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Wednesday, 6 November 2013

The Key Metrics John Chen, Blackberry's New CEO Needs to Achieve and Fast


Thorsten Heins is leaving BlackBerry. John S. Chen will be appointed as Executive Chair of BlackBerry's Board of Directors, responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry. Mr Chen will also serve as Interim Chief Executive Officer pending completion of a search for a new Chief Executive Officer.


how can we expect John Chen to perform differently to the outgoing CEO?  What actually is the job of the CEO at Blackberry

A chief executive officers headline job description probably reads something like this.  
"The CEO shall be responsible for the management of the corporation and shall exercise overall control .The CEO shall, in all his actions, be responsible and accountable to the Board of Directors and subject to the general laws and other legal provisions of the countries in which the corporation operates"

Lots of biz speak above but what does it mean, what are the key performance indicators or “Job Role” of a CEO.  There are many articles, books and papers on this subject but they all more or less agree that the core requirements of an effective CEO are

1.    Setting the business Strategy

2.    Hiring, directing and managing the senior management team

3.    Setting the Corporate Culture

4.    Managing Capital expenditure

5.    Communicating

Setting the business Strategy

Strategy tells the company what business they’re in and how they plan to make money doing it.  When a CEO is sloppy with strategy, we get a confused message.  For example are we a retail consumer business selling “tens of millions” of devices? Or are we a B to B organization selling secure end to end business solutions?

If a company wants to have multiple strategies for their business that is OK and modern tech companies really need to have more than one core competency in order to run a balanced business model but to address different markets you need to employ different methods.  Microsoft does not have the same strategy for their MS Office products as they do for their Xbox, quite simply because they are different things addressing different needs. 

In a purely operational world every single activity that happens within an organisation should have an obvious and direct supporting role for the business strategy.  If it is not obvious to an employee why they are doing a task then the task can be perceived as wasted motion and probably is.

When a CEO is good at making and communicating strategy, everyone in the company knows what business they’re in and can get behind it. If he is not then nobody knows what the hell is going on.

Hiring, directing and managing the senior management team

All the company executives report to the CEO, so it’s the CEO’s job to hire and fire the right people to execute the business strategy. When a CEO hires an excellent senior team, that team can keep the company running in times of turmoil. When a CEO hires a senior team member and they are not performing the issue must be addressed, too often senior hires made amidst grand press announcements are allowed to under perform unchecked because of the potential embarrassment to the CEO who hired them.

Setting the Corporate Culture

Corporate culture that is not aligned with the business strategy can be a rock that wrecks the ship of the most skilled CEO.  Corporate culture is not generated from the bottom, it starts at the top.  If the culture needs to change it must start at the most senior level.  Culture has to be part of the strategy of “how we do things”.  If for example John Chen decides that his department heads must be responsible decision makers rather than bureaucrats and the senior team do not agree with  they must go.  If they are not removed and replaced with a team aligned with the culture then the CEO’s strategy will likely fail or at best be crippled.

Managing Capital expenditure

A critical CEO’s duty is allocating capital expenditure or spending money. The CEO chooses the projects that run and the projects that are closed down. This is why a CEO can’t delegate strategy, because the projects that receive capital expenditure should only be projects that support the business strategy.  If a project does not support the strategy of the business then it is taking resource away from what is important to the business.

Communication

The CEO communicator role means marketing the company to outside and inside stakeholders.  Outside stakeholders are first and foremost the shareholders, then the Press and finally customers.  Internal stakeholders are the organization's management, employees and suppliers. Different CEO’s have different ways to manage communications.  Like him or loath him but the Steve Jobs was an example of a brilliant communicator, his product launches were electrifying, he could make the mundane exciting and the exciting seem unprecedented.  He drove himself and his teams to over performance and everyone from suppliers through to customers felt they were on a great journey of discovery

Every utterance of the CEO is held to high scrutiny and it takes a skilled communicator to ensure his words are not used in a way that drives value out of the organization. (Osbourne Effect)

Some CEO’s use marketing agencies to help control their communications and some are oblivious to the effect their words have and just wing it and hope for the best.  The CEO’s in this category almost always fail or at best are considered lightweight.

