That time I told Blackberry how to save their business (and they ignored me)

Let me tell you about that time I told Blackberry how they could save their business and they chose to ignore me. But wait... isn't it a bit cliche for an innovation guy to talk about Blackberry? Or Blockbuster / Kodak / Toys R' Us? Sure it is. But the thing is, this is a true story from my life, and as a wise man once said “Nothing is a cliche when it’s happening to you.”

Down, but not out

In 2012 Blackberry was a giant of the corporate world on the decline. After their meteoric rise and dominance of the global smartphone market, by the early 2010's they were down but not quite out. There were still two countries on the planet where they held the top spot. One was their native Canada, which wasn’t surprising given their national pride in the brand. The other, curiously, was Indonesia. My team and I were approached to unpack this strange phenomenon: market research was required to understand what was driving the enduring success of Blackberry in Indonesia and to help replicate this secret sauce across other markets. It was a last-ditch attempt to resuscitate the business and breathe life into an ailing brand.?

Get the message?

Our research uncovered a multitude of reasons for Blackberry’s success in Indonesia, but at the center of it was their obsession with Blackberry Messenger (BBM), a free messaging service available only on Blackberry devices. Especially in a country where network coverage could be patchy, BBM provided a reliable, free messaging services that included advanced features like group chats. These features had taken off like wildfire in Indonesia where the value of sharing real-time information in curated social circles was baked into the fabric of their culture. In short, the popularity of BBM was an indicator of the swelling cultural phenomenon of social messaging, a growing trend that was about to explode out of Asia onto the global stage. Sales data confirmed our hunch: Indonesians weren’t buying Blackberry handsets because they loved them, they were using them purely as a utilitarian BBM access device.

We shared our findings with Blackberry’s leadership and stressed that rather than seeing this as a negative, the potential of the growing social messaging opportunity could actually hold the key to reviving their business. We also shared market intelligence on a handful of then small startups like WhatsApp, Viber and Line that, while nascent and struggling to break the stronghold of SMS, had clearly identified the opportunity and were capturing growing attention from the tech world. We raised the looming threat of these newer players, but also stressed that the installed user base and brand credibility of BBM gave them a huge advantage.

A new hope

Our proposal was to spin off BBM as a standalone service, an advanced messaging app that would work on any device. We understood that a hardware company might think it radical to put their software on other people’s devices, but we also had historical evidence on our side; after all, hadn’t Microsoft dominated the PC era with this strategy? Weren’t Google pursuing a similar strategy with their Android OS? BBM hadn’t begun with the intention of being a standalone app, but some of the greatest innovations in history had been a case of accidentally stumbling into a solution in search of a problem.

We felt it was an opportunity to explore an entirely new business model for Blackberry in a space where they could legitimately claim universal appeal. Unfortunately, their leadership team didn’t feel the same. Meeting after meeting, we faced pushback on why this wasn’t a viable way to move forward. If BBM was the only reason people were still buying Blackberry handsets, wouldn’t it be suicide to put this app on other devices and hand the advantage to Apple and Samsung? My analogy of a slow, prolonged death being worse than pulling the plug and rolling the dice for reincarnation didn’t quite have the persuasive effect I’d hoped.

Coffee and crushed dreams

In a last-ditch effort to plead our case, we set up a meeting with a senior Blackberry executive. We met at a hipster cafe, the oppressive heat and cacophony of traffic of the outside world muted behind the squeaky clean floor-to-ceiling glass walls.

The crux of our discussion was that if Blackberry didn’t seize the growing opportunity of social messaging, then WhatsApp or one of its competitors soon would. The executive calmly took a sip of his latte, smiled and explained that WhatsApp couldn’t possibly pose a threat to BBM as they had the superior product. The explanation was long and technical, but as an example he cited the fact that BBM provided its 15.8 million U.S. users with two blue check marks or “ticks”: one for when a message was sent, and a second blue tick once the message had been received by the recipient. At the time, WhatsApp only provided one. In his reasoning, this feature was a prime example of BBM’s superiority. Incredulous, I asked whether this was a feature that might be replicated by others, but he remained adamant that technical complexity prohibited others from offering such a functionality.

Despite my best attempts to argue to the contrary, the conversation ended soon afterwards. The executive stood to leave, explaining he had to run to another meeting. All very civil. We shook hands and said we'll be in touch. He gave us a recommendation for a great local restaurant to try while we're in town. We exited the building, stepping out into the scorching mid-afternoon heat, our voices drowned out by the noise of traffic. We never heard from him again.

Dying a not so slow death

Of course, we all know what happened next. WhatsApp quickly introduced the two-ticks feature, along with many others, quickly growing their user base across the globe. This led to WhatsApp’s acquisition by Facebook just over a year later for $19 bn. Today, WhatsApp is the largest messaging platform on the planet with almost 3 billion users. Indonesia is consistently one of the heaviest users of the service in the world.

What happened to Blackberry? They have lost 97% of their market cap. They have been trying for decades to reinvent themselves, so far unsuccessfully. BBM was eventually spun off as a standalone app for iOS and Android, but it was too little too late.?

So, what's the lesson here?

This is where most MBA versions of the Blackberry case study end. Blackberry were caught in a cycle of operational inertia, preferring to defend their existing business model instead of attacking a new opportunity, and as a result were disrupted by a younger, more nimble competitor. Replace “Blackberry” with “Kodak”, “Blockbuster” or “Toys R’ Us” and you have a neat little template for how innovation goes wrong.

But what might we learn if we ask the question “why”? Why were Blackberry caught in such a tailspin? They had plenty of viable opportunities to invest in - our research project was just one of many similar ones going on around the world. They had resources to invest in new ideas, at the time they were still generating significant revenue that could have been diverted into building new business models. They had some of the best talent in the world, many of whom have since gone on to senior leadership roles at Samsung, Apple and other top performers in the industry.

The truth is, Blackberry’s leadership probably did believe in our recommendation. However, when you have sales teams who need to meet their quarterly targets in order to take home their bonus, it can be hard to convince them to rock the boat in the hopes of future success.?

I’m reminded of a quote from James Clear, author of Atomic Habits: “You do not rise to the level of your goals. You fall to the level of your systems.” Blackberry didn’t fail because they were dumb. They failed because they didn’t have the necessary innovation systems in place to build the business of tomorrow.?

Amer Iqbal is an innovation consultant who has guided dozens of Fortune 500 companies to build the business of tomorrow. He is the author of the upcoming book The 5 Ways to Innovate and hosts the Riding the Wave of Innovation podcast. Learn more at https://amerspeaks.com