Earlier this year when discussing the challenges faced by Microsoft (NSDQ: MSFT) and CEO Steve Ballmer, I stole a quote from a speech given by former IBM CEO Lou Gerstner: “Transformation of an enterprise begins with a sense of crisis or urgency.” An anonymous executive at Research in Motion (NSDQ: RIMM) may have tried to create that sense of urgency this week with an open letter to the company’s co-CEOs posted by BGR.
The executive remained nameless, and while BGR said it had verified his identity it’s hard to know whether or not the letter is truly authentic. However, it certainly rings true to anyone who has watched RIM squander its leading role in the smartphone world over the last few years by failing to recognize the breakthroughs made by the iPhone until it may have been too late. The company is now facing an uncertain six months as it scrambles to get two new BlackBerry 7 models out the door before switching to a completely new software design in early 2012, and layoffs and cost-cutting are on the table.
A few excerpts from the memo, which is worth reading in its entirety:
“I have lost confidence”: “We are in the middle of major ‘transition’ and things have never been more chaotic. Almost every project is falling further and further behind schedule at a time when we absolutely must deliver great, solid products on time.”
Make users the priority: “We often make product decisions based on strategic alignment, partner requests or even legal advice — the end user doesn’t care. We simply have to admit that Apple (NSDQ: AAPL) is nailing this and it is one of the reasons they have people lining up overnight at stores around the world, and products sold out for months. These people aren’t hypnotized zombies, they simply love beautifully designed products that are user centric and work how they are supposed to work.”
Software is the key: “Just look at who our major competitors are: Apple, Google (NSDQ: GOOG) & Microsoft. These are three of the biggest and most talented software companies on the planet. Then take a look at our software leadership teams in terms of what they have delivered and their past experience prior to RIM… It says everything.”
Developers, developers, developers: “There is no polite way to say this, but it’s true — BlackBerry smartphone apps suck. Even PlayBook, with all its glorious power, looks like a Fisher Price toy with its Adobe (NSDQ: ADBE) AIR/Flash apps.”
Updated 1:04 p.m. PT: RIM responded on its corporate blog to what it called the “Open Letter,” admitting that it faces challenges but refusing to address any of the specific points made by the employee. The company also not-so-subtly reminded any employees that it looks down on airing these concerns in public as opposed to behind closed doors, perhaps having missed the section of the letter in which the RIM employee says that “unfortunately the culture at RIM does not allow us to speak openly without having to worry about the career-limiting effects.”
All in all, a trademark piece of defensiveness from RIM. Their statement follows in its entirety.
An “Open Letter” to RIM’s senior management was published anonymously on the web today and it was attributed to an unnamed person described as a “high level employee”. It is obviously difficult to address anonymous commentary and it is particularly difficult to believe that a “high level employee” in good standing with the company would choose to anonymously publish a letter on the web rather than engage their fellow executives in a constructive manner, but regardless of whether the letter is real, fake, exaggerated or written with ulterior motivations, it is fair to say that the senior management team at RIM is nonetheless fully aware of and aggressively addressing both the company’s challenges and its opportunities.
RIM recently confirmed that it is nearing the end of a major business and technology transition. Although this transition has taken longer than anticipated, there is much excitement and optimism within the company about the new products that are lined up for the coming months. There is a fundamental business reality however that following an extended period of hyper growth (during which RIM nearly quadrupled in size over the past 5 years alone), it has become necessary for the company to streamline its operations in order to allow it to grow its business profitably while pursuing newer strategic opportunities. Again, RIM’s management team takes these challenges seriously and is actively addressing the situation. The company is thankfully in a solid business and financial position to tackle the opportunities ahead with a solid balance sheet (nearly $3 billion in cash and no debt), strong profitability (RIM’s net income last quarter was $695 million) and substantial international growth (international revenue in Q1 grew 67% over the same quarter last year). In fact, while growth has slowed in the US, RIM still shipped 13.2 million BlackBerry smartphones last quarter (which is about 100 smartphones per minute, 24 hours per day) and RIM is more committed than ever to serving its loyal customers and partners around the world.