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Wednesday, 13 November 2013

Is John Chen the Man Who Can!

John Chen is the man charged with bringing profitability back to BlackBerry.  
He is 58-years-old, and originally from Hong Kong.  He came to the United States in 1973, and last week was named executive chairman and interim chief executive of Blackberry.  It has not been disclosed how long Chen has been working with Blackberry but we can assume it wasn't an overnight decision and he may have been involved for several weeks before the collapse of the “go private initiative”, possibly dating from the recent announcements of massive layoffs.
He said during a recent interview with Reuters "I know we have enough ingredients to build a long-term sustainable business, I have done this before and seen the same movie before." He also said he has no intention of killing the BlackBerry handset division as he looks to stabilise the business.
Where Chen did it before was as CEO of Sybase, a maker of computer database software that was losing money and in crisis as he took the helm in 1998.
Sybase then was in a position similar to BlackBerry's now: it had very little credibility with Wall Street, posting a 1998 operating loss of $98 million.  However Chen put in place a radicle program of cost cutting and rationalisation and in 2010 he sold it to SAP for $5.8 billion.
So far we have not heard about his strategy for reviving the company, but he has indicated that a turnaround will take about six quarters.  Incidentally Thorsten Hein’s said much the same thing.
It appears that his early plans include meeting with government customers as well as those in the financial and telecommunications sectors in North America and Europe in an effort to stabilize those relationships. He also vowed to bring in new executives. We can assume these actions are happening or in the pipeline.
Is John Chen the new Steve Jobs?
Well we all know he isn't but interestingly Apple was in much the same position as Blackberry in 1997. Despite being a driving force behind personal computing in the 1980s, Apple was being annihilated by Microsoft and their products were not selling.  When Jobs returned to Apple few believed that he could turn around a $3 billion company on the verge of bankruptcy.  

There appear to be three things Chen is doing to move Blackberry back into profitability.
Step 1: Cut losses.

When Jobs retook the helm at Apple, he cut products and employees alike. Seeing that Apple was stretching itself thin by trying to compete in computers, digital cameras, and more, he scrapped 70% of Apple hardware and software products and laid off over 3,000 workers.

While painful, most critics agreed with Jobs: Cutting Apple's loses allowed the company to focus on creating a handful of products.
Under Chen, BlackBerry is set to cut 40% of its workforce, or about 4,500 employees. While Chen has yet to announce any strategic plans, cutting employees saves BlackBerry millions in operating costs and creates time to figure things out.  Interestingly Thorsten H had already announced that Blackberry had trimmed its product line from six to four devices.  

Step 2: Decide on a Blackberry story to tell.

When Chen first joined his Sybase in 1998, he stated that it was a very, very dead company. “You have to have something that you are uniquely qualified to do. I always ask the question -- what is our right to be a company?"

Chen realized that Sybase customers were loyal but that they needed to know if Sybase had a future.  The first thing he did was to visit the customers and build trust.  Chen also looked to the future and bet that the future was in mobile communications. The bet paid off. It will be interesting to see if Chen can achieve the same type of forward looking technical disruption at BlackBerry.  The Blackberry Story is not shouted enough, the brand has reached a stage of Niche proportions within the massively expanded smartphone market.  But it is a great Niche if it can be capitalised.  “Security, Reliability, Professional grade device, knowing that the owner of a Blackberry device is a serious business person who “Stands Apart” (Paul Clarke).  This is a good story if Chen can get the story across.
At Apple, Jobs made some radical alterations of strategy; he ceded the personal computing war to Microsoft and took an $150 million investment from his erstwhile nemesis. In addition to the job cuts, the money gave Jobs the time to think about what he wanted to say. Along the way he revolutionised tech marketing and invented the  “Apple Story”.  Jobs got his rebranding machine in motion and launched his 1997 "Think Different" campaign featuring people from Albert Einstein to John Lennon.  He said at the time that the purpose of the campaign was “to remind customers and employees what the company stood for”. He later explained "You can't talk about profit; you have to talk about emotional experiences." Rebranding Apple as a counterculture, rebellious spirit in technology was important for Apple's future success.

Step 3: "Position the Company for the Future."

For tech companies, figuring out where the future lies is more important that looking at current sales figures. In stabilizing the company, Jobs mapped out Apple's computing future in four boxes showing four key products –

 Type
Consumer
Professional
Desktop
iMac
Power Mac
Portable
iBook
PowerBook

each product was designed to address emerging trends in personal media and communication. In 2000, Jobs also extolled the benefits of combining hardware and software to make the computer user friendly for non-technical everyday consumers. He said: “If we do our jobs right, no one else should be able to do what we can do. We should be in an incredible place as this convergence of computing and communications explodes in the next few years.”
Soon, Apple released the iPod, which signalled the mass-market adoption of a device that blended beautiful hardware and intuitive software. Most important, the iPod showed that Apple could successfully skip a technical generation and leap past Microsoft.  The same happened with the iPhone.  Users could understand it out of the box.  Unlike the Messy unreliable and complex UI’s of previous touchscreens.  The iPhone was the perfect convergence of technology and marketing.  It looked and felt beautiful; it combined a Phone, iPod, Camera, and email device and could be operated without lessons all in one package.  It didn't really matter that the only part to work perfectly was the iPod bit and the other features were a bit hit and miss.  The flaws were ironed out as the device matured.
BlackBerry is not Apple. BlackBerry’s leaders have always better understood enterprise customers rather than consumers. Under the stewardship of ML and his protégé TH Blackberry were in a losing battle to sustain their position in the consumer market.  Unlike Google and Apple They did not get what drives consumers.   The flagship Z10 launch was a perfect example the gap in understanding between the consumer and the Blackberry management.  Blackberry acted as if the market was waiting with open arms and wallets to receive the latest and greatest BB offering but the consumer market did not care.  To make matters worse the Z10 “flagship” looked as functional as a piece of budget office furniture.  I remember opening the box of my pre ordered Z10 and thinking…”they could have made more of an effort” Minimalist comes to mind.  There is nothing to make it stand out while it is sitting on the demo stand in the store.  It looked BORING.  It was also frustrating that "artists impressions" had been circulating for a number of years and most of these concepts looked far better the final Z10 version.  Blackberry had a chance to indulge themselves and offer something that looked as special as the OS but perhaps that was to much to ask.
Lucky for BlackBerry, tech eras come and go. Just as Apple jumped ahead a generation, John Chen has a chance to do the same with BlackBerry.  He'll likely try and skip a technical generation and aim to become more relevant.  It's uncertain exactly how Chen will do that as we haven’t heard any plans yet. However it is clear that BlackBerry still has a strong brand in security and enterprise, so he'll likely focus the company on the enterprise and government segments.   As Chen told Reuters this week, "I have done this before and seen the same movie before."
Best of Luck!

An opportunity missed?
 
Various beautiful Concepts were floated around the internet before new devices launched