Thursday, November 7, 2013

Learning from Losers: Blackberry

Learning from Losers: Blackberry

My Blackberry Torch is in about the same shape as the company.  The keys are falling off my phone, and the software is balky at times.  While I still like the keyboard, it’s actually my incredibly cheap data plan that prevents me from getting rid of the phone.  Blackberry has just completed a $1 billion convertible debt offering designed to buy it a bit of time to sort out its affairs.  This comes after its largest shareholder withdrew a buyout offer, and other bids for the company failed to materialize.  Blackberry is the second major Canadian technology company to lose its way.  You may recall that Northern Telecom was a casualty when the bubble burst over a decade ago.
Hedge Fund Foray (2000)
Most often when we choose to study companies we opt for the successful ones.  Surely our own prowess as business managers or investors will be enhanced if we understand what made Apple, Amazon, or Google successful.     These stories are always told with the benefit of perfect hindsight, and thus fail to thoroughly explore the myriad of decisions that happened to put these companies on the road to dominance.  Moreover, success stories tend to overlook the role of luck in bringing a company or a CEO to the pinnacle.

I believe there is more to be learned from stories of failure.  In examining failures we tend to explore more of the options that faced the company as it headed down the wrong path.  Thus there’s much to be learned from answering the following question.  How did Blackberry lose its position as the dominant player in the mobile device business?   Many of the answers are contained in an investigative report in the Globe and Mail[1], “Inside the fall of BlackBerry: How the smartphone inventor failed to adapt.” A team of reporters shows how Blackberry failed in three key areas.   The company failed to listen to its customers, it ignored the competition, and it fell victim to deep rifts in the company and on its board.  It’s true that the technology was changing rapidly, but Blackberry seemed to have the means to develop the products needed to compete. I urge you to read the Globe and Mail’s report.

Today, many of you will be far more interested in the debut of Twitter than the painful tale of Blackberry.  However, as we try to predict Twitter’s success and keep an eye on its potential weaknesses, we might want to keep the Globe and Mail’s story close at hand.



  1. Palm created a market for PDAs and enjoyed great success in that market -- until it was supplanted by new markets. Likewise, Garmin for the standalone GPS. Likewise, Wang for the standalone word processor of the 1980s. Palm and Wang are long gone; Garmin (to the great credit of their executive team) has managed to sustain profitability, but they are no longer a dominant force. BlackBerry/RIM is just the most recent technology company to go down this path. The odds that a company will thrive throughout multiple technology changes are infinitesimal. Apple did, but for every Apple there are 50 that do not.

  2. Being the pioneer and owning the market is not often a good thing, despite the often stated adage about "first mover advantage."