RIM: How to Destroy a Company in Three Easy Steps

Rob Enderle

Boy, if you look back even five years, RIM was a vastly different company. Back then, RIM was at the top of its game, talking smack about Apple not having a chance in the smartphone market, and having successfully fought off Microsoft as the lead smartphone platform for business and government. What a difference five years makes. Now folks like me are being asked how to switch from BlackBerry devices to almost anything else, there is talk about breaking up or selling all or part of the company and it has gone from a company that rivaled Apple to one that appears to be chasing Palm into obsolescence.

Typically, you can break a company failure into three major mistakes and I think I can do that here making this all a learning experience. Currently, RIM is looking at splitting the company into parts, but in fixing anything you need to start with the problem and RIM’s problems generally aren’t tied to a split-up.

Let’s explore that.

Mistake One: Lose Track of Your Customer

We got an early warning that RIM had lost track of its customers when, while engaged in a losing intellectual property fight, it threatened to cut its users off if it lost the case. This wasn’t the last time either and RIM started to demonstrate a level of user abuse that was nearly unprecedented. This actually came after series of efforts where it sold through companies like Dell and HP, then bypassed those firms for future business and destroyed them as viable future partners.

You simply can’t abuse customers like this and not expect them to jump ship for a better alternative and when Apple and Google came along, jump ship they did.

Mistake Two: Fail to Protect Key Assets

One of RIM’s strongest assets for business was the perception that the firm was more secure. However, the process that RIM used to collect and distribute messages provided a single point of penetration for investigative agencies to probe for criminal or illicit political activities.

RIM was caught between a rock and a hard place and appeared to provide some level of access to these governments so that its phones wouldn’t be banned. While this was tactically strong, it was strategically catastrophic because it removed security from the assets pile and dropped it into liabilities because there is no real analog to the RIM servers that were compromised on any of the competing platforms. And if foreign governments could gain access, then the platform was not only not secure anymore, it was providing what appeared to be penetration advantages, making it easier to gain access to otherwise secure messages.

However, this wasn’t the biggest mistake. RIM’s lasting advantage was providing smartphones with real, rather than virtual, keyboards. This meant people could blind text by feeling the keys and didn’t have to look at the phone so closely. Texting accidents are up since the iPhone came to market and it could be argued this is partially due to the increased use of screen phones that lack keyboards and the higher level of distraction they provide. In meetings, keyboard phones are less obvious and texting speed is generally higher.

In short, there were a number of angles that RIM could have used to defend a keyboard as a better interface, including pulling an old film of Steve Jobs saying exactly that.

Instead, it built an iPhone clone and seemed to agree with Apple that keyboards on phones were dead. In short, instead of having Apple chase it, RIM immediately chased Apple.

Mistake Three: Forgetting What Business You Are In

RIM wasn’t in the smartphone business at the start. It made a two-way pager. It was in the business mobile communications business. The iPhone is an iPod with phone capabilities. Apple is in the entertainment business, particularly consumer electronics. At the outset, the two firms are and should have been focused on completely different efforts.

As consumers started buying devices and IT stopped the trend to buy phones, RIM should have shifted to services that could reside on, and enable, secure communications. The only hardware should have been focused on the business and government segments that need unique solutions that couldn’t be met by a consumer device.

RIM didn’t have the skill set to build entertainment products. Apple didn’t have the skill set to sell business solutions. RIM had no business going into entertainment, but they forgot what business they were in and the rest is unfortunate history.

Wrapping Up

There are a lot of ways to kill a company. The three best are to abuse your customers, fail to protect your assets and to suddenly forget what business you are in. Most companies struggle with making one of these mistakes and RIM has excelled in making all three. Splitting up the company only addresses the third problem (depending on the partner) and makes it more difficult to build solutions. It can work, but only if the firm can return its platforms to some level of popularity/viability.

In the end, they may only serve as the latest lesson on what not to do.

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