How Not To Suffer The Fate of RIM Blackberry. A Lesson in Commoditization and Longevity

 

 

They have volumes in common with you.

It shouldn’t come to much surprise that the embattled Research In Motion, makers of Blackberry, will become that next failed company. Despite occasional resuscitation from loyal fans, reminiscent of Saab’s recent fiascos which lasted years too long, RIM created a niche only to fall prey to the enemy of the great: Commoditization. RIM’s stock is down ytd at this writing by a mind numbing 70%. This didn’t need to happen. 

RIM was “The” smartphone company until a competitor named Apple out innovated and out competed their own product. How did Apple deftly spring past RIM? Surprisingly with ease. RIM forgot they would have competition. Most would presume that RIM with its well priced iconic product Blackberry would assuredly not be affected by commoditization in which a product becomes indistinguishable from its competitors. You would be wrong. What is happening with RIM is probably occurring in your company. 

The road to ubiquity is laced with land mines.  At a time when business moves at the speed of thought RIM responded to business demands traditionally slow if at all. RIM was slow to advance from its core market of B2B to B2C which was fast becoming tepid and then continually released poorly designed products. Flanked by a perpetual assault by competitors i.e. proliferators on price and innovation such as Google android and Apple with their “rope a dope” techniques, RIM continued to over promise and under perform.

I find three reasons why RIM has failed. 

1. Deterioration – When low end competitors move in with low-cost, low benefit drawing the mass market.
2. Proliferation – When competitors develop new combinations of price and unique benefits attacking an existing market.
3. Escalation - When competitors squeeze profits by offering more benefits at the same or lower price.

If you were RIM’s CEO or Board person you would find they have faced two out of three of the challenges. Deterioration and proliferation.

 Now, RIM is undermined by a reputation of poor quality, lack of innovation an inadequate customer service.   

Earlier this year at RIM's Capital Market Day Mike Lazaridis founder and Co-CEO of RIM announced he was presenting on RIM’s Playbook. He discussed the features but little to nothing on differentiation. 

In Jonathan Geller’s the "Boy Genius” he writes: 

“Picture yourself sitting in an executive briefing at Research In Motion. You’d hear Mike Lazaridis unequivocally state time and time again that BlackBerry smartphones would never have MP3 players or cameras in them because it just does not make sense when the company’s primary customers were the government and enterprise. “BlackBerry smartphones will never have cameras because the No. 1 customer of ours is the U.S. government,” Mike Lazaridis would say in meetings. “There will never be a BlackBerry with an MP3 player or camera.” 

What does Mr. Jobs do? 

He strutted the iPhone which eschewed the design of then top players RIM’s BlackBerry and Palm’s Treo line. Avoiding groupthink, Apple and Jobs dropped the keyboard, and replaced the stylus with the finger and multitouch. RIM? 

Continues Geller: "When you hear Mike (RIM CEO) talk about the latest and greatest, it's been the same thing for ten years: security, battery performance, and network performance. RIM has positioned battery life and network performance for years. People are not concerned with iPhone batter life," one source told me. Network performance to Mike trumps any innovation a device like iPhone offers. Mike is convinced people won't buy an iPhone because battery life isn't as good as a BlackBerry."

This is a textbook example of deterioration. The outcome is predictable.

In today’s business environment there are new rules of war: 

• Speed
• Agility
• Adaptability
• Innovation
• Fierce competitive resolve.

This is the new world of business competition at the speed of thought. The old days are the old days. RIM's leadership looks grim. They are models of security conscious businesses for sure. A feeling of victory is understandable. But not where investors are lukewarm with growth prospects and more erstwhile competitors are nipping frantically at the flanks.   

How's Your Business Doing? We can help. Contact us for your free consultation!

Speaking & Advising 

As the CEO and founder of InnoThink Group, Jim can help your organization enhance the strategic innovation and competitiveness of your business policy and strategy, with an emphasis on increasing top line growth. 

