Is RIM's management the cause of its failure?

“Jim and Mike brought the company to where it is … which is part of the biggest problem they’re facing,” said Charter Equity analyst Ed Snyder, who has covered RIM since its public listing in 1997, two years before the BlackBerry was launched.

“They’re stuck in the past. They know what worked and keep playing that card and it’s not working any more, and they don’t seem to have any ideas,” he said.

via BAY STREET-As RIM struggles, talk of a change at top surfaces | Reuters.

In the case of Apple, the departure of the founder is considered a grave threat to the continuing success of the company.

In the case of RIM and Microsoft, the continued tenure of the founders is considered a grave threat to the success of the company.

Clearly, the theory that founders of successful companies can assure continuing success is flawed. Coupled to that implied causality is that departure of founders is always a problem.

Both are reflections of the idea that companies are predominantly successful (or fail) because of the skill (or incompetence) of a small group of individuals.

What the idea fails to explain is why companies fail (or succeed) as a cohort. RIM’s troubles are similar to Microsoft and to Nokia’s. Did they conspire or collude to fail simultaneously? Historically, incumbents fail simultaneously, regardless of who’s in charge.

And what about the problem that a company goes from success to failure (and vice-versa) while the same management is in charge. The “smart manager” theory of company success is as pervasive as the “stupid manager” theory of company failure. The perplexing thing is that while both of these theories are applied within the lifetime of a company, the management does not change.

  • When something bad happens, even if it's a situational accident, it's human nature to blame the nearest human involved. It''s very difficult for us to blame situations, because people make much more satisfying targets for our anger and frustration.

    When our phone drop calls, we blame AT&T, not the tiny transmitter in our phone that pales in comparison to the cell tower's transmitter, or the third (biggest) factor, the invisible swirling electromagnetic field we're moving in along with the buildings and the trucks.

    Steve Ballmer has been a recent target of blame for Microsoft's performance, but VERY FEW PEOPLE know what they're talking about. Personally, I love to blame the "suits" in a company for sucking the life out of it (Apple has very few "suits" I would think). But still I/we have no clue.

    The actual answer is "D: Some combination of all of the above." And an insightful answer cannot be tweeted because it has to be discussed. Almost all tech writers (esp. the parrots) don't know what they're talking about. Only a long expose written up in something like Rolling Stone or The New Yorker can reveal the peculiar and complex dynamics inside a company that make it do what it does, not to mention how it interacts with the complex dynamics of the changing marketplace around it. Each company is so different from the next, and as you say, it's folly to think they all follow some sort of common pattern.

    Oversimplification of complexity is the fundamental problem and challenge here.

  • Gromit1704

    I think in the case of Microsoft there is a hope that Gates will come back and miraculously transform the company like Steve Jobs did on his return to Apple. That won't happen but it is why the anti Balmer cause has got some traction. RIM, Nokia et al were all once innovative but could not sustain it. They once had the killer products but became complacent. Apple have managed to keep innovative longer than most, and have thrown in some products that have disrupted the market. That wrong footed the incumbants and some of their panic products and utterances made their management look silly.

    • His Shadow

      Gates return to reinvigorate Microsoft is based on two assumptions, which I think are patently false. One is that Gates gives a crap about Microsoft, having moved on to arguably more important things like saving the world (I'm only being a little facetious there. Gates is doing good works). The other is that Gates is passionate about the quality and user experience of the users of his products. This is plainly wrong. Gates is not some design genius that made his company successful thru innovation and forward thinking and cutting away the cruft to get at the heart of a product. Gates great insight was one of salesmanship. He saw an opening, and using software he didn't own planted the seeds of an empire. Everything from that point was about securing and expanding that empire. There is nothing Gates would bring back to Microsoft that would significantly change it's fortunes. Microsoft under Gates grew thru acquisitions that for the most part amounted to nothing, or were made for the expressed intent of killing competing technologies.

      • Gromit1704

        I absolutely agree. Microsoft were never great innovators, but the difference under Ballmer is that they have been slow to get to market when someone else has shown them the path. All those Android phones should really be Microsoft phones.

      • TwangisKahn

        I have to say, one of the great side benefits of Steve Jobs returning to Apple is how much it has and will affect Bill Gates' legacy. There is growing momentum suggesting that Microsoft was never any good and held it's position of dominance through good fortune and monopolistic pursuits.

      • davel

        Gates or at least microsoft was an early and passionate devotee of lawyers. They patented ideas that were not their own in a world of hackers who did not defend their turf legally. Then they used volume pricing and marketing to grab market share. Excel would not be where it is today if Lotus had prevented them from stealing their macros.

        Years ago Gates turned the company around in the face of Netscape. He saw the writing on the wall and Microsoft embraced the web. Microsoft is in the uncomfortable position of trying to grow into the new markets while guarding its franchise.

        Apple has entered new markets while allowing its franchise to succeed or fail. But it also did not have much to defend.

    • asymco

      Due to the way Microsoft is owned, Gates has sufficient and necessary control over Ballmer.

      • FalKirk

        You beat me to the punch. With regards to Gates, if he had any great insights on how to change the direction of Microsoft, he surely would have imparted them to Ballmer already (and insisted that they be acted upon). Gates is not the answer.

      • Ted Cleaver

        You're right, Gates is not the answer. But he is the only smooth way to move out Ballmer. Gates steps back in until a real successor is found and given time to develop credibility. Then Gates can step down.

