We have all seen examples of the impact of powerful leadership. With stories and anecdotes from sports to business, we have seen how the right leader at the helm can create a modern day comeback story.
Remember the tale of the "almost lost" Hewlett-Packard (HP)? In the face of disastrous strategy backlash and morale plummeting as low as the stock price, the company changed leaders. Meg Whitman, a U.S. Business Hall of Fame inductee, has succeeded in turning the company around with exceptional revenue boosts and a stock increase of almost 40%.
If you have been paying attention, you would have noticed a definite distaste for the recent endeavors of Research In Motion (RIMM). What was once a leading provider of some outstanding wireless products and services, it seems the company has lacked the drive to live up to its mission (or name) by remaining oddly silent in the mobile realm. Is news of it beating expectations a herald of a turnaround on the horizon?
Looking at the Present
I'm sure several ears perked up at the headline news that RIM beat earnings expectations. Perhaps it is the eternal optimist in all of us. Further listening/reading squashed our hopes, however.
The company posted its third straight quarterly loss, totaling a staggering $235 million, compared with a profit of $329 million last year. Looking at its utter lack of rollouts and all but rolling over for companies that are gaining momentum, such as Nokia (NOK) and Apple (AAPL), the big question was not "How could it have lost this much?" but rather "How could it have only been this much and not more?"
The answer: widespread layoffs and closing manufacturing facilities. These moves prevented an even greater second-quarter loss and bumped up the company's cash position. Even so, as a whole, revenue fell 31% to $2.9 billion.
The "good" headlines turned out to be journalists just being polite. The loss was slightly ahead of the first quarter's figure and Wall Street's extremely low expectations for a fizzling company.
Looking at the Past
Investors and board members alike are asking these questions. RIM should have been far out in front of the smartphone and mobile computing market with its game-changing BlackBerry. It was the new industry standard that pushed competitors to make great strides in features, functionality, and mass appeal.
And what strides they made. Answer upon answer to the question, "What could be better than a Blackberry?" came with rollouts like the iPhone line, Droid, and even HTC rolling out three smartphones under its new "One" series. Devices carried better cameras, more music and media capabilities, and some high-speed upgrades that appealed to individuals and businesses alike.
To these responses, RIM simply watched as BlackBerry smartphone sales dropped 21% to 11.1 million units and revenue plunged 19% to $4.2 billion, allowing the company to disintegrate into a skeleton of what it was just a few years ago. It was the loud customer complaints that finally pushed it to roll out a haphazard upgrade to its tablet, the PlayBook. Nearly all these "improvements" were of little consequence in comparison to other tablets already on the market, though a native email client, calendar, and contact functionality seemed at least a step in the right direction.
With Nokia gaining ground because of its strategic partnerships with leading brands such as AT&T (T), Verizon (VZ), and HTC -- labeled the world's third-largest phone maker by market value -- little space is left for a company that remains idle for so long.
A New Strategy
Can CEO Thorsten Heins turn this around?
Since January, facing the loss of two other high-level executives, Heins has begun a re-visioning process that has led to some surprising moves. Time will tell if these moves prove to be effective. For example, earlier this year it acquired Paratek Adaptive RF in hopes of rolling out new front-end components for cell phones, which has yet to happen. Any movement on this front could potentially allow BlackBerry users quicker data speeds, fewer dropped calls, and even longer battery life.
Heins also hoped to gain back market share through offering basic data plans to non-smartphone users. The thought process was that once cellphone users experience data usage, it will be easier to transition them into smartphone users and -- ideally -- BlackBerry device customers. However, the company still has to contend with the negativity instilled in the consumers mind about BlackBerry as "antiquated" and "inconvenient," as well as the fear that updates will be few and far between.
What Will Happen and Why
What is to become of RIM? With a commanding lead by almost every other smartphone manufacturer, HTC's position to lead Android to a 50% global share of the handset market before the end of this year, and Apple's juggernaut the iPhone being the highest selling phone ever, can RIM make a move that will make it competitive once again?
It will take delivery of strong products in a timely fashion to win back consumers. Direction toward narrowing focus and marshaling all of its resources can lead to investors seeing potential returns, but only if proper implementation of such a strategy occurs. What also must take place is the company's push in strategic partnerships.
Smartphone and tablet markets have outsold PCs and can only increase in the coming years. Businesses will be looking for strategic and cost-effective solutions to mobile phones and computing needs. Those with the ability to take advantage of this will undoubtedly reap the rewards. Based on past performance, sluggish leadership, and repeated poor financial performance, I see little evidence that RIM will be the vehicle of choice for investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.