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3 Brilliant Business Moves That Looked Dumb Initially

Three major global businesses bet heavily on their CEOs' big decisions. Onlookers were sure the results would be disaster. Boy, were they wrong.

The iPhone? Many "experts" thought it would flop. Television was a curiosity, but no challenge to the power of radio. PCs would go nowhere; what were they capable of doing?

Plenty of great business decisions have been derided when they were made. Prasad Kaipa and Navi Radjou, coauthors of From Smart to Wise: Acting and Leading with Wisdom, came up with some great examples. Not that entrepreneurs are always right, but remember that many times, the naysayers really don't know what they're talking about.

Be ready to start over.

Managers and business owners can get too stuck in their habits. After all, they are experts at what they do. Sometimes the only way forward requires you to take a step back and get a new view of a situation.

When Sam Palmisano became CEO of IBM in 2000, he realized that the company was stuck. So he promoted top executives into general managers of business units. But they all had to build those units from nothing, learning everything they were supposed to know all over again. It seemed crazy to many. After all, IBM was a huge company with massive resources. That was true. It was also a company that was relying too much on previous formulas for success at a time when the Internet was coming into full bloom, reshaping an entire industry. The best managers tried new strategies and cultivated what Kaipa and Radjou call "beginner's mind." The company sold off businesses that had peaked, like the PC division, and moved into areas that would see the company's next stage of growth in services.

Kill your darlings.

This advice, often given to writers who become so enamored of their prose that they forget what they're trying to communicate, is applicable to business, as well. It's another formulation of Clayton Christensen's innovator's dilemma, when what powered the success of a company in the past will be eaten away by innovations.

Xerox CEO Ursula Burns has taken the danger to heart, eliminating some traditional product lines and moving into new areas, such as business process management. Although people at the company who longed for tradition might have been unhappy, Burns is keeping Xerox from doing the same thing over and over, until it's no longer needed and there is not enough time to shift into new areas. What would you call Xerox if it hadn't made the hard decisions? Kodak.

Undercut your own products.

One of the hardest decisions to make is to introduce a new, lower-priced product that would seem to knock the bottom out of your own market and margin. That's what Rata Tata, then CEO of Tata Group, did in 2002. The company already owned Jaguar and Land Rover, two high-priced English automobile brands. But Tata decided that the company would come out with a $2,000 compact car. Impossible, said critics. How could you make a profit? But the company persevered and launched its Nano project, filling in a huge market gap and helping to propel Tata Motors on its way to becoming the fourth largest automobile manufacturer in the world by 2015.

IMAGE: Getty
Last updated: May 2, 2013

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by columnists are their own, not those of

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