I am not fully versed in the notion of innovative disruption, but it seems pretty obvious that a Clay Christensen-esque Innovator's Dilemma disruption is what's going on here: somebody had a decent product, is first to market, but doesn't have a clear enough vision to see how to stay on top and stay innovative and gets blindsided by unexpected (read Apple + Android) competitors. I wonder how closely the non-cliff notes version of RIM's fall matches the innovator's dilemma model.
I think RIM and Nokia both had "Cash Cow Disease". The Blackberry and Symbian had been successes for so long that short-term profits/losses and internal politics prevent the companies from investing in new (and seemingly "inferior") technologies that would cannabilize their own successful products. For example, Nokia had touchscreen phones that didn't sell well, so they thought the touchscreen iPhone was a "toy".
RIM in particular continues to have strong financial numbers. But the outlook is bad as the trends are showing decline rather than growth.
The innovator's dilemma really takes a toll on company's who main source of revenue is being disrupted and at the same time have to report to shareholders.
Yes, this is absolutely an example of the disruptor being disrupted. RIM has killed themselves by trying to out-increment features on a handheld email machine all the while ignoring, or failing to perceive as relevant how both iPhone and Android were irreversibly changing the basis of competition.
RIM's only survival strategy is to stop playing catchup with me-too products that the market has already passed, and to offer something different leveraging their proprietary platform if possible, but satisfying and targeting a completely different market need, such as doing mobile social more elegantly or something like that. I'm in process of writing a detailed analysis of RIM's missteps that have enabled disruption, and why their current strategy is pointing them to oblivion. This article is killer for RIM -- only 26% of Blackberry owners plan to get another! http://tiny.cc/iphone5_kills_the_pack
The term is 'disruptive innovation'. It's an often misunderstood concept - the key point is that not all innovation is disruptive. The defining feature of disruptive innovations is that they are initially worse than the technology they displace, but as they are significantly cheaper they allow the tech to reach new markets. Since the iPhone was a high-end product, it can't be called disruptive.
Sorry for the late reply. Clayton Christensen, the person who invented the term, cited the automobile as an example of an innovation that was radical but not disruptive. The textbook disruptive innovation is the PC, since in terms of value for money it was much worse than the mainframes it replaced, but opened up computing to new markets.
Christensen's basic thesis is that disruption is primarily a marketing phenomenon, not a technical one. If an innovation is clearly better to what came before, the incumbent companies will start to use it since it's what their customers demand. However, if an innovation is worse-but-cheaper, the existing companies won't be interested, but new startups will spring up to sell the disruptive innovation to previously unserved markets. Over time the new technology gets better, replaces the old technology, and the incumbent firms that didn't switch get disrupted.
@IssaacL. You are right that most people don't know what a disruptive innovation is. That derives from too many believing that it means "innovation" of any kind, or "better" than anything else in the market because they equate the endgame (the disruptor usually ends up with dominant market share and the best product, but only after many product cycles) with what creates disruption, and they aren't the same thing.
However, your brief definition skims over way too much of the theory. Disruptions don't always have to be cheaper or "worse" in the qualitative way that is generally understood. To disrupt, an innovation simply needs to be substantially better on a dimension that the new market cares about, while being referentially worse (compared with incumbents) on a dimension that the existing market and incumbent producers care about strongly (and therefore aren't incented to compete against the disruptor until it's too late).
This is a completely consistent with Christensen, and also with market reality. However, Christensen was wrong about the car because he didn't follow his own logic. Do you see buggy and horse whip manufacturers anymore? Do you see people raising horses for transportation? How about trains as the primary (dominant) form of mechanical overland transport of goods and people? Cars were initially "worse" in that they spewed lots of dirty soot into the air, required fueling stations that didn't exist, could only drive on paved roads (which also didn't exist), and broke down constantly (which meant everyone that drove one had to be a mechanic). But, motorized vehicles were also superior in that they could go faster for very long periods of time without needing rest, they were cheaper per mile to operate than a team of horses, and they were fun to drive, offering a sense of freedom. Cars disrupted lots of things -- you just have to identify the right market and the cause of its disruption.
