An analysis of the tech giant’s fall from glory

Presented by:Neha Randhawa I Rajitharan Rajanthiran I Jason Repovs I Amit Lath

BEGIN

END

OVERVIEW & HISTORY

I

GENERIC STRATEGY

II

INFORMALNETWORKS

IV

FORMAL STRUCTURE

III

BEHAVIOURAL

CONTROLS

V

SUMMARY &RECOMMENDATIONS

VII

THE TOP

MANAGEMENT

TEAM

VI

WHERE ARETHEY NOW?

VIII

1984

1997-1999

2002-2005

2007

2010-2011

2012

2013

RIM Founded

2002-Voice Calling 2003-First Blackberry

with color screen 2005-4 million

subscribers

2010-Buys QNX 2011-Playbook

Launch, Service Interruptions, Job cuts

RIM name changed to Blackberry

John Chen appointed CEO

1997-RIM goes public 1998- First Blackberry 1999- High Demand

for Blackberry. RIM listed in NASDAQ

Most valuable company in Canada

12 million subscribers

Co CEOs Step down

BB10 launch delayed

Layoffs continue

Industry

Telecommunications &

Wireless Devices

Differentiation Strategy

Product Features and Performance

Low Data Usage (Data compression)

Security

Reliability

Prestige

Target Market

B2B Sales

Geography

HQ in Waterloo, Canada

Sales offices around the world

Research in Motion

Strategy as a

Plan: RIM

Strategy as a

Process: Apple

Rational

Planning

Respond to

internal &

external forces

“Corporate

needs”(INTENDED STRATEGY)

BYOD &

Consumer

wants(EMERGENT STRATEGY)

INTENDED STRATEGY

FUELED BY FOCUS ON…

NOT REALIZED

REALIZED STRATEGY

“Mistakes and opposition are inevitable.

What is not inevitable is passivity, not

trying, not seeking to accomplish things

… What is not fine is paralysis or inaction,

which arise because we have little skill in

overcoming the opposition that inevitably

accompanies change, and little interest

in doing so …” (Pfeffer, 1992)

•Leader in smart phone hardware and software.Vision/Mission

•Worldwide smartphone share=9.6%Smartphone Market Share

•ROIC: 28.11% ROA: 23.4% ROE: 28.3%ROIC, ROA, ROE

•Revenue grew 47% to over US$3.04 billion.Revenue

•Profit of US$631.6 millionProfit

Company ROA

(%)

ROE (%) ROI (%) EBITDA

(%)

Quick

Ratio

Current

Ratio

Total

Debt to

Equity

Blackberry 23.45 28.26 35.99 32.44 2.93 3.51 0

Apple Inc. 16.48 28.6 36.07 19.49 2.09 2.36 N/A

Nokia 23.93 53.89 56.37 16.11 1.23 1.54 0.09

Samsung 8.49 15.31 14.25 0 0.82 1.41 0.28

Co-CEOs

R&D Marketing Operations Finance HR

Dimensions of structure Aligned with Strategy?

Complexity (high)

Formalization (med)

Centralization (high)

FUNCTIONAL STRUCTURE

Innovation was desperately needed, but…

…the company simply wasn’t well-positioned to

respond to the threat.

Centralization & Complexity

Creativity & Innovation

Trust Networks

• Mike Lazaridis: trusted by engineers within the company

Advice Networks

• No significant issues evident

Communication Networks

• Very fragmented

• Lazaridislearned of iPhone release while exercising on his treadmill

Rules

• Formal rules aligned with strategy (managing wild ducks)

Rewards

• Backdated stock options rewarded the wrong behaviour – status quo instead of pushing forward

Culture

• “Don’t challenge the big guys”… career limiting move

• Perpetuated through hiring practices

• Norms didn’t support risk-taking

Sources of power: Possessed them?

Formal authority

Expertise

Centrality in information flow

Being liked

Reciprocity

Control over scarce resources

Risk-aversion

Co-CEO structure

› Domain-specific expertise led to

fragmentation in opinions and

communication

› Lead to slow (no?) recognition of changes in

the external environment, hindered

adaptation and response… slow

implementation

› Missed opportunities

Set direction

Design organization (structure & processes)

Instill a culture of excellence and

ethical behaviour

Effective Strategic

Leadership?

Create a vision

Mobilize commitment

Institutionalize change

Transformational

Leadership?Situational Leadership?No evidence

Issues with the top management team

Cultural norms sabotaged innovation

Incentives rewarded the wrong

behaviour

NET RESULT: A lack of responsiveness when

it was most needed in the organization

Eliminate the Co-CEO structure› Critical to achieving communication flow

Redefine target market

Refresh company vision/mission

Build new norms:› Accountability

› Voicing of opinions

› Iterative feedback loops

› Customer-driven innovation (look externally as well as internally)

› Support risk-taking

Alignment of incentives and controls

One CEO

Posted a profit the past quarter

Moved to divisional structure

Mass layoffs

Focus on enterprise customers

› Return to core competency

› New vision & strategy

› Moving away from “the middle”

•Maintain market leadership in enterprise mobilityVision/Mission

•Worldwide smartphone share=1.9%Smartphone Market Share

•ROIC: -6.61% ROA: -4.80% ROE: -6.61%ROIC, ROA, ROE

•US$11.073 billionRevenue

•Profit of $646 millionProfit

Company ROA

%

ROE % ROI % EBITDA

%

Quick

Ratio

Current

Ratio

Total

Debt to

Equity

Blackberry -4.82 -6.62 -12.66 1.94 1.53 2.06 N/A

Apple Inc. 19.39 30.72 37.98 32.43 1.4 1.68 0.14

Nokia -2.23 -8.47 3.88 4.39 1.29 1.46 1.03

Samsung 15.09 22.8 25.58 16.78 1.61 2.16 0.08