Summary

To recap, a CEO is responsible for everything. But even though they are responsible for everything there are duties that can’t be delegated. First is setting the company’s strategy. Second is hiring, firing and leading the executive team. Third is setting the culture of the company. Next there is allocating capital expenditure.  Last is managing communications.

I believe Thorsten Heins is a very clever man.  I also believe he is a nice man. however the evidence has shown he was not a good choice for CEO of BlackBerry.  If we want to play a blame game then the responsibility for his failings are with the people who put him in the position.  Enough said!


Post Mortem


Setting the business Strategy
In the twenty two months since he took the post he changed his strategy several times, from the outset it appeared he was trying for the consumer market, when this failed he edged towards the enterprise space.  When this failed he cut the number of planned handsets and tried for the social software that was BBM.  His launches of the Q and Z OS10 handsets were the wrong way round and should really have been launched at the same time. His various strategies failed and each failure made the situation worse.

Hiring, directing and managing the senior management team
His direct reports over promised and under delivered.  His sales team failed to sell, his marketing team failed to market.  He was taking advice from people who were not in touch with reality.  He did not effectively manage his senior team or enforce targets for them to deliver and did not coach them or fire them then when they failed.


Setting the Corporate Culture
There is no doubt that a total change of culture is required at Blackberry, it is no longer a technological behemoth rolling over everyone in its path.  It needed a culture akin to a start-up were deadlines are exceeded and technology is pushed beyond expectations.  Instead we got over promises on launch dates and under delivery on launches.  TH acted as if customers were begging for this wonderful new Blackberry invention whereas by the time the staggered launch's there very few were actually interested.


Managing Capital expenditure
Since 2009 the writing has been on the wall regarding the change in consumer habits.  Thorsten Heins should have been well aware of the way the market was changing and should have cut his operational expenses according to the market forces.  Instead Capex and headcount increased until a to little to late emergency reaction was needed (and for gods sake don't mention the Jet!).
Over production of the Z10 caused a one billion dollar write down, the Playbook write down should have been a lesson learned.  It showed the appetite was for new BB offerings was low.

Communicating
The most damning failure at Blackberry is poor communication.  The aborted BBM Launch was easily explained but instead the press were allowed to paint it as another example of BB incompetence. 

When TH did communicate he was not above planting both feet firmly in his mouth. The list of Faux Paux is long and may coin the new phrase "he just uttered a Thorsten".  For four years the press have called Blackberry "the struggling smartphone maker" or worse. For the CEO of an entity perceived as struggling he came out with some whoppers.   

"Tablets will be dead in five years". Whereas at the time Tablet sales were and still are  predicated to reach 34 Billion dollars by 2015, that is enough to put the effort in for now considering the short life cycle of tech products.  I am not saying TH is wrong and he probably has a point but for him to say what he did after the failure of the Playbook smacked of sour grapes.

When he said "IOS is out dated".  He was laughed out of town for that one!  Maybe IOS is getting old now  but Apple consumers love their products and the last launch sold 9 million units on the first weekend. 

When TH said "We will sell tens of Millions of OS10 devices".  Well that was just plain wrong and many investors took that as forward guidance, they invested and lost trust and money.  He would have been much better off saying that they were off to a slow start and publicly shaking up his sales team.

Authentic communication builds trust, There are very few people who trusted Blackberry prior to the recent shake up and most are in a holding pattern waiting to hear the plan. 

To conclude
John Chen has a big job but the evidence of his past achievements show he is capable and professional.  He is not afraid of making big decisions and everything he has said in the short time since he has took over makes perfect sense.  He appears considered and articulate and has a firm  grasp of the sort of person a successful CEO needs to be.  If he can build stakeholders trust in the company he will succeed if he can't he will fail. 

I for one wish him the best of luck!