What the BlackBerry story can teach us about challenges of innovation

Spark53:59Why is innovation so difficult to sustain?

When the BlackBerry stepped onto the scene in 1999, it was an instant star the first cell phone capable of sending emails. It became a status symbol among business people and, eventually, teens everywhere. It came to bear the nickname 'CrackBerry' but that hype could only take it so far.

"I do not believe that any of those three guys really had any vision for what this product was going to mean at a cultural level," Matt Johnson, the director and co-writer of the biopic BlackBerry, told Spark host Nora Young.

The three guys are Mike Lazaridis and Doug Fregin, co-founders of start-up Research in Motion, and co-CEO Jim Balsillie. Together, they created the groundbreaking and once coveted smartphone.

The new film, out May 12, is a fictionalized retelling of the rise and fall of the Canadian company, based on the book Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, by journalists Jacquie McNish and Sean Silcoff.

Johnson, who also plays the role of Fregin, says the BlackBerry's strength eventually became the source of its demise as things quickly changed in the industry with the arrival of the iPhone.

In June 2007, Apple came out with its first touchscreen phone, but it wasn't a success from the outset. It was riddled with bugs, while also crashing the AT&T network. In an interview that year, Steve Ballmer, then CEO of Microsoft, said "500 dollars? Fully subsidized? With a plan? I said that is the most expensive phone in the world. And it doesn't appeal to business customers because it doesn't have a keyboard. Which makes it not a very good email machine."

Between 2007 and 2009, BlackBerry was still experiencing growth, having broken into the international market with a still rising market share.

"I think that there was a lot of internal delusion for those three to four years after the iPhone came out that they were still completely and totally fine and so there was no need for them to pivot again If they had just been, 'Oh my God, here's a consumer product that the world is fascinated in, maybe we should follow this'. But again, they were making too much money," said Johnson.

But that changed in the 2010s, when the company and its founders began to struggle to keep up the growth.

Slow to embrace disruption

Elizabeth Altman, a professor of management in the Manning School of Business at the University of Massachusetts Lowell, says people's love for the BlackBerry keyboard made it difficult for the company to consider moving to a touchscreen, calling it "a hard transition that wasn't natural for them to make."

"I think that [Lazaridis] believed that what he did was perfect and that holds with his reluctance to let go of the clicking type keyboard," said Johnson. "And they did not come to it from the point of view of 'how are we going to revolutionize the way people communicate?'"

They developed a network that allowed mobile devices to receive push emails for the very first time making a very local device for a very local problem.

"I think that these were engineers. I think that they could see six feet in front of their face, but they could see six feet in front of their face with 2020 vision. And they were able to solve problems in the '90s that nobody else could solve," said Johnson.

"In some ways, the analogy that fits is like they were creating the absolute best ice being pulled out of a lake and brought to civilization and Steve Jobs invents the refrigerator. Like that, to me, is the gap between those two products."

Building an ecosystem of innovators

Altman says in that time, as smartphones were evolving, it became clear that apps and developers were essential in the industry. "I think it was one of the executives at Sun [Microsystems] who said, 'the smartest people in the world don't work for our organization'. And that philosophy, that a lot of very smart people work outside of an organization but they can innovate in ways that make the products better, is the idea behind app stores."

"No one is using phones that have only software by one company, but it's to all of their benefits," she said.

And Altman says that's possible by working with a network of both internal and external innovators. For instance, Apple made its iOS accessible to developers and its interfaces allow developers to build apps that work on the iPhone.

"As these developer ecosystems grew and as it became clear that these phones were in fact platforms and these companies were running platform-based businesses That's how you started to get incredible innovation ... I'm not sure BlackBerry followed that path to the extent that the others did," she said.

The reluctance to shake things up when a business and its products are doing well is part of the challenge to innovate, Altman says especially when these companies are beholden to investors and large clients.

She points to two main kinds of innovation, sustaining and disruptive. The former being innovations that are extensions, continuations or more traditional progressions for a company and organization, appealing to the same customer base, and much easier to slot into existing systems. Meanwhile, disruptive innovation, true to its name, tends to be more accessible and usually comes up from the bottom and then changes the way an industry or market works.

Altman also notes that innovation can initially look worse than what's already there. All of the systems built to do what the company does well are essentially working against the company, doing new things. Making it potentially difficult for companies to embrace new models, especially when they're disruptive.

The problems BlackBerry engineers solved are in the IP of the iPhone, like double spacing to create a period or autocomplete in an email when typing somebody's name, and they still hold the patent on these features. "So to say that they weren't brilliant is wrong. But I do not think that they had a vision for their product," said Johnson.

BlackBerry announced it would stop making phones in 2016 and then discontinued service on its smartphones in 2022. The company has now reinvented itself primarily as a cybersecurity company. But its story is just one example of how challenging it is for organizations to not just become innovators, but to respond quickly to new challenges and opportunities.

Similar scenarios have played out in other industries, like the case of Blockbuster. When Netflix, a tech-enabled innovation, emerged with a DVD mailing service that eliminated late fees and eventually moved to a subscription business model, Blockbuster was unable to adapt. The company's entire business model was built around rental fees and relied on $600 million a year in late fees.

Even beyond the case of BlackBerry, after years spent thinking about the physical size of their phones and the quality of their calls, companies like Nokia, Ericsson and Motorola had to adapt to the demand created by mobile broadband.

Altman, who served as a vice president at Motorola in various business development and strategy roles for most of the first decade of the 2000s, witnessed that firsthand.

"We were using mobile phones as phones for a very long time until all of a sudden we started using them as mobile devices. And then, if they weren't that good at making phone calls, that was OK because we were actually quite happy to be watching Netflix on them," she said.