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Company's Downfall

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Table of Contents

Abstract.....................................................................................................................................3

Introduction..............................................................................................................................4

Hubris born of success.........................................................................................................4

Undisciplined pursuit of more.............................................................................................5

Denial of risk and peril...........................................................................................................6

Grasping for salvation............................................................................................................6

Capitulation to irrelevance or death.......................................................................................7

Conclusion..................................................................................................................................7

References..................................................................................................................................8

Company's Downfall
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Abstract

Blackberry company underwent the five stages Jim Collins refers to as "The Five Stages of

Decline" despite the company's previous success and what was perceived as an inability to

decline. However, it is essential to note that Jim Collins notes that no company is immune to

a decline. Collins identifies five stages that a company undergoes before it "dies." Using

Blackberry as a case study, this assignment notes that a practical application of the five stages

reveals that Blackberry basked into its glory for long and departed from the factors that had

made the company a successful enterprise. In addition, the study observes that Blackberry

denied the risk and peril through several factors such as the initial high costs of the iPhones

that led many people to continue purchasing their brand and exclusive deal with AT&T that

made it challenging for consumers to change their phones. With the exclusive deal with

AT&T expiring in 2011and other factors coming into play, such as the introduction of

Android phones, Blackberry grasped for salvation by introducing new products rapidly into

the market before becoming irrelevant.

Introduction

Jim Collins argues that institutions are susceptible to a decline in their growth

notwithstanding. The business world is rife with examples of companies that have declined
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significantly despite their previous success, such as Blackberry. Collins argues that the fall of

an organization can be reduced to five main stages that include and are limited to Hubris born

of success, the undisciplined pursuit of more, denial of risk and peril, grasping for salvation,

and capitulation to irrelevance or death. Collins notes that whereas most institutions appear

healthy on the outside, the companies may be sick on the inside. According to Collins, to

understand how successful institutions find themselves at stage five, it is essential to

contextualize the stages to practical applications in the business world. With the assignment

noting a need to explore why organizations decline and eventually fail, this study notes a

need to examine the practical application of the five stages presented by Collins in the study.

Hubris born of success

According to Collins as quoted by Rooney (2019), successful companies may find

themselves insulated by success even in instances where their executives make poor

decisions. Collins argues that companies are likely to become arrogant and view success as

an entitlement, leading to a scenario where the company loses sight of the underlying factors

that occasioned the success. In contextualizing this stage to Blackberry, the company once

had 50% of the smartphone market in the United States and 20% globally (Appolonia, 2019).

The company was among the first smartphone makers that had found a way to ensure that the

wealthy would use their phones as a status symbol (Appolonia, 2019). The company relied on

a simple design philosophy; It marketed the device to the wealthy by promising an easy way

to keep business professionals connected through the ability to respond to emails, texts,

browse the web, and have a portable computer at their palm (Appolonia, 2019).

The smartphone maker also had the Blackberry Messenger feature that was distinct

and transformative. The BBM Messenger allowed instant connection to the business

professionals. The innovations by Blackberry occasioned the first stage of Hubris, born by

success, with the company having a revenue of over $3 billion in 2007 (Appolonia, 2019).
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The smartphone maker also had government contracts and important business deals that

played a role in consumer adoption, making Blackberry a significant player in the United

States (Appolonia, 2019). The company, therefore, was in a situation where they deemed

themselves successful because they did particular things, which replaced penetration of

understanding and insight. In other words, the company no longer sought to understand

conditions where what they did would no longer work.

Undisciplined pursuit of more

Collins notes that companies in this stage want to grow and pursue more success at the

expense of disciplined creativity (Baumgartner, 2010). As mentioned in stage one,

Blackberry was founded on a platform that encouraged innovation and leveraged solutions

that served the business professionals. However, the rise of Apple appeared to disrupt the

market with the introduction of the first touch-screen phone by Steve Jobs (Appolonia, 2019).

Steve Jobs had a different approach that did away with the buttons and introduced a giant

screen (Youssef, & Haj Youssef, 2013). Consumers were yet to interact with a full touch-

screen phone. Instead of responding to the threat posed by iPhone, Blackberry did what

Collins describes as venturing into areas that they are not great at. Collins notes that whereas

companies may be complacent and resistant to grow, an organization attempting to grow

beyond its ability signals the company's downfall. Blackberry was caught up in both

situations.