      • Marcos_El_Malo

        I'm not saying it couldn't happen that way. I'm sure it would be soothing to investors.

        But that just seems to be further delay in turning the company around. Logically, the intermediate step of Gates as interim CEO is unnecessary.

      • iosweekly

        Oracle to merge with Microsoft leaving Ellison in charge – I would love to see this.

  • CndnRschr

    The issue with RIM is not like Microsoft or Nokia. RIM is still making lots of money, has a clear direction (migration to QNX from the antiquated and inadequate BBOS) and a client base that still values them. They have, like Apple, an integrated model (although the emulators for PlayBook undermine this). Their problem is that their co-CEOs are out of step with the world. Lazarides takes it too seriously and cannot interact well with the media – he is defensive and doesn't seem to understand media relations (partly because the Canadian government keeps patting him on the back and telling him he's a soothsayer). Balsillie is distracted and tainted by the share trading penalty. Unlike Microsoft or Apple, we have no clue as to who might be an internal alternative/prodigy because these two have effectively run the company as a family business. At Apple, nerds are given stage time – ditto Microsoft (although the latter then seems to dispose of their talent prematurely). For all of Steve Jobs persona, he shares the stage and lets others speak on the record. RIM? Try getting past the CEOs and you are lost. This is a parochial company working in an international playground. The irony is that they are better placed than Microsoft to get through the current doubts – if they execute. Instead, we have premature releases, whining of technology limits, lack of coherency of developer models, etc, etc. RIM needs a fresh face and for its two largest shareholders to step back. As long as the new CEO isn't from Redmond, they will be better off and Balsillie/Lazarides will be richer.

    • asymco

      Both Nokia and Microsoft make lots of money and have a lot of customers that value them. They would even argue that they have clear direction.

      But that's not the point. By citing what's wrong with the management you are implicitly suggesting that they are to blame. The question in the headline is whether management is to blame or something else is to blame.

      • CndnRschr

        Agreed, but I think people are prematurely discounting RIM and the question is why? Is it the lack of technological savvy and product opportunity or is it a perception of failure to deliver/execute? I also think that the question of whether the CEOs are actually to blame or not is somewhat moot. The question is, has perception of management sunk to a point where it is holding back value of the company. If so, as Founders, Lazarides and Balsillie will still retain their interest in the company, but could appoint a new CEO. If that person simply satisfies the question that new management is needed, it will be a positive move. In other words, are Balsillie and Lazarides a drag on RIM stock? I'd argue yes because the response by management (ML & JB) to questions from the market, analysts, media, etc has hurt rather than helped RIM. Are they good managers within the company? Likely yes – this is what we don't know from the outside – but their phenomenal track record makes we armchair critics look pathetic (this is also likely true of Ballmer to a lesser degree, ML and JB built RIM from scratch). Are they maximizing shareholder value by presenting a clear and compelling vision – hell no. At least Elop has been consistent, communicative and not paved over the deep problems at Nokia.

        I wonder whether Google will develop the RIM disease over time? Schmidt had a level of objectiveness that Founders often lack, as do parents of kids.

      • Ian Ollmann

        If I may be so bold, I think Horace is saying (without saying) that these companies are failing not because they are doing a poor job or the management is doing a poor job, but because the bar has been raised by a disruptive market entry. Thus, comments like "incumbents fail simultaneously, regardless of who is in charge", etc. You simply have to play a better game to make the championships this season.

        What these organizations need to do to succeed now is either play much better game or find something that they can do that the disruptive entry is unwilling to do. So, you can build a better iOS — this is hard — or, you can do something Apple doesn't want to do. I think Microsoft will try to build a better OS. They need too much scale to be interested in a niche market. This will take them a while, but they can afford to wait, and Nokia seems poised to deliver volume when Microsoft is ready. RIM may try for a niche market with close corporate tie-ins, something that is culturally difficult for Apple. Google will just give the OS away for free and shoot for low margin devices, which is something Apple so far doesn't seem to want to do. HP is something of a wildcard. However, I doubt they will achieve much penetration without licensing PalmOS to others, which seems unlikely.

        HP aside, these are all reasonable strategies. Some will succeed better than others. I doubt any of them need a change of leadership to pull these respective strategies off. Though, one or more of these CEOs might stand to go for other reasons.

  • gprovida

    The simplistic explanations of stock market daily changes due to positive or negative news has been conclusively shown to be wrong (Irrational Exuberance) but like astrology remains a wonderful story for news "worthy" mythology. Similarly, the equally simplistic story that the people or founders are primarily responsible for success and failure vastly simplistic. Even Steve Jobs without his brilliant team a acquired at Pixar and Apple (recall NEXT) would not be nearly as successful. Job's ability to recognize, attract, and leverage these people is perhaps one of his greatest skills. While the leadership of a company like Nokia, MS, and RIM hold some responsibility, there is disturbingly little data driven analysis to identify real lessons. Another lesson from Freakonomics and Irrational Exuberance (and similar work) is we need to get beyond stories as data. We too easily succumb to false pattern recognition. Stories are important to illustrate and understand data, but we too easily fall into the trap of "common sense.".

    One of my delights in this site is the ruthless use of data and questioning the common knowledge. I look forward to further work from Horace and would recommend similar rigor at Gartner et al.

    • asymco

      There are three things you can blame: 1) resources (assets which include people, including managers) 2) processes (which are very difficult but not impossible to change) or 3) priorities (which so hard to change that they are practically impossible to change).

