Responding and Failing to Respond to Pressure

  • October 3, 2013
  • Scott

The inside story of how Blackberry blew it is fascinating.  It paints the picture of how RIM confronted the threat of the iPhone and failed to respond adequately.

Horace Dediu of Asymco succinctly captures the failures in a subsequent post:

  • Engineering priorities were around constrained hardware and optimizing around that
  • Missing the window of opportunity to respond to the shifting market
  • Bad feedback loop from network operators obscured data from customers

There were some additional points that seem more like symptoms than causes to me.  But the other things that was amazing is how he points out the parallels to Nokia – and how they were both affected by Apple’s iPhone:

Theirs was “the Mac in a phone” idea. The reason it worked was that it was not a phone. The reason it worked is because it was the hardest disruption to spot:
A new market disruption

Ironically, Lazaridis seems to have verbalized the issue, assuming his recollection is correct:

“If that thing catches on, we’re competing with a Mac, not a Nokia,” he recalled telling his staff.

But neither RIM nor Nokia mounted a swift, sure response to the challenges and pressures presented… partly because the challenges didn’t show up in decreased sales at first… until about 16 quarters out…

So this is the crux of the incumbent’s dilemma: how do you rally a response when you don’t feel any pain? It’s worse actually: how do you embark on a painful course of action while feeling comfortable and safe?

The only answer I have to this is that you have to rally responses when you’re comfortable.  You have to work hard to identify threats to your business and either diversify, hedge, or double down to compete.  And if you’re concerned about the low end competition, first make sure you’re sucking the oxygen (profit) out of the market, and then move downstream judiciously.  Apple was a master of this with the iPod, and may prove to be again with the iPhone.

This is the kind of thinking we put into our own business at BP3.


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