Can a single person save a formerly indispensable brand? Or will public perception and a rocky recent history overwhelm even the most competent executive?
Research in Motion's (RIM's) fall from state-of-the-art communications device maker to tertiary player in the mobile market was so sudden and so pronounced that it warrants a detailed explanation, and a turnaround specialist who works quickly. Instead, RIM promoted from within after its co-chief executive officers recently stepped down.
See The 5 Best Corporate Comebacks.
What happened, and how to fix it? Enter Thorsten Heins, a Siemens lifer and its former chief technology officer, who left to join Research in Motion five years ago. Despite his best intentions and his earnest appearance, the overwhelming consensus opinion is that the task ahead of Heins is impossible.
Will Heins Be What RIM Needs?
What's astounding is that the belief is almost universal: hardly anyone outside of Heins's immediate family thinks that Heins can make a difference. Then again, maybe that's not so astounding, given his unfortunate quote upon assuming control: "I don't think there is some drastic change needed." English is Heins's second language, but still. A company infamous for a recent network blackout and whose late-to-the-party tablet can't send nor receive email (without a BlackBerry attached, which would seem to defeat the purpose), needs to change drastically.
So what exciting, inspirational announcement did Heins assuage consumers and investors with upon taking office? He essentially told them to hold tight. BlackBerry's latest iteration of its operating system, BlackBerry 10, will be available in a few quarters. To hear Heins say it, a man with something of a vested interest in the outcome, it's going to be great. Unfortunately for RIM, the company doesn't have the luxury of telling its existing customers and potential new customers to wait. Not that a operating system update, especially a major one, can be rushed; however, it's not as if iPhone and Android (to say nothing of Nokia, Symbian and Windows Phone) are standing still and waiting for RIM to make a move.
RIM's financial statements back up the pessimism. They're not uniformly horrible, as revenue is up and shareholders' equity is moving in the right direction; however, net income is dwindling rapidly and if the trend over the last few quarters continues, a once mightily profitable company will soon start losing money. (For additional reading, check out 12 Things You Need To Know About Financial Statements.)
Rise and Fall
It's hard to imagine that there was a time when the company behind BlackBerry boasted the operating system of choice among professional users throughout much of the developed world. It's also hard to imagine how quickly the landscape changed. In four short years, the same forces that have spurred Apple's iPhone and Google's Android series of devices to positions 1 and 1A atop the mobile market, while rendering Hewlett-Packard/Palm's webOS dead on arrival, has left RIM in limbo. As of November 2011, the company's market share sits at around 6.5%, according to reports released from comScore. The stock has lost roughly 74% of its value in the past year. It's trading at an eight-year nadir.
RIM reached its peak in the early 21st century, thanks to a breakthrough concept easy to define and easy to appreciate: its signature product line allowed users to send and receive emails without being tethered to a workstation. Similar to most successful shift changes, the concept of mobile email then advanced rapidly throughout the industry. It went from unique technological marvel, singularly identified with RIM, to indispensable feature that every mobile phone user on every platform now takes for granted.
RIM positioned its devices as made for business, with push email, proprietary messaging and a full keyboard necessitating a small screen. That was in contrast to that flash-in-the-pan toy from Apple, a shiny glorified music player with a high-resolution screen, virtual keyboard and line of accessories.
Apple adapted, killing the perception of the iPhone as a non-business device before that perception had a chance to take root. The iPhone worked flawlessly with Microsoft Exchange ActiveSync, and exploited a huge structural deficiency of RIM's: what if I want to send messages to someone who has a device on a different platform? Google's open-source Android followed suit (so closely that Apple founder Steve Jobs's famous dying wish was to drive Android out of business.) As for RIM, with its dizzying number of models, most of which differed only superficially, even a de facto presidential endorsement couldn't save it. This lead to the company's fade from 43% market share into relative obscurity. Next stop, oblivion.
The Bottom Line
Heins can, and probably should, start slicing expenses mercilessly. (RIM's overwrought and ineffective advertising would be a good place to start.) However, he's stuck trying to sell obsolete products whose capabilities come up short against those of competitors' similarly priced devices. An unenviable position for any executive to be in, and perhaps one that there's no graceful escape from.