When Ziyad Mir was looking for a work placement in 2009, there seemed no better place than Research In Motion Ltd.
Like his colleagues in the University of Waterloo’s famed systems design engineering program, which is known for spinning out world-class programmers, Mr. Mir admired the entrepreneurial success of a local startup that grew into Canada’s biggest technology company. RIM was right next door and had unbreakable ties to the university – having been started by Mike Lazaridis when he was still a young student there.
But times have changed, and although this region is still rich with talent, many of the brightest no longer aspire to work at the company that helped put Waterloo on the global map. “It was definitely a really great place to have your first internship,” says Mr. Mir, now a 20-year-old intern at LinkedIn Corp. in Mountain View, Calif. “But you don’t see a lot of the strong students ending up wanting to go to RIM full time, which is sad.”
The talent, in other words, is following the customers, millions of whom have shunned the company’s once-dominant BlackBerry in favour of smartphones made by Apple Inc., Samsung Electronics Co. Ltd., and a host of other wireless-industry rivals. To take one remarkable measure of the shift: Apple sold 37 million new iPhones in the final three months of 2012 – about half as many phones as are used by the 75 million BlackBerry subscribers in the world today.
That RIM is losing, and losing badly, is obvious. The question is what can be done to halt the slide. Technology companies, more than others, are vulnerable to death spirals: A poor set of products causes customers to flee, causing revenues to fall, causing layoffs or other cutbacks, causing the best people to leave – which then makes it more difficult to innovate and create compelling new products.
It is the job of Thorsten Heins, the 54-year-old German physicist who this week became RIM’s new chief executive officer, to arrest the decline. He has already said that RIM will not pursue the quick-fix solutions that have been proposed – breaking up the company, selling it, perhaps getting rid of the handset business to focus on software and services. “We are going to do this ourselves,” he told the company’s 17,000 employees this week. They will do it the hard way.
For Mr. Heins, repairing RIM will require him to change its image with a number of important groups. With consumers, RIM must somehow portray the BlackBerry as cool again, via a new marketing strategy that will be driven by a person he hasn’t yet hired. Mr. Heins needs to win over large wireless carriers like AT&T Corp., who are as infatuated as their customers with the iPhone and Android phones. He must woo outside developers, who are a big reason for Apple’s success, and persuade them the BlackBerry is not dead – and is still worth creating software applications for.
It’s a complicated task. And it all starts in Waterloo.
RIM’s business went off the rails because it couldn’t produce a smartphone on time that was better than its competitors’ products. But it couldn’t create a better smartphone because, in part, its work environment has become increasingly dysfunctional and bureaucratic, according to numerous sources close to the company.
Employees and former employees describe a process where they were frequently re-assigned in the middle of complicated, long-term projects because there was no executive in control who could make firm decisions about key elements of the production process. That led to wasted time, and immense frustration for employees, one person said.
Mr. Lazaridis, who resigned as co-CEO this week, was considered by some to be a perfectionist. He would, at times, delay the process by requesting more and more software features and functionality, sources say. Some believe the unusual two-headed structure of the company, in which Mr. Lazaridis and Jim Balsillie both held the CEO title, also slowed things down. “What has happened [now]is that there has been an agreement to have everything flowing through the desk of one person,” a former RIM executive said. “You remove the potential for duality.”