Strategy Made Simple: Explore + Exploit 

-------------------------------------------------------------

Where, oh Where, did Blackberry go? 

If you are like me, someone born in the 90's, you know how far too well the mystery of BlackBerry’s (RIM) descent from stardom. Most people to own a cell phone in the mid-2000's had a BlackBerry, for during its reigning time it was a magnificent piece of technology. Seriously, it had the best game installed on it, Brick Breaker , Tetris . If you know, you know (sorry 2000’s kids, you don’t even know what a great phone game was that).

Come 2008, RIM had accumulated a peak share value of $150 CAD, meaning that if you invested in 100 shares Jan 2, 2003, at a price of $3.57 a piece you would be able to cash out with a healthy $15,000. That’s huge!

Since 2008, RIM has tanked to around $12.65 per share. And the question we should all be asking, is why? How was a Goliath of a company able to fall so quickly to something that was as threatening as a child with a sling?

David and his iPhone

It shouldn’t come as a surprise that the iPhone played a significant role in the demise of BlackBerry. However, it wasn’t Apple that destroyed

The late Steve Jobs had made the epic return to Apple, cleaned house, and delivered one of the most awe-inspiring product pitches in history (Jan 9, 2007). This presentation was magnificent and remains magnificent till today .Presentation link of iphone launch - YouTube clip https://youtu.be/x7qPAY9JqE4

Though Apple did a lot of things incredibly right, the burden lies on BlackBerry. It would be easy to say that BlackBerry simply lived its time and that the reign of Apple was unstoppable with the smartphone on the horizon, but that’s a fallacy. BlackBerry was in the perfect market position to mitigate and flourish amidst the new Apple iPhone. BlackBerry failed not because of the iPhone, but rather because of the fallacy, as coined in book  "Billion-Dollar Lessons," “Staying the (Misguided) Course” (Carroll & Chunka Mui 2009, p. 86). This simple fallacy is the reason many companies, and individuals fall from great heights. Your company could easily be at risk like BlackBerry, and you may not even recognize it.

Staying the (Misguided) Course

In Carroll and Mui’s book, they discuss several other strategy traps that companies often fall victim to, but we are only looking at one. I highly recommend this book for more insights on why businesses fail beyond the scope of this post.

Let’s carry on the BlackBerry story…

BlackBerry, in its strong market position (close to 20% of the cellular Operating System market share), became arrogant of its prowess, neglecting to see the new technology of the smartphone as an oncoming threat. They, instead of researching and developing in the up and coming smartphone category, dismissed it as a fad or a lesser technology.

Truthfully, Apple wasn’t a huge competitor to RIM as they hardly made up half of what rim had as market share. RIM had the OS/cellular market on lock down.

Apple wasn’t given much room to breathe with its new product, but it had just enough room to breathe.

RIM instead of exploring the new technology Apple developed and countering it with its own smartphone (which they had the manufacturing capabilities to do better than Apple) became ignorant and arrogant. RIM ignored the threat to their own demise.

Soon enough when Apple began to gain market share, and by the time RIM tried competing, it was too late. Apple was far too ahead, and new competitors already jumped on the scene with patented technology. RIM was left behind with Brick Breaker to keep them company.

RIM failed to explore + exploit.

Explore + Exploit

To “explore + exploit” simply means to continually be researching and searching for new and competitive ideas, and once you find one exploit the heck out of it (while not forgetting to continue exploring).

RIM failed to adapt, or even acknowledge, to the new information coming their way, as I think many of us do when these sorts of things happen. We become stubborn because we have thought to metaphorically strike oil in a bottomless well. However, this is hardly ever the case in reality and it is the result of too much exploitation and not enough exploration.

We often become comfortable with what we have come to define as good, so much so that we reject any new offer calling it lesser.

I think you know what I mean, as I am sure you have met people that persistently argue for something purely because they are afraid of admitting something contrary to their assumptions could be true. This is a pride issue fundamentally, and one which we all can slip into. It is an issue that effects relationships, business, investments *cough* crypto is not making a comeback *cough*, and core beliefs.

It is the reason we see people still arguing that Tim Horton’s has a better quality of coffee than McDonald’s. Factually, this is a fallacy. Tim’s, as noted in The Star, basically sold their “holy water” to McDonald’s. The beans once used by Tim’s during its glory days are now under the possession of McDonald’s. Implying that, if you want real original Tim’s coffee, you should be heading to McDonald’s. But many people refuse to leave Tim’s due to an emphasis on their exploitation of what once was good.

I should preface, I don’t really like Tim’s or McDonald’s coffee. I would much rather order high-quality single origin beans and home brew a pour over in my Chemex. Back to the point…

BlackBerry could have devoted some effort into research and development to combat the new technological threat.

Putting it All Together

A healthy company that is longing to maintain its success must invest into exploration while also exploiting the what is good.

Here are three simple exercises you as a leader of a company or simply as an individual longing to find a better coffee:

1. Change your routine 10-20% of the time. Take a new route to work, try a new brand of toothpaste, listen to a new artist. Becoming more creative and competitive beings by knowing what’s out there.
2. Ask why questions. I am a firm believer in the why’s of processes, rather than the what’s. Understanding why you like Tim Horton’s coffee is important, to showing you your values and decision-making process. It could very well reveal your need to try something new.
3. Lastly, buy your competitors product. How else are you going to get an edge on your competition if you don’t even know what they even have?

Now get out there and try something new, spend some money and time researching the competition, and learn from your competitors.

--------------------------------------------------------------------------------------------------------------------------