RIM skating on thin ice with new CEO

Research in Motion (RIM), maker of the BlackBerry smartphone, announced earlier in the week that its two co-chairmen and co-CEOs Mike Lazaridis and Jim Balsillie were stepping down to be replaced by virtual unknown, Thorsten Heins.

New CEO Thorsten Heins
New CEO Thorsten Heins

While there are many companies playing the fiscal prudence card in this economic climate, RIMs lack of real change, and indeed denial of any real problems with its business model, seem bizarre to any one watching the company.

The company genuinely seems to think its only failing is in marketing. Its appointment is token. The announcement this week of a product managing nobody, a quiet conservative manager (that was only made COO in August), will probably see the end of RIM in its current form.

BlackBerry has decided to stay the course. Its customers won’t. I imagine governments and businesses around the world have already started planning for the end of their RIM based product life cycles and will be looking at alternative systems. These customers aren’t going to wait another year for new products.

RIM can only cruise on its government contracts and third world sales for so long.

The first point of interest? The sharemarket gave a collective ‘meh’ to Heins’ appointment. The company’s share price dribbled down 13% to $15 (at the time of print). It closed at $17 on Friday. Remember this company was valued at around $70 this time last year, and around $144 in 2008.

A quick summary of 2011.

Its current product line, the Bold 9900, is of a product design that lost its cachet half a decade ago. Its Blackberry Playbook was released in April and didn’t feature a dedicated push email client, the company’s bread and butter. Its QNX operating system is rapidly turning into vapourware with a now estimated launch date of late 2012. Its new generation of phones, supposedly running on this software, are nowhere to be seen – let alone demoed. The Blackberry network crashed for 3 days in October 2011, with little communication from its head honchos. It sacked 2000 staff. As a final joke to close the year, eco-activists Greenpeace ranked them the least ‘green’ technology company in the world.

The point is, the top end brass don’t seem to know what they’re doing, what their customers want or much of anything about the modern technology market.

Its best we don’t go further backward in time to crooked stock options, unusual corporate structure and high employee dissatisfaction.

Most companies have been killed by far less, and it is a measure of RIMs solid cash holdings that it is still standing.

In the face of Apple and Android’s market domination, fellow strugglers Nokia and Microsoft decided to go radical to attempt to break this duopoly. RIM needed the same fundamental shift in its governance, led by a maverick – not a backroom boffin. Even if they did actually try to find their Steve Jobs (and it appears not), its doubtful that anyone would want to take the role.

Heins joined the company in 2007 as its Senior VP Blackberry Handheld Business Unit. This was the year when Apple disrupted the market with its iPhone. Heins spent the remaining years of the Apple era rising through the ranks as head of product engineering and finally COO of product and sales.

This is the man whose career rise parallels BlackBerry’s fall. This is the man who oversaw the product design and release of the BlackBerry Storm and the BlackBerry Playbook, collosal failures. He oversaw the part of the company most analysts criticise when they discuss BlackBerry’s failings. This is the man they chose to be their new CEO.

Perhaps this is unfair, perhaps Lazaridis and Balsillie had undue control and rejected a swathe of great product designs his team came up with. Maybe he wasn’t allowed to look beyond the QWERTY keyboard after the Storm disaster.

If so, this simply means he’s their puppet – which again is no improvement to the company’s fortunes. The fact that Balsillie remains vice-chair (behind new chair Barbara Stymiest, another insider), and Lazaridis remains on the board as a ‘special advisor’ means that he will still be under their control. Heins’ comments upon his accension back this up.

"Mike and Jim took a bold step 18 months ago when RIM purchased QNX to shepherd the transformation of the BlackBerry platform for the next decade. We are more confident than ever that was the right path. It is Mike and Jim’s continued unwillingness to sacrifice long-term value for short-term gain which has made RIM the great company that it is today. I share that philosophy and am very excited about the company’s future."

This is a bizarre denial at its best. The key sentence is ‘We are more confident than ever that this was the right path".

"Going forward, we will continue to focus both on short-term and long-term growth, strategic planning, a customer- and market-based product approach, and flawless execution. We are in the process of recruiting a new Chief Marketing Officer to work closely with our product and sales teams to deliver the most compelling products and services."

I’ve never heard of any company that wasn’t going to focus on long term and short term growth, strategic planning and a customer/market based product approach. That sounds like a job description, not a strategic plan. This is hardly the call to arms the company needs.

This also fits the old RIM Modus Operandi, we will all be proven wrong once the next product launches, and the company’s woes are tied to marketing.

Even if the company did present a comprehensive strategic plan, it may already be too late. Its marketshare for third quarter 2011 was just 11% – and this was before the iPhone 4S launch.

Critics wanted a new leader who could rejuvenate the design and operational sides of the business, or prepare it for sale to the rumored buyers lining up. They got neither.

Besides, who would be interested? Nokia, Microsoft, Amazon and Samsung all kicked the tyres, and walked off.

The company’s corporate structure has also been long mystifying to outsiders, and scared off potential bidders.

Being a Canadian company, perhaps the country’s national obsession, ice hockey, gives more of an insight into RIMs managerial thinking. This is a company where its boardrooms are named after hockey greats. Balsillie is a hockey nut, who has repeatedly attempted to buy an NHL team and move it to Hamilton, Ontario. He and Lazaridis have long run the company as they pleased.

An NHL ice hockey season is a whopping 82 games long. It takes 4 sets of best of seven playoff series to win the Stanley Cup. These games also have unlimited overtime. For this reason it is often considered a tough sport, defined by endurance, ruggedness and tenaciousness.

I cant help but feel that RIM sees itself as the old fashioned ‘grinder’, a hard as nails, bleeding, toothless winger, down for the count in overtime, with the series tied at 3. Old and battered, RIM thinks that as long as it keeps grinding through the pain, it will wear out its opposition; its tenaciousness will win. It will exemplify true Canadian values.

Unfortunately, its opposition are younger and hungrier. RIM has done well to last this long, but they are up against slicker skaters, sharper shooters that are better coached and smarter. It really is only a matter of time.

Twitter: @allanswann

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