On the one hand, the company reasoned that iPhone was not targeted to the business

community, and as such, it [the iPhone] was not a threat to its business. On the other hand,

Blackberry introduced a full-touch screen phone styled as "Blackberry Storm" in 2008

(Youssef, & Haj Youssef, 2013). The Storm received a backlash from tech reviewers who

noted that the phone was too sluggish and buggy.

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Denial of risk and peril

According to Collins, business executives blame external forces for changes in the market. In

addition, during this stage, the company views the changes in the market as temporary or

cyclic. A company may also consider the changes as "not too bad (Baumgartner, 2010)." The

management of a company is also likely to discount negative data while amplifying positive

and ambiguous data. In contextualizing this stage to the Blackberry scenario, it is essential to

consider the management's factors to deny the warning signs.

BlackBerry had partnered with AT&T to have an exclusive partnership that ran up to

2011. In addition, the high costs of iPhones made Blackberry appear like the best alternative

available. To this end, Blackberry continued to sell a considerable number of units (Youssef,

& Haj Youssef, 2013). Blackberry's management further failed to consider the growth of the

smartphone market by underestimating how quickly the market was changing. The

smartphone market was quickly changing, with the iPhone introducing an updated device into

the market yearly (Appolonia, 2019). In addition, the market had witnessed the introduction

of new smartphones such as the Motorola Droid (Moussi, & van Amsterdam, 2017). The

management reasoned that the disruptions were temporary and the company would bounce

back to its position. The company's failure to consider the considerable influence of the new

products and a need to adapt to a fast-paced market were precursors of the fourth stage where

the company attempted to salvage itself in a desperate attempt.

Grasping for salvation

Under this stage, the decline of a company begins to manifest to all. Companies may choose

to respond positively or negatively (Baumgartner, 2010). For instance, a company may

introduce a "charismatic visionary leader" who boldly attempts to pursue untested strategies.

In addition, companies may attempt to transform radically or use solutions that may appear

positive. However, these strategies do not last. For Blackberry, this stage was characterized

by the constant introduction of devices that were considered innovative. Blackberry

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attempted to introduce devices that would catch up to iPhone and Motorola Droid. Blackberry

responded by introducing devices such as the PlayBook tablet and Torch (Appolonia, 2019).

However, these devices were less desirable and did not sell significant units. Later, the

company attempted another quick fix by changing its name, hoping that the loyalists would

be on board. However, the strategy did not bring forth the desired results.

Capitulation to irrelevance or death

The arrival of the iPhone 4 in June 2010 led to a scenario where iPhone sales surpassed those

of Blackberry for the second time (Youssef, & Haj Youssef, 2013). Apple and Android had

taken an approach where developers would develop an app and place them in an ecosystem

known as the "app store (Moussi, & van Amsterdam, 2017)." The company would proceed to

have a 0% market share in 2016. Officially, the company was dead (Appolonia, 2019).

Conclusion

Collins notes that despite companies appearing too successful to fall, they are always

susceptible to failure through the "Five Stages of Decline," a fate that Blackberry underwent.

Collins notes that a company will undergo five stages before its dead or irrelevant. The

Blackberry case study highlights the five stages the company went through before its decline.

The company was caught up in the Hubris of success, which made the company depart from

the factors that had made the company a success. The company would proceed to deny the

risk and peril before grasping for salvation and finally becoming irrelevant.
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References

Appolonia, A. (2019, November 21). How blackberry went from controlling the smartphone

market to a phone of the past. Business Insider. Retrieved September 20, 2021, from

https://www.businessinsider.com/blackberry-smartphone-rise-fall-mobile-failure-

innovate-2019-11?r=US&IR=T.

Baumgartner, E. (2010). How the Mighty Fall: And Why Some Companies Never Give In

[review]/Collins, J. Journal of Applied Christian Leadership, 4(1), 134-136.

Collins, J. C., & Collins, J. (2009). How the mighty fall: And why some companies never give

in. Random House.

Moussi, A., & van Amsterdam, U. (2017). Mini-Case Study: The Downfall of

Blackberry. Universteit van Amsterdam, 5.

Rooney, J. J. (2019). How the Mighty Fall: And Why Some Companies Never Give In. The

Journal for Quality and Participation, 42(3), 38-39.

Youssef, M. H., & Haj Youssef, M. (2013). Strategic tensions within the smartphones

industry: the case of BlackBerry. VISTAS: Education, Economy and Community, 3,

125-141.