Victim Of Success: The Rise And Fall Of BlackBerry by [email protected]

Though BlackBerry has less than 1% of the smartphone market share today, it once had more than 50%. The question is how such a successful company could fall so far. Journalists Jacquie McNish and Sean Silcoff provide many of the answers in their book, Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry.

Wharton marketing professor Americus Reed recently had an opportunity to talk with McNish about what we can learn from the rise and fall of BlackBerry.

An edited transcript of the conversation follows.

Americus Reed: I want to start off with some questions about what drew you to this topic. Tell us a little bit about why you wrote this book, Jacquie.

Jacquie McNish: It started with an investigation I did when I worked at The Globe and Mail here in Canada with my colleague Sean Silcoff. The great untold story in Canada in the technology sector globally was how the maker of something that we loved so much and that we were so addicted to — the BlackBerry – could fail so quickly. It was an enduring mystery that was very hard for any business journalist to crack: [Research in Motion (RIM), was a] very, very insular company based in Waterloo, Ontario, outside of Toronto, [with] a very small business feel to it despite its global reach. We spent a lot of time trying to crack it.

We were finally able to talk to some of the principals and did an investigation for the Globe and Mail that led to a wonderful agent in Washington, Howard Yoon, calling up and saying, “You guys should write a book,” and that’s how it all began.

Reed: What do you think sets this book apart?… Tell us a little bit about why this particular book should be on people’s must-read lists.

McNish: We live in an era of constant disruption. No matter where you are, there’s an algorithm or a new way of doing something that’s more efficient, that challenges the old way of doing things. We will look back on this period as being as significant socially and economically as the industrial revolution.

“In this era of disruption, the mother of disruption stories is the BlackBerry story.”

In this era of disruption, the mother of disruption stories is the BlackBerry story. A company that introduced the BlackBerry in 1998 became a $20 billion company from nothing in less than a decade. Then four or five years later, it was back down to a $3 billion company, gasping for breath. It’s not only a disruption story; it is a story of the speed of the technology race today. There has not been a technology that has so quickly penetrated the consumer market as the smartphones did with the BlackBerry being the innovator. Not since the television in the 1950s. We’ve never gone from zero to more than 50% of the consumer market so quickly.

Reed: When I look back on the heyday of the BlackBerry brand, I’m reminded of those images of how deeply it was connected to the business community. In other words, it was seen as a symbol as those who had made it professionally. I remember very vividly our President at the time holding up his BlackBerry and saying, “I cannot live without my BlackBerry,” very much in line with what you were describing with respect to this iconic rise of such a great brand. Tell us a little bit about the genesis of this rise. What were the key business moments that precipitated this rise to greatness for that particular brand?

McNish: Timing is everything, and coming from an outside perspective is very important in innovation. At the time, in the 1990s, a lot of people were racing in the handheld device space. I remember when the Palm was the “It” thing. That only synced your calendars and your contacts with your desktop, but it was the hot thing then. The other hot thing was Motorola’s Tango, the one-way pager that you could [use to] send a few messages … but they were very distant and very unreliable because of their big network.

You had IBM trying to do stuff. You had Ericsson as well strapping … a very successful cell phone onto a very tiny keyboard. If you had fingers the size of a squirrel, you might be able to tap onto it. So all these people were racing to get into that space, essentially with products they already had. Even Apple tried with the Apple Newton with the stylus; that was a disaster because the software just wasn’t right.

BlackBerry looked at this market and came at it from a very different point of view, and this is the key thing about successful innovation. You’re not only offering new innovation, you’re changing the rules of the game. What none of the competitors, the big players, understood was that at that time in the 1990s, bandwidth was very limited for data transmissions. Mike Lazaridis, the founder of Research in Motion, which was BlackBerry’s founding name, understood … how limited the bandwidth was at that time. So he created an instrument that parceled out bits of data communications … so that it would not overtax the networks, whereas everyone else wanted to charge you $4,000 for something that the networks could barely function to transmit. They had that simplicity of design [and] the conservation of the data being transmitted.

The final wonderful thing was that everyone was using their little squirrel keyboards. He said, “What if we create this kind of arched keyboard where you could use opposable thumbs?” That was just one of those breakthrough moments he had one night. That’s the innovation side of the story.

The other side of the story is staying alive because then you’re a small company from Waterloo, Ontario, that’s struggling to make it. You get something right like the BlackBerry, and the big players want it. Some of the big players were there from the beginning. Palm tried to buy them. US Robotics, when it was making modems for mobile data communications, placed a big order and then withdrew it, nearly killing the company because they took on debt to meet that order…. That was managed by Jim Balsillie, a Canadian businessman who went to Harvard, who came back and decided that technology was going to be the key to his success. The two of them were a powerful combination in the early days….

Reed: Can you speak a little bit about the particular strategies that were being pursued at that time by the company?…

McNish: [RIM] did something very innovative. They created these guerilla marketing teams…. They threw boxes of BlackBerrys in the back of their cars, and they went to conferences, they went to airports. They specifically looked at airports for people who were carrying back then the big, heavy laptop computers with the large modems that may or may not have worked, and said “Here, try this.”

“Everyone was using their little squirrel keyboards. He said, ‘What if we create this kind of arched keyboard where you could use opposable thumbs?’”

They called it the Puppy Dog Routine. They said, “Give us your card.

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