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RIM Blackberry Tumble By: Joshua Hauger and Sophal Espiritu

BA305 Leon Chickering

Joshua Hauger and Sophal Espiritu [Type the company name]

RIM BLACKBERRY TUMBLE 1

Background

Research in Motion (RIM), now officially known as its commercially proven name of Blackberry, experienced a dramatic shift in consumer use leading to reduced unit sales and revenue. Leading causes of sales loss are communication breakdowns both internal and external, design conflicts and flaws, as well as marketing errors on behalf of the CEO and marketing team. Its social media struggles also highlight communication struggles which could have been avoided. This report will attempt to analyze the various aspects of Blackberry’s challenges and present possible courses of action (COA) available to change the current catastrophic market share losses.

Communication Factor -Internal

All large organizations require great communication flow between staffing elements; particularly between design, finance, and marketing teams. Communication interruption with these groups will inhibit an institution’s ability to design, manufacture, and distribute products in a timely and useful manner. Blackberry experienced this communication breakdown on an ambitious scale. During initial startup Blackberry found an excited consumer base demanding smart phone technology capable of generating an on-the-go office environment. Designers, including hardware and software developers, exploited technological abilities to deliver a handheld device capable of voice communication, email, and wireless access protocol (WAP) – commonly referred to as simply internet access. Initial introduction into the market RIM BLACKBERRY TUMBLE 2 place was excitingly fast and highly profitable.

However, as with all technologically driven products the market has many powerful competitors, namely Apple and Microsoft. Both of Blackberry’s strongest competitors delivered powerful devices capable of exactly the same properties as the

Blackberry model 850. Blackberry did not meet the competition with the same vigor found with initial entry. Blackberry did not fail in the software capacity, but failed to communicate well with the customer. Overconfidence rang superior and design elements supporting WAP technology were slow to change. Blackberry models commonly utilize a QWERTY style keyboard and limited touch screen processes. In fact, Blackberry will not market a fully integrated touch screen input until release of the

Blackberry 10 scheduled to release in March 2013. The Apple IPod was released with full touch screen integration in 2007. This puts Blackberry a full six years behind one of their strongest and most popular competitors. Consumers clearly articulated a demand for full touch screen capabilities and Blackberry failed to head this demand.

Failures to communicate well with consumers generated an unexpected shift away from Blackberry products. Hardware design teams expectantly receive majority of the finger pointing. Design elements were slow to change and Blackberry missed the proverbial iron while it was hot. Design teams did not listen to the consumer. Additional criticism must be placed on marketing’s failure to also listen to the customer, but on more than one area. Marketing departments play a pivotal role in keeping a pulse on the consumer base. A large portion of this maintenance is in the form of customer interaction and observing market trends. The trend away from QWERTY data interface RIM BLACKBERRY TUMBLE 3 clearly shifted to touch screen application. Marketing failed to monitor consumer trends and placing a premium on consumer satisfaction.

Technology is not a standstill industry. Remaining constant too long will inevitably generate downfall for any organization. One topic of intrigue rests in

Blackberry’s internal communication. Now former CEOs and Jim

Balsillie failed to run an organization with great communication processes. The irony here of course is that Blackberry was a leading distributor of communication devices.

“One former employee says the situation got so bad that internal deadlines simply weren’t taken seriously. As a product launch date inched closer, it was common for a few teams working on the same project to realize they were unlikely to make the date, but no one spoke up, under the belief that another team was even farther behind.”

(Castaldo, 2012) Executive officer responsibilities include ensuring the flow of communication. Understandably a CEO does not work at the functional level; however frequent internal staff meetings and milestone briefings would have openly identified teams falling behind on their assignments and provided a forum to motivate the team.

COA recommendation for future organization policy is to conduct quarterly staff meetings to encourage free flowing exchange of information. As product introduction date into the marketplace gets closer meetings would occur on a bi-monthly schedule to ensure product is ready for a timely introduction.

Communication Factor - External

Internal organization communication remains empirically important to ensure RIM BLACKBERRY TUMBLE 4 cross talk amongst staff elements. However, perhaps equally important is communicating the product offered to the market. Blackberry has become synonymous with failing to communicate well with their consumers. Bloomberg BusinessWeek brought this information to light, “The first Blackberry TV ad ran in 2008, nine years after the product was launched, when it was already racking up sales of more than $6 billion a year.” (Brady & Miller, 2010) Advertisement remains a paramount focus toward maintaining frequent interaction between an organization and consumers. Reaching target consumers is self-limiting when advertisement fails. Consumers may know about the Blackberry and may have friends that own one, but word of mouth will never wholly disseminate information to potential consumers as found in commercial advertisement.

An immediate COA to turn this around is to highly publicize introduction of the newest

Blackberry model using all forms of media available, i.e. online, print, and television campaigns.

