RIM RIP? How Heins can help save the company

Posted by Rob Enderle

RIM got a new CEO this week, yet it is still quite easy to write the corporation off.

Indeed, the company is dropping like a rock in market share, investors don’t appear to like anything the board is doing (including selecting a new CEO), while both Apple and Google appear unstoppable.  

RIM RIP? How Heins can help save the companyInterestingly enough, if you look back far enough, Microsoft once seemed virtually unstoppable, along with IBM, Commodore, Compaq, and 3Com.

Yet, only IBM remains above the scrabbling fray - simply because its founders designed Big Blue to be immortal. Even so, IBM almost didn’t make it and was forced to pull in an external CEO (Nabisco), along with a CFO from Chrysler and a CMO from outside the tech industry to execute its turn around.   

As you may recall, Apple was redesigned around Steve Jobs, but is likely to struggle without its co-founder in the future. Meanwhile, Google hasn’t even learned how to spell security in some twisted homage to the Microsoft of the 1990s. Even putting these two serious issues aside, neither firm was designed like IBM - to be immortal. This suggest both companies will eventually stumble, either from a catastrophic mistake (and Google likes to live on the cutting edge) or over the course of years, perhaps following the model of Apple’s stagnation and near suicidal decline in the 1990s.  

I’ve spent a good deal of my life either going in and cleaning companies up or analyzing what they did right or wrong. So, using the successful IBM turn around as an example, let’s talk about how RIM could potentially pull out of its death spiral. 

In Need of a Team

While Louis Gerstner gets most of the credit for turning IBM around, it was actually the CFO who had been selected prior to his joining IBM that deserves most of this credit. Jerry York had successfully transformed Chrysler with Lee Iacocca.  But Louis Gerstner (who appears to take most of the credit, which admittedly is a perk of the job) also hired a CMO outside of the industry who went to work on IBM’s brand and image. Abby Kohnstamm, apparently one of the most powerful women in the world today, built a marketing organization inside IBM that was second to none and, at the time, you would have been hard pressed to find her equal in the tech market. 

Essentially, IBM would have failed without York bringing Big Blue's expenses in line with revenues and aggressively eliminating waste. Similarly, it was Kohnstamm who took IBM’s negative brand equity and restored the brand into one of the comany's strongest assets.

This is what is so often missed in a turn around.  One person alone can’t do it and if you look for that perfect person you search will go on too long and you’ll likely still end up dissatisfied. In IBM’s case they (and I interviewed one of the board members who made this decision in the 1990s) actually chose York first, then Gerstner, and Gerstner chose Kohnstamm.

The end result? The team that initially restored IBM proposed a succession plan so Sam Palmisano could finish the job. Today, IBM is once again one of the most powerful technology companies in the world and a darling for both its investors and customers. This proves it can be done - but only if the right team is in place. 

RIM’s Team:  Not a Great Start

Let’s be clear: Heinz is a better fit for RIM than Carol Bartz was for Yahoo. But in some ways, RIM has a similar problem to IBM’s. Meaning, they too have lost their market and are struggling to get it back. Fortunately, RIM’s product portfolio is vastly simpler than IBM’s is (or was), and it is obviously far simpler than Apple’s was before Steve Jobs and his triumphant return.

In addition, they are in better financial shape, which could actually prove to be a problem because heavy financial pressures is what forced both IBM and Apple to make dramatic changes. Often, if you are fighting
for your very survival, you’ll take bigger risks. And fear, at least for a time, can be a very effective motivator. Of course, the question remains: is RIM hungry enough yet?

Perhaps the core of RIM’s problem is the firm’s inability to capture the imagination of buyers. This is largely a marketing problem, and engineers - in general - don’t understand marketing. If we assume marketing is truly the issue here, then the selection of an engineer as CEO to lead a "turn-around" team might be
inappropriate, or at the very least, ineffective.

While RIM could also benefit from a CFO with relevant "turn around" experience, even more critical is a CMO who is capable of recovering the company's brand, while providing improved direction in terms of both products and marketing.

It is probably also worth noting that Nokia is in the same boat as RIM, and I think it is quite unlikely both firms will be successful in their rehabilitative efforts. In fact, given the high failure rate of turn-around initiatives, I would argue that the odds are against the success of both companies. RIM is looking for a new CMO, and if they pick one with a background similar to Abby Kohnstamm’s (unlikely), their odds would significantly improve because folks like Abby understand how to recover a brand and work with agencies to build interest back into products. 

Wrapping Up:  A Long Chance

In the end, RIM has a definite chance of turning things around. However, that chance evaporates if the company can’t even create the initial impression its CEO will be successful. Promoting, albeit indirectly, a self-fulfilling prophecy leaves little chance or hope RIM will recover despite heroic efforts from its rank and file.

However, as with Jobs at Apple during the early years, if RIM is perceived as a company with turn-around potential then that too could become a self-fulfilling prophecy - assuring RIM’s renewed success.  

Simply put: RIM needs consumers and IT buyers to bet on the company again. If the firm can’t recover its brand and image, well, that won’t happen. So, in the end, it really won’t be up to the new CEO, but rather, it will be the new CMO's responsibility to start the ball rolling in the right direction.  

But for him or her to be successful, the CMO will have to arrive equipped with an appropriate skill set, which like IBM, will probably need to come from outside the tech industry, along with adequate funding for marketing (which engineer/CEOs tend not to provide). This puts the odds solidly against a RIM recovery, but also suggests that if they got the right CMO, their chance of recovery could increase exponentially.   Let’s see which path RIM takes.