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Editorial cartoon by Brian Gable (Brian Gable/The Globe and Mail)
Editorial cartoon by Brian Gable (Brian Gable/The Globe and Mail)

What Liberals and RIM shareholders have in common Add to ...

Research in Motion is a tremendous success story for Canada: A small start-up in Waterloo rises to become the dominant smartphone provider in the world.

But the smart money is that RIM missed its opportunity to continue to grow over the past few years.

Technology companies are only as good as their pipeline of new ideas. For every Google, expanding constantly into new intellectual space, there is a Yahoo that seems doomed to wither.

All products go through a life cycle, which you can see here.

Basically, sales for a product will eventually peak and decline. Companies need to constantly introduce new products to maintain overall revenues. Technology companies will furiously purchase small firms to get their hands on promising technology that can be the next big product.

The argument is that RIM made a major strategic miscalculation when it failed to use its cash to purchase and develop multiple new product lines when Blackberries were selling like – well, Blackberries.

There is likely some truth in that, but RIM enjoys feature advantages in security that will allow it to be a highly successful niche smart-phone player in the future. The recent approval of the Blackberry 7 by the Pentagon means continued preferred access to a market that already owns 250,000 Blackberries.

There is some strategic similarity between RIM and the Liberal Party of Canada.

The Liberals also once seemed like the dominant force in its marketplace, and squandered their opportunities to expand into new products for new markets.

The truly dominant Liberals of the 1940s and 1950s were gradually shorn of their electability in multiple regions of the country. The West became increasingly disenchanted with the Liberals, first switching with Diefenbaker in the 1957 election. The National Energy Program and other policies further alienated Liberals and the West.

Quebec exited the “government coalition” game with the failure of Meech in 1990. Earlier, Quebec voters wisely waited to see how the rest of Canada was voting and then jumped into large majorities at the last minute to remain on the government side. (There were exceptions to this trend when one party had a francophone leader or the dominant policy was explicitly polarizing against francophones.)

But after 1990, Quebec voters were happy to park their MPs in the opposition benches, be it with the Bloc Québécois or – most recently – with the NDP. Furthermore, the Liberal advantages in Quebec – once a unique offering of a francophone leader and a bi-cultural history – are now replicated by other parties.

That left Ontario as the foundation for the Liberal governments of the 1990s and early 2000s. But winning almost all of the seats from the largest province was always a temporary situation resulting from the right dividing into Progressive Conservative and Reform/Canadian Alliance factions. With the resolution of that split in 2003, a significant reduction in Ontario MPs for the Liberals was a given.

The rational response would have been to attempt to find new appeals to new regions of the country with the seats to help form a majority government.

Some attempt was made with the strategy behind the 1995 budget to make in-roads in the West. The theory was that Wmployment Insurance reforms and service cuts would cost seats in Atlantic Canada, but these would be off-set by gains in the West attracted to good fiscal management.

The seat losses in Atlantic Canada came as expected, but the seat gains in the West didn’t materialize. The cultural resistance to the Liberal brand in much of the West was too strong to overcome with bankers reports. The result was a near loss of majority in 1997, and a switch in strategy to “demonize the right and polarize the election.” While this worked remarkably well in 2000 and saved the Liberals in 2004, it has failed since to deliver anything but ever lowering seat counts.

Like the service outages that damaged RIMs reputation, scandals accelerated this slide but were not the root cause. The reality is that the Liberals desperately need a new region where they can make an impact and offer a fresh perspective on government.

Like RIM shareholders, Liberals can still hope that there is a breakthrough product in the pipeline – a leader or polarizing policy or game-changing event that redefines the landscape.

Like RIM shareholders, Liberals should be demanding plans to innovate and grow the organization out of its current cul de sac.

Like RIM shareholders, Liberals can only wish those innovations were made when the organization was at the top, not when it was sliding toward status as a niche player.

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