What a Potential Blackberry Sale Says About Canadian Innovation

In a recent Globe and Mail op-ed, columnist Konrad Yakabuski argues that the likely sale and potential breakup of Blackberry would be a major setback to Canada’s innovation agenda.

And as has been common in commentary, he also draws parallels to the demise of previous research and development (R&D) powerhouse Nortel. As Yakabuski wrote,

“If Blackberry is sold – as seems likely after the board announced a strategic review and hired investment bankers – it will most likely be carved into pieces. That stands to make Canada’s innovation situation worse. The company, which benefited from government grants and loans in its early days, has given back by nurturing the countless startups for which BlackBerry is a customer or mentor. Nortel played a similar role in its day. The loss of an anchor can compromise an entire ecosystem of innovation, making it even harder for startups to make the leap to commercialization.”

The Globe and Mail has been reporting extensively on the company’s future, seen in articles like “The decline and fall of Canada’s global corporate superstars” and “BlackBerry’s future is in pieces”.

Breaking Down the Issues

A quick scroll through the comments on any of these articles – or casual listening across our country’s proverbial water coolers – makes it clear that the future of Blackberry is a hot button issue. There are camps, there is rhetoric, and there is emotion. But using Blackberry’s current situation as either a symbol of contemporary innovation challenges or as a canary-like indicator for the future of Canadian innovation is problematic.

In unpacking the link between Blackberry’s future and its impacts on Canadian innovation, there are two distinct arguments. From the perspective of critics, the hypotheses are that Blackberry is struggling because it lacks innovation; also, the sale of Blackberry will reduce the amount of innovation in Canada. In my opinion, both are logic leaps.

Is Blackberry Struggling Because it Lacks Innovation?

Ongoing security improvements, overwhelmingly positive Q10/Z10 device operating system reviews and the controversial but creative idea to offer platform agnostic BBM technology – as well as the decision to spin the technology into a separate company – are clear signs of innovation.

There may be better reasons to explain Blackberry’s loss of market share and sinking stock price. These include that the innovations were not strategically aligned to maximize appeal with the growing consumer demographic, that marketing has been inconsistent and improperly focused, or that corporate operations or product distribution management have faltered with growth. All of these claims seem to hold some truth to them. To say that Blackberry has lacked innovation, however, is, in my opinion, fundamentally inaccurate.

Will the Sale of Blackberry Reduce Innovation in Canada?

It’s difficult to predict whether any sale or breakup of Blackberry will result in quantitatively less innovation than if the company retains its current corporate structure. If we judge innovation by R&D investment, it would be hard to have mathematical certainty about what Blackberry would have spent over its company future in the event of a sale, and vice-versa. As a result, I would contend that outright, quantitative prediction is a mug’s game.

In my opinion, a more intelligent, nuanced response is that R&D is a blunt and sometimes indeterminate measurement of innovation. The Council of Canadian Academies recently completed an expert panel report at the request of Industry Canada to assess innovation in Canada. Though it did find many benefits to industrial R&D (IR&D) investment, it’s not the same thing as innovation.

“IR&D and innovation are not synonymous. IR&D consists of any scientific research or technology development undertaken by Canadian businesses. Innovation, on the other hand, is the broader concept that can be defined as ‘new or better ways of doing valued things.’” (P.9)

The panel listed four key areas of R&D strength in Canada, including:

  • Aerospace products and parts manufacturing,
  • Information and communication technologies,
  • Oil and gas extraction, and
  • Pharmaceutical and medicine manufacturing.

And here’s where the argument that a sale of Blackberry will reduce innovation in Canada begins to sound particularly weak. Even if a sale results in reduced R&D spending by the new corporate form or forms – which is difficult to prove – and even if a reduction in R&D spending guarantees a reduction in innovation (also difficult to prove), it stands to reason that a single company should never dramatically impact Canada’s overall innovation agenda. Blackberry is one company in one of the four areas of R&D strength in Canada.

The Big Picture

R&D and innovation in Canada have bigger problems than Blackberry’s future. A recent Conference Board of Canada report on domestic innovation shows that even by a broad array of 21 different indicators, Canada lags. According to their findings,

“Despite a decade or so of innovation agendas and prosperity reports, Canada remains near the bottom of its peer group on innovation, ranking 13th among the 16 peer countries / Countries that are more innovative are passing Canada on measures such as income per capita, productivity, and the quality of social programs.”

Hootsuite founder Ryan Holmes believes that, from a digital communications technology perspective, the temptation for entrepreneurs to sell out too early or join the brain drain to Silicon Valley is part of the problem.

“And the magnetic allure of Silicon Valley means people with qualifications are migrating en masse to the Bay Area. An estimated 350,000 Canadians live and work in the Valley – an entire lost generation. It’s no exaggeration to say that much of the world is in the midst of a global brain drain of engineering talent.”

Eli Lilly president and CEO John Lechleiter believes that, from a pharmaceutical perspective, weak Canadian patent regulations are stifling innovation.

Michael Bloom, vice-president of organizational effectiveness and learning for the Conference Board of Canada, believes that companies need to improve and formalize innovation management systems.

There are many key contributing causes of and prescriptions to Canada’s innovation lag, but none of them truly involve Blackberry. At most, Blackberry is the symptom – not the diagnosis.

Conclusion and Insights

Using Blackberry’s current challenges to strike up a national debate on R&D or innovation is thorny. In rifling through the waves of press coverage, it seems like media outlets are using an innovation angle to give legs to one of its favourite corporate narratives.

The obsession with Blackberry fortunes is natural because mobile devices are deeply personal products that are highly integrated into our daily lives, whether consumer, student, or professional. Also, Blackberry’s is a reverse underdog story, and some people love watching a former market leader struggle.

Unfortunately, when we bring larger public policy debates around innovation into heated discussion around controversial companies like Blackberry, it can unnecessarily politicize or bias the national discourse. As well, I worry that such politicization may allow other Canadian companies that aren’t doing their part on the innovation front, but are in less prominent or popular industries than mobile devices, to escape the same amount of media scrutiny.

Denise Brusndon is an IPilogue Editor and a JD/MBA Candidate at Western University.
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