Publicly-Traded Company on the Toronto Stock Exchange Assignment
Research in Motion (RIM) co-chief executive officers (CEOs), Jim Balsillie and Mike Lazaridis unexpectedly found themselves facing serious public scrutiny not from the competitors, market analysts or consumers but from one of their own senior executives. In an attempt to have their voice heard, an anonymous senior-level RIM employee addressed an open letter to both Balsillie and Lazaridis, however, the letter was sent to the online technology news provider Boy Genius Report (BGR). Upon BGR verifying the identity of the source RIM employee, the full contents of the letter were featured in an online BGR article, which quickly spread into mainstream media. The details of the open letter had provided various candid criticisms of RIM's leadership, its product development and its employee culture. In addition, the employee offered personal insights, outlined specific actions necessary for RIM to improve and expressed the desire to see the company regain its dominant position as an industry leader.4 In a year during which RIM already faced pressure from a dwindling market share, failed product attempts and a sinking stock price, co-CEOs Balsillie and Lazaridis not only needed to figure out how to respond to the claims of the letter publicly but more importantly to work out how to communicate to RIM employees internally.
Global mobile communications company RIM first began in 1984, when 23-year-old Lazaridis, a dropout of the University of Waterloo, and Douglas Fregin, an engineering student from the University of Windsor formed RIM upon obtaining a contract from General Motors of Canada to perform industrial automation of General Motor's operations. The young company was able to survive from one contract to another. Building on its success, RIM had grown to employ over a dozen employees with annual revenue in the millions by the late 1980s. In 1988, the company explored its new market opportunities involving wireless operations, which enabled RIM to become “the first wireless data technology developer in North America and the first company outside Scandinavia to develop connectivity products for the Mobitex wireless packet-switched data communications networks. The technology was widely used for business communications, such as processing credit card sales.”
In the 1990s, RIM continued to acquire various telecommunication companies to provide research services on solutions to wireless systems. One contract in particular involved “a paging and cellular telephone company that required RIM to investigate the potential of new wireless digital network systems. This contract led to the development and manufacturing of modems, which in turn led to the further development of a complete wireless e-mail system in collaboration with the Swedish mobile phone company Ericsson.” Through important research contracts, RIM was able to develop its own internal capabilities and become more than just a service provider by evolving its company business operations into developing communication products. The company reached a major breakthrough in 1992 when RIM researchers discovered a device to receive and send messages on a pager. Equipped with the new technology of communication, Lazaridis was determined to develop the innovative technology of sending e-mail over wireless networks.
In 1992, Jim Balsillie joined RIM, reportedly investing $250,000 of his own money into the company by mortgaging his own home. The move had empowered Balsillie overseeing the company's finances and business development tasks while allowing Lazaridis to return to the area of his strengths in engineering and research. The partnership eventually led to RIM's first product breakthrough in 1996, with the release of the Interactive Pager. Seen as innovative, the product signified one of the first of its kind to introduce consumers to the novelty of sending and receiving messages over a wireless network. Although the device was short-lived and replaced by other products, many of the Interactive Pager's features helped to produce a strong foundation for the development of RIM's future lines of smartphone products. In order to
continue developing new products and expand business operations, RIM listed itself as a publicly-traded company on the Toronto Stock Exchange in 1997, raising more than US$115 million in capital from investors. A year later the influx of money proved to be well spent, as RIM introduced the first BlackBerry handheld wireless computing device to the public. By 1999, BlackBerry offered its users the ability to access basic e-mail and two-way paging on a six-line display using a small QWERTY keyboard. In addition, its users could also browse specially-formatted pages that offered news, stock market data, weather and travel information. Moreover, RIM entered into agreements with companies such as BellSouth Wireless and Rogers Cantel to secure wireless service.