      Because processes and priorities are never well understood or even observed, the prevailing wisdom is to blame (or praise) resources, i.e. individuals, for a company's woes (or successes).

      • Marcos_El_Malo

        Harry Truman, the 33rd President of the U.S., popularized the phrase, "The Buck Stops Here". (This phrase comes from another idiomatic U.S. phrase, "passing the buck".

        If we're going to blame failed processes or misplaced priorities, it still comes back to management. If management fails to correct failures and assign new priorities, then THEY have failed. When management is successful, they are rightfully lauded. Jobs understood disruptions, and therefore disrupted his own product lines. He was once asked about cannibalizing sales of older successful products with new ones. Paraphrasing his reply, he said something to the effect of: Someone will cannibalize our sales so it might as well be us.

      • iosweekly

        Hi Horace – your brief 2 paragraphs seem to be describing some sort of well thought out process of analysing a companies components for causes of success/failure. Is there a book or text you can advise that outlays this is a bit more detail? or is this something you have produced by yourself? (in which case you should write a book).

      • asymco

        The whole of disruption theory (as a discipline of innovation theory) is about understanding company failure. One of the "axioms" of the theory is that the causes are usually rooted in asymmetric forces which compel smart people to do dumb things. There is a sense of "there by the grace of God, go I" when you see how historically all disruptions tend to turn geniuses into fools.

        On the other hand, enlightened management is all about being able to master disruption and sustaining forces at the same time.

        That is the rarest skill in a business leader.

      • Chris

        There's an interesting distinction you make between "smart people" and "enlightened management". The smart business people of yesterday that fell to disruptive forces would not be called smart today. Learnings can now be had from previous companies that have failed to identify and react to disruptive technologies, and therefore a higher bar has been set for standards in management.

        In order for today's management to be classified as smart, they need to be able to manage both disruptive and sustaining technologies. While resources, processes, and priorities may be the component elements to blame, the company leadership can affect all three, and is therefore ultimately responsible.

      • Kas

        I suggest "The Design of Business" by Roger Martin. I'm not too far into it yet but it discusses the issue of many successful companies not being able to change course, because they just grow and evolve into an organisation designed to exploit their existing innovations (because that's where the money is), and not at creating new ones (because that's where the risk is). This isn't much of a problem when your competitors have evolved into the same beast, but when a company like Apple grows up, things get fun.

        I read once that Steve didn't want more than 100 people on the team creating the Mac, keeping it small enough for one person to manage. 25+ years later we recently found out there are about 80 VPs at Apple.

  • CEOs' job description is to lead the company to success in constantly-changing times. Some individuals are better able to handle some environments (say, cost-cutting in an industry slowdown; efficiency maximization in steady-state markets), while less able to respond to others (say, rapid technological change; need to reinvigorate a tired corporate culture).

    And then, sometimes you get lucky and sometimes you don't. Circumstances conspire for or against you.

    But in the end, it is the CEO's job to succeed DESPITE all the obstacles, recognizing that sometimes they're pretty severe. If the guy at the top (yes, almost all guys) can't find it in his team, a team that he has built, then a better team leader is needed. Not just new, more able to deal with the current and upcoming realities.

    We really don't know whether a

  • Waveney

    Perhaps extended success or failure is a function of the development possibilities of a particular product. With Apple, it appears to be the rapid development of OSX which has morphed into music players, phones, media players, tablets and iTV set-top boxes rather than the products themselves. It seems that whatever you want to throw at OSX – it will fulfil the necessary functions and do it well. ie. only successful products which are built on a successful and well designed foundation, will have legs and this virtually ensures success for follow up products which leverage the same principles. One-off success sales generally fall off a cliff when their single idea formula is exposed as last years tech – there is nothing to build on.
    Car manufacturers are classic examples of the latter. Build a new model, then offer yearly improvements small stylistic changes until it becomes stale. Apple on the other hand, seems to relish killing off well selling products to keep the overall concept aka. the ipod line and doing regular total redesigns of imacs.
    I remember when Word 6 was the epitome of word processing, lean, reasonably intuitive and a boon to productivity. Since then, bloat, illogical UI changes and reduced functionality have all but destroyed that memory.

    • CndnRschr

      That was Word 5. Word 6 was an ungodly carbuncle that still elicits nightmares and was the first step in the demise of Word as an effective application (as opposed to MS money-maker).

  • ljp

    RIM has to be the oddest failure I've ever seen. They make more profit than any other manufacturer outside of Apple, are continuing to grow and are carrying out an OS transition started in the best financial year in the companies' history. That's a move very few CEOs would ever attempt. It took the complete collapse of sales for the current Android manufacturers to move away from WinMo and Symbian.

    RIM has been written off more times than I can remember and these articles are just another example of the confirmation bias of the analysts involved. They have been calling for the end of RIM for so long they only look for the news that supports that position.

    • CndnRschr

      Agreed. They share a common quote with Mark Twain about the premature news of their death. Analysts sometimes appear to want companies to fail. RIM has made mistakes and their leaders have screwed up by showing their public confusion to their under-performing stock price but instead of shutting up and letting the results speak for themselves, they keep blurting out unfathomable statements as though they are in competition for the dumbest quote award with Trump and Palin.

      RIM is hurting in the US but thriving elsewhere. Android and iOS are serious threats but RIM is more like Apple than Google and still has data security advantages. I should say I used to be a Crackberry addict but now use an iPhone. It's their OS that is a lead anchor but QNX should help rectify that deficiency (as long as they solve the inherent keyboard/Touch interface dichotomies and consistencies).