The fact that the very first cars were really more hobbyist or wealthy-man's toys is irrelevant -- so were PCs until they became economical and found their niche through VisiCalc spreadsheets.
The fact that Christensen wrote the seminal books and made the observations from which the theories were derived doesn't mean either that he is always right, nor that he always applies the theories correctly to predict disruption. He famously declared both the iPod and the iPhone to be not disruptive at their introduction, yet they are archetypal examples of disruption.
In 1949, Thomas Watson Sr, IBM's then president famously declared that he couldn't envision a need for more than 12 computers to satisfy the needs of the entire world. Sometimes we're too close to things to see the forest for the trees.
Also, the Wikipedia article has been overwrought by many techies who think it's about technology, and as such isn't an entirely accurate or good summary of disruptive innovation. In that respect, you are correct -- technology is neither necessary nor sufficient for disruption to occur, but correct market segmentation and positioning strategy, having the minimum viable feature set to satisfy an unmet or underserved need, targeting a market slice that is willing to pay to have its problem solved at a price that you can afford to make it are all critical properties of disruptive innovations, and they are entirely about marketing and business model, not about technology.
Still, we all know that the majority of disruptions are enabled by new technology because it can create opportunities to solve unmet needs at a price point acceptable to an unserved market.
I don't know if that better answers the original question, but it is sometimes, although not frequently the case that disruptive innovations are more expensive than what they replace. The iPhone is a great example of this, as is the original IBM PC which was far more expensive than the PCs that came out of the late 70s, but had the big advantage of IBM's imprimatur endorsing it plus an open architecture, which attracted apps and an ecosystem of vendors springing up to support it.
While in the short term, Android and iOS are having an impact, RIM's longterm fate is affected by Windows Phone 7 because that is the easiest Mobile OS upon which Enterprise can standardize comfortably - iOS is just too consumer centric [e.g. three year obsolescence] and has a history of sloppy security practices [e.g. lying to Exchange], and Android is somewhat fragmented due to diversity of device capabilities and does not give a high priority to integration with the Microsoft stack.
All the things RIM does well for enterprise, Windows Phone is likely to do better over the long term. And with Nokia getting set to leverage their existing reputation for quality on top of WP7, it is hard to see what RIM can bring to the table when it comes time to convince IT.
[http://www.cio.com/article/501815/iPhone_3.1_Breaking_Exchan...]
To be fair, every mobile device that Microsoft released was supposed to destroy RIM. I'm still not convinced that Microsoft can pull of a decent phone with full Exchange integration.
I'm a little sad for RIM and would like to support a Canadian company but in the end they just aren't able to adapt. I don't think they ever will unless there is a management change. Seriously a tablet that can't receive email Nativity? That's what they were know for yet they can't use there strength right. QNX is a decent system, open it up, let others use it, in the end they won't be able to stop the tsunami of apple and android without help, other manufacturers using their QNX platform could help.
I don't have the deisre to support a Canadian company simply because they're Canadian, but I'm with you on the rest of it. When I heard RIM bought QNX I was ready for a game changer from them, but alas... too little too late. Perhaps it never could have worked; maybe Google with buy the QNX part of RIM and do something with it with respect to Android. I'd like to see it shine someday.
That was exactly Nokia's problem, they tried to cram whole computer in a phone. They even called their smartphones 'multimedia computers' and primarily targeted them for geeks. They never had a real idea why smartphones are useful. That strategy led them to huge amounts of code bloat and features without usability and made the development of updates horribly slow.
I think that Nokia's problem was they tried to redesign their software stack 3-4 times, never waiting long enough to get a mature enough product with real feedback before ripping things up and starting again. The worst case was the latest switch to WP7, especially after looking at the first (and maybe last) Meego phone release. It's like trying to build a house, getting the framing and walls up and right after you paint it you decide to go to a completely different foundation.
