Why BlackBerry’s bold pivot is the right move

By Deborah Aarts, Canadian Business | October 7, 2016 | Last updated on October 7, 2016
2 min read

This article was originally published by Canadian Business.

Earlier today, BlackBerry finally did what many have expected for almost five years and announced it would stop making its own handsets. There hasn’t been a Canadian business strategy so heavily scrutinized since Avro scrapped the Arrow.

According to CEO John Chen, the move positions the company for growth and removes a significant burden on its balance sheet. “We are reaching an inflection point with our strategy,” he said in a statement. “Our financial foundation is strong, and our pivot to software is taking hold.”

Read: BlackBerry ending internal hardware development

“Pivot” is the key word here. No one is surprised to hear it used—it is the buzziest of buzzwords—but the word is a bit startling coming from the CEO of a $3-billion company with more than 4,500 employees. Businesses as big as BlackBerry aren’t generally known for making major shifts in their strategies. Chen’s willingness to do it now suggests the company is a lot more forward-thinking than skeptics might give it credit for.

The idea of rapidly changing course is a central tenet of the so-called Fourth Industrial Revolution. If you’re not familiar with that phrase—or its more grating synonym, “Industry 4.0”—it describes the economic shift spurred by the merging of digital and physical systems. As World Economic Forum founder Klaus Schwab put it in a much-discussed piece published in January, “The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace.” He went on to state that, for business leaders, “the acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate, and these drivers constitute a source of constant surprise, even for the best connected and most well informed.” In non-wonk terms, that means things are changing crazy fast; companies better be able to adapt on the fly.

Read: Seeking lower risk? Try twice the diversification

It’s a notion that also forms the bedrock of Eric Ries’s entire Lean Startup movement. “When we discover that our experiments have stopped being productive, let us pivot to a new, fundamental strategy that can allow us to do better experiments,” Ries told a rapt audience at South by Southwest a few years back. “That’s what a pivot is.” He and his devotees believe in the mantra of “build something, test it, adjust, repeat.” It all makes perfect sense for a scrappy young digital outfit whose fixed assets amount to little more than a few laptops and a latte machine.

Read the full story in Canadian Business.

Also read: Check portfolios for accounting diversification BlackBerry restructures debt to cut interest costs

Deborah Aarts, Canadian Business