How to fix RIM

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…

Hire a Chief Marketing Officer

Research in Motion’s marketing situation is in shambles and for some bizarre reason it has yet to fill the shoes of that position after more than three months of it being vacant. Insiders report that Jim Balsillie has taken over those duties. Does Balsillie think that marketing is a small enough beast that he can handle while performing his co-CEO duties in tandem? RIM’s marketing strategy has been aimed towards saving the company money.

Instead of doing most of marketing and advertising in house, RIM offloads that to carriers, which is why most ads and commercials featuring BlackBerry also feature AT&T or whatever other carrier is running the promotion. Although this has worked well for RIM over the years because BlackBerry devices have sold themselves, the iPhone era has stolen the spotlight away from RIM’s devices. The BlackBerry has lost many of its selling points and come this summer its last bastion of utility, BlackBerry Messenger, will take a major blow from Apple’s iMessage service.

The thing about offloading your marketing to your distributors is that your product portrayal is at their mercy. If a distributor doesn’t really care for your product, it won’t be depicted in the best way possible. Many times a carrier’s marketing strategy is the wrong one, making ads about your product that are contrary to what the real message is that your product should be screaming. Take for example the following BlackBerry PlayBook commercial from Telus:

That commercial focuses on all the useful features of the PlayBook how sexy cockatoos are. This doesn’t mean that all carriers do terrible jobs at promoting BlackBerry products. Verizon did a commercial that not only emphasized the business environment, but also touted the features of the BlackBerry device.

Except it totally threw the BlackBerry under the bus and negated everything it just said in order to promote Verizon’s network. In a world where online computing is just as important as offline computing on mobile devices, especially in a business environment, this commercial pretty much tells you not to buy a BlackBerry because it is limited. There are plenty of BlackBerry commercials on YouTube, some made by carriers, other by BlackBerry. There are a handful of good commercials that actually show the devices they’re promoting in action, but the rest simply ignore the device in favor of a punch line (like the Verizon commercial), to cater to a market segment with the wrong message, or to limit an important feature by only appealing to a single and small market segment.

RIM is in damage-control mode and it needs to start by bringing marketing back in house. Forget Verizon, forget AT&T, and forget any other distribution channel that was in charge of advertising BlackBerry products. RIM has a brand image to save and the only way to do that is to make sure that it markets its products with the message they want, not the message the third party channels want. If RIM tanks and BlackBerry is laid to rest, Verizon and AT&T aren’t going to shed a tear; they have Android, Apple, and Windows Phone 7 to fall back on.

RIM needs to fill the CMO position and it needs to fill it fast. Balsillie should not be making marketing decisions, especially when his hubris is recently getting the best of him. I mentioned earlier that Ray Ozzie at the helm was a good idea because he was a technical guy and a thinker, but he lacked a lot in sales and marketing. Hiring a strong Chief Marketing Officer will be the perfect counterbalance to Ozzie. Ozzie already has shown some social savvy with FUSE so he won’t be pig-headed like Lazaridis and Balsillie are. Since I’m throwing out names to fill positions in a purely speculative manner, I believe that Maureen Sullivan of AOL would be a good fit (in a perfect world I’d choose either Beth Comstock of GE or Jon C. Iwata of IBM).

Sullivan is a bit of an enigma in the industry, primarily because she became an AOL executive before hitting the age of 30. A former agency sales rep at Google, the brilliant Stanford grad was snagged up by Tim Armstrong when she was only 27 and made her his chief-of-staff. She was the brains behind the company’s rebranding and at 28 she became AOL’s CMO. For those that think the rebranding of AOL to Aol was a failure, think again. However, recent events have made investors and consumers a bit worried about AOL in general. Most fingers are pointing to CEO Tim Armstrong and Arianna Huffington as the reasons AOL is being driven to the ground. Marketing alone can’t save AOL, but Sullivan’s marketing strategies have definitely helped the brand instead of hurt it.

Research in Motion would be a good place for Sullivan to jump ship to as her tech and marketing background will be quite useful at the mobile giant. Maureen was at Google New York, which focuses on large scale software engineering, distributed systems, infrastructure, and advertising. All these are exactly the kind of arsenal RIM needs, which is why Ozzie and Sullivan would be a good pair. Her work at AOL shows that she is confident with brand positioning and architecture on the business side as much as she is with the creative aspects such as brand identity and AOL Artists.

A young, enthusiastic, relevant, and intelligent individual like Maureen Sullivan is who RIM should fill its CMO vacancy with. Coupled with a person like Ray Ozzie at CEO the dynamic would be a sure way to allow RIM to come back swinging. However, together they will have to find a solution to RIM’s most glaring issue…

Decide whether to focus on enterprise or consumer

RIM never was a consumer oriented company; in fact, the BlackBerry became wildly popular among consumers by accident. BlackBerry Messenger was an easy way to message others in a guaranteed way without dishing out extra for a texting plan. Its main appeal to businesses was that it was secure and delivery was always guaranteed and on time. Like an Apple product, it just worked. BBM is also the reason RIM is doing so well in international markets, especially emerging ones, as mentioned at the beginning of this article. In countries like India where low wages and emerging infrastructure don’t allow the luxury of owning an iPhone or an Android device, BlackBerry lets its users ditch a texting plan and stick with a data plan for unlimited messages via BBM.

