3 Universal Truths To Be Learned From RIM's Mistakes4:00 PM EST Tue. Oct. 02, 2012
RIM's current struggles can be traced back to a number missteps in recent years ( see "An Inside Look At Where RIM Went So Wrong" in the iPad Exclusives section of the CRN Tech News iPad app), from a governance model that left too much power in too few hands to the underestimation of new rivals. While those scenarios might not seem applicable to your company, business governance and management experts say there are some lessons any solution provider can learn from RIM's problems.
Here's a look at three universal truths gleaned from RIM's downfall that show how not to fall victim to your own recipe for success.
1. (BIG) CHANGE IS GOOD
Michael Cusumano, professor of Management and Engineering Systems at MIT's Sloan School of Management and author of the book "Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Uncertain World," told CRN that the structure of a company's technology almost always reflects the personalities of its leaders. In Waterloo, Ontario-based RIM's case, its technology has lacked the flexibility it needs to survive in a world where smartphones are expected to deliver it all. Accessibility to movies, music, books, apps and cameras is now just as hot a selling point as the phone itself.
So even though the BlackBerry was designed to provide enterprise users with secure, on-the-go email -- which it did, successfully, for years -- it's simply not enough to compete anymore in the new world of smartphones. And that can be tied back to former RIM co-CEOs Mike Lazaridis and Jim Balisille, Cusumano said.
"These two guys [that were] running the company have not shown themselves to be terribly future-looking or flexible," he said. "They've tried to remake RIM into a more viable competitor to Apple and the Google Android community, but in some ways, it's been too little, too late."
Once a company's leadership becomes "well versed" with a particular technology (for Lazaridis and Balsillie, that technology was security and email) chances of a major strategic overhaul become more and more grim, Cusumano said. He has dubbed this trend the "Platform Leader's Dilemma" and pointed to Nokia as another example.
Like RIM, Finnish telecommunications company Nokia and its management team grew very comfortable (and, at one point, saw much success) with its feature phones. But as the market came to view phones as do-all, be-all pocket companions, Nokia didn't respond quickly enough -- and took a massive hit in the market because of it.
"Look at Nokia, which also was the king of the feature phone. They have also had trouble adapting to the world of the smartphone, which is really a multimedia Internet device," Cusumano explained. "Nokia optimized its phones basically just for making phone calls. RIM optimized the BlackBerry for secure email. It's still viable for that, but enterprise customers or corporate customers want to do much more with their phones today."
Microsoft, Redmond, Wash., which centralized much of its power in Bill Gates and now in Steve Ballmer, also has fallen victim to a lesser degree to the Platform Leader's Dilemma. Its mobile OS Windows Phone is still struggling to carve a space for itself in the smartphone market, and other product launches, such as Windows Vista, have fared even worse, Cusumano said.
But, despite the massive, evolve-or-die challenge faced by RIM and other struggling tech giants, there is one company that they can turn to as a beacon of hope: Apple. The Cupertino, Calif.-based tech-company-turned-cultural-icon once had a bout of the Platform Leader's Dilemma itself that it had to shake before arriving at its market-changing ecosystem of content.
"Apple had its rigidities, too, but they have managed to evolve," Cusumano told CRN. "There was a change in strategy for the iPod in 2003, and I think it was done kicking and screaming, but [Steve] Jobs and other people around him realized that they had to open up the software architecture just enough to encourage outside content and outside applications."
And look how well that turned out.
NEXT: Never Underestimate A Fresh Set Of Eyes
2. NEVER UNDERESTIMATE A FRESH SET OF EYES
There's a chance, of course, that embracing change is simply not part of RIM's DNA. The Verge published an article earlier this year that described Lazaridis' product development strategy as "incremental." The lifelong engineer believed that changes made to the BlackBerry portfolio should happen slowly and subtly, over time. Introducing major changes could leave RIM's traditional user base feeling confused and overwhelmed, he thought, according to the article. Minor improvements ensured a more familiar, comfortable feel.
But, according to Bill Crittendon, professor of International Business and Strategy at Northeastern University, this baby-steps approach leaves a company open to the possibility of being overtaken by those making larger, more drastic leaps in the R&D lab.
"The issue of incremental change isn't enough," Crittendon told CRN. "Those kinds of things will take you so far, but you are at risk of someone leap-frogging you with a new approach."
Lazaridis and Balsillie, the original proponents of this incremental design strategy, stepped down in January, meaning there could be an opportunity for RIM's new CEO, Thorsten Heins, to turn things around by sparking larger, more frequent changes to the BlackBerry brand. But Crittendon isn't convinced Heins, who had been a part of RIM's corporate culture for four years prior to his appointment, will be able to drive such a change.