RIM continued to expand business operations through additional public offerings, raising US$250 million in 1999, and another US$950 million in 2000. The BlackBerry quickly grew in acceptance and gained in popularity, receiving industry acclaim in 2000, when the device was named Best Telecom Product of the Year for its ability to send and receive corporate email. Meanwhile, it also won the PC World Class Award for Best Wireless Communication Device, for its small and lightweight design and constant access to email. However, RIM had faced serious conflicts over a group of Illinois-based inventors who filed a lawsuit in a U.S. Federal Court, accusing RIM of developing its wireless e-mail network by infringing on patents held by an American patent-company, NTP Inc. of Virginia. The lawsuit would carry on for years. At times RIM was threatened to discontinue BlackBerry service to its American customers before RIM and NTP finally announced a settlement in 2006, in which RIM agreed to pay NTP US$612.5 million to settle all claims.
The company continued to develop the popular BlackBerry device by releasing newer versions with increased user capabilities. In 2002, RIM upgraded the BlackBerry to include voice and data transmission, while also allowing its users to access multiple e-mail accounts. Advancements continued in 2003, with the introduction of color screens on Blackberry devices for the first time. By 2006, BlackBerry devices included MP3 players, cameras and instant messaging capabilities between BlackBerry users with the release of BlackBerry Messenger. The successful development of both software and hardware features had driven an increase in consumer demand for BlackBerry devices. These consumers were often associated with the nickname “CrackBerry”, as they often experienced obsessive symptoms when constantly accessing information, sending e-mail, messages, or simply keeping their BlackBerry device close by at all times. In addition, the term “BlackBerry thumb” was also commonly used to refer to the repetitive stress injury that could occur as an individual's thumbs were overused from constant typing. In 2007, RIM hit a milestone, as the number of BlackBerry subscribers had officially passed the 10 million mark. Its consumer demand had remained strong with RIM reporting another 1.65 million subscribers in its third quarter of 2007 alone, and with the company revenue doubling over the previous year to have reached US$1.67 billion and still continuing to grow.
In 2008, BlackBerry devices held an estimated 44.5 per cent of the U.S. smartphone market, where its market share had risen from 35.1 per cent since 2007, RIM was in a dominant position and yet it was not without any industry competition. There had been major changes in the smartphone market in 2007 due to the launch of the Apple iPhone. Although the iPhone had provided end-users with fun interactive features, which were not available on a BlackBerry, such as a touch screen, downloadable apps and a wide selection of games, many businesses and their employees remained loyal to BlackBerry devices for their business functionality and reliability. While the iPhone captured an estimated 19.2 per cent of U.S. smartphone sales in the first quarter of 2008, Apple, at that time, represented a minor share of the market compared to RIM. However, the numbers highlighted an increased demand for new smartphone options and capabilities of a smartphone. In an effort to capitalize on the changing market demands, RIM released the company's first smartphone device, the BlackBerry Torch, with touch-screen capability in 2008. Having delivered a new operating system and social networking integration,
the BlackBerry Storm served as a symbol of RIM's move outside its traditional BlackBerry designs. However, many industry analysts and consumers viewed the new BlackBerry Storm as more of a catch-up device for RIM, rather than a leap forward ahead of the competing Apple iPhone. From their point of view, industry analysts considered RIM's inability to produce a BlackBerry that could outperform the iPhone represented a missed opportunity and shifting momentum in the mobile communication world towards Apple.
RIM again felt the pressure of changes in the marketplace when Apple released the iPad, a touch-screen tablet-computing device in January 2010. With no direct competition in the newly created tablet market, Apple left many companies including RIM scrambling to create products or opt out of the market completely. After much consumer waiting and anticipation, RIM introduced the BlackBerry Playbook, a touch-screen tablet in April 2011. This release date was over a year after the launch of the original iPad and a month after the release of the second version iPad2 in March 2011. To make matters worse, the BlackBerry Playbook failed to meet the expectation of its consumers and industry professionals. Although there had been a long delay in releasing the BlackBerry Playbook, critics pointed out that the device was rushed to market, missing key features such as e-mail, contacts and calendar applications. At the same time heavy criticism also emerged. RIM was viewed to have not sufficiently complemented original elements to the user interface but had excessive similarities to its competitors' products. Other comments were overly direct, such as “Don't buy it, the reasons? It's not fully baked.”
