt to save the firm, a new chairman was brought in.

He closed hundreds of stores, fired Gerald Ratner and attempted to move the group up-market. Eventually the efforts paid off and the company remains a huge player in the retail jewellery market to this day. Though it has long shed the surname of its former boss and it now trades as Signet Group.

Gerald Ratner, meanwhile, is still active in business and has had a range of ventures over the years.

Late last year it was reported that he had even launched a surprise bid to buy the loss-making UK arm of Signet - which includes H Samuel and Ernest Jones.

Kanye West

Kanye West isn't just a musician - he was also the head of a multibillion dollar business empire through his Yeezy brand.

Stretching across the worlds of music and fashion, amongst other things, the Yeezy brand featured tie-ups with all sorts of other companies, including big-names like Gap.

But it probably became best known, and most profitable, through its partnership with Adidas, which led to the creation of the Yeezy line of footwear (and eventually all sorts of other pieces of clothing).

Yeezy became a huge profit-maker for the German sportswear brand.

At its high water mark in the early 2020s, it was generating somewhere in the region of $1.7 billion in revenue in a single year. And, because West was getting an 11% royalty cut from the line, it meant that in that single year he took in around $190 million dollars.

Needless to say, it was a very lucrative partnership for everyone involved.

But then in October 2022, West blew it all up.

He made a number of anti-Semitic remarks on Instagram and, despite growing criticism over his stance, he doubled down in the days that followed.

Quite quickly all of the partnership deals he had with various brands began to evaporate. He seemed to believe that, because of how important Yeezys were to Adidas, they wouldn’t drop him - but at the end of October they too announced they were immediately ending the partnership with him.

They also said that doing so would knock around €1.1bn off their revenues for that full year.

In the end, their profits fell by around €460m in 2023, almost entirely due to the fact that they pulled the Yeezy brand. They were also left with the headache of what to do with a massive stockpile of footwear that they couldn't sell.

In the end they sold some of them off and donated some proceeds to charity, before eventually striking a deal with West to sell him the remaining stock that was left.

West continues to control the Yeezy brand, and sell clothing through it, but it is far from the brand that it once was.

At the height of the Adidas Yeezy era, Forbes estimated West’s net worth to be in the region of $2 billion. Today he's thought to be worth closer to $400m.