Imported from Yugoslavia in the 1980s, the Yugo should have been a golden opportunity. The 1970s gas crises spurred demand for smaller, efficient and affordable cars; meanwhile, America had taken a shine to Yugoslavia—with its eagerness for trade alliances (thus rebuking Soviet Union embargos), the country was a scruffy puppy that American industry could adopt and coddle with Coca-Cola, blue jeans and Bon Jovi music. Thus the Yugo offered US consumers the cheapest car around, made by an Eastern Bloc nation's adorably industrious people. But despite its low price, owners came to rue its fragility and poor performance. It became an instant joke, and thereafter regarded as the worst car ever.
So what can you learn from the Yugo?
1. Don't just ask "what"—ask "why."
The Yugo was meant to fill a demand. America's "Big Three" automakers weren't offering fuel efficient cars, and Toyota and Honda were themselves moving into deluxe models. The door was open for cheap, no-frills transportation, and Yugo did exactly that—all too well. By delivering the most low-end car imaginable, Yugo created an undesirable and inadequate brick. This is the first mistake: When identifying a demand, we often only ask, "What need isn't being fulfilled," without following up by asking, "Why isn't that need being fulfilled?" Had Yugo America considered why no one was offering cut-rate cars at miniscule prices, they might have understood the limitations of their product, and addressed them before moving forward.
2. Have the tools and the talent
The Yugo wasn't just the product of shoddy design and entrepreneurial myopia. It was the product of an outdated East European factory whose conditions earned observations that "OSHA would have a field day" with it (today, harmful and shoddy facilities can mean big trouble—just ask BP and Apple). Meanwhile, the manufacturer lacked adequate resources; the car's engine was an obsolete model, and used an antiquated carburetor that failed emissions tests. Also consider that Yugoslavia's car industry was almost nonexistent, resulting in a slim talent pool lacking any manufacturing.
When that's your source for product, don't expect to be marketing the next iPad. To successfully deliver in any endeavor, every aspect of your operation and resources should be the best they can be. If any element doesn't meet the standards you expect of the end result, you're setting yourself up for disappointment.
3. Have a leader you can believe in
The single greatest element of the Yugo's folly was perhaps the man in charge, Malcolm Bricklin. Previously known for introducing America to the Subaru 360—a car perhaps worse than the Yugo, with the informal slogan "Cheap and ugly does it!"—and his reputation for fraudulent business tactics, Bricklin was a would-be John DeLorean with twice the flamboyance and a crummier eponymous car (the forgotten 1974 Bricklin). In the annals of inept entrepreneurs, Mal Bricklin is the ultimate cautionary tale: Know who is steering your ship. Learn his or her background and intended direction. Those with a history of error or half-formed plans are unlikely to forge a path to success. (And if you are the leader… well, lots of luck!)
4. And if all still goes wrong …
Take heart. The best laid plans can still come up short, but not every failure is the ultimate nadir. Even the Yugo gets a bum rap as the "worst car ever"—the aforementioned Subaru 360 was outright dangerous, with a Consumer Reports rating of "Not Applicable" to 1968 quality standards. The same goes for Germany's three-wheeled Messerschmitt, which used a lawnmower-esque pull cord to start. Don't forget Chevrolet's Corvair, which inspired Ralph Nader's Unsafe at Any Speed. Or, heck, even the Pinto.
-- Alex Tuttle, Vault.com
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