So everyone has heard of Creative Destruction, the phenomenon of change that destroys incumbents and gives birth to insurgents, a repeating and accelerating cycle of technology killing its commercial antecedents while opening opportunity to a new generation of attackers. Richard Foster, a director at McKinsey, wrote a book in 2001 about the trend, finding in his research that the average tenure of the S&P 500 was shrinking from 61 years in the late fifties to 18 years today. Gone are Kodak, Palm, Compaq.
The fall of Research in Motion — aka Blackberry — is stomach churning to contemplate if you’re the CEO of a technology company over ten years old. According to the New York Times the company owned half of the smartphone market in 201?. That’s 50% market share a mere three years ago. Now, as the company dies under the assault of the iPhone and Android, it is “exploring strategic options” … aka looking for a buyer.
Jean-Louis Gassee, the ex-Apple exec, told the Times that “Buying Blackberry is necrophilia.”
From status symbol to relic in only a few years. Obviously somebody at RIM was either:
a) complacent and had the hubris that the market share was eternal or …
b) blind to the signs of technical disruption that were going to trash their business model (touch screens, app stores, media & entertainment ecosystems) …
or c) cocksure that IT departments at big companies would see the upstarts at Apple and Google for the insecure, hackable toys they were and stand by Blackberry’s vaunted BES secure server technology
Then the President bitched he wanted to use an iPhone and suddenly every corporate drone in America was pounding at the doors of IT demanding iPhone support.
If the Blackberry can blow the dominance of a market in just three years, then who is next? The minicomputer industry wheezed along for at least a decade after the introduction of the PC. The shift to solid state from analog took a decade to crush the old guard in vacuum tube monitors and spinning hard drives. Intel’s fat and happy ownership of microprocessors is getting slapped around by ARM and aggressive competitors like Qualcomm. Microsoft? Well, that’s a tale for another day, but don’t count out the corporate inertia that is propelling that beast forward (and don’t discount the potential of the Xbox, the most remarkable accidental asset in MSFT’s arsenal). PCs are dying, just getting diversified and pushed hard into the emerging markets but I think I’ve bought my last laptop (as I am writing this on a Nexus 7 tablet with a bluetooth keyboard).
The old strategic imperative to keep 70% of the business in the cash cows, 20% in incremental improvements and 10% in bet-the-farm-over-the-horizon initiatives is a death sentence in this days of agile ready-fire-aim startups with nothing to lose and everything to gain. Innovation — the darling buzzword of management consultants in the last decade — can’t be performed by committee nor Powerpoint. For some of the technically driven behemoths acquisitions are the solution, buying up the Waze’s and Tumblr’s and hoping the integration process doesn’t squelch the spark that made those companies so hot to begin with.
Over dinner a few months ago with the CEO of Acquia, Tom Erickson, he told me he was drawn to the irresistible combination of SaaS, Cloud and Open Source. All three trends are massive disruptors that wiser people than me knew were coming over a decade ago. But the companies making the most of those disruptions are the ones with nothing to lose. As Mitch Kapor once said, the biggest impediment to progress is an installed base.