However, as emerging markets boom, they will inevitably catch up with the western world in terms of technology and disposable income. In China, wages have been increasing in tremendous amounts, with its largest manufacturing provinces getting minimum wage bumps of 14% to 21% this past year to combat the widening gap between rich and poor. So although RIM’s overseas revenues were up 67% the plateau is quickly approaching, followed by a decline similar to that which is happening in North America.

Enterprise solutions have been RIM’s bread and butter since it was created and the BlackBerry brand has been burned into our brains whenever we think of business people and what technology they carry with them. Apple is slowly creeping into the enterprise realm but RIM still trumps it when it comes to security, which is the primary feature businesses and governments are interested when choosing a mobile device. With iMessage being a push towards BlackBerry Messenger, all Apple has to do is add a layer of security that is on par with BBM in order for that push to become and shove and for more situations like this one to arise.

So Research in Motion is an enterprise solutions company which inadvertently acquired a completely unexpected market segment in the early 2000s. Its recent innovations to appeal to both areas have fallen flat on their face, with the BlackBerry Storm, the BlackBerry Torch, and the BlackBerry PlayBook offering little to members of either market segment. In fact, the PlayBook launched without a native email application, something that is considered a standard for every mobile device in the market today regardless of its cost. RIM would not even give a straight answer at CES 2011 as to whether or not the PlayBook was geared towards businesses or towards consumers. RIM’s inability to take a position showed that it had no idea what it was doing.

Increasing competition in the business sector from companies like SAP’s Afaria and Open Text are offering cross-platform enterprise solutions which allow businesses to use a wide variety of devices at once instead of just one. RIM is being attacked from all sides and Lazaridis and Balsillie are flooding us with promises that QNX will fix all of its problems. Unfortunately, betting on a new OS framework is not the solution. The BlackBerry brand needs a complete overhaul and it needs one fast. It’s extremely hard to penetrate both consumer and enterprise markets in the mobile industry, as both Android and Apple have discovered. What they have learned is that by building a solid foundation in one segment you can slowly build upon that foundation to entice another segment. This is why Apple is creeping into the enterprise realm while its primary focus is consumers.

Research in Motion was stagnant in its innovation and was even more stagnant in evolving its enterprise capabilities. The ideas that Afaria and Open Text are just now deploying should have been on RIM’s R&D table back in 2008. Yes, give RIM a pass for 2007 when it believed that the iPhone was a fad that would die out. By 2008 all indicators were pointing to the iPhone being the device of the future and RIM should’ve jumped on that and offered cross-platform compatibility and apps on the enterprise level. This would have built the bridge to the consumer market that RIM desperately needs.

It’s not too little too late though. RIM can still restructure successfully as long as it focuses on one segment for now, enterprise. Right now it has the advantage over Android and iOS in that market and with a new CEO and a CMO it can rejuvenate its business and help dig itself out of its hole. RIM is still trusted by businesses worldwide, it is the consumers that are making the most noise. Businesses are also disgruntled because RIM has failed to keep up with the changing trends in the marketplace but until solid competition or a sound alternative emerges, RIM still is the business world’s mobile poster boy. The changes listed must happen immediately and one final change must occur in parallel…

Get the hell out of Canada

What’s extremely mind-boggling is that RIM is a global company with a very local way of doing business. Four out of its six primary facilities are located in Ontario, Canada with the other two being an obligatory UK location and the other being just a suite instead of a building in Texas that deals harbors its Global Department of Licensing & Standards. All the innovation, research, manufacturing, corporate governance, and design happen within a 550km (about 372mi) radius from HQ. With the exception of the Mississauga location, it all happens within a 92km (about 58mi) radius from HQ.

It’s not surprising that Lazaridis and Balsillie are so disconnected with the world and refuse to acknowledge clear signs of trouble for their company. I’m sure that Ontario is a wonderful place full of brilliant individuals, but RIM needs to stir up its gene pool by adding fresh DNA from other parts of the world, otherwise it will continue to be this festering monster of inbred creativity and decision making. It needs to open major locations in other parts of the world to recruit fresh talent with insane ideas.

Open a place in New York for starters. It’s close enough to home and close to a center that is known to produce innovation and strategic business ideas in the tech sector. Silicon Valley almost seems like a given, but why not open a location in Hong Kong or India. Emerging markets like that are home to an innovation breeding ground as young entrepreneurs there are pushing themselves to extreme limits to secure their foothold in the boom that’s occurring.

RIM needs fresh faces and fresh ideas, faces and ideas that won’t be found by closing itself off in Mordor Ontario like it has done so for all of its life. Restricting Mike Lazaridis and Jim Balsillie to chairmen positions and bringing in an innovative CEO and a Chief Marketing Officer that knows how to rebrand and reposition a giant company while ensuring that it stays relevant and connected will allow for RIM to focus its innovation on a specific target market for the short term. By getting rid of some old crusty faces and bringing in fresh new talent in areas that consistently produce such talent RIM can easily turn the tide and bounce back in enterprise solutions while slowly creeping into consumer markets.

Whether RIM does these exact things or not doesn’t matter. Change is coming to RIM and the solutions listed would be the least bloody. The other alternative is a hostile takeover, and nobody at a company that is being taken over wins when a hostile takeover happens.