There is probably no more powerful a symbol of the change that wireless technology is bringing to daily life than the BlackBerry. Its very name has come to indicate: The person carrying this is hyper-productive and never out of contact. And there are lot of these folk—more than 14 million at last count.
The stock performance of BlackBerry's maker, Canada's Research In Motion (RIMM), has been nothing short of phenomenal in the decade since the first devices—called Inter@ctive Pagers— hit the market in the summer of 1998.
In those days only the obsessively connected wore pagers. To send the wearer a message, you called a living, breathing telephone operator who would type your words and send them along, making the device chirp like an agitated parakeet. The idea of a constant connection to the same e-mail messages that resided on your office desktop PC was a foreign one. A decade later, living without that connection is almost unthinkable to many.
For much of that, you can thank Mike Lazaridis, co-chief executive officer and founder of RIM. He dropped out of the University of Waterloo in Ontario in 1984, a few classes short of a degree in electrical engineering, and started the company that year. Early products were radio modems for point-of-sale terminals and wireless data insert cards for notebook PCs. It has been a busy decade. Lazaridis recently sat down with BusinessWeek's Arik Hesseldahl to talk about the lessons RIM has learned about innovation in that time.
In tough economic times, companies start looking for places to cut, and very often that's in research and development. RIM is growing like crazy and doesn't need to worry about that now, but that wasn't always the case. How did you get to this point where your innovation has paid off?
If you really want to build something sustainable and innovative you have to invest in R&D. If you build the right culture and invest in the right facilities and you encourage and motivate and inspire both young and seasoned people and put them all in the right environment—then it really performs for you. It's what I call sustainable innovation. And it's very different from the idea that you come up with something and then maximize value by reducing its costs. But building a sustainable innovation cycle requires an enormous investment in R&D. You have to understand all the technologies involved,
There's more to the BlackBerry than just the gadget itself.
Right. Everyone focuses on the iconic object, but they forget the enormous investment we've made in security technology, the private network system, the server technologies built for all the e-mail systems, not just one. We didn't just buy an operating system from one company and a radio technology from another, and have them assembled somewhere in Asia. We actually built the whole thing. It gives us an opportunity to build on something that is strong and well-founded, and I don't mind investing in it because I know there's a return.
Let's say I'm a new RIM employee fresh out of graduate school. What do I need to know about RIM's culture? Where do the ideas come from?
Well, one place they come from is weekly vision meetings where I talk to various teams that we bring in. We also have all these committees, and I know it sounds very bureaucratic, but these are brainstorming leadership committees on everything from technology to research and development, manufacturing to the user interface of the product. You don't have to be an executive to be on these committees. It all depends on your capability.
So you're in with the engineering teams who bring ideas to you that may or may not prove fruitful down the line? How do you keep them focused on things that are likely to pay off?
We use the product. The whole company uses the product. It makes us very competitive and it brings discipline to our interactions.
Decisions get made very quickly and they get made in very collaborative ways, and they get made with accurate information. So we actually test new ideas within the company.
So you're your own Beta testers.
Exactly. And because of the way the devices are built we can update the software and test a new feature right away. And that's great because 9 times out of 10 you're wrong with this stuff. One of the things we've learned is that just because something looks good on paper doesn't mean we've assumed correctly how people will use it. And so being able to test everything with our 8,000 employees has been very efficient. We not only have executives using the product but we're also Canada's largest single employer of co-op [cooperative education] students, so we have the whole spectrum of the very young to the very experienced all working at the organization. We have a wide cross-section of people who are testing these ideas.
Tell me about the shift to the new keyboards. Instead of the traditional 10-across QWERTY keyboard from the original BlackBerry devices, on some newer, smaller devices like the Pearl, and the BlackBerry 7100 before that, there are only five keys across, and each key supports two letters. That was a fundamental shift in your product design.
Yes and no. We're not trying to be all things to all people with just one product. Our heritage was reliable, practical, but they were big and clunky. They didn't feel like phones. So the idea was this: Build me the smallest BlackBerry you can. I wanted a statement product. We wanted to show the world that we could build really great smart phones.
Now we had this technology, SureType, that predicts what you're trying to type. If you think about how the world had been locked up in this box, with a three-by-four key matrix on phones with the letters packed on them, and that hadn't changed for 50 years. The whole industry has been using text messaging on these tiny alphanumeric keypads. If consumers were willing to put up with those compromises to send a text message, imagine how they'd like typing naturally in long sentences instead of code words and slang. By adding two columns to the standard phone key lineup, you can fit a full QWERTY on there.
Some companies are trimming back on basic research. I'm thinking of Hewlett-Packard (HPQ), which has recently said it will cut the number of research projects. How do you keep control on the longer-term research and maintain that focus you talked about earlier?
Some basic long-term research is done by our university partners. We also have some in-house teams doing basic research in line with the BlackBerry product. I've sometimes stepped in and stopped research projects. The corollary to that is that my researchers have in some cases come to the rescue when something they were working on turned out to be relevant.
What's an example?
If I remember, there had been some resistance to adding a camera to the BlackBerry. The thinking was that users weren't so interested.
Right. And when the time came to put a camera in the first Pearl, the researchers had already done some work and found a camera that worked with the parts we were using.
Tell me about some big mistakes that led to improvements? How does RIM quantify and learn from errors?
I don't know if you'll remember but the BlackBerry 957 was one of the thinnest PDA form-factors ever. It was one of the most successful products we had.
It was one that I carried for some time.
It was a great little product. But the way we achieved the thinness was we put the battery inside and sealed it so you couldn't replace the battery. In order to replace it you needed a service call. What we learned from our enterprise customers was that IT departments wanted to replace those batteries themselves so they'd last longer. We had achieved a really thin design but in the end we decided that was a mistake, and we made the battery user-replaceable. We got what we wanted, a really thin product, but in the end it turned out to be far more practical for our customers to go back to replaceable batteries, and a thicker product.