    • Gilligan

      RIM sells a product that nobody actually wants, not even the people who buy them. That's a disaster in slow motion.

      • CndnRschr

        There are plenty of RIM sales to consumers (largest growth). Lot's of people buy just for BBM (although I don't see the attraction). It is true that many companies force Blackberries on their employees, but this is the same of having the latest Windows PCs running XP forced on you.

      • ljp

        Do you realize how dumb this comment is? If they can sell tens of millions of devices to people that don't want them, then they're an even better company than portrayed.

      • Gilligan

        If you don't see the point of the comment then by all means, hang on to your RIMM shares. Maybe even increase your holding at these bargain prices. Surely such a great company will come back with a vengeance. While you're waiting, though, you might spend your time rehearsing the phrase "Would like fries with that?"

  • chandra

    I keep saying this.
    The core of the answer is a conscious rejection of complacency-thinking and ruthless passion for the new best thing. Passion is a driver for change. Ruthlessness allows you ditch anything that isn't the best thing any more.
    Apple is anti-complacent, passionate about great products. And it is ruthless about moving forwards.
    To me, these are the core attributes of corporate robustness.
    The rest is important but it is a veritable mountain of details about execution.
    I could kick off by starting a list but I am trying to follow Horace's template of saying less and expecting others to rise to the occasion.
    Ahem. Cough.

    Chandra Coomaraswamy.

    btw: the text box expander control for comments doesn't work.

  • Sam doji

    In selfish gene,Richard Dawkins put forward the concept of MEME, an idea that tends to reproduce itself and spread in communities as a culture, fashion,music and so forth. Successful MEME such as”don’t Mary your cousin” reproduce and spread rather than Memes such as”one for all and all for one a la communist”

    This is a direct application of classic evolutionnary model where success depends 3 things
    -process variation which stands for gene mutation in biology
    -selection or the survival of the fittest and

    • kizedek

      Evolutionary analogies always fall short in the real world. Evolution is blind and always fails to account for intelligence and design. The mechanism for change is reactive and amounts to blind chance.

      Even poor CEOs should do better than blind chance and late reactions to their environments two or three generations down the road. Two or three years in the tech business is an epoch.

      Since most people would define Corporate Success as more than merely surviving, some clear direction for the future is required. Some CEOs and companies are better at this than others.

      What's interesting about the DNA of Apple is that its innate intelligence has engendered an extremely clear picture of what it intends to be like; and it has for much of its life self-selected its own genes according to that intelligent design. Hang the environment — rather than merely being adept at adapting, Apple is about re-engineering its environment to better suit its own vision of itself and its place in an ideal environment.

      Meanwhile, some companies rely on their own inbred DNA that never had the range of adaptability and variation of good genes that Apple started with. Their only hope to survive or prosper is to recognize changing conditions and adapt to them as fast as they can… or, grab some code base off Apple and splice it into their own DNA and hope they don't end up like Frankenstein. Any fresh infusion is going to have to include a new mindset that transforms them into a new creature. That fresh mindset needs to be advanced by a couple of generations because incorporating it will take a couple of generations.

      What of strategy; does blind Evolution "employ" strategy? The doomed creature can't prepare ahead for the next meteorite to wipe it out, because it can't even conceive of meteorites in the first place. A self-aware creature is going to have to prepare against the unforeseen and the unknowable. A good CEO will take steps to meet changing environments BEFORE they change. An exceptional CEO will make favorable changes to the environment first. Each organism living in the same ecosystem must make similar changes in order to survive — but what if one of them itself dictated certain changes in the environment to which they must all adapt? Clearly, that organism would enjoy some advantages.

      In short, an "application" of this inadequate analogy to an analytical situation in which the object is to look ahead and make predictions based on the intelligence and self-awareness of the subjects is at best calling for answers to the same questions every article on this site always asks: what makes this company different? At worst, it presupposes what most analyses of Apple and this industry always seem to assume: this industry and the companies in it are governed by predictable natural laws (if we could only discover them!), and the successful winners are those that seem to get more than their fair share of random and lucky mutations (if we only knew why that was!).

      The only answer the blinkered Richard Dawkins can give is one in hindsight, and a tautological one at that: Apple was successful because, well, it's still here; and it happens to be more successful at being still here than those few who are also still here; and we know it is 'more successful' than the others, because, well, the other ones who are also still here are the ones who display the most Apple-like characteristics.

  • RIM is taking a play from the Google business model. Was Google a has-been, a one-trick pony with desktop search? It was going to be, but then it expanded its turf…and do you know what it did to stay relevant? It tweaked its adwords engine.

    ONE small change to boost profits. That is all it took. Do you know how? It took a lesson from google-japan and displayed the URL in its ads.

    RIM is tweaking various areas of its business. QNX is the path it must take to get to that next level. RIM will eventually stumble on the "answer" to its problem, but it is doing so correctly. IT is not ignoring security, BES as it moves forward…albeit slowly.

    Give QNX on playbook a try, and you'll see what I'm talking about in terms of fluidity of an OS.

    • Dick Applebaum

      While I agree that QNX is the path… I don't believe PlayBook is the vehicle to RIM's survival.

      It has been over 4 years since Apple announced the iPhone. RIM has, yet, to offer a reasonable contender — in a business where it was a leader.

      RIM, needs to deliver competitive QNX phones in CY 2011 — the PlayBook is only a distraction.

