CIO Leadership, IT Performance

What CIOs (and other executives) can learn from Research In Motion’s dramatic decline

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"It's easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date."

—   Roger von Oech

Remember the first Blackberry you ever saw?  I do.  It was in a conference room in Washington DC at an industry task force meeting I attended in late 2003.  The device as we know it today had literally just been introduced a few months earlier.  A colleague from another company had acquired one of the early ones.  What I most remember is it sitting on the table buzzing around like a wounded insect every time an e-mail arrived.  Within a couple of years Blackberries had become status symbols the way pagers (beepers as they were called then) were in the late 1960s.  Having one was a symbol of status and importance. In the 2008 presidential campaign then candidate Obama sported one on his hip and was regularly photographed checking messages in between campaign speeches.  Upon his election he was supplied with a special highly encrypted model by the government.  Our first connected president.  On August 18, 2009, Fortune Magazine named Research In Motion as the fastest growing company in the world with a growth of 84% in profits over three years despite the recession.

How quickly times have changed.  Innovations such as the iPhone and various Android devices quickly toppled RIM from their seemingly invincible position. Tuesday of this week RIM announced that it had hired investment bankers to pursue "strategic options.” According to a May 30 story on MSN Money, RIM’s shares have plummeted almost 80% over the past five years as the BlackBerry was eclipsed by the Apple iPhone and other products. Sales have failed to meet Wall Street expectations as its market share plunged. The company lost $125 million in the latest quarter. According to Reuters, RIM's market capitalization is now $5.5 billion, down from $84 billion at the company's peak in 2008.

In my last post I quoted Craig Winn who once said “You are never closer to your greatest failure than when you are at the moment of your greatest success.”  RIM is a visible and painful example of how true this can be.

What can CIOs, or any executive for that matter, learn from this episode? Let me suggest a few lessons.

It’s a long way down from the top. Being the biggest, the best, winning a prestigious award, whatever the “top” means, a fall from there means a long and painful decent.  RIM’s decline didn’t happen overnight.  The problem, as pointed out in the MSN story quoted earlier, is that “The BlackBerry maker is living in a dream world that will come crashing down on the Canadian company sooner rather than later.”  The lesson? When the fall starts, do something! Failing to recognize the problem and deal with it early leads to a long, sometimes rapidly accelerating, decline that will only get worse until no fix is possible.

Be a little paranoid, someone, or something, is waiting to eat you for lunch. Andrew Grove famously titled one of his books “Only the Paranoid Survive.”  A little paranoia can be healthy. When I work with entrepreneurs one of the questions I always ask is “Who is your competition?” All too frequently the answer I get is “We really don’t have any competitors.”  WRONG.  Every business has competitors.  If you are a CIO running an IT organization your competitors are anyone or any thing that can do what you do better, faster, cheaper or with greater quality than your organization can.  Effective CIOs compete effectively by being the first to recognize competitors and proactively find ways to compete better or pivot and embrace the new innovation. CIOs who ignored trends in outsourcing got outsourced.  Those who ignore the potential benefits of mobility devices, cloud computing or whatever the next innovation is risk having someone else make decisions about their future.  As Jack Welch once said, “Control your destiny or someone else will.”

Everything happens fast these days. The pace of life in general and business in particular is accelerating at a remarkable pace. Nowhere is this more evident than in the uptake of new technologies. Have a look at the attached graph from a piece titled “Adoption of New Technologies Since 1900.”  Note the speed with which newer innovations reach a large percentage of households compared with just a few years ago.  CIOs can’t spend too much time taking a “wait and see” attitude.  Stay out front.  Do your homework.

Finally, Disruptive innovations are rarely totally new.  In fact, most are variations on existing technologies.  Apple didn’t invent the smart phone but they perfected it into a disruptive innovation. RIM owned this market in 2008.  No more.  Don’t automatically dismiss a new technological innovation just because it may seem initially primitive or out of the mainstream, or worse, it isn’t one of your “standards.” Keep an open mind and think critically about how it might affect your company’s business or how your organization might be able to exploit its capabilities.   It is the things you ignore that usually come back to bite you!

I would welcome your thoughts and comments.

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Discussion
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pearl
Pearl Zhu 89 Points | Thu, 05/31/2012 - 17:05

Hi, Joe,  RIM's up-down cycle really teaches us the exponential changes facing business today, it's not just the products, the features, it's also about the leadership, the ecosystem and evolution, the next wave comes more strongly and promptly to push down the previous one. "Only paranoid survive", from CIO perspective, now the customer-centric business cross vertical sectors claim they are information business, which means, CIO need drive the changes and ride on the wave, not just be controllers only.