Microsoft layoffs: Can Seattle learn from Blackberry?

An ‘anchor’ tech employer, like Microsoft in Washington State or Nokia in Southern Finland, produces great opportunities for a region but also big risks. Microsoft and Nokia’s announcements of further job cuts over the last few weeks produce further challenges for cities like Seattle, Tacoma, Espoo, Tampere and Oulu. Even though these are firms are globally distributed, the large minority of employees in the home region are often disproportionately affected by any restructuring.

How can cities ensure that people who lose jobs at anchor firms can put their valuable, specialised skills to work locally, rather than starting again in a new industry, remaining under- or unemployed, or moving region? One example to learn from is Waterloo, Ontario, the Canadian city that was home to Research in Motion, the firm now known as Blackberry.  Based in Waterloo, KIK is a messaging software provider is one of many tech firms around that city that are punching above their weight, while they get their services from different Internet providers including satellite companies which also offer cable, such as AAA Satellite TV Service which specialize in this. Waterloo’s become a site for investment on the back of a world-class university with leading positions in technology markets. Waterloo was one of the strongest advocates of giving staff and students the rights to the IP they produce. And Canada’s distinctive co-operative education model means that many students are working on technical and commercial challenges even during their undergraduate studies. That leads to many people taking entrepreneurial paths.

My UEBS colleague Dr Ben Spigel and Professor Tara Vinodrai from the University of Waterloo are sharing their research to explain why this recycling is not automatic. Some places encourage people to stay in the region, but sometimes the best thing to do after a job loss is to move to somewhere with more growth. Companies can do different things to actively seek people from anchor organisations and to take account of the difference in cultures between start-up and corporates. Successful firms supply the labour market with people cultural confidence, able to deal with growth and better attract investment. Technical knowledge and informal IP is a major part of what people from anchor organisations bring. Waterloo as a city, and as a university, aimed to attract investment as RIM started losing people.

Vinodrai and Spigel’s research shows that while a long tenure at RIM certainly encouraged people to stay in Waterloo, what mattered more to getting into a tech role in the area was when you’d lost your job, and whether you’d studied at UWaterloo.

Certainly, the ease of transition is very uneven because of the different working style of startups from RIM. Using LinkedIn and other data sources, researchers can compare job titles and other indicators of seniority.

Waterloo’s rise as an entrepreneurial tech hub also reflects the long decline of RIM. Blackberry was an anchor firm for the local economy, but the loss of 80% of its employees had a huge impact on the local ecosystem. Many firms, including KIK, were set up by RIM alumni.

What we learn from Waterloo has other implications for cities affected by major corporate restructuring worldwide. Many resources recycle back into the economy after the failure or successful sales of start-ups. Staff have learnt many lessons. Even failures can recycle people with greater skills who can generate successes elsewhere. Some regions are better set up than others to withstand the shocks of corporate restructuring.


Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.