      If RIM can't see this, and execute accordingly, I see little hope for their survival.

    • Abhi Beckert

      If they are "taking a play from the Google business model", then it is not working (or not working yet).

      Google is one of the companies taking over RIM's customer base, so Google's strategy is clearly a good one. If RIM really was taking the same strategy then they would be in a healthier position than they are now.

      I think RIM is following some of google's strategy, but they're not following the parts that work.

      • @Abhi: absolutely right. Google deserves props for having recognized the new smartphone paradigm and taking a non player (Android, Inc.) and making it into a mass market phenom in three years. Credit also apparently due to clever marketing at Moto, if the Wired story is right.

        What's to argue about how Google came into an utterly foreign market, and blew off the doors? And how could RIM be any different?

        Anecdotes abound how RIM absolutely thought Jobs was lying about iPhone capability, how the battery would be dead in 45 minutes, how you could never sell such an expensive product. The fact that there was a basis for all these beliefs blinded them to how iPhone had changed their world.

        QNX seems to be a nice OS entry, and ought to be acknowledged as an engineering accomplishment. But having good root stock does not make your wine good. RIM has NOT built competitive apps for QNX and the toolkits for developers to build real 3rd-party apps is astonishingly absent.

  • Sam doji

    The concept of amplification states that successful genes spread rapidly to become a growing niche in the ecosystem

    If we apply this evolutionnary model to market economy, winning ideas and business strategies should at least have those properties.

    This framework cannot describe the overall dynamics of social and technological change and their impact on market winners and losers.

    In addition, in a multifaceted dynamic issue such as the global market economy we need time to understand why RIMM or any other company is a winner or looser in this environment.

  • Abhi Beckert

    If something outside the company's control turns a successful company into a struggling one (in rim and microsoft's case: competitors releasing products that change consumer expectation), then it is the CEO's fault not because he caused it to happen, but because he is the only person in a position to do anything about it.

    As a programmer, if I think the products i'm working need to change to match new consumer expectations, there is nothing I can do about it. Only my boss can give me permission to abandon what has been working, and move onto something completely different.

  • pk de cville


    What about the difference between a janitor and a VP (link below)? Isn't powerful leadership about being responsible for all of it, no matter what happens.

    • asymco

      Responsible yes. Cause of failure? Maybe. Often not. If a company is failing management should be punished because there are no excuses or reasons that are acceptable. However, replacing management will probably not be a remedy for what ails the company.

  • westechm

    Management can only be judged on how it does in a specific environment. Rim had been a successful company until Apple disrupted the environment. The management at RIM had built a company by itself disrupting the mobile phone business, but then settled down into a pattern of harvesting what they had planted. They switched from managing change to managing momentum, and were taken by surprise by the iPhone success. They may not be capable of changing back. The fire in the belly tends to burn weaker as one grows older.

    Bill Gates major interest in life at this time are his charitable works. His interest in Microsoft is as a source of cash to pay for these works. Microsoft is a cash cow and Steve Balmer’s prime challenge should be to protect the cash flow. He has wasted a lot of money that Gates could use in chasing other products. If the stock slips a bit more it might catch Gates’ attention. Bill Gates really has no interest in developing a bigger and better Microsoft. (Caution: this is my personal opinion.)

    People who rise to the top of companies rarely get there because they are the best and the brightest. It is usually a set of circumstances which conspire a person to rise to the top in spite of themselves. Perhaps they have one good idea on which they capitalize and ride it for years. Perhaps they are extraordinary politicians and can sway support for them with no personal delivery of success. The one thing that has impressed me in my life is how average most company leaders are in fact, and how large their egos can be when judging what they have in fact delivered.

    Without a doubt I believe the best and most impressive leader today is Steve Jobs. He certainly has proven himself at managing change, while still managing product lines (the Mac and now the iPod) where growth has slackened.

  • So far, there have been two clear OS winners in the universe of Smart Phones: iOS and Android. The failure to date of all three companies discussed above has been not to create a competitive OS system to those two, which goes beyond creating just software/hardware. iOS is clearly part of an ecosystem (iTunes, the App Store, etc.) that creates value beyond the device itself. To some extent, Google is trying to replicate that, though the biggest part of its success to date may have been riding on lower price points and the supply constraints of Apple, including single-vendor distribution in some markets. Failures of the 3 incumbents come from not quickly enough recognizing the threat presented by iOS and the follow-on Android, and not quickly enough generating a technical answer AND a market alternative to it. In the case of RIM and Nokia, such a failure may lead to corporate failure; for Microsoft, it is the loss of a growth opportunity. Certainly management must take great responsibility for these failures. Much as a country experiencing an unexpected military threat, these companies need to respond to the iOS threat as if there experience depended upon it. Leadership is necessary, but perhaps not sufficient if the companies don't have sufficient resources to meet the threat.

  • Many comments reject the idea that RIM is failing / has failed, but nobody can challenge the observation that they are in crisis.

    RIM was tremendously successful in exploiting the pre-iPhone environment, where phone data was expensive and unreliable; they built devices that overcame those obstacles, and prospered.

    But the Big 3 automakers thrived in the 50's and 60's, when inflation-adjusted gas prices were falling, only to take a pair of sharp blows in 73-74 and 79-81. Those price explosions brought effective competition into the US — who wants a gas guzzler when the cost of gas has doubled? — and by 2008 the 1999 runup had finally knocked two of the three into the gutter. (Ford, not as able a competitor in the earlier years, managed to be fast on its feet enough to stay standing.)

