Strategy: Don’t Become BlackBerry

Strategy: Don’t Become BlackBerry

Is your strategy keeping up with marketplace evolution?

When I was in graduate school several years ago, the leading business thinkers of the day taught that managers of service businesses often slipped up because they had grown up in the era of manufacturing and continued to think in terms of “product” when they were leading a service organization. The upshot: Wrong focus = off-target strategy = poor results.

This time of year, most organizations are in the heat of strategy planning. Hours of careful thought and discussion are going into setting priorities and making decisions about investments and budgets. But those who don’t evaluate the assumptions on which these plans are grounded will start 2014 with a poorly designed plan.

Apple: World’s Best Brand

Steve Jobs understood the importance of strategic focus. He didn’t think of Apple as a product-based company or even a technology-based company; his vision for Apple was to provide a service “enriching lives.”

According to Interbrand, Apple is now the world’s best global brand, based on a formula that calculates the value of brands from a combination of financial performance, influence on consumer choice, ability to charge premium prices, and deliver profits. (Coca-Cola had been in the No. 1 spot since 2000, when the organization started its annual survey.)

If I had to put Apple into a category, I’m not sure which label I’d use: Product designer? Music distributor? Software developer? Computer manufacturer? Leader of a brand tribe? Creator of an experience? Or all of the above and then some? Follow Apple’s evolution from the first Apple I on April Fool’s Day in 1976 to today’s global brand, and you see the evolution we are experiencing from a product-based society to a complex service-based society.

Question: Are your strategies grounded in product designs or technologies that could be easily copied, bypassed, or reverse-engineered? Challenge your assumptions and evolve into focusing on your organization’s unique knowledge base, capabilities, or other service-related strengths that create value for customers.

Blackberry’s Product-Focused Demise

According to Darwin’s theory of evolution by natural selection, given enough time, species will change and adapt to their environment in order to survive, and those that don’t adapt will go extinct. Consider the recent decline of Research in Motion and the events that led up to it. RIM came on the scene in 1999 with the introduction of a two-way pager and followed in 2003 with its first smartphone with email capabilities, the BlackBerry. RIM ultimately gained significant industry market share by offering email services to non-BlackBerry devices through its proprietary connect services.

In 2008, RIM launched the Storm, its first touchscreen, keyboardless device. It was an initial hit, and RIM stock reached almost $150 per share.

But RIM had a convoluted management structure, with co-CEOs that included the company’s founder, Mike Lazaridis. As touchscreen smartphones were being introduced, he insisted that the company stick to keyboard devices, which had been popular in the corporate market, and to not compete in the commoditizing consumer market against touchscreen competitors like Apple’s iPhone.

Ultimately he and co-CEO Jim Balsillie divided over strategy and brought their fight into the boardroom. A new president was elected who decided to pursue the consumer market with a touchscreen product, but by that time RIM was woefully behind, with an inferior product.

The Globe and Mail, Canada’s national newspaper, recently interviewed an executive with BlackBerry (the company’s new name), who said, “We believed we knew better what customers needed long-term than they did.” Because executives focused on products and their functionality instead of what would enrich the lives of customers, company stock has fallen to about $8 per share as of this writing. The company has put itself up for sale at a fraction of its previous value. According to industry pundits, BlackBerry is in the process of going extinct.

Question: Is your strategic thinking keeping up with evolution? Consider whether you are attempting to predict the future and adapting, or if you are assuming that what worked in the past will guarantee success in the future. Traditional industry boundaries are becoming less rigid—invisible in some cases—and you must adapt to survive.

Vision with a Purpose

I’m enthusiastic about what’s next, as we evolve into a society where the lines between product-based or service-based organizations begin to blur. Where are we headed? Some business thought leaders are saying that consumers are starting to look to business, not government, to create positive change on social issues. (And since I’m writing this column during the federal government shutdown, I’d have to agree.)

Evolution is evident here too, from “cause marketing,” when businesses tout donations to a good cause, to “corporate social responsibility marketing” when businesses proclaim their high ethical standards to leaders involved in defined social projects. Some examples are United By Blue, an apparel and clothing company that removes one pound of trash from oceans and waterways for every product it sells, and Toms, a shoe company that uses profits to donate shoes and eyeglasses to children in need around the world.

With the influence of social media, businesses are being held accountable to do more than simply donate to a good cause. Consumers are more conscious of social issues and aware of the impact of their consumption. Even ever-popular Apple has been criticized for its use of Chinese sweatshops and poor handling of hazardous waste in its supply chain. The evolution is causing business to adapt from a strict product-based or service-based focus to being purpose-based.

Question: Does your strategy support a deeper purpose that contributes to society? The evolution of business means it’s time to deeply challenge your organization’s impact on social and environmental issues.

Mark W. Sheffert (mark@manchestercompanies.com) is founder, chairman and CEO of Manchester Companies, Inc., a Minneapolis-based performance improvement, board governance, and litigation advisory firm.

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