The business world drastically changes over the years and can be considered a rollercoaster ride with all the ups and downs. Failure is a natural part of a business in which could cause companies to go completely under or help rebuild based on the mistakes made in the past to help create an empire. To gain more of an understanding of how businesses rise and fall, the case study will focus on a company that had it all and changed technology in many ways. The name of the company was called Research in Motion (RIM), which was founded in 1984 by Michael Lazaridis, who was an engineering student at the University of Waterloo. In 1999, RIM launched the BlackBerry, which laid the platform for the development of smartphones. RIM made a name for itself and became one of the most successful businesses during that era. Sales continued to increase, and in 2007, the company had a market capitalization of more than $60 billion. However, in 2011, sales maxed out at $20 billion and continued to decrease throughout the years. By 2016, deals only reached $2.2 billion with a market capitalization of $4 billion, which put the future of BlackBerry in jeopardy. To further understand the importance of this case, the primary focus will highlight the cycle of the BlackBerry and the mistakes made which caused the company to collapse.
Time Cycle Upon release of the BlackBerry in 1999, RIM became one of the largest companies during that time. In many ways, BlackBerry was the producer of the world’s first widely adopted premium smartphone brand (Luo, 2018). However, the BlackBerry was not the only personal device of its kind out on the market. Other devices available to consumers included laptops, mobile phones, MP3 players, and personal digital assistants, also known as PDAs. Even though these products were also available, the BlackBerry had the upper hand based on the email function that also established the product as a corporate tool. With sales continuing to increase, RIM decided to create a newer version of the BlackBerry, which released in 2001. It was called the 957, which was more significant than the original version and shaped like a Palm device. With the release of their new product, RIM created new partnership deals with major companies at the time in which included Compaq, AOL, and Nortel Networks. Even though product sales continued to increase, there were still some issues that RIM experienced. For instance, the BlackBerry network coverage was limited and did not function well outside of the major cities. To fix this issue, RIM partnered with other companies to help operate their network and license their email redirecting technologies (Himsel & Inkpen, n.d.). Competition Throughout the years, BlackBerry sales continued to increase, and the company made smart decisions to improve its handsets with color displays and other options that become more attractive consumers outside of enterprises (Tofel, 2013). With the advanced technologies of the BlackBerry, other electronic companies noticed the empire RIM built along with the riches that came with it. Other major companies decided to hop on board and created similar products that could help better the companies.
Companies such as Nokia, Samsung, Siemens, Motorola, and HP had all launched same email devices to remain in the business game; however, Blackberry continued to stay on top until Apple released their iPhone. In January 2007, Apple announced that the company would introduce the iPhone that would be much more user-friendly than the BlackBerry and other smartphones out on the market. With the release of the iPhone in June of 2007, RIM shares dropped 10%. Even though Apple sold more than four million iPhones from the launch date, Apple was still second to BlackBerry in unit sales (Himsel & Inkpen, n.d.). BlackBerry still had the upper hand in the enterprise world because of compatibility issues with corporate email systems and security concerns with the new iPhone. Apple realized the concerns and continued to work on bettering their product. By this time, RIM CEOs did not think much of the iPhone due to the small device and the fact that it lacked a physical keyboard. The Impact of Smartphones Smartphones made a massive impact in the market and before the evolution of these devices; BlackBerry was considered the king of the smartphone. However, with the constant advances Apple kept introducing through their iPhone, large carriers began to shift towards the new iPhone. Sales continued to increase for Apple, which raised concerns for RIM and other companies. By this point, Apple had signed a contract with AT&T to sell its iPhone, which was considered a massive success for Apple.
With all the hype going on, Verizon wanted to take part in the game and decided to join forces with Android which led to the launch of Android phones in 2009. With the rise of Android and Apple sales, BlackBerry sales began to decrease causing some significant concerns for RIM. RIM’s Move With the launch of Apple and Android products, RIM realized the importance of needing to keep up with the competition. In 2008, RIM launched various new products, which included the Bold and the Storm; however, the problem with these products was the physical keyboard. Even though the new products were considered a solid evolution of the original BlackBerry, the CEO’s realized that a touchscreen product was necessary to remain in the competition. Unfortunately, the pressure got to the CEO’s, and the touchscreen without a keyboard was released to compete with the iPhone. The release of the new touchscreen BlackBerry was a disaster because of the technical glitches and the physical appearance of it. This product was considered the first mechanical failure from RIM. By this time, the CEO’s of RIM realized that they tried to do too much with the smartphone to keep up with the competition in a short period, which caused many problems. Due to the significant failure, RIM realized that the company could not compete with the high-end hardware. Even though RIM failed in keeping up with the touchscreen smartphone, the company continued to engage in new technologies to help boost sales and one day to be on top of the market again. Research in Motion eventually changed its name to BlackBerry in 2013 and released their BlackBerry App World in 2009 (Steele, n.d.). The BlackBerry App launched 2,000 apps; however, the developers received 80% of the app revenue. Another issue with the release of the apps was the number of apps released. As previously stated, 2,000 apps were released, but Apple had released 65,000 apps at the same time, which caused more problems for BlackBerry and considered another failure. The Fall of RIM BlackBerry was the world’s first widely adopted premium smartphone brand and while at its peak, BlackBerry owned over 50% of the US and 20% of the global smartphone market and sold over 50 million devices a year. Today, BlackBerry has 0% of the smartphone market and has a stock price in the single digits for most of the past few years (Luo, 2018). A common question that is asked by many people is how did BlackBerry fall from such soaring heights? There are many answers related to this question; however, it began with the governance and leadership at RIM. When the company first started, CEO’s Balsillie and Lazaridis worked well with one another and continued to innovate the world. With the competition growing stronger along with other issues, the two CEO’s began to show signs of strain. It all started in 2001 with the patent infringement suit that was filed against them by NTP, which is a U.S. patent-holding company. The lawsuit was a long-lasting battle that lasted all the way to 2006, and in the end, RIM settled to pay $612.5 million. Before the trial, the stress was getting worse for the two CEO’s, and their relationship began to decline over the years. Upon the legal battles and stress, CEO Lazaridis’ health started to diminish and went into a downward spiral. In 2007, RIM was caught up in a scandal that affected dozens of organizations that involved in backdating employee stock option grants.
