Research in Motion Ltd. is one of Canada’s top technology companies, but lately it has fallen on hard times.
Its stock has declined severely and billions have been taken off the market value. The situation has sparked broad public interest. It’s difficult to have a lunch with anyone that doesn’t include a RIM discussion, and even my fitness trainer asked me about it at our last session.
The fall from grace provides important lessons for small businesses, especially those in the high-tech sector. RIM is a role model: started by two entrepreneurs who made Blackberry a household name. The financial community has positioned the company “in transition,” but its situation is more like a crisis.
Here are six lessons from the continuing saga:
1. Going public
Think hard about it. Aside from being expensive, it may take all the fun out of growing a company. The investment community has its own objectives and time frame, and you may not want to manage for quarterly results. Anyone looking at the financials of RIM would say it’s a successful corporation, but it’s the future that counts, and clearly the investment community’s time frame and expectations are different from the company’s.
2. Marketing counts
Build a brand that will appeal to your future customers. RIM has counted on the instructional and corporate brand support to move it into the future, but the latter is clearly not sufficient. “They are resting on their laurels,” said a large RIM investor as he sold some of his shares. The public face of RIM is technology and finance – marketing has been getting short shrift.
3. Don’t ignore or evade tough questions, especially from informed, interested parties
The company line – trust us, we see the way out – is not playing well. There is obviously not acceptance from management that it’s in a crisis situation. Only when you accept reality can you begin to deal with the key issues facing your organization.
4. RIM’s knee-jerk reaction to margin squeeze seems to be a variation on industry layoffs
Everyone likes cost savings, despite the fact it rarely works. At a time when you need all your employees to pull together, what RIM has managed to do is create a culture of fear and uncertainty. This is how you deepen the crisis, not work your way out of it.
5. Money (balance sheet)
Projects, new products and ventures sometimes don’t live up to the revenue and profit forecast. Launch dates are delayed and investment may need to be increased. A company with little or no debt has a higher probability of overcoming these problems. RIM’s balance sheet puts it in a good position. Small businesses should emulate its financial balance-sheet tactics.
6. Management: Can co-CEOs work?
There’s no doubt this situation can work and there are examples. However, it does take good communication and a clear definition of roles. When is it time for company founders to take on other roles and let someone else lead the company? There are no rigid rules for this, but these are good questions requiring serious thought at the board of directors level.
RIM’s co-CEOs are defenders, with closed minds to structural change. This is not leadership. The co-CEOs are also co-chairs of the board of directors, making change even more difficult. Openness to change must be a central tenet for RIM and any other organization.
Knud Jensen is a faculty member in the Ted Rogers School of Management at Ryerson University.