Communication to customers during the 2007, 2008 and 2011 power outages of its networks was another catastrophe of its own. The company was well-known for speed and reliability, and also for providing internet and email services to its customers.

During these periods of power outages, millions of global users lost services for days in

Europe, the Middle East, Africa, Canada and North America. This failure was thought to be caused by a malfunction of one of the company’s main pathways, which was responsible for the connection between main email servers and Blackberry’s network.

During this crisis the company gave little or no information to its customers regarding issues nor provided an estimated timeline for the fix. Even if the situation hasn't RIM BLACKBERRY TUMBLE 5 changed, by regularly informing users that it is being worked on provides assurance that their woes are being taken seriously. The business partners of Blackberry seemed to be as affected by the blackouts as BlackBerry users. The partners began to question whether or not Blackberry could conduct services reliably. They feared that the blackouts may be the beginning of a trend of poor service. Blackberry had many successful competitors that were not experiencing these issues. To stay relevant in its field, Blackberry needed to act swiftly to resolve this issue.

The pathway malfunction also caused the internet service to become interrupted, which could have even more devastating consequences. It was found that people were using devices such as smart phones to conduct business when they were out of the office. People used laptops in the past for such activities, but have since switched to smart phones as they are easier to transport and more convenient. Interruptible internet service will hinder the ability of these workers to successfully conduct business activities on the go. Becoming known for unreliable services could irreparably damage

Blackberry’s business. Nearing the end of the 2011 power outage crisis, “The company’s co-founder Mike Lazaridis apologized in a video message to BlackBerry users, saying services "are returning to normal” in parts of the world, but he wasn’t able to say when they will be fully restored.” He later went on to say, “We know we've let many of you down. You expect more from us. I expect more from us.” (Lonescu, 2011)

By reaching out to customers in this way, and taking personal responsibility without trying to push blame, it showed delayed accountability. However, not offering more insight to causes of the problem left customers and the media feeling skeptical and RIM BLACKBERRY TUMBLE 6 increasingly frustrated. Openness, speed and transparency are key factors in crisis situations. Compensation isn’t a bad idea either. “The company later offered $100 in free apps to customers affected by the crisis as an apology and to compensate them for their down time. The number was a staggering 70 million consumer and corporate users.” (The Canadian Press, 2011)

Social Media Responses

Social media offers a range of potential benefits in business communications with its consumers and the general public. In this rapidly changing environment, managing social media outlets can be more of a challenge than companies have bargained for but it’s an art which requires perfecting. In order to manage this influx of incoming and outgoing messages, companies such as Blackberry should have adequate staffing to monitor social media traffic. Blackberry has become a poster child for social media fails because they got it so spectacularly wrong on so many fronts and, they continued to get it wrong. Its plight taught us that when a company fails to ‘get’ social media, its misuse can have serious repercussions from which a brand may never recover.

For instance, after immense pressure from investors and shareholders, co-

CEOs, Mike Lazaridis and stepped down and Thorsten Heins was appointed as the new CEO of the company. Heins was a chief operating officer who joined the company four years ago and was now taking the reins from its founders after the company has lost tens of billions in market value. Social media and regular media did not take this change of leadership lightly. Some voiced words of support while RIM BLACKBERRY TUMBLE 7 others questioned how a major executive change while the company was so fragile, could lead to it imminent demise. One of the first things Heins did was state on a conference call that he didn't think significant change was needed. “He said the leadership change was not a "seismic" event. Heins said he's committed to switching the company's phones over to a new operating system, which is expected late this year.

That's the same plan favored by Lazaridis and Balsillie,” (Gillies, 2012)

During times of crisis, social media can be especially unforgiving and harmful to business. As previously mentioned, there was poor communication with its customers during the power outage crisis. They ran several Twitter feeds, an official Facebook page, but there were gaps of over 12 hours between service updates. Also, with unrestricted social media outlets, they must be monitored and customer care employees must proactively engage with customer responses. They simply cannot leave these negative and frustrated comments posted and ignored. Ideally, they should be providing hourly updates so users have some indication that they are moving towards a resolution. This should have been part of a communication planned well in advance - something that should swing into action as soon as a serious problem has been identified. We all accept that with technology outages happen from time-to-time.

However, in this instance, it is not clear what was happening and how long it was going to take to fix and those were the main frustrations. Blackberry needs to get better at valuing and communicating with their customers: use the other media channels to talk to customers through Twitter, Facebook and online news - there is nothing wrong with issuing a press release or picking up the phone and calling the media the old fashion RIM BLACKBERRY TUMBLE 8 way. An immediate COA is for BlackBerry to establish its own service update site to more effectively deal with future issues, and run their social media in a more holistic way.