The relationship became rockier because Balsillie’s role was dealing on the financial side, which included the stock options. In 2009, another settlement ended, which allowed SEC to undergo a consultant’s study of RIM’s management and Boardroom practices. Another major hit to the company included the departure of long-time chief operating officer Larry Conlee. His resignation left a gap in top management, which forced both CEO’s to handle the day-to-day business. Company Changes With the resignation of Conlee and the constant disagreements between the two CEO’s, the company continued to experience significant problems. For instance, in 2011, Google’s Android exceeded RIM to become the leading smartphone operating system (Himsel & Inkpen, n.d.). With Google taking over the lead in sales led to more conflicts for RIM and their consumers. The CEO’s could not agree on anything and always argued with one another, which led to a bleak future. Balsillie wanted to focus on new software and services; however, Lazaridis wished to continue to focus on building BlackBerry smartphones. Eventually, the disgruntled business led to both CEO’s bringing in their handpicked employees to help foresee their vision, which stirred the pot, even more. After their shenanigans, several senior executives left the company and RIM also announced 2000 job cuts, almost 11% of its workforce. Power Changes Even though RIM experienced many problems, surprisingly the company continued to do well in Indonesia, Spain, and Thailand.
However, the company could not compete in the U.S. market, which led to the drop in shares from 44% to 10%. Due to the disappointment in the U.S. market, in January 2012, Thorsten Heins was promoted to chief executive officer and sided with Lazaridis against Balsillie. The new promotion and the double-teaming against Balsillie eventually caused him to resign in 2012, and not long after, Lazaridis left the company in 2013. With Heins in charge of the company, he announced that the company would stand by Balsillie and Lazaridis strategy for turning the company around. However, the company continued to do poorly, and new CEO John Chen replaced Heins in 2013. Despite all the power changes made, Blackberry announced that it would discontinue the smartphone with keyboard and touchscreen to focus on the hardware market, which allowed the company to release Android-powered phones in 2017. Identifying the Problem RIM truly changed the world when the company introduced the BlackBerry, which revolutionized in communication for nearly a decade. RIM had it all and created the optimal device of its time. However, developing such a powerful device opened up the door for competing enterprises to build a similar product or even better. The problem lies in the changing of the market, which led to the failure of BlackBerry. Things are only aspirational as long as people see them that way. In BlackBerry’s case, there was a duty to protect that emotional high ground that it did not fulfill (“Stealing Share,” 2016). Realistically speaking, the success of BlackBerry and the reason why they were on top for nearly a decade was due to being the first company to introduce a highly innovated product. BlackBerry had a substantial business going especially in the corporate world that led to the company feeling superior. The lack of focus to create innovations for the average consumer put a significant damper on the company. With Apple joining the game of the rapid stage innovation technologies, Steve Jobs sensed the opportunity to gravitate towards the everyday person and create a phone with similar features to the BlackBerry, but with many more options. One of the ideal selling points for the iPhone was the built-in camera.
However, CEO Mike Lazaridis believed that corporate users would reject camera phones. The business world is about satisfying customers and giving them what they want. The CEO’s thought they knew what the people wanted, but in reality, they were tunnel visioned by the corporate world, which blinded them to capture the opportunity of the everyday customer. Arrogance plays a crucial role in the failure of BlackBerry. The CEO’s of the company had plenty of opportunities to be creative and come up with innovations, but they were stuck on their original product and chose to focus on only the corporate world. When the iPhone came out, BlackBerry noticed how everyday consumers wanted the new iPhone. Even though sales continued to decrease for the company, Lazaridis remained optimistic that the enterprise sales would keep them on top. However, by the time BlackBerry realized that it needed to reach out to consumers directly, it was too late (Vara, 2013). It is unfortunate for the company that started the game was playing from behind trying to catch up but eventually lost the game in the end. Conclusion The business world of innovation is considered a war-game in which many companies are willing to go to battle to remain on top. Businesses can and will attack in numerous ways, and it is vital for companies to prepare for battle.
Unfortunately for BlackBerry, their defensive attack did not work out for the company. If a company has the luxury of being first to market, they must defend that position with all of their resources at their disposal (“Stealing Share,” 2016). Being first in the market can bring a lot of success, but it is also dangerous because of the other companies chasing the newest innovation as well. Vision is essential in the business world, and BlackBerry lacked this one crucial factor. A company that claims to be innovative should have leadership that can visualize new ideas; unfortunately, that is the reason for the rise and fall of BlackBerry.