Publications
Publications
- April 2021
- HBS Case Collection
Transforming BlackBerry: From Smartphones to Software
By: Ranjay Gulati and Nicole Tempest Keller
Abstract
On the verge of failure, BlackBerry brought in John Chen as CEO in 2013 to orchestrate a bold turnaround of the company. Once an iconic leader in the smartphone market, BlackBerry was best known for its tactile QWERTY keyboard, strong security, and a focus on business users. By 2009 it had come to dominate the North American and global smart phone markets. But Apple and Android entered the market with a strong consumer focus and an extensive suite of apps. BlackBerry’s subsequent efforts to emulate their competitors was too little and too late. With few options left, the board brought in Chen. Under Chen’s leadership, Blackberry executed a full pivot from a hardware company to a software company, focused on the cyber security market. Leveraging their expertise in security, and funding it by monetizing their extensive real estate holdings and library of intellectual property, Chen led the successful transformation of the company into a software enterprise. Along the way came many challenges including how to delicately manage the ramp down of its hardware business as it ramped up its software business.
By 2020, BlackBerry had $1 billion in software revenues, with strong gross margins, and positive operating cash flow. However, BlackBerry was at a crossroads. The stock price had stubbornly plateaued as investors waited for signs of significant growth. Yet in order to grow, BlackBerry might have to sacrifice profitability to gain market share as it competed against both deep-pocketed, large players and agile startups. The decision to invest heavily in growth would have far-reaching implications on BlackBerry’s go-to-market strategy, pricing, and distribution. Focusing on market share would violate the model that Chen had worked so hard to put in place. Was this the right strategy? Were there other options the company should pursue?
By 2020, BlackBerry had $1 billion in software revenues, with strong gross margins, and positive operating cash flow. However, BlackBerry was at a crossroads. The stock price had stubbornly plateaued as investors waited for signs of significant growth. Yet in order to grow, BlackBerry might have to sacrifice profitability to gain market share as it competed against both deep-pocketed, large players and agile startups. The decision to invest heavily in growth would have far-reaching implications on BlackBerry’s go-to-market strategy, pricing, and distribution. Focusing on market share would violate the model that Chen had worked so hard to put in place. Was this the right strategy? Were there other options the company should pursue?
Keywords
Pivot; Managing Change; Turnaround; Smartphone; Change Management; Leading Change; Transformation; Organizational Change and Adaptation; Digital Platforms; Change; Information Infrastructure; Applications and Software; Competitive Strategy; Cybersecurity; Technology Industry; Transportation Industry; Canada
Citation
Gulati, Ranjay, and Nicole Tempest Keller. "Transforming BlackBerry: From Smartphones to Software." Harvard Business School Case 421-052, April 2021.