Social media can also serve as an effective marketing mechanism for release of new products. Many bloggers post product reviews on their personal sites or through

Facebook and twitter accounts. With the highly anticipated release of Blackberry Z10 and Q10 equipped with its new operating system Blackberry 10, many were anxious to see if these new devices could generate enough sales to compete with Apple iPhone and android phones. Something even Microsoft’s sleek Windows phone couldn’t do.

Like its many communication failures, features of the new devices leaked before its initial release, therefore the element of surprise was lost. Changing the company name was the biggest announcement, if anything. All is not lost for Blackberry though and many consumers and investors are coming around to see it. The company is a long way from reclaiming its original market share but they are moving in the right direction, which is forward into the future.

Designers Falling Behind

Products with heavy design elements demand software and hardware design team interaction; as well as frequent communication with market analysis teams.

Blackberry displayed slow reaction time in meeting market place consumer requirements. Neil Patel provides interesting insight into the Blackberry’s inability to meet consumer demands. “RIM failed because they had technical wizards at the helm RIM BLACKBERRY TUMBLE 9 who never valued the end users input. It was an engineer-driven culture which worked as long as there wasn’t any competition.” (Patel, 2012) Apple provided the negative competition base Blackberry was not prepared to combat for share of the smartphone market. Design teams conducted business for many years with an expectation that they, the designers, knew what was best for the consumer. The challenge with that line of thinking rests with the design team working in a bubble. Designers frequently write software with individual requirements in mind. This application is true in most all occupations, i.e. food service. However, the end user of the Blackberry smartphone holds a different set of core requirements for the tools they use to communicate and the speed of which they must interact.

Design teams in this instance were not hindered by using the QWERTY method of interaction with the Blackberry product so they assumed, incorrectly it turns out, that consumers would also accept the current Blackberry design structure. On the contrary, with Apple interjecting the marketplace with touchscreen data input with great consumer appreciation Blackberry’s designers were working in a vacuum. Again, communication flaws at the staffing level allowed for little communication between designers and marketing teams. Ideally marketing team members would have conducted consumer research into the new IPod reception in the market and found consumers appreciated the new data input process. This information in turn should have passed on to design teams for immediate design modification. Conversely, Blackberry remained in a stagnant posture far too long with no marketing officer appointment until 2009. Delaying a strong pursuit in marketing strategies may have caused a demise at such a level RIM BLACKBERRY TUMBLE 10

Blackberry may not recover. Competition and the pace of technological change are the most critical issues currently facing BlackBerry. Its strategic moves into mobile communication devices and portable entertainment downloading places the company in stiff competitive conditions from every angle. The technology and entertainment industries are constantly and rapidly changing. New competitors, low-priced rivals, and potential substitute products all threaten to reduce the perceived value of Blackberry.

COA recommendation for the current marketing officer, Keith Perry, is to immediately generate interaction with cult Blackberry users. Social media must remain at the forefront of this new interaction strategy. Blackberry possesses a limited window with which to reach out to dedicated followers and generate a cult like following. Developing relationships with consumers will provide Blackberry information needed to immediately begin work on future generation Blackberry devices targeting tomorrow’s emerging demands.

Conclusion

Introduction of new Blackberry devices meeting consumer requirements and expectations may provide Blackberry the much needed boost of confidence needed to compete for market share for top competitors. COAs outlined in this report will replace the culture of poor communication internal to staffing and external to loyal customer bases. Equally important are the changes and filled leadership positions at the CEO, marketing, and financial level. Blackberry has a place in this market and continued interaction with design teams and proper communication strategies will propel this organization deep into the future of smartphone application. RIM BLACKBERRY TUMBLE 11

Castaldo, J. (2012, January 19). How management has failed rim. Retrieved from http://www.canadianbusiness.com/technology-news/how-management-has-failed-at- rim/

Brady, D., & Miller, H. (2010, October 07). Rim's : Failure to communicate. Retrieved from http://www.businessweek.com/magazine/content/10_42/b4199076785733.htm

Patel, N. (2012, April 12). 8 marketing lessons from rim's slow death. Retrieved from http://www.quicksprout.com/2012/04/12/8-marketing-lessons-from-rims-slow-death/

Lonescu, D. (2011, October 13). RIM Founder Says 'Sorry': BlackBerry Blackout Continues. Retrieved from http://www.pcworld.com/article/241825/blackberry_blackout_continues_rim_says_sorry. html

The Canadian Press. (2011, October 17). BlackBerry Apps: RIM Offers Customers $100 In Free Software After Outage. Retrieved from http://www.huffingtonpost.ca/2011/10/17/blackberry-free-apps_n_1015008.html

Gillies, Rob. (2012, January 23). New RIM CEO says drastic change not needed. Retrieved from: http://usatoday30.usatoday.com/tech/news/story/2012-01- 22/Blackberry-RIM/52748290/1