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January 31, 2012 | By Barry Moltz

Guest Post: 2011’s Top Business Model Blunders


Today’s guest post is from Jim Muehlhausen CPA, JD, founder of The Business Model Institute.

Each year, The Business Model Institute polls their readers to find the biggest business model blunder.  Here is the 2011 list of business model mistakes:

  1. Bank of America $5 Debit Card Fee.  America’s largest bank tried hard to run off valued customers, and it worked!
  2. Netflix/Quixter split.  Netflix won the DVD war with Blockbuster and was poised to be the leader in streaming technology.   Not only did they not seize the top position in streaming, but they managed to nearly kill the golden goose.
  3. Blockbuster failing to capitalize on Netflix botch.  Blockbuster still has a powerful brand.  There was a big opportunity when Netflix dropped the ball.  Blockbuster could have dropped everything BUT streaming and ran full speed to lead the digital charge.  Instead, they have vending machines, physical stores, and more of the same.
  4. Snap On licensing its name for cheap Chinese junk, again.  Snap on is the #1 premium brand of tools, by far.  They continue to license the brand for Chinese junk sold at Costco.
  5. Sears/Kmart continuing to spiral towards death.  Kmart/Sears is virtually irrelevant in the marketplace and they did nothing radical to fix it.  It’s like watching a slow train wreck.  You know it’s coming, just not when.
  6. Wal-Mart SKU rationalization.  Wal-Mart decided that their customers did not want or need their favorite brands, so they removed many of them.  Wal-Mart figured that shoppers wanted clean looking stores like Target, not brand options.  It turns out that customers know what brands they want better than Wal-Mart buyers.
  7. Congress failing to do anything resembling lawmaking.  Congress may not have a business model per se, but if they do, boy did they screw it up.
  8. Groupon accounting scandal.  Wow, you mean we can’t count liabilities as revenue?
  9. NBA Tries New Business Model: Irrelevance.  In a game of millionaires vs. billionaires, nobody won except the lawyers.
  10. Airlines nickel diming customers to death.  It is ironic that the airline industry has finally discovered how to get profitable- annoy your customers to death.  The next step is pay toilets and rental pillows.

About the author: 

As the founder of the Business Model Institute, Jim Muehlhausen licenses his materials worldwide and is a nationally known business speaker.  Over the past ten years, he has personally coached hundreds of business owners in more than 5,000 face-to-face coaching sessions and has clients in North America, Europe, Asia, Africa, and the Middle East.

Guest Post: 2011’s Top Business Model Blunders was last modified: January 31st, 2012 by Barry Moltz

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