The phrase “severe reality distortion field” is probably not one you bump into every day. But if you were seeking a clinical description of the problems that continue to beset the once-vibrant health of BlackBerry-maker Research In Motion, SRDF might be just the ticket.
The phrase comes courtesy of Christine Comaford, a San Francisco-based “rapid-growth and turnaround expert,” who, as a BlackBerry owner, is also a disappointed observer of RIM's recent travails. “I am so depressed to see what's happening to the company.”
SRDF, according to Ms. Comaford, is a distinguishing symptom of Founderitis, a more serious malaise that, in her judgment, clearly victimized Jim Balsillie and Mike Lazaridis, the former chief executive officers of RIM.
Sometimes referred to as Founder's Syndrome, it typically strikes successful business owners and organizations that fail to adapt to changing competitive landscapes.
Founders must overcome incredible odds to realize their visions, often by adopting unorthodox strategies.
For example, when Michael Overs, founder of Toronto's Pizza Pizza, was starting out, he insisted that all franchises share a single telephone number, and that customers be guaranteed delivery in 30 minutes – or the pizza would be free. Although consultants warned him that both ideas were impractical, he held out and built an empire. Iconoclasm, when it works, can pay huge dividends.
But with Founder's Syndrome, the very character assets that yield initial success – stubbornness, charisma, risk-taking – eventually become liabilities. Hostage to old ways of looking at the world, founders fail to see the emergence of new realities and can be blind to recommendations – or, in the case of RIM, demands – for change.
“Things that are strengths early on tend to become pitfalls, your Achilles heel,” says Harvard Business School professor Noam Wasserman. Author of The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (due out in March), Prof. Wasserman analyzes two dozen case histories, including the stories of Twitter founder Evan Williams and Pandora founder Tim Westergren, and offers a road map for how to avoid the most common mistakes.
“If you define Founderitis as needing to completely control the vision, remaining too attached to the venture, the product, and to the early employees,” he says, “several of those people were [victims of]exactly that.”
The virulence of Founderitis is greatest among entrepreneurs, charities and other not-for-profit agencies, and appears to strike men more frequently than women – not only because women are underrepresented in CEO suites, but because, studies show, they tend to manage more consultatively.
Although the term Founderitis was coined in the late 20th century, it has a rich pedigree.
In 1924, for example, Henry Ford sold his 10-millionth Model T, oblivious to suggestions that its design was obsolete. Three years later, the car's assembly lines had to be shut down, as Ford scrambled to build a new vehicle to compete with upstart rival General Motors.
The late Walt Disney is another instructive case in point – “a brilliant creator and charismatic leader who left his signature on the company and the culture,” maintains Thomas Hellmann, a professor at the University of British Columbia's Sauder School of Business. “The quiz question is, ‘What happened to the stock price on the day he died?' The answer is, ‘It went up.' Most people would argue Disney overstayed.”
Mr. Balsillie and Mr. Lazaridis were guilty of the same sin, Ms. Comaford laments. RIM is a virtual textbook case of Founderitis, she says. Even as executive talent departed and the firm's market share steadily eroded, the co-CEOs continued to insist that nothing serious was amiss and that its strategic game plan was inviolable.
This week's long-delayed passing of the torch to former chief operating officer Thorsten Heins gives her no comfort. Among Mr. Heins's first declarations was that no drastic change was needed at RIM.
“On what planet?” an incredulous Ms. Comaford asks. “Drastic change is totally needed. Management is out of touch. It has low emotional equity with customers, with the market and with internal staff. There's no marketing evangelism and there's no innovation. Its turn-around plan is vague and ambiguous.”
Of course, RIM is only the latest casualty of a syndrome that has plagued the high-tech universe, where the frightening pace of change threatens to render even startling innovations commercially irrelevant. Hubris typically figures prominently.
Consider Jerry Yang, co-founder and former CEO of Yahoo Inc. Wedded to his convictions about the company's value, he spurned a 2008 takeover offer from Microsoft that valued Yahoo at a staggering $44.6-billion. Afterward, its shares plummeted and are now worth about half that amount. When, earlier this month, Mr. Yang resigned from the company, the stock immediately jumped 4 per cent.
Or consider the late Steve Jobs, visionary co-founder of Apple. He was forced out by the same CEO he recruited, John Scully, in 1985, after his imperious behaviour alienated huge swaths of the company's staff. Mr. Jobs seemed to have learned the lesson. His second coming at Apple, from 1997 on, produced a stock bonanza. And, as his health declined in 2011, he effected a smooth leadership transition, anointing COO Tim Cook as his successor.
For RIM and other victims of the syndrome, it doesn't have to be this way, Ms. Comaford insists. Founders can inoculate themselves. “The key is to establish a vibrant set of outsiders who ask tough questions. People on company boards tend to ‘go native' after 90 days. They want to be part of the tribe. They drink the Kool-Aid and keep asking for more. We need people who want water instead.”
Prof. Wasserman concurs. RIM became dominant by successfully navigating the treacherous shoals that threaten founders, he says.
Mr. Lazaridis recognized his own limitations and, in 1992, brought in Mr. Balsillie to fill in the gaps. Then, they adopted and sustained an unconventional and often unworkable co-CEO management structure.
“That, too, makes it an outlier, very unusual,” Prof. Wasserman says. “But you do need people internally who push back and consider not just about the best-case or expected scenarios, but worst-case situations, where you might have to adjust the vision radically. It's the founder's baby. But he may need to change his approach to parenting, or find an adoptive parent to take it to the next stage.”
For Mr. Balsillie and Mr. Lazaridis, founder push eventually came to founder shove. What remains to be seen is whether it came too late to save the company.
Michael Posner is a feature writer for the Globe and Mail.