Blackberry to battlefields: The unexpected side of risks and how to tackle them

Everybody knows Steve Jobs, but do you know who Mike Lazaridis is? Perhaps not! However, if you are of my generation, you have likely used the product he created – the BlackBerry.

The first version of wireless handheld device for sending and receiving emails, that came to be known as the Blackberry, debuted in 1999. At first, nobody thought there would be a market for this. In an interview in 2014, Lazaridis said, “When I introduced the BlackBerry 10 years ago, I couldn't explain it, people didn't understand it. People didn't know what we were trying to do.”

BlackBerry went on to become a cultural phenomenon and a status symbol, earning a loyal fan base. Famously, President Obama refused to relinquish his BlackBerry to the Secret Service when he arrived at the White House as the duly elected President of the USA. In 2009, BlackBerry accounted for nearly half of the US smartphone market. By 2014, however, its sales had plummeted to less than 1%.

BlackBerry was unseated by the iPhone and cheap Android devices that followed. The iPhone, launched in 2007, was more like a mini-computer in a handheld device, rather than just a secure wireless email device. Although BlackBerry was ahead of its time, in perceiving the need for a wireless communicator, it had missed the opportunity to go one step further.

Lazaridis was watching the televised report of the launch of the iPhone from his treadmill. "How did they do that?" he wondered.

BlackBerry’s executives were initially in awe of Apple’s ability to pack so many features into one phone. However, they weren't impressed enough to race to build a consumer device that was just as useful and aesthetically pleasing. Research In Motion (the company that made the BlackBerry), valued at over $70 billion in 2008, was decimated and never recovered.

In the real world, risk arises from unexpected quarters and not just from technology changes or consumer. Morgan Housel, a partner at the Collaborative Fund and a New York Times bestselling author, speaks about the nature of risk in his book The Psychology of Money. He recounts an episode wherein field mice may have played a key role in the German army’s defeat in the Battle of Stalingrad during World War II.

In 1942, a German tank unit was waiting in the grasslands outside Stalingrad in preparation for the battle. Housel writes:

“When tanks were desperately needed on the front lines, something happened that surprised everyone: Almost none of them worked. Out of 104 tanks in the unit, fewer than 20 were operable. Engineers quickly found the issue. Historian William Craig writes: ‘During the weeks of inactivity behind the front lines, field mice had nested inside the vehicles and eaten away insulation covering the electrical systems.’ The Germans had the most sophisticated equipment in the world. Yet there they were, defeated by mice. You can imagine their disbelief. This almost certainly never crossed their minds. What kind of tank designer thinks about mouse protection? Not a reasonable one. And not one who studied tank history.”

I do not wish to leave you with the belief that it is only the unexpected that you cannot prepare for. In the words of financial historian and economist Peter Bernstein (Against the Gods), “Risk is a choice rather than a fate.”

Dainik Bhaskar is today the largest circulated newspaper group in India. In the 1980s, however, its presence was limited to the (undivided) state of Madhya Pradesh. And even there, it was more of a sub-regional satrap: dominant in Bhopal but absent in Indore, which was the commercial hub of the state.

The young Ramesh Chandra Agarwal, who built the DB group to its current stature, decided to make a foray into Indore. But there was a roadblock – his father, the family patriarch, was opposed to the decision and the risk it would involve. Finally, Ramesh Chandra had his way and received the margin money for a loan from his father with this warning: “Go do it at your own peril, the risk will be yours and yours alone.”

From that risky beginning, it has worked out well for the group, which has built a leading news media franchise beyond just the Dainik Bhaskar newspaper in India. Risk is a choice.

In 2005, the group then decided it would enter the biggest market of them all – Mumbai – and that too with a newspaper in English. Mumbai and English were the strongholds of the Times of India group and its owner Bennett & Coleman. The Mumbai edition accounted for more ad revenues than all their other editions across the country. Then two things happened. First, the Delhi-based Hindustan Times also decided to enter the Mumbai market. The Times of India mounted a strong defense – first by launching a flanking tabloid, the Mumbai Mirror, and tying up advertisers with long-term deals.

The DB group, along with the Zee group, launched the DNA newspaper in English in 2007. It haemorrhaged money and went through several editorial and management changes but to no avail. In 2011, Ramesh Chandra decided to exit the venture, given the significant bleeding that was hurting their balance sheet.

In the words of Girish Chandra (son of Ramesh Chandra), his father had said, “Let’s cut our losses and move on. Why put good money into something bad?” These two episodes in the life of Ramesh Chandra define his attitude towards risk management and the successful media business he created.

Risk means more things can happen than will happen. You avoid risk at your own peril. If you do not take risks, you will not achieve your goals.

Ultimately, risk is about the choices we make, not just the circumstances we face. Make those choices prudently!