In retrospect, even though RIM had generated a net income of US$2.4 billion for 2010 as a whole (see Exhibit 1), its share of the U.S. smartphone market declined from 38 per cent to 30 per cent (see Exhibit 2). Some research reports indicated that RIM's BlackBerry market outside North America (see Exhibit 3) had primarily driven the sales of the company. Intense competition had mounted in the smartphone market. As a result, RIM lost its market share to the growing popularity of the Apple iPhone, in addition to new smartphones using Google's Android operating system, including devices from HTC, Motorola, Samsung and LG Electronics. Disappointed with the BlackBerry's dropped market share, analysts and investors no longer viewed RIM as the dominant force in the marketplace. Consequently, in June 2011, RIM's stock price had devalued by more than 50 per cent earlier in the year, from US$68 to less than US$26 (see Exhibit 4). Despite the major transition, RIM leadership held confidence that a healthy financial position of nearly US$3 billion in cash, no debt and new products in development would revive the company to regain its leading position in the smartphone market (see Exhibit 5).
THE EMPLOYEE'S LETTER On Thursday, June 30, 2011, at 10:45 a.m., an online technology news provider, Boy Genius Report (BGR), released an online article, featuring the contents of an open letter from an anonymous senior-level RIM employee to the company's co-CEO's, Balsillie and Lazaridis (see Exhibit 6). In the opening statement of the letter the anonymous employee justified the decision to send the open letter via a third party news provider, stated:
Mike and Jim, please take the time to really absorb and digest the content of this letter because it reflects the feeling across a huge percentage of your employee base. You have many smart employees, many that have great ideas for the future, but unfortunately the culture at RIM does not allow us to speak openly without having to worry about the career-limiting effects.
With the featured BGR article appropriately titled, “Open letter to BlackBerry bosses: Senior RIM exec tells all as company crumbles around him”, Jonathan S. Geller, the writer of the
article, disclosed to the readers that before the full contents of the RIM employee's letter was released online, BGR had investigated and confirmed the actual identity of the RIM employee.
The RIM employee structured the letter to identify a total of eight problems for Balsillie and Lazaridis to address: focus on the end-user experience, recruit senior software leaders, cut projects to their basics, invest in developers, improve product marketing, employee accountability, treat the press and customers with humility, and engage and interact with employees. In the closing sentences of the letter, the RIM employee offered some personal insights into the current state of the company and day-to-day operations by making the statement: “We should also address issues surrounding making RIM an enjoyable workplace. Some of our offices feel like Soviet-era government workplaces.”
After providing the full contents of the RIM employee's letter, the BGR article revealed that RIM did not give an immediate response to a request for comment. At the end of the online article, it concluded that RIM employees were invited to share their thoughts or feelings on the company by sending BGR an email or posting on the comment blog.
The coverage of the anonymous RIM employee's open letter quickly spread to other mainstream media outlets with some headlines reading:
“Open letter from anonymous RIM official blasting company surfaces online” – The Financial Post. “Leaked letter describes chaos at RIM” – Sun News. “Drama in BlackBerryland: RIM Exec Reportedly Rips Superiors” – TIME Techland.
In addition to the year in which the company already faced serious pressure from a dwindling market share, failed product attempts and a sinking stock price, co-CEOs Balsillie and Lazaridis would need to devise an appropriate course of action to respond publicly to the claims of the letter from an anonymous RIM employee. More importantly, the leadership would need to provide communication internally to answer the ensuing concerns and mounting questions of RIM employees, in order to maintain the stability within its organization during what could be looked upon as a defining period in the company history.
The two issues to focus on are: Dwindling market share and Employee dissatisfaction
A. Establish context for your paper by summarizing the important details of the case and outlining the specific issues (Dwindling market share and Employee dissatisfaction) that you will address.
B. In response to the presented issues (Dwindling market share and Employee dissatisfaction) , define clear and specific communication goals. Who are your target audiences and what do you want to accomplish with your communication?