Blackberry Breakdown
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BLACKBERRY BREAKDOWN The company that led the smartphone revolution and sparked our collective mobile addiction is now a shadow of its former self. What went wrong? Association decision makers can learn much from the answer. 51 ASSOCIATIONS NOW 7–8/2014 BY JEFF DE CAGNA, FASAE The New Clock of Strategy RIM was founded in 1984 and needed 15 years to bring its first device, the RIM 850, to market. The RIM 850 was a two-way email pager with a tactile QWERTY keyboard that quickly became the signature feature on all of the company’s devices. Three years later, in 2002, RIM released its first smartphone, the 5810, with the same tactile keyboard, as well as a right- side scroll wheel used to navigate the Let’s turn back the clock. Imagine it is 1999 and your employer, Research device’s monochrome screen, which in Motion (RIM), releases the first in what will be a series of extremely displayed a small number of icons popular BlackBerry mobile email devices. The Canadian concern, which for preinstalled apps such as email, listed on the Toronto Stock Exchange as part of a successful initial public calendar, and contacts. offering the year before, joins the NASDAQ as well, and in the decade It did not take long for users to ahead, the company’s compelling technology and business model will become addicted to the BlackBerry’s transform RIM into the dominant player in helping enterprises and nearly instantaneous delivery of consumers around the world manage their mobile email traffic with email. The overwhelming psycho- increased efficiency and security. The future looks bright. logical imperative to constantly check your BlackBerry—which one Now let’s fast forward to the summer of 2013. Imagine you are sitting observer described as “the tyranny in a conference room in Waterloo, Ontario, after being told that Black- of the red light” after the color of the Berry Limited, which had changed its name from RIM earlier in the year, flashing email indicator on the top is exploring the possibility of putting itself and all of its assets up for sale. of the handset—established RIM as Although not a surprise, the news still hits you hard. You realize that Black- the major force in the burgeoning Berry, the corporate inventor of the smartphone category in North America mobile marketplace, while the device and one of the world’s most influential technology innovators, is in serious became a cultural icon. (Remember jeopardy of disappearing from the business landscape altogether. the “CrackBerry” and the very public At that moment, with a thousand questions bouncing around your discussion of President Obama’s head, you focus on the only one that matters: How could this happen? secure BlackBerry?) By January 2010, How indeed. RIM reached its highest penetration in the U.S. smartphone market, with a Remarkably, in 2014, the focus of the still-unfolding BlackBerry narra- 43 percent share. tive has shifted from the company’s imminent demise to whether its cur- Unfortunately for RIM, this strong rent leaders can execute on their challenging turnaround plans. Whatever market position would not last. The the outcome of the story for the company, the BlackBerry situation arrival of the iPhone in 2007, along offers clear lessons that association boards and CEOs must learn if with the first Android smartphone they are to avoid making unnecessary and costly mistakes and give themselves a genuine opportunity to build their organizations to thrive in the years ahead. Going Mobile 52 ASSOCIATIONS NOW 7–8/2014 2006 “CrackBerry” is selected 1999 2002 as word of 1984 The company’s RIM releases the year by Research first device, its first Webster’s New 2007 in Motion is the RIM 850, smartphone, World College Apple introduces founded. is released. the RIM 5810. Dictionary. the first iPhone. release the following year, unleashed a hyper-rapid pace of innovation in the mobile space for which the company was not prepared. RIM may have needed more than 20 years to establish its place in this market, but it took less than half that time for the company to become an also-ran. Today, BlackBerry is a largely incon- sequential player relative to Apple and Google, holding only a 3 percent share of the U.S. market as of the beginning of this year. In 2014, every industry, profession, MICRO“aSOFT CEO STEVE BA LLMERtoy”’S and field that associations serve is assessmeNT OF THE First IPHONE feeling the powerful effects of intense and accelerating societal transforma- tion. Strategic decision making and action to create meaningful value in this age of transformation must take place on a fundamentally different and much faster clock, one that fully appreciates the speed of the personal For example, when the iPhone was with the idea of partnering on an and professional challenges stakehold- released