Is BlackBerry's John Chen the Next Steve Jobs?
BlackBerry may seem a world away from becoming the next 100-bagger... but there's still a chance.
If you think about it, Apple was in the same boat in 1997. Despite being a driving force behind personal computing in the 1980s, the iPad-maker was outstripped by Microsoft . Similarly, BlackBerry smartphones were all the rage in the early 2000s, then the company lost focus. Now, BlackBerry doesn't even register on your radar in today's smartphone war.
Of course, Apple had Steve Jobs. But few believed that even Jobs could turn around the $3 billion company on the verge of bankruptcy. Though John Chen faces a similar situation at BlackBerry, he's smartly following in Jobs' footsteps.
Here are three things Chen is doing to turnaround BlackBerry.
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. That resulted in laying 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 still 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 and gives him time to figure things out.
Step 2: Decide on a story.
When Chen first joined his Sybase in 1998, he admitted that it was "a very, very dead company." Reflecting with IDG Enterprise in 2010 about his successful turnaround of Sybase, Chen said: "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 who used its traditional database products were loyal. All they needed to know was that Sybase had a future. Soon, Chen realized that that future was in mobile communications. The bet paid off: In 2012, the company was bought by SAP for $5.8 billion, an obvious endorsement of his turnaround strategy. Now, Chen is taking a similar step at BlackBerry. In a telephone interview with Reuters last week, he said, "I know we have enough ingredients to build a long-term sustainable business."
At Apple, Jobs did the same by building the Apple story.
Before he could do so, he first had to cede the personal computing war to Microsoft -- taking $150 million investment from his nemesis. In addition to the job cuts, the money gave Jobs the time to think about what he wanted to say.
Soon, Jobs launched his 1997 "Think Different" campaign -- featuring people from Albert Einstein to John Lennon -- to remind customers and employees what the company stood for. Jobs 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: "Skate where the puck is going to be."
At the end of the day, all companies have to bring home the bacon. For tech companies, there's a higher bar: figuring out where the future lies, and becoming the top dog in that space.
In stabilizing the company, Jobs mapped out Apple's future in four boxes showing four key products -- each would tackle emerging trends in personal media and communication. In 2000, Jobs also extolled the benefits of combining hardware and software to make the computer "friendly" for everyday consumers. He went on to say:
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 signaled the mass-market adoption of devices that blended hardware and software. Most important, the iPod showed that Apple had successfully skipped a generation, leaped past Microsoft, and left its old rival behind.
Unfortunately, BlackBerry is not Apple. BlackBerry has always better understood enterprise customers, not consumers. And that's probably why BlackBerry was doomed to fail as it fought with Apple and Google. Lucky for BlackBerry, tech eras come and go. Just as Apple jumped ahead a generation, BlackBerry has a chance in John Chen.
Of his turnaround at Sybase, Chen told The New York Times in 2006,
I thought, wouldn't it be great if we could exploit what we know and then skip a generation and go ahead of our competitors and become more relevant. People were laughing at us for getting into mobility so early and they were saying there's no money there, wireless is just a dream and everyone's losing so much money. We are now the largest enterprise-software provider in wireless technology.
At BlackBerry, he'll likely do the same: skip a generation aiming to become more relevant. Now, it's uncertain exactly how Chen will do that (no plans have been released yet). However, two things are clear:
BlackBerry still has a strong brand in security and enterprise, so he'll likely refocus 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."
Should you invest in John Chen's BlackBerry turnaround?
As far as CEOs go, John Chen seems as good as any to bet on. He's not only taking the right steps to turn around BlackBerry in the short term, but he also has the industry and management expertise to help BlackBerry dominate enterprise again.
At the same time, just because Chen is taking the right steps doesn't mean you should invest right now. Cautious investors would do well to wait and see how this turnaround takes shape.
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The article Is BlackBerry's John Chen the Next Steve Jobs? originally appeared on Fool.com.
Fool contributor Kevin Chen has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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