The most important lesson from BlackBerry’s downfall

There were obviously many contributing factors to BB’s downfall. The first sign of the company’s vulnerability came in the outage of October 2011, which resulted in a three-day shutdown of e-mail and BBM (BlackBerry Messenger). On the other side of the service blunder was the aggressiveness from competitors like Apple, Samsung, and Google, lining up […]

There were obviously many contributing factors to BB’s downfall. The first sign of the company’s vulnerability came in the outage of October 2011, which resulted in a three-day shutdown of e-mail and BBM (BlackBerry Messenger). On the other side of the service blunder was the aggressiveness from competitors like Apple, Samsung, and Google, lining up to eat BB’s lunch – which they eventually did.
Another slip was BB’s decision to not enter the smartphone market early, perhaps two or more years late, even though the company’s pioneering e-mail-enabled handsets seemed to have prepared the way for the introduction of smartphones. Yet another goof-up by BB: the unwillingness to form partnerships. The story of Google’s Android operating system (OS) does hint on the importance of partnership – just watch the high-flying Samsung laughing profusely to the bank on the back of Android, while Google itself is making a killing from ads in the devices of numerous companies like Samsung that use Android. At the time that Thorsten Heins took over as CEO of BB, big tech companies like International Business Machines Corp. (IBM) and Hewlett-Packard (HP) showed interest in partnering with BB, at least in the services sector, but Heins declined and instead decided to pursue his new line of smartphones, which came two years late, leading to unsold inventory and billion-dollar write-off! 
Unfortunately, reversing the downward trend has not been possible for BB. There have been real desperate, if not costly, efforts to come back, but they just haven’t worked. There have been a slew of product launches: the Z10 operating system in March 2013, with a marching Q10 device; the launching of Passport on 24 September 2014 as BB’s answer to iPhone and the Galaxies, and the release of Classic on 17 December 2014. Launching the Z10 smartphone that isn’t well differentiated or much cheaper compared to the top-shelf devices (from Samsung and Apple) did not help BB, as consumers did not seem to have enough reasons to switch.
There were other desperate attempts by BB to avoid bankruptcy. There were thousands upon thousands of lay-offs, the imported German CEO Heins was fired, the founding co-CEOs resigned, John Chen, formerly of Sybase (now a part of SAP) was recruited to do for BB what he had done for Sybase. BlackBerry even put itself up for sale; but there no suitors! The BB case illustrates how unforgiving the tech business can be if you slip.
The big question is: Which of BB’s missteps is the most damaging of them all? Which of the business “crimes” that BB committed is the most heinous?  To answer this question let us listen to what Jack Welch, former CEO of General Electric said in his 2006 interview with Professor Goldman of Harvard Business Review on the topic of emotional intelligence. I have “parsed” Welch’s statements from the audio tape: “Change Catalysts: Leaders who catalyze change are able to recognize the need for it; challenge the status-quo and champion a new order. Have to re-invent yourself all the time. You can never be in a place where the world outside is changing faster than you are inside. You’ll be falling behind. I saw today’s journal; eight new devices, eight animals, trying to take on RIM and each of them – Samsung, Motorola,…, every one of them has a new thing, and now the fight is on. Well, RIM had better be changing inside – to make the keyboard easier-to-use, to make it do more,…, or the next guy is going to get him”
Guess what? Welch was absolutely right – RIM wasn’t changing inside and they “got him real bad” a few years after Welch’s statement. Apple and Samsung got BB. Remember that Welch’s statement was made when BB was at the top of its game, with no runners up. I am awed by the prediction, and how it had come to be true, because BB failed to acknowledge the business genius in Welch.
Thus, failing to join the smartphone bandwagon on time appears to be the worst crime that BB committed, and the most important lesson to be learned from the company’s downfall. Being unprepared for touchscreen, Verizon’s $500 million contract to BB to develop BlackBerry Storm (touchscreen) against Thanksgiving (November) 2008, in what could have been BB’s largest contract ever, went bust as the deadline could not be met, and the fact that product came out buggy.
In an interview on a recent book on BB: “Losing the Signal,” David Yach, the former chief Technology Officer of BB, was quoted to have said that he learned in retrospect that beauty mattered, fun mattered. “That was so antithetical to BlackBerry. It was aimed at efficiency, security and all the practical things people in the biz world want.” Well, except that it wasn’t the biz world that beat a path to iPhone; it was folks who weren’t looking for productivity, but for slickness, fun, music, vanity, FaceTime, and the like.
The take-away from this article is that not being adaptable might have been BB’s major crime.