While Research in Motion Company (RIM) is not at the brink of bankruptcy (yet), they are at a clear crisis point – a crisis of leadership and brand that has come on the heels of a disastrous 2011. They have lost their innovation mojo and the past 12 months were a cluttered timeline of poor decisions and disastrous business outcomes:
- They lost a placeholder in the “Top 5” global smartphone manufacturers list.
- Their North American marketshare tanked (what is a polite description of moving from 42 percent to 9 percent in 18 months).
- They went from being a market leader to a fast follower globally.
- Their playbook launch was late, lackluster and a market failure (which is clearly witnessed in the $299 firesale currently out in the market).
- Significant corporate layoffs occurred throughout the year, and some key talent losses hampered their ability to execute.
- Their new BlackBerry Operating System (BB OS) continues to be delayed, which is dragging down in year revenues.
- Their lack of innovation and past protectionist behaviors have alienated the development community – RIM’s platform is clearly in the #3 position behind Apple and Google’s Android platform.
The fact that the market responded to purchase rumors this week by bumping up the stock price by approximately 9 percent is a clear statement that there is a lack of trust in RIM’s leadership and the ability to move them away from this death-spiral.
With some quick, agressive action, it is very possible for RIM to move out of this corporate position and back to their market leadership. We’ve seen examples of this in the past; with Apple (when Steve Jobs came back), IBM (transition from mainframe to desktop), Ford (in the wake of a devastating credit crunch and a shift to fuel efficient vehicles) and Lego (proliferation of video games in late 1990s).
Around this time, Lego almost went bankrupt – they had grown into a large, bureaucratic organization with cumbersome and complex processes and slow product development cycles that had them lose touch with their markets and customers. So, Lego took a leap of faith and chose to innovate their way out of their situation. For the first time, they hired a CEO from outside the family, infused a large amount of capital to create some breathing room and took a real hard look a their governance structure, processes and practices. They streamlined their supplier pool, manufacturing facilities and product catalog. They also challenged their team to quickly re-connect with the market and their customers.
The outcomes of Lego’s willingness to take risks were:
- Highest profitability ever within three years.
- Removal of any remnants of “not invented here” syndrome through their embracing of the “Open Innovation Approach.”
- Establishment of a robust developers/partners network that do work for the privilege of working with Lego vs. for the financial return – they have built an ecosystem that strives to have the best products available in the market.
- Constant innovation in their products and service development has enabled them to maintain their global leadership in an ever changing and competitive marketplace.
RIM leaders and engineers should pick up their lego blocks and take a page from that corporate experience to bring innovation back front and center…
RIM has announced that they have hired Goldman Sachs to assist them with their current situation – does this signal a “Fire Sale” or a private equity infusion from a venture capital firm? Our hope is that they focus more on the infusion of strong leadership and innovation to build the company up and maintain that legacy of technology leadership, rather than tearing them apart and selling them off ala Nortel. Or will we see them, because technology is a very different beast, fall to the velocity of innovation, which is so high that by the time RIM’s management gets around to deciding what the next move, industry leaders such as Apple, Google, etc. will have already passed them by? If RIM waits too long, it will go the same way as Palm, Motorola and Nokia, know for being great in their day — and still alive — but no longer leaders.
In doing a bit of research on RIM we found this article, stating that RIM actually (back in the day) used Legos to test a BlackBerry. Now that’s the kind of creativity they need to return to! Maybe, in fact they need to go back to 1997 and starting playing with Legos again to re-infuse the company with that sense of innovation.