Why BlackBerry’s future looks brighter than it has in years: Duncan Hood

A lesson in optimism from… Nortel?

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(Flickr/Santiago Atienza)

(Flickr/Santiago Atienza)

When good companies blow up, it can be a terrible shock. Enterprises that took years to build—that once ruled the world—can collapse into smoking heaps right before your eyes. We watched in horror when it happened to Nortel back in the early 2000s. And over the past few years, we have watched it happen all over again to BlackBerry.

A recent report reminded me of the similarities between the two collapses. Published by Jonathan Calof, associate professor of international business and strategy at the University of Ottawa, it’s the definitive study on why Nortel—once the ninth most valuable company in the world—imploded. Calof and his team surveyed hundreds of former Nortel officers, customers, competitors and consultants in an attempt to distil just what it is that can cause successful companies to fail. And, in the process, he uncovered a ray of light for BlackBerry.

Calof discovered that Nortel’s demise was due to a slew of factors, but the most noteworthy trigger was an overwhelming sense of arrogance at the telecommunications giant, which prevented it from taking its new competitors seriously. This was combined with an internal lack of resilience owing to poor financial management and a broken company culture, as well as the “black cloud” that engulfs any company in big trouble, driving away even the most loyal customers and investors.

Sound familiar? Everyone who reads the paper knows that all of those factors were at play in BlackBerry’s collapse as well. But when I finished Calof’s report, I wasn’t convinced BlackBerry is doomed to follow in Nortel’s footsteps. In fact, I felt more optimistic about its future than I have in several years.

That’s because near the end of his report, Calof comes to the surprising conclusion that even when Nortel’s share price had already dropped from $800 to less than $30 and the company seemed destined for bankruptcy, it could have saved itself. How? By abandoning its expansion plans, retrenching and selling off its non-essential business units immediately. Unfortunately, that’s not what Nortel did. Instead, its CEOs fiddled with the company’s internal structure, launched investigations and focused on image rehab.

BlackBerry’s new CEO, John Chen, has taken a different approach. He realized that while the company is in dire straits, its core business remains remarkably sound. Despite mounting competition, BlackBerry is still a leader when it comes to offering reliable communications solutions for business and government power e-mail users who like the keyboard and take security seriously.

To save the company then, Chen needs to focus on this core viable business and quickly divest all assets not directly related to it. He seems to be doing just that. Chen has outsourced handset manufacturing to Foxconn, the Taiwanese electronics manufacturer that makes the iPhone for Apple. He has eliminated positions that were focused on the broad consumer market. He’s selling off the company’s real estate, meeting with customers and revamping the BlackBerry Bold, which is still outselling the newer Q10 and Z10 phones to this day.

Chen’s plan just might work. It’s doubtful BlackBerry will ever realize its dream of becoming a global handset player again, but it could carve out a profitable niche serving clients for whom security and reliability come first. It will likely be a smaller player, at least for now. But it will be alive to see another day.

3 comments on “Why BlackBerry’s future looks brighter than it has in years: Duncan Hood

  1. In my opinion there were 4 main reasons for BlackBerry’s present situation. The first was the companies starting point being founded by students who new how to start a company but not how to run the company efficiently beyond its initial foundation. This is a typical problem many entrepreneurs trap them selves in by not hiring those how are better at running the company after its initial start-up. The second is that the company new it had an inadequate financial control but was unable to rectify the problem. Thirdly the company new its marketing and PR capabilities were inadequate and ill equipped for what it needed to do but again it failed to resolve the problem and which is still a problem to this day. The forth problem area is its inability to consolidate its strengths in RD and devise adequate strategies that would have better helped in transitioning from there previous product range to the new QNX based products.

    Reply

    • Konrad you’ve formed an opinion based on information that doesn’t exist.
      1: I agree that the founders should have put more talent in C level positions earlier on so that they could address their arrogance. But BlackBerry became the jewel of the mobile industry because it was the best product for business and consumers wanted a piece,. So this is your ONLY point I actually agree with.
      2: Research in Motion has always had solid books, this is where it has never been like Nortel, saying they had inadequate financial control? What did they lack in control? they had an excellent revenue stream from service, and they had a profitable hardware stream, zero debt, owned their lands, owns their factories, and had great relationships with their supply chain, the relationship with Marvell IMO was one that started their undoing by not abandoning their agreement back in 2009 with Marvell when they were outpaced by another supplier Qualcomm at every step.
      3: Research in Motion never learned how to market, it goes back to your point 1, they never had to tell people about BlackBerry because BlackBerry was the best, they focused on continuing growth and expanding markets at a time that while they were breaking their own records the 3rd party sales and marketing organizations they hired failed to stress what the market was changing into and failed to help BlackBerry. We are still facing this problem at BlackBerry, though we’ve yet to see how John Chen will address this he replaced Thorsten Heins CMO choice who clearly didn’t grasp mobile.
      4: WTF? I’m sorry BlackBerry failed to address hardware needs in 2009 when it kept Qualcomm and Marvell processors as CDMA and GSM instead of unifying both under Qualcomm and pushing hardware forward faster, the 9800 should have had a 900Mhz processor which wouldn’t have been industry leading at the time but was available under both Marvell and Qaulcomm processor families. it also should have had a GPU as competitive touch screens did. But lets get to QNX which you brought up. BlackBerry purchased QNX mid 2010, and launched BlackBerry 10 based on QNX January 2013, little over 2 years to bring in a new core, and develop a full new platform. you say they should have been faster? Lets look to Apple. Apple started Project purple in 2005, and launched iPhone/iOS in 2007, approximately 2 years later, without having to endure scrutiny of the public, an executive change, and growing stock market pressure. so to put BlackBerry and their use of talent for R&D under pressure is insulting, they developed an OS superior to the first generation Android, first generation iOS, or Windows Phone 7, they did it with the world telling them to give up, and they continues to advance it faster than any other mobile OS has seen advancements with 2 CEO changes.

      BlackBerry has a crazy amount of faults, but your assessment leaves out any resemblance of fact base.

      As to the Article the similarities between BlackBerry and Nortel are so few are far apart drawing lines between them is a messy web. Research in Motion Co-CEO’s certainly had the arrogance of Nortel CEO’s but really that was the end of it, They always had a strong financial position, and they still do today 2 CEO’s later, they had a range of products and continued to diversify something Nortel failed to do. Though both BlackBerry and Nortel missed a massive shift in their respective industries. BlackBerry addressed the shift with QNX,. and I am more confident under John Chen in my investment in $BBRY than I was under Thorsten Heins, whom I very much liked as a leader and a person.

      Reply

      • Stephen, You hit the nail on the head with your comments. The one area that i think you neglected to talk about, which was something that could’ve been extremely benefivial to Blackberry, was the cross platform integration of BBM. This was suggested by Jim Balsillie years ago but nothing ever transpired of it. Look at what has happened to WhatsApp. BBm was, and still is in my opinion, the best messaging application available. Early cross platform adoption could have been huge for Blackberry.

        I just wanted to add to your comment about the BB10 OS platform. The amount that it has grown and refined itself in a little over a year is tremendous. As someone who has used 3 of the major platforms, BB10 is for me, the most efficient and well structured of all of them. Hopefully they will continue to develop it to the best of their capabilities. The early release leaks of 10.3 look to be on the right track once again

        Reply

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