    And now RIM is faced with perhaps a more dramatic change: Its previous expertise, minimized data communication, has become irrelevant as networks' capacity has ballooned, and their tilt towards low-power, mostly-text tiny screens has been made irrelevant by Moore's Law, rapid tech changes in screens, batteries and memory prices.

    And, of course, the iPhone, which opened the door to a full-featured OS, versus the intricate, hand-coded OS's that receded it.

    RIM, IMHO, HAS recognized that the world has changed, and has put its energy into developing a brand new platform for its business (QNX), while it tries to shift gears from inexpensive, low-power devices, to compete on even terms with iOS, Android and WP7. But they were WAAY late in turning the company priorities— when you're later to market than Microsoft, you have a problem, because nobody (else) has the financial resources to buy their way into a market where two or three successes have taken root, and are covering all their bases smartly.

    So, RIM MAY hang on based on its sterling reputation with businesses, and if it can build a consumer community. But the signs for both are not good. The Playbook shows only potential; it is not a competitor: mostly, it shows that RIM is WAY behind on both platform software AND developer relations (4 announced development tools; the most important 2 N/A). And the BBM success could evaporate as quickly as Danger did; it is too easily replicated.

    So, @CndnRschr and others, RIM is like a building that is still standing after an earthquake, only some damage shows from the outside. But you can see the structure is busted.

  • poke

    I think RIM, as a company, just finds itself in a place where it can't compete. The kind of user experience it was dealing with on the Blackberry isn't in the same league as an iPhone-class device. I'm sure this issue permeates it from top to bottom. It also has yet to meet with catastrophic failure so the issue remains in the future and easy to dismiss. I'm sure RIM's CEOs spend their days bemoaning the media for making it seem as if they're having problems when actually they're doing quite well (much like Nokia used to). They probably don't get what all the negativity is about. I suspect even if the company did want to turn itself around it'd be hard to find the talent to do it.

  • PGiese

    All very interesting comments and a solid point of discussion Horace. One of the elements that has not been getting much airplay (mostly due to a failure to understand it) is corporate culture. Inevitably, if you follow a company from its inception to its final gasping breathes you can see the stages through which a company progresses In the same way most every organic structure does.

    There is the adolescent phase, where it struggles against more powerful or well-established contenders to introduce a product that is enough differentiated to attract marketshare and give the company the wherewithal to continue, many,many businesses fail in this stage. But this stage attracts those who are high risk takers, who evince a dynamism and a strong devil-take-all approach (working insane hours, etc.) produces a sense of destiny in the organization.

    The young adult stage, where a successful market entry has allowed some growth (or demand has driven it), and the company learns (hopefully) from its mistakes, and survives them. This is when you see the addition of an HR department (for example), changes to more upscale office space, and the dynamism is tempered by experience. The hours are more stable as more people can be hired, and a second product meets with success.

    Moving from there into mid-life, the company hardens its processes, formalizes its staffing, and adds additional management to its overhead. This is where a lot of companies falter too. Often because they push to legitimize themselves in the eyes of the business world, perhaps also because if they have not done so previously, they are entertaining an IPO. It is in this stage that you start seeing "middle-management spread" territorialization, and inter-departmental competitive behaviors.

    Surviving this, and assuming it is not merged with or acquires another company (which by the way helps mask some of the inherent issues of this and the previous stage), the company moves into the mature stage. Heavier more numerous management structure, increasing rigidity in processes, policies and roles. Products become more and more derivative, or formulaically diversified, a weather eye must be kept on the stockholders now as well. Internal communication becomes so formalized that a wide conglomeration of informal communication networks replace the formal ones for communicating real information.

    Microsoft, RIM and Nokia are show signs of the mature stage. Rigidity in response to market changes and challenges, incessant infighting, CYA, predatory staff seizures, and numerous reorgs. Look also for the key IP holders – the ones who had the vision, and the adaptability to drive the dynamism. If they depart, this stage becomes toxic to the organization.

    Steve Jobs has driven a lean, flat organization. Deliberately hiring hungry and dynamic visionaries (and acquiring young dynamic companies). Suggestions that Apple buy mature companies (like Sony for example) are not understanding how Apple operates. Apple is rather like Peter Pan – deliberately so. They have chosen the dynamism and energy of an adolescent/young adult stage, to keep driving innovation. This is where the challenges are – the CEOs of these other companies have allowed the companies to mature and become hardened in their viewpoint, product, and approach to market. It's culture baby – its groovy, man!

  • John

    The short answer has to be yes, RIM's management is at fault. Who else could it be? Short of an asteroid strike then management has to take the blame as they are the only ones with access to the levers of power. In small companies this happens all the time. In large companies it seems rarer. The CEO of a large company is often a financial type with little understanding of the products they sell. They may hire marketers or factory managers and task them with keeping the products current and fire them if they fail. In some companies like Oracle and Apple the CEO actually knows the business. A few years back it was breathtaking to watch as Steve Jobs made everyone switch from the PowerPC to Intel CPUs. We watched one man stand on stage and tell 20+M users that we were making a big, big change. I doubt an MBA type could have the gravitas to pull that off.

    • Kas

      I agree with everything you said except your conclusion.
      It's no coincidence that the companies in trouble are both competitors to Apple. In a world without Apple, these guys would still be on top.
      Apple 2.0 IS their asteroid.
      No one else would have survived any better.