in 2007, Mike Lazaridis and “iPhone killer,” which came in the ers confront every day in this volatile Jim Basillie, RIM’s co-CEOs, pub- form of the company’s first touch- environment. Strategy today and in licly dismissed the impact of the new screen device, the BlackBerry Storm, the future must be a continuous, real- device on the company’s fortunes. released in November 2008. time process of learning, rather than a (Again, in fairness, former Microsoft The strategic partnership did not calendar-driven exercise in planning CEO Steve Ballmer made the same work out as either RIM or Verizon that occurs on “association time.” mistake, infamously referring to the had envisioned. The Storm came to first iPhone as “a toy.”) Internally, market many months after its original The Duty of Foresight however, the company’s senior man- release date, and the underlying tech- It is easy and perhaps a bit unfair to agement knew the technology power- nology was still not as good as that criticize companies for their failure to ing the iPhone was superior to the used in the iPhone. Although RIM recognize disruption in the moment, technology inside its own devices. made positive public statements about especially when it appears so glaringly Apple partnered exclusively with the Storm, customers did not like it. obvious in retrospect. In RIM’s case, AT&T to develop and market the Sales were poor, many devices were however, there is good reason to ask iPhone, which the media quickly returned, and RIM abandoned it. what the company’s most senior called a “BlackBerry killer.” Verizon Despite the company’s unsteady decision makers were thinking. Wireless, in turn, approached RIM transition into the iPhone era, the 53 ASSOCIATIONS NOW 7–8/2014 43% 2013 2008 2010 BlackBerry The HTC BlackBerry reports a 3% Dream, the first reaches $965 million 2014 smartphone to 2008 its highest loss after the BlackBerry’s use the Android RIM releases its first touch-screen U.S. market failure of its Z10 U.S. market operating system, device, the BlackBerry Storm. The penetration, touch-screen share falls to is released. would-be “iPhone killer” sells poorly. at 43 percent. smartphone. 3 percent. business media continued to report customers to eventually come around on RIM’s brisk global growth, and the to the corporate point of view. company’s senior decision makers RIM faced another serious chal- were convinced that their loyal corpo- lenge when listening to its customers, rate and government user base would since the company had two distinct sustain RIM while it found its footing groups of buyers: On the one hand, CAN on less familiar terrain. Unfortunately, consumers who were increasingly the need to maintain its success at attracted by the flexibility, high design, BLACKBERRY that time, grounded in deep-seated and coolness factors of the iPhone and SURVIVE? assumptions about the long-term Android devices and, on the other, What can associations viability of its existing business model, corporate and government technol- learn from the company’s prevented the company from thinking ogy executives who did not want the through how the iPhone had forever their employees’ BlackBerry devices to turnaround plans? changed the rules of the game in the have cameras, apps, or other features Visit asaecenter.org mobile space. that could compromise email security. to read Jeff De Cagna’s In 2014, association boards, work- According to The Globe and Mail, RIM ing in partnership with their CEOs also alienated some developers with companion article, and senior executives, have a “duty its restrictive requirements for mobile “The BlackBerry of foresight” every bit as critical as applications, which came on top of the Bounceback?” their recognized legal duties of care, complexity of the BlackBerry operating “duty of foresight ” in listening to and learning from all IT’S EVERY stakeholders, not just members. They BIT as loyalty, and obedience. When it comes system at that time, as compared to need to integrate those frequently criticaL as to developing business models under the simpler interfaces on Apple iOS or contradictory sensibilities into their assOciatiON which associations can thrive, myo- Android. organizations’ view of the future. BOards’ pia and complacency in the face of Reacting with hubris to customer recOGNIZED profound societal transformation is a feedback is not unusual for organiza- Real-World LEGAL duties toxic mindset, second only to igno- tions struggling to figure out how to Consequences OF care, rance or denial. The duty of foresight respond to disruption, and perhaps Neither companies nor the people LOYALTY, AND is the responsibility to orient the work feeling a twinge of sympathy for the who run them are perfect, and we OBEDIENCE. of governing toward deeper reflection predicament in which RIM’s board should not expect them to be.