My Report Card for Blackberry Management
This week we learned that Blackberry Management could make up to ~$85,000,000 if Blackberry is sold and the management team is let go. Lots of thought obviously went into the Board's decision and I am not going to comment on all the issues the Board would have addressed. I do think that now is as good a time as any to reflect on the performance of the senior management team - here's my 2 cents:
Strategy - D+
Blackberry's decision to design, produce and market the Z10, Q10 and Q5 was premised on two "bets" that management got horribly wrong. Bet 1 - There are 'enough' people still around ('blackberry people' - i.e. hyper-connected, multi-taskers, blah blah) that would rush to purchase this phone. All market data suggests this assumption was wrong. Bet 2 - Blackberry could make money selling these phone. Industry trends continue to show that only 2 companies can make an appropriate return in this space: samsung and apple.
Strategy is also about focus. Blackberry has a solid offering with BES 10 and Secure Workspace looks like a winner. Had they pushed these offerings earlier, they may not have had so much trouble trying to take back share from Air Watch and Mobile Iron. Similarly, BBM could have been a social network...imagine it had gone cross platform 2 years ago and achieved just 20% of Facebooks valuation...wooo.
Bottom line, Blackberry's Management makes major errors when it comes to strategy decisions.
Execution - C+
First the good news - Blackberry did an excellent job growing its cash balance, despite surviving off its slowing BB7 sales and service revenues. BB also executed its restructuring program with a solid degree of focus and pace. One could argue that they took to long to bring the platform to market - I think that is a strategy mistake (i.e. they focused on too many things) - less of an execution issue. I am impressed they put together a solid OS given its was their first kick of the can with QNX.
The real setback from an execution perspective was in their marketing. I am really not sure there is much I need to say here. Not only could they not 'promote' the product well - they could not even aggressively defend themselves against numerous false accusations.
From a sales perspective, they continued to make the bonehead decision of serving major telcos from Waterloo. This really symbolizes that lack of customer focus within the company (i.e. while the telco is not technically a customer, they are pretty damn important to BB)
Talent and Capabilities - C-
The good news - solid additions to the Board (Prem, the Private Equity guy). I also think their General Counsel is a 'player'. He is pretty assertive about protecting Blackberry's interests and they seem to have played the patent game pretty well.
The bad news is that they did lose a lot of talent in the past 18 months. I don't think these folks were all starts, but to lose your head of global sales, your head of sales for India, the guys who worked to create the hub, etc...well, you can't say these people were all morons given the importance of the jobs they had. What we got instead was Frank, who did a lousy job with the marketing. Tough to judge Kristian...what is most disappointing, is the lack of a real star to the team. Someone who could have at least bought Blackberry some 'extra time'...like Marissa Mayer at Yahoo...not clear whether she is good, but she is giving that dog of a company some forward momentum.
At the end of the day, I think that management has failed to perform adequately. On the one hand, I sympathize with them...this is a brutally competitive industry in which quick decisions could have fatal consequences...this is not a hydro company, retailer, or government agency...this is equivalent to playing 2 speed chess games at the same time. So, I would be open to brining in a great team and paying them a whack of money (i.e. $85,000,000). Unfortunately, I think we got the wrong team for this job. So what comes out of this...nothing, it is too late.