If you’re interested in having Jim speak at your next event, simply use this form to send us your details and speaking requirements, and we’ll be in touch shortly. Or you may call us at 719-649-4118. 

Coaching

Need to grow your business and career?  Business, Career or Life Coach. We Have The Right Strategies to Revamp Your Life and Business.  

 

The Culture of Collaboration: Competition and Collaboration

Follow Us

They compete in the marketplace, but now they’re also collaborating.

BMW and Toyota have announced they will collaborate in two areas: the companies will share costs and knowledge for electric car battery research, and BMW will supply diesel engines to Toyota. Toyota owns the luxury brand, Lexus, and therefore BMW and Toyota directly compete in the luxury car segment. Both companies have a significant collaboration track record.

In The Culture of Collaboration book, I describe how BMW and Toyota create value by collaborating internally and with business partners. The preface, which you can read here, reveals how my visit to the BMW design center in Munich some years ago sparked the book.

So why would two competitors collaborate? Collaborating makes sense within enterprises and with partners, but the marketplace requires pure competition. Right?  Well, that depends.

Collaborating among competitors makes sense when the collaboration:

1. Creates value for both parties
2. Begins with structure and clarity
3. Involves non-differentiating processes

Clearly, the BMW/Toyota collaboration nails number one. “We think that this collaboration will allow for development of next-generation batteries to be done faster and to a higher level,” Toyota Executive Vice President Takeshi Uchiyamada said at a news conference. Both companies will share the costs of battery development. 

Toyota will reportedly use BMW’s 1.6 and 2-liter diesel engines for cars sold in Europe beginning in 2014. This is reportedly the first time Toyota has procured an engine from a competitor. According to a story by Yoshio Takahashi and Kenneth Maxwell in the December 2, 2011 edition of the Wall Street Journal, the collaboration will reduce BMW’s engine production costs per unit by increasing volume. So, value creation is at the heart of this collaboration.

What about #2, structure and clarity? Based on what I know of BMW and Toyota and their approaches to collaboration, chances are this effort involves much of both. In any collaboration among competitors, both parties must establish boundaries for collaboration at the outset. Most importantly, the competing collaborators must determine use and ownership of existing and jointly-created intellectual property. Far fewer problems arise when business unit people, engineers, marketing folks, lawyers and others from both companies hash out these concerns rather than simply handing off the issues to lawyers to hash out in a vacuum.

Regarding #3, I’ve found that collaboration among competitors works best when the effort involves eliminating redundancy in non-differentiating processes. These are typically under-the-hood processes that are not part of a company’s market or product perception.  Two companies that each make hot sauce might use the same bottling equipment. Two newspapers in the same market might use the same printing presses. Entire industries participate in consortiums for purchasing, saving each competing company substantial money. These shared, non-differentiating processes are invisible to the customer. 

Engines are invisible to all but the most die-hard car enthusiasts, so collaborating on this process arguably fits the bill as non-differentiating. Typically, car batteries have nothing to do with the vehicle perception in the marketplace. In the case of electric cars, though, the jury is still out whether the battery is invisible to the consumer. The technology is in its infancy, and therefore the market consists primarily of early adopters. These consumers are more techno-savvy, realize the lithium-ion battery is intrinsic to the product’s technology and performance, and therefore may place a heavier emphasis on the battery in their purchase decisions.

So, it remains to be seen whether battery research and development is non-differentiating for BMW and Toyota. Nevertheless, if both companies can save substantial money on development and bring vehicles to market sooner and customers perceive and actually get better electric vehicles, this collaboration will prove successful.

via collaborationblog.typepad.com

Speaking 

As the CEO and founder of InnoThink Group, Jim can help your organization enhance the strategic innovation and competitiveness of your business policy and strategy, with an emphasis on increasing top line growth. 

If you’re interested in having Jim speak at your next event, simply use this form to send us your details and speaking requirements, and we’ll be in touch shortly. Or you may cal us at 719-649-4118.