This past Monday, I woke up to the news that Jim Balsillie and Mike Lazaridis were stepping down as joint CEOs of embattled tech giant Research in Motion (RIM). Waterloo-based RIM’s descent has been well documented; and we know, too, that this decline has continued even as RIM continues to do well in the business market as well as elsewhere in the world.
Considering “elsewhere in the world,” most of my friends and colleagues know that I am a big fan of cricket. Right now India is wrapping up a test series (long form of the game) against the Australian team and have performed poorly. The Indian cricket captain, M.S. Dhoni, like his RIM counterparts, helped build India into a cricketing powerhouse, leading them to victories in the World Cup T20 Tournament and the coveted World Cup of Cricket Limited Overs tournament last year in India. Notwithstanding the greatness of these leaders in delivering many solid wins, in both cases their organizations have been in decline since attaining their creative peak.
So what is going on here?
Let’s consider five things:
The “what’s new” business is a high-pressure game. While the mobile market is effectively a utility, its devices, functions and capabilities are not. They are actually all about the latest and greatest, keeping users at the cutting edge and having a host of online capabilities at your fingertips, literally. RIM was caught off-guard first by the rise of the iPhone. Then came Google and Android, and an incredible array of low-cost devices with high capabilities and superior function, and in a heartbeat RIM found itself far behind in the touchscreen market. It is in this sense – that they were no longer innovating, instead remaining complacent with the steady growth of their core products in the business market – that RIM failed to respond to what the “what’s new” market demanded.
Losing touch with the hyper-engaged. Based on the tracking in our ongoing study, The Bridge, Zinc Research has for several years flagged the demise of RIM and the ascent of Google and Apple in Canada. Our key point here is that this trend was seen first specifically by the user segment we defined as the hyper-engaged. While these data are specific to Canada, the numbers are also applicable to the US – and in both cases the hyper-engaged segment is far and away the most critical market in terms of who drives the trends in the mobile market (and many other technologies). The take-away? If you stay committed to your products and your service platform, you will remain attuned to the hyper-engaged market. If you fall out of favour with them, it is your company’s imperative to move quickly to understand, and respond to, their changing preferences.
Brand. This is about the way you do business, the belief in your business, and the culture of your business. It is the alignment of all these elements that has the potential to create a powerful brand. For many years, through the vision and application of Lazaridis and Balsillie, RIM was at the top of their game. They focused on the key constituents of their product, primarily corporate security and e-mail, and delivered superbly for many years. However, once the game had changed to more touchscreen-oriented devices, their brand and the culture of the company were not able to align with the way they were doing business and with their belief in where the business was going. As a result of this misalignment and shift in culture, as well as RIM’s paucity of innovation, the premium attached to the RIM brand was severely eroded. Further, the cache of the RIM devices declined rapidly in comparison with the increased functionality of touchscreen devices and the integration of online marketplaces and apps.
Knowing when to leave. Returning briefly to cricket captain M.S. Dhoni, again there is little doubt that he is a hard-working genius. He delivered India’s greatest cricketing championships and took his team to the top of the world test rankings. However, over the last year, India’s test performances have been poor. It’s true that India’s team is aging, but the fact is that Dhoni’s captaincy has lacked creativity. After taken India to the top, it is likely that given the demands of the modern game, fatigue was setting in. Similarly, the fatigue factor for RIM’s CEOs has been well-documented, i.e., Balsillie’s distraction with the NHL and Lazaridis’s activities in other initiatives, such as the Perimeter Institute, all of which have affected the success of RIM. Much was invested in the leaders’ vision with respect to how RIM would evolve, and by the time the market was well in decline, the grave realization of their inability to turn the RIM ship around was evident.
This aspect of departing post-crest has many implications in terms of “going out on top,” but more importantly, going out only after you have invested the time and energy to ensure that creativity and product innovation will be sustained. (As noted before, mobile telephony is no longer a utility business (that’s the service providers); it’s a “what’s new” business). One can look at Steve Jobs and consider his initial departure from Apple: He had delivered a substantive win with the Macintosh but was forced out shortly thereafter. We can only imagine what would have happened if he had stayed on, but on the other hand, as Jobs himself often said, during this time away from Apple he renewed his passion for the product and the company. On his return, he was committed to making great products and building the Apple brand. Consequently, this time he had the foresight to consider the legacy of what Apple could become; indeed, even before his tragic death last year, that foresight had already become a cornerstone of Jobs’ own legacy.
The Canadian entrepreneurial climate. Canada has a good track record in innovation. However, it has a poor track record in taking the next step. Canadians are very adept at building solid companies that perform well but which then falter when they hit that critical point of staying attuned to the market. Part of the fault is the culture of complacency fostered in Canada. This is akin to seeing first-generation business leaders doing exceptionally well, followed by the next generation that squanders their hard-fought gains. But this problem runs much deeper. Today in Canada there seems to be a greater sense of self-interest, and an unwillingness to share, compared to other centres of innovation. RIM under Balsillie and Lazaridis hit that point about five years ago. Things appeared to be on a solid roll, but in fact the truth was that some of these bad behaviours were starting to set in. Entrepreneurial success is more about sharing and being connected to the world than about absolutely locking in and protecting your product and market. It is about striving for excellence and commitment to being a great business.
Returning to cricket, one can look at the Australians, whose team culture is one of constant re-invention. Apart from a period in the doldrums in the 80s, the Australian cricket team has always been effective in knowing the right time to change leadership and the composition of the team. There have been many unpopular choices that have made it onto the field, but the team has done remarkably well based on a willingness to give such players a chance, and to learn-by-doing in the theatre that international cricket affords. Over the last 20 years, the shift in captaincy from Allan Border from Mark Taylor to Steven Waugh to Ricky Ponting and now Michael Clarke has demonstrated a commitment to staying innovative and true to the “Baggy Green” brand, but also to staying in tune with the shifting tides of what the demands of the global game require. For entrepreneurs and other business leaders, there is much to learn from successes, and losses, like these.