Research in Motion is in a tizzy. The recent first quarter earnings call showed a drop in net income, a projected drop in revenue of almost $1 billion, and the announcement of layoffs, sending the stock tumbling up to 20% in the aftermath. Furthermore, the PlayBook stats weren’t promising either as RIM reported that 500,000 units were shipped so far. That’s shipped, not sold. A third of that could easily be sitting around in the channel or on retail shelves. That’s not too bad when compared with Android’s Honeycomb tablets, which have had more retail time but only about 600,000 have been activated in the field. The silver lining to all of this is that international revenues were up 67%, year over year. However, we’ll get to how this is not necessarily a good thing later on.
Is RIM destined for failure? Will the BlackBerry brand end up being pawned off to some private investment group for peanuts? Can RIM ever get its mojo back? RIM may be bloodied and bruised, but it hasn’t been KO’d yet. Here’s how it can save itself.
Bring in a new CEO
Google’s problem was that it had too many chiefs and not enough Indians. Research In Motion’s problem is the exact opposite: too many Indians, not enough chiefs, but at the same time there are too many chiefs. Yes that makes absolutely no sense because RIM’s corporate structure makes absolutely no sense as well. When RIM announced the upcoming layoffs, it said the layoffs were to be “focused on taking out redundancies,” meaning they’re cutting out the excess fat and consolidating jobs that can be done by one person instead of two or three. RIM’s executive structure of two CEOs and three COOs will remain unchanged, however.
Jim Balsillie and Mike Lazaridis are the co-CEOs with Lazaridis also picking up the President role. Under their leadership RIM took off and became the wireless juggernaut that dominated the industry for more than a decade. Unfortunately, their business model remained relatively unchanged over the years and its rigidness and inability to adapt became clear in the post-iPhone era. A report called “The Rise and Fall of RIM under Balsillie and Lazaridis” seems to be inevitable in the coming years if Lazaridis and Balsillie remain at the helm.
However, this isn’t a call for Balsillie and Lazaridis to resign completely. Keeping them as co-chairmen of RIM’s board of directors will be the right choice, but their functions as co-CEOs and Lazaridis’ function as President should be eliminated. After all, Lazaridis is probably RIM’s biggest and most vocal cheerleader and you need someone like him on the board to be the “yes we can” guy.
However, in order to restructure like RIM is planning, there needs to be fresh guidance from the top, and unfortunately the top is made up of people who have gone from being entrepreneurs to being business owners. A fresh new face must assume the CEO role and its daily duties in order to steer the RIM boat clear from the jutting rocks. RIM doesn’t need a visionary at the helm; RIM needs a thinker and a person that is highly technical. RIM’s problem does not lie with innovation, but with refusing to acknowledge issues that exist. I believe Ray Ozzie would be a good fit for CEO at RIM because he will help restructure the company with other thinkers and technical people, instead of business executives.
RIM needs to position itself in the market with clearly defined lines, something which it is not doing under the Lazaridis/Balsillie umbrella. Ozzie’s experience with software architecture and his understanding of productivity and social programs will allow for more money to be put in areas that RIM needs to give attention to, such as cloud computing, bulletproof OS, functionality, and security.
The downside’s to Ozzie is that he is not a seller. He is all technical and all thinker, but then again, so was Bill Gates. Ozzie also hasn’t had much leadership experience, even when he worked at Microsoft. He never led any major projects and his last big accomplishment was Lotus Notes. Groove is still trying to find its niche as Microsoft SharePoint. However, Ozzie was also responsible for Microsoft’s FUSE Labs which is doing some amazing things when it comes to merging social and productivity. But what’s the current RIM leadership look like? Are Lazaridis and Balsillie technical guys or sellers?
Lazaridis is clearly the tech guru of the team and Balsillie is the sales/marketing/PR guy. Because of that there is usually some sort of conflict that arises out of singled out interviews when both CEOs aren’t present. Together they are left-brain and right-brain, but apart they’re a disorganized mess.
This was a great relationship in the early days of RIM when they took Motorola’s SkyTel pager system head-on. The exponential boom of the tech industry that followed required for a globalized company to have a global corporate structure. Unfortunately, RIM stayed with the closed structure that has changed little since 1984; the CEOs are performing the jobs that are should be performed by other executives. Take for example Jim Balsillie and his role as Chief Marketing Officer. He really doesn’t hold that title but he has assumed all the duties since Keith Pardy left the position in March. Which brings me to my next point…