Two isn’t always better than one. At least that’s the line of thinking that Research in Motion (RIM) demonstrated on Sunday, when the Canadian company announced that it was replacing its co-chief executive officers — Jim Balsillie and Mike Lazaridis — with one CEO. Thorsten Heins, who has been at RIM since 2007 and was most recently a co-chief operating officer, will take on the new role.
RIM has lost significant ground in the mobile sector since the launch of Apple’s iPhone and Google’s Android-based devices. According to The Wall Street Journal, in addition to service outages and ongoing product delays, the company’s share of the smartphone market in the U.S. has fallen below 10%.
Balsillie and Lazaridis defended their joint-CEO leadership structure in the midst of the company’s well-publicized difficulties, arguing that replacing them at a critical time would only derail a turnaround. But some analysts have questioned the arrangement. In a recent Knowledge at Wharton article, Wharton management professor Lawrence Hrebiniak notes that having two CEOs could turn out to be a handicap in the long run, because it potentially muddles decision making. “When things are going well, none of this is questioned,” he adds. “When RIM was dominant, it could have had five CEOs and been fine.”
According to the Journal, Heins has a reputation for managing execution and has been training for his new role for some time. But the real issue for RIM, according to Wharton management professor Daniel A. Levinthal, is not the person — or persons — at the helm at the company, but rather where the entire ship is headed. “RIM, in my view, needs a new strategy,” he says. “The shift in leadership may help precipitate that, but a new person executing the existing strategy will continue to be disastrous.”
Heins, however, indicated during a Monday conference call with analysts that he doesn’t see the need for any “drastic” changes in strategy — instead placing an emphasis on “process discipline” and “scaling the company further.” He also said that he wouldn’t consider splitting up RIM into separate businesses. “We are strong because we have an integrated solution. We are vertical. We have our network. We have our services. We have our enterprise service out there with more than 250,000 enterprises connected to it. And we have fantastic devices and a fantastic ecosystem that we’re building. I want to build on that. ”
But if a strategy overhaul is really what’s required, what would Levinthal recommend to RIM? “My suggestion is to stop thinking of yourself as a device company — and certainly don’t bother thinking of yourself as a consumer product company.” RIM already has “a killer app,” he points out — the company’s secure email and instant messaging communication. “Let [those services] be device independent and run on Google’s Android [platform] or the iPhone. Communication would still flow through the RIM private network, and corporations will pay the ‘toll’ for that.” Doing so, he adds, would save RIM “a fortune developing and marketing devices that people increasingly don’t want to buy, and preserve [the company’s] revenue flow.”
