Tuesday, January 24, 2012

Research In Motion and its new CEO

The two co-CEOs and founders of Research In Motion (RIM), the smartphone company, maker of the "Blackberry," have resigned their roles and appointed an insider, Thorsten Heins, as the new CEO. The founders, Jim Balsillie and Mike Lazaridis, will remain on the board, the latter as vice-chair.  In an email to RIM employees, they wrote, “Almost two years ago, we made the very difficult decision for RIM to go it alone – to not follow the path of our competitors and adopt a third-party operating system. We knew then that the ability to control our destiny and differentiate our own platform, products, services and brand would be vital to our future. With this decision and the transition that followed came great scrutiny. We felt we were right and so we stayed the course. With this transition to a single, unified platform, this was the right time to make this change.”

In short, smooth sailing. But will it be so smooth? The RIM stock price fell 9.1% after the announcement. The “street’ worried that Heins was good at implementing changes, but was not good at envisioning new directions. Indeed, Heins, in describing the company’s plans, said that, “It is going to be continuity, but its is not going to be standstill.”

Of course, Heins choices and prospects for success depend on whether or not the company’s current trajectory is sound. The co-founders’ email is suggestive here. They defend their decision to stick with their own operating system. Yet this decision has made it difficult for RIM to compete with Apple and Android-enabled smart-phones, both of which are supported by a dense ecology of “App” developers. The smart phone, once a business appliance, has become a consumer product.  Apps, unnecessary for the corporate executive, are essential for the consumer. Indeed, one of RIM’s operating principles was to sell its phones through companies. But increasingly, companies are letting consumers buy their own smart-phones.

Seen in this light, the founders’ evocation of “our destiny” has a bit of a mythological feel.  Indeed the email paints the picture of the two founders heroically sticking to their guns in the face of much opposition, in order to secure the firm’s future. 

But when myth is present, irrationality is not far behind.  In a classic study of the Saturday Evening Post magazine, Abraham Zaleznik argued that successors to its founder, Cyrus Curtis, slavishly stuck to his operating traditions, strategy and corporate mythology; namely, the magazine as representing a tranquil small-town America, just when the country was rapidly urbanizing.

It may seem sensible for Heins to genuflect to the founders, after all they remain on the board and he operates in their shadow. But uprooting a mythology provokes psychological difficulties as well. We are all emotional creatures of the human family. When we face high stakes events we code them, sometimes consciously, and sometimes not, as family dramas. Corporate succession can evoke the psychological process through which children transcend their parents’ worldview and their way of life. This process is often taxed by feelings of guilt. We are after all grateful to our parents for giving us the chance to live, and for ensuring that we will survive our infancy and childhood psychologically and physically intact.  In transcending them, in becoming different, despite our dependence on them, we may feel that we have to reject what they stood for and believed.

This resulting guilt can have two contradictory impacts. It may inhibit us in choosing what we yearn for, hence the difficulty some children have in marrying outside their parent’s faith or ethnic group. Or, we may turn the guilt to our favor, interpreting it as a sign that our parents have oppressed us and that we need to be free of them. We turn our guilt against them and in the process we devalue them.

Perhaps Wall Street is wondering if Heins can mobilize the psychological aggression required to uproot and devalue what may be RIM’s mythology, at least as it is being written by its founders.  To do this, he has to overcome two sources of guilt. One source is based on the simple fact that, like good parents, the founders have created enormous opportunities and wealth for thousands of people.  What does it mean to devalue their judgment? The other is based on the fact that, should he choose to launch a new strategy, he will upend careers and relationships, with no guarantee that he will succeed. To create he has to destroy.

This is one reason why companies facing turning points in their business, sell themselves. The buyer --another company, or sometimes a corporate raider --enters the scene feeling no obligations to the founders and the mythology they created.  They think in fresh ways and use destruction creatively to create a new business model.  Perhaps the street is wondering if Heins can mobilize this aggression?  If there is wisdom in crowds, the answer would appear to be “no.”

No comments:

Post a Comment