Why good strategy is important. A review of Blackberry (formerly Research in Motion).

1. An analysis of the tech giant’s fall from glory
Presented by:
Neha Randhawa I Rajitharan Rajanthiran I Jason Repovs I Amit Lath

2. BEGIN
END
OVERVIEW
& HISTORY
I
GENERIC
STRATEGY
II
INFORMAL
NETWORKS
IV
FORMAL
STRUCTURE
III
BEHAVIOURAL
CONTROLS
V
SUMMARY &
RECOMMENDATIONS
VII
THE TOP
MANAGEMENT
TEAM
VI
WHERE ARE
THEY NOW?
VIII

3. 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

4. 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

5. 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

6. “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)

7. •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

8. 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

9. Co-CEOs
R&D Marketing Operations Finance HR
Dimensions of structure Aligned with Strategy?
 Complexity (high)
 Formalization (med)
 Centralization (high)
FUNCTIONAL STRUCTURE

10. Innovation was desperately needed, but…
…the company simply wasn’t well-positioned to
respond to the threat.
Centralization &
Complexity
Creativity &
Innovation

11. Trust Networks
• Mike Lazaridis:
trusted by
engineers
within the
company
Advice
Networks
• No significant
issues evident
Communication
Networks
• Very
fragmented
• Lazaridis
learned of
iPhone release
while
exercising on
his treadmill

12. 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

13. Sources of power: Possessed them?
 Formal authority
 Expertise
 Centrality in information flow
 Being liked
 Reciprocity
 Control over scarce resources

14.  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

15. 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

16.  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

17.  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

18.  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”

19. •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

20. 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