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When Good Isn't Good Enough

Leadership lessons from BlackBerry's demise -- a cautionary tale for companies big and small.
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Once upon a time, a little Canadian company that nobody had ever heard of invented something really cool: a handheld device with a keyboard that business people could use to email virtually anywhere in the world. The really cool thing about it was that it really worked--flawlessly.

The company, Research In Motion, called it a BlackBerry.

Next thing you knew, every boardroom meeting had three or four executives or VCs thumbing away like crazy on these things. People were developing injuries called BlackBerry Thumb. It was a genuine craze that more or less created a new market for Smartphones. RIM owned that market for a good many years.

Then Apple's iPhone came along and changed everything with a multi-touch display, a great web browser, and a whole ecosystem of third-party app developers. Google did the same thing with its Android platform.

The response from RIM's then co-CEOs was baffling. They didn't believe the virtual keyboard would catch on with users. They mocked their new competitors, essentially dismissing them as nonfactors. That would turn out to be a very big mistake.

BlackBerry's market share plummeted, as did RIM's profits and share price.

Six years later, RIM has a new name--well, not-so-new, it's BlackBerry-- a radically new operating system called BB10, and a reasonably competitive product called the Z10. Unfortunately, it's not nearly enough to materially alter RIM's severely diminished position in the market it once dominated. And the reasons why provide important lessons for every executive and business leader.

Its leadership doesn't get it. After that fateful iPhone launch, it took four and a half incredibly long years and $70 billion of lost market capitalization before RIM's cofounders and co-CEOs finally stepped down. But instead of bringing in some fresh blood to shake things up, the board promoted an insider, Thorstein Heins, to CEO. His initial reaction to RIM's situation was, "I don't think that there is some drastic change needed." Yes, he eventually came around, but it still feels very much like when Yahoo made Jerry Yang CEO. And look how that turned out.

It's too little, too late. Highly competitive global markets like cell phones can be brutal and unforgiving. They're not just going to wait around for years and years while a company decides to get its head on straight and put out a competitive product. In this market, a year is a long time. Two years is way too long. Six years is ludicrous. Once the dominant smartphone platform, BlackBerry's market share has sunk to single digits. Customers have spoken. The market has moved on. This ship has sailed.

It lacks a robust ecosystem. Smartphones aren't the first products to essentially lock in customers with software they're used to, third-party applications for just about anything, and all manner of add-ons and accessories. That's one of the big reasons why Windows PCs have been dominant for so long. And while RIM has indeed made it easier for app developers to come on board, the BlackBerry app store has but one tenth the number of apps of either Apple or Android.

It's completely outclassed and outmatched by ginormous competitors with breakthrough innovation coming out of their ears. Because RIM more or less created and dominated this market for so long, it's easy to forget how tiny it is in comparison to its three main competitors: Apple, Google, and Samsung. What can I say? In terms of every metric imaginable--market value, cash, revenue growth, profits, intellectual property, engineering talent--these are three of the most formidable companies in history. I just don't know how a little company on the ropes is supposed to come back against that.

It certainly appears as if BlackBerry finally does have a competitive product with some really nice features that may attract some new customers and allow the company to hold onto others, especially its big corporate accounts. But a leapfrog it isn't, that's for sure. And slugging it out with the likes of Apple and Samsung is only going to get tougher and tougher. In this situation, I'm afraid that "good" isn't even close to good enough.

Last updated: Feb 1, 2013

STEVE TOBAK | Columnist

Steve Tobak is a management consultant, an executive coach, and a former senior executive of the technology industry. He's managing partner of Invisor Consulting, a Silicon Valley-based strategy consulting firm. Contact Tobak; follow him on Facebook, Twitter, or LinkedIn.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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