  • Chris

    There are a lot of very smart visitors to your site, Horace, posting insightful comments about company culture, leadership, and who should be at fault at RIM, Nokia, and Microsoft. I also fully agree that management is at fault – there is clearly a leadership crisis at this point in time, and Steve Jobs is one of the few outstanding leaders out there.

    Let's examine this from a different perspective: from that of the employees of the 3 failing companies mentioned, and then tie it to the impact of poor management.

    RIM, Nokia, and Microsoft all employee very smart people – engineers, programmers, marketers, etc. They are all good at what they do, but they need to be told what the action plan is by senior management which is ultimately responsible for the company decisions. What's immensely frustrating for all these smart people working at these 3 companies is that many of them took notice of the iPhone launch in 2007, and then bit by bit, over the last four years, saw company management make decisions that were the wrong decisions and lead to where these companies are today. Those who took note of the iPhone at the time knew how game-changing it was, and yet the leadership at RIM, Nokia, and Microsoft were too stuck in their ways to take notice and react seriously. I'm sure you could find dozens of employees at each of the 3 companies that would say things like: "if only we had implemented my idea…", or "if only that product VP had listened to me…", or "we could have easily had the best app store if we had done x, y, z…". Yet those same employees are now looking at their respective leadership teams thinking "these guys really dropped the ball this time…".

    The net of my argument is that many of the ideas that could have kept RIM, Nokia, and Microsoft in a much more competitive position with respect to Apple existed INSIDE the companies, yet the leadership teams did not have the presence of mind to bring those ideas to the surface and execute on them. Did Steve Jobs personally invent the iPhone? Did Steve Jobs personally have the idea for the iPad? The App Store? Probably not… but Steve and his leadership team worked with the engineers inside Apple to being them to market. The leadership teams at the other 3 companies did nothing of the sort, and they are to blame.

  • Todd


    Yes, a fabulous CEO can not guarantee success nor does a terrible one guarantee failure. This is the only absolute we can state.

    It is like the captain of a sailing vessel. Reaction to changes in the wind and weather are what make a great captain/CEO. There are always forces outside of the captain's control which dictate success or failure.

    It is their ability to correctly identify and capitalize on opportunities, or safeguard against rogue elements which separates the good from the poor. No matter how good you are at sailing, you still need the wind to blow and no matter how mediocre you are, a steady wind in the right direction gets you to your destination quickly and safely.

    Your article almost seems to totally discount the role of management in the success or failure of companies, which I'm sure is not what you meant. If we could rewind 20 years and swap Steve Jobs and Steve Ballmer as CEO's would you still invest in Apple?

    Keep up the astounding work you do. I have found no other site which generates as thoughtful and smart discussion board debate as this one and that is a direct correlation to the quality of you and this website. I almost hesitate to post here so as not to muck it up!

    Cheers – Todd

  • Bruce in NZ

    Horace, have you read Good to Great by Jim Collins? I think some of the answers to the questions you are asking are in that book.

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  • Incredible conversation thus far. I came back to add the following to what some have hinted at so far….

    It has to do with "world views" and "filter bubbles" of corporations.

    As for WORLD VIEWS, we have the journalistic characterizations of companies. For example, Apple doesn't ask customers what they want, they fully deliver upon first release things customers didn't yet know they wanted. Microsoft observes, and if it decides it wants to play, it divides and conquers (embrace, extend, extinguish?). Asian companies seem to be units driven. And as for RIM, what is it's world view? Many commenters have tried to characterize something that is hard to pin down in a sentence. And how does the local culture influence these world views (e.g. Silicon Valley, Europe, Asia, and, uh, Canada. 🙂

    As for FILTER BUBBLES, one wonders what it's ike to work inside these various companies. Is what's happening around them filtered somehow? How much do they "see what they want to see"? How much is there a strict internal narrative or ideology (like American Republicans and Christian religions) which must be accepted lock-stock-and-barrel or you'll be seen as a heretic or not a team player?

    How much are these world views affected by actual personalities at the top? We think Steve Jobs' personality and world view infuses Apple, as does Larry Ellison's at Oracle. Ballmer's influence is not clear. Nokia just got a personality replacement. RIM is what, multiple-personality?

    And the books "Good To Great" and "Halo Effect" referred to in the previous posts point to internal corporate culture that can develop a personality and influence of its own. I know that at one large corporation absolutely no one is allowed to refer to anything as "problems" and must use the word "challenges" instead.

  • Childermass

    I feel like the White Rabbit – late!

    This is a complex issue and simplifying may not work, but here goes anyway.

    Most management is mediocre. That has to be true because there are so few truly outstanding individuals and certainly not enough to go round even the top 100 US companies. And yet businesses continue and even thrive. These are the 'sound model' businesses, established with clear purpose, agreed and long lived methodologies with products that are good enough to keep the business in its market. These are the businesses Warren Buffet wants to invest in – the ones that 'could be run by fools, because one day they will be'. They tend to go on from one generation of management to the next, but only seem permanent because they have life spans similar to our own. (How many top 100 companies from 1900 still exist?)

    Then there are the 'entrepreneurial' businesses that rise (and rise and rise, sometimes) on the back of the founder's genius, or willpower, or stubbornness, or luck or all those. They tend to vanish when the man goes.

