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The Globe and Mail

BlackBerry left behind? That’s so Canadian

As Apple prepared to launch its iPhone in 2007, BlackBerry's then co-CEO sounded both defiant and defensive. What he did not sound was worried.

For Jim Balsillie, Apple's imminent incursion into the smartphone space that BlackBerry owned "bought validation that would have cost hundreds of thousands of dollars of advertising." Instead of talking down its rival, BlackBerry would focus on its customers and "let the miracle of compounding [sales] do its job."

Few seemed to take issue with that approach at the time. Who knew demand for the iPhone's bells and whistles would spread like California wildfire? Wasn't the real money in the government and corporate sectors that depended on the BlackBerry's superior security features and comfortable keyboard? With "Crackberry" fans like Barack Obama, it seemed people who mattered would not be swayed by fancy apps.

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Yet, this was the critical moment when BlackBerry blew it. And when the definitive business-school case study is written about the once supreme smartphone's slide, there should be a chapter on the Canadian cultural defect that blinded it to its own vulnerability.

Call it complacency or conservatism, there is a bias in Canadian business against disruptive change. The attitude is that as long as the status quo is yielding heady growth and profits, why rock the boat? Only, anyone will tell you that it's usually smarter and easier to shake things up before others force you to.

At the height of its popularity, BlackBerry made a common Canadian mistake in refusing to rethink its business model out of the fear that it would alienate existing customers. It put greater stock in customer loyalty than in responding to signs that Apple and Google were redefining the smartphone market.

The same blindness killed Nortel. The defunct telecommunications equipment-maker resisted entering the wireless market because it feared angering the landline telephone companies that were its bread and butter. When the big telcos themselves moved into the cellular space, Nortel needed to play a costly game of catch-up (with acquisitions and investment in research) that contributed to an eventual financial disaster.

If BlackBerry was merely complacent, our manufacturers and resource hewers have been comatose. We remain wedded to producing low-value-added auto parts instead of designing the cars they go into. The oil patch, and the politicians who regulate it, remain in deep denial about the threat of climate change and Canada's rogue-nation environmental status. Mr. Obama's initial rejection of the Keystone XL pipeline should have been a wake-up call. Instead, Stephen Harper reacted by saying he won't take no for an answer.

"Virtually all global corporations have a single national culture at heart," Kai Hammerich and Richard D. Lewis write in Fish Can't See Water. "Management and the board are often culturally blind to the effects of their own company's culture and may not realize when deep change is required. … A company under crisis will often revert to its core national culture."

Mr. Hammerich (a Danish-born headhunter) and Mr. Lewis (a British linguist) don't spend a lot of time discussing Canada in their book, other than to place it in the "slow-moving" category when it comes to our "instinctive reaction" to a crisis. In business, we're halfway between the Americans (cool, factual, decisive planners) and the Japanese (courteous, amiable, accommodating), which probably just makes us conflicted.

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We're usually fine, as long as we're operating in regulated industries where barriers to entry are high and product differentiation is low, such as banking and telecom. But where some cultures thrive on disruption, seeing opportunity in a crisis, Canadians would rather hide under their desks until the storm passes.

In 2008, BlackBerry's all-Canadian board of directors should have recognized that conservatism was their enemy. Instead, they took the well-trodden Canadian path of least resistance, letting inertia dictate the company's fate. It's not been a pretty sight.

Contrast that with Nokia. The Finnish handset maker also suffered from a cultural defect that slowed its reaction to Apple and Google. But it has a 148-year history of reinventing itself in a crisis. Its first foreign CEO (Canadian-born Stephen Elop) did not change that culture during a three-year stint that will end with the sale of the company's handset unit to Microsoft.

Nokia is not out of the woods. But with great assets, innovation and Finnish sisu (perseverance), its odds of redemption are far better than those of its once complacent Canadian counterpart.

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