Is It Over at RIM?

Will the BlackBerry die? As hard as this is to believe, things are looking quite bleak at Research in Motion, and the end of the company as we know it is now a real possibility.

When I last wrote about RIM and the BlackBerry mess, only a few months ago, I gave the company more than the benefit of the doubt. Core, major problems have been evident for some time (declining sales are always a strong indicator that something is really wrong at any business), but it was easy to see that possibilities did in fact exist and that a turnaround was possible. After all, RIM and BlackBerry are (OK, were) two of the strongest brands in mobility and that the company's large installed base could serve as a temporal buffer while the firm worked on what's next.

Since then, though, it's been one problem after another. Another major service outage. The Playbook tablet isn't exactly setting the world on fire. Problems with simple things like the name of the next product line. Delays in said new product line. Market share still falling. And, perhaps most surprisingly, no changes in company leadership.

The last point is now the critical one. We've all been hearing over the past couple of years about how the pay of big-company CEOs is often far out of alignment with reality and especially in terms of delivering value and returns to investors. But even more importantly, when a company slips badly, it's usually time for new senior management. Someone stepping in to serve as an interruption to whatever thinking has gone awry is the single best way, IMHO, to fix what's wrong. Yes, this usually involves all manner of trauma - instability, layoffs, and more. But, just as strong medicine or even surgery is required in many cases to cure disease, such is usually the best course of action in the corporate world as well.

And yet, RIM has taken no action here, probably the result of a dysfunctional Board of Directors. Six of the 12 Board seats are held by senior managers, and the two Co-CEOs are also Co-Chairmen; this just plain wrong. I'm always, in addition, suspicious of any company that has co-CEOs. This version of the matrix management structure is just as bad as all the others - lines of authority must be simple and clear. Someone (meaning some single individual) needs to be in charge of each functional area with oversight through the management chain, all the way to the Board, who, in RIM's case, don't appear to be doing their job. Having two people share a single position makes zero sense to me, and, regardless, such is clearly not working here. Companies that optimize for the needs of managers and employees usually fail; the interests of customers and investors must come first.

And as is now clear, RIM has lost both momentum and confidence among those customers and investors. There is now a real possibility that RIM will fail altogether. The stock is selling at about book value. BlackBerry is no longer cool. With the era of personal liability/BYOD/consumer-driven (as opposed to enterprise-driven) sales now here, RIM's business model clearly needs some serious revamping. Remember, this is the company that practically invented, along with Palm, the smartphone. And Palm, another bad sign, is gone as well. Perhaps the biggest message here is an old but difficult one: if a given company doesn't eat its own children, someone else will. Sitting around fat and happy while the landscape is reset by others isn't a good path to success. We've seen this time and time again with each major technology and market transition across essentially every industry throughout history, and such really is an easy lesson to learn. In RIM's case, there really was no need for that education to be so dramatically experiential in nature. Any good CEO worth his or her pay, and any good Board of Directors, could have seen this coming.

• Restructuring
• Smartphones
• BlackBerry
• Research In Motion
• RIM
• serious corporate screwups