"When they named him, No. 1, you're naming a CEO from within, and that comes with risks," he explained. "Because, is that person going to understand the need for change? And [Heins'] comments, right from the get-go, suggested that he did not recognize a need for change."
Heins had said in a RIM-hosted conference call announcing his appointment that no "seismic" changes were needed, and that he looked optimistically toward the future.
The new CEO expressed a drastically different sentiment later in the year. In June, after disclosing a quarterly loss of $518 million, Heins stressed he was doing everything in his power to slash RIM's operational costs and make it a leaner organization. A significant reduction of its workforce, which will eliminate nearly 5,000 people throughout the course of the year, was unfortunately "necessary" to move forward, he said.
RIM's new leader also has emphasized the need for a revamped marketing strategy, brought on a new chief marketing officer, and acknowledged the role the bring-your-own-device (BYOD) trend has played in its decline.
Still, RIM's hope for adopting a completely new line of strategic thinking may have rested much more safely in the hands of an outsider, Crittendon said. Keeping all the decision-making power in the hands of an executive that has been "groomed" from within RIM's corporate culture -- especially at a time where change is crucial to staying alive -- could be a dangerous move, perpetuating the very rigidity of thinking that brought RIM to where it is in the first place.
NEXT: Platforms, Not Products
3. PLATFORMS, NOT PRODUCTS
Resistance to change and a lack of outside influence aren't the only factors contributing to RIM's rapid loss of market share, Cusumano told CRN. The company's focus on devices and hardware, rather than its software platform, also played a role.
He explained that operating systems provide much more opportunity for growth and stability than actual devices do because tangible products such as smartphones and PCs tend to shift form factors with time and the fluctuation of consumer demand. This makes them a less reliable (or at least riskier) source of revenue for a company -- unless there's a homegrown and well-adopted OS behind them.
"Platforms are something that, once established, have real staying power to them," Cusumano said. "Hit products come and go and get replaced. But platforms are around for a long time."
Since the introduction of iOS and Android, RIM's BlackBerry OS has been steadily losing ground. While once accounting for nearly 50 percent of the U.S. mobile OS market, the BlackBerry platform slipped to a significantly smaller 8 percent by August 2012, according to market analyst ComScore.
Cusumano noted several causes for this decline. The first, and perhaps most simple, is that the BlackBerry OS is not developer-friendly. He said he has heard from application developers first-hand that RIM's platform is clumsy and difficult to build for. They also complain of an "unnatural" user interface and glitchy Web browser.
"It's sort of a red flag when you start hearing this from app developers," he said.
The other hurdle faced by RIM is the OS market itself: With iOS, Android, Windows Phone and a slew of other mobile platforms to go up against, there are simply too many choices for developers. The OS market has become diluted, and rather than have half a hand in a variety of OS pots, many developers are choosing to align themselves with just one. Unfortunately for RIM, it simply hasn't built up a dedicated developer base as robust as Google's or Apple's.
"In the mobile world, you can't have too many platforms because the power of network effects is going to drive the market toward a smaller number of platforms so that applications can have more economies of scale," Cusumano said. "So developers are not going to write apps if there are half a dozen de-compatible platforms. They are going to start choosing. And they have already been choosing Android and Apple, and pushing out RIM."
RIM is slated to launch a new OS, BlackBerry 10, next year. Unlike its predecessors, the new OS will come equipped with an Android app player, allowing users to download Android apps onto their BlackBerry smartphones. While this perhaps could pull in new users and broaden its developer community, Cusumano thinks RIM's best bet is to form alliances or a "coalition" with other tech companies to really push its platform forward.
Following a "strength-in-numbers" line of thinking, he suggested RIM team up with other tech giants struggling to fight back against market leaders Google and Apple, such as Nokia or even Microsoft. Together, they may be able to pool resources to create a more viable third competitor.
"Otherwise," he said, "[RIM] could just sink back into being a smaller-focused, product company selling email devices."
The new OS, which originally was scheduled to launch this fall until RIM delayed it in June, also will arm future BlackBerry devices with touch-capable keyboards and a revamped camera.
Cusumano and Crittendon both feel that RIM could have avoided its market nosedive if it had opened its doors to change and paid more attention to its rivals. Once an industry leader and symbol for entrepreneurial success, RIM no longer produces technology that stays "in front." And in a market as fast-moving as mobility, staying in front is key.
Both academics agreed that without the addition of outside influences, a major strategic overhaul, or an operating system that attracts new customers, RIM's efforts today may simply be, in the words of Cusumano, "too little, too late."
"Financially, it's not yet a crisis. But, the trajectory is clearly headed there," Crittendon said. "And in order to change that trajectory, to move it in a different direction, they're going to have to think very differently than they have so far."