    It is the 'entrepreneurial' businesses that can be disruptive and we are in a rich vein of them at the moment. You could argue Microsoft was until Gates moved on. Now the challenge is do they have the 'clear purpose, agreed and long lived methodologies with products that are good enough to keep the business in its market'? I would argue they fail on all three counts but mostly because of number one. No clear purpose. They no longer know what it is they do.

    Using 'smart manager', 'stupid manager' as the only paradigm doesn't help because most businesses carry on through phases of both, as HD says, unless they are 'entrepreneurial and disruptive, then it matters hugely who runs it. Whether they survive the passing of the man depends upon their ability to anticipate, learn and grow. But most of all on the clarity of their purpose.

    Microsoft – unclear, fail. Google – unclear (at the moment), unless they get clarity quick they will fail, Nokia – unclear, fail. RIM – unclear (lost it somewhere), fail. Apple, crystal clear with real efforts to transfer attitudes and message (Apple University), maybe they will make it.

  • joe

    hey, guys, chill out. Smartphone only 27% of total phone market, there's time to adjust, which RIMM is doing with the UI and navigation skills exhibited with Playbook; and these consumer-oriented features will be ported to phones over next few months. Jobs taught RIMM about value of fluidity and UI, now Jobs wishes I Pad had same fluodity and true multitasking as Playbook – apps will folow. And my bet is OS 7 will equate to experience on I phone. let's see, but it's waaay too early to declare RIMM a Nokia – RIMM knows hardware and software; NOK only knew hardware.

    • @joe, all sounds good. Except…

      RIM has good hardware & a solid OS. What it DOESN'T have is any way for app developers to write real apps. (Don't give me any BS about Flash/AIR or HTML; corporate IT types might use the latter for simple apps but the first is 99% used for games and maybe a kiosk or two.) Go ahead & visit the Playbook developers' page; there's not even a “COMING SOON!” about a native toolkit or the Android conversion for all the tonnage of apps that the co-CEO so totally disdains.

      Alright, he is sweating profusely; he KNOWS that he needs apps but… their developer support is zippo, so he puffs up his chest & talks what he DOES have.

      You say that RIMM knows hardware and software; the evidence that they know software for the app era is strikingly absent. And per tomorrow's Monday Note by Gassée regards Nokia, the fact that OS5/6/6.x is a dead end is a desperately bad situation for all those very effective and efficient BlackBerrys that are supposed to pay the rent until they can shoehorn QNX into their vastly under-powered phones, is a terrible sign.

      It may be too early to declare RIMM a Nokia, but there is a good chance they will suffer the same fate, and little evidence that they have a functioning plan to avoid it.

  • Bazz

    Polaroid went from making sunglasses to instant film to instant color film and the died when film died.
    How many inventions does it need for a company to survive 60 years? In cars none as long as the people buy your new models each year!
    So what do we learn of the management of the two companies used as examples.
    One's inventive and unlucky and the other dumb and lucky!

  • Maxmz02

    definitely the management, it lead to strange culture , then low morale, low efficient, finally self killing, like I said 3 years ago, RIM is old before really grow up.

    Strange culture in RIM, and this culture generate self-destroy political environment.

    In RIM if a new hired person figure out major problem and introduce efficient approach, both manager and his buddy group member will proof their wrong approach works. just like someone point out driving a car is right way, pushing a car is wrong way, then both manager and his buddy group member will hate you, and proof that 3 person can also move the car by pushing it. cheating email will be sent to some vice president, saying like: see, the car moving, pushing a car is a natural part of the process.

    It is very strange company culture and strange company political environment, it promote stealing and cheating skill. RIM’s management may be a typical instance in MBA course.

    This culture deny or steal hardworking team members’ contribution/innovation, generate strange political environment, destroy RIM.

    July 7th 2008 when I start to work in RIM ID group, I found RIM’s CAD skill in ID group is still in low efficient level of 10 years ago, like ID changes can’t be regenerated in mechanical part, so I point out the problem and introduce efficient topdown process, to make sure top level adjustment will always be regenerated in down level.

    But the RIM’s CAD experts wrote email to 3 VPs and successfully make them believe that—–whenever top level adjust, continuously and manually audit final parts is a natural part, means low efficient is a natural part in every RIM’s device design program.

    They abuse their power layoff the only driver, and use 3 person pushing the car, they will keep “continuously and manually audit final parts”.

    “continuously and manually audit final parts” is the mark of not qualified for the position, but in RIM, strange thing happened, they like not qualified person around them, and they are affraid of qualified person in their group, so that no one will point out their wrong approach, so we all know why RIM low efficient, why RIM is in a strange political environment.

    • SAM

      I fully agree with above comment. RIM is a big bereaucratic socialist company. Live and let live is the policy. Its quite strange to see staff with lower qualifications head the department while junior staff is highly qualified. A manager can be a diploma holder while the working staff have masters degree. Of course there will be clash on opinions.

    • SAM

      I fully agree with above comment. RIM is a big bereaucratic socialist company. Live and let live is the policy. Its quite strange to see staff with lower qualifications head the department while junior staff is highly qualified. A manager can be a diploma holder while the working staff have masters degree. Of course there will be clash on opinions.

  • ahmed sawy

    In RIM if a new hired person figure out major problem and introduce efficient approach, both manager and his buddy group member will proof their wrong approach works. just like someone point out driving a car is right way, pushing a car is wrong way, then both manager and his buddy group member will hate you, and proof that 3 person can also move the car by pushing it. cheating email will be sent to some vice president, saying like: see, the car moving, pushing a car is a natural part of the process….