I don't think I've ever seen a company cut employees en masse like this truly help a company come from behind to regain their former status. It sends so many wrong messages. If those 10% of your company aren't worthwhile, why were they hired and employed in the first place?
If management can afford to cut staff by 10%, the C and VP level management should be fired. Start by cutting at the top, not at the bottom.
Cutting that deep means that management was fine with spending money like drunken sailors. Nothing RIM or Nokia has announced in the last few months in terms of changes has shown that they are going to do anything other than wither and die on the vine.
I can't disagree with the first two paragraphs, but for the last, what about shutting down entire divisions? If a company invested in a failed product that requires a number of specialized employees, does it imply they were spending money like drunken sailors when they have to let them go?
"Nike makes some of the best products in the world. Products that you lust after. But you also make a lot of crap. Just get rid of the crappy stuff and focus on the good stuff."
nothing will help these companies. It is time for them to go.
Look at the bright side though - 2000 of mobile developers is relieved from working on dead-end products and ready to be injected into red-hot mobile hiring market to work on the successful mobile products. Its win-win for everybody - the developers, their new companies, consumers.
What makes you think that all 2000 are engineers? RIM consists of many departments (IT, Sales, Marketing, R&D). They also have stuff like SAP for their ERP systems. That thing needs a team of developers that don't necessary develop "mobile" software.
From my knowledge, there are competing software/apps within the internal RIM ecosystems itself so these people that got laid off could potentially be the result of internal wars.
For example: software A that was built using the old RIM ecosystems (from the OS, the API, the toolkit, etc) and old mobile paradigms/concepts competes against software B that was built based on the latest web 2.0 + mobile crazed. Perhaps it's time for software A to die. Some companies might just shift these engineers to software B's team while other decided to shut down the whole team (sometime it's not easy to integrate new team members, especially if software B was a result of acquisition).
From one of my friends who worked at RIM on a co-op job less than a year ago: "I definitely saw a lot of redundant jobs and am not surprised they're cutting this many".
They were hiring anyone and everyone they could for a while there, so I think this is a good move. Keep the best employees are double down on them.
Well, that's what a functioning market where there is competition does. Allow people to pick what they want, and it so happens that what people now want aren't BlackBerries. Both Apple and Google should remember that -- their positions aren't set in stone and to maintain them in the long term they need to avoid resting on their laurels.
I would be really interested to read an informed analysis of these two cases in the context of public company shareholder dynamics. I think it's an understated advantage of Steve Job's ultra-centrality at Apple that shareholders tend to defer to him in a way that I expect they might not with other companies (obviously this might become a disadvantage when he leaves). Has pressure from shareholders meaningfully affected the decision-making of companies like Nokia and RIM? Are short-term incentives defeating long-term incentives because of such pressure? I don't know, but I'd love to hear from someone who does.
And they've done a lot of amazing turnarounds, from paper mills to rubber boots to cables to TVs to mobile phones. But this is the first time they surrender the decision making power of the company to a third party, Microsoft.
That may make adapting to changing situations harder.
esr also keeps a close eye on the developments in the mobile phone market. His latest blog post on this is at http://esr.ibiblio.org/?p=3493 , a short quote:
"Nokia’s strategy, insofar as it’s actually had one since the tie-up with Microsoft, has been to hang in there on volume sales of dumbphones until it could deliver world-beating WP7 handsets. The major risk here, other than the wild unlikelihood of WP7 ever becoming anything consumers actually want, was that the Chinese electronics industry would undercut them on price-performance. I predicted this would happen, it is happening, and Nokia’s disastrous July earnings call is the result."
While "keeps a close eye on" is certainly an accurate description of what he does, "makes accurate and/or well-founded predictions" is not, and that's more important. Someone who wanted to be well-informed about mobile would do far better by reading Horace Dediu, for example.
I think esr lost a lot of credibility with his claim that the iPhone was facing imminent collapse, followed by Apple's record quarter. He seems more interested in finding any evidence whatsoever for the proposition that Android will dominate the market, than in doing thoughtful analysis. The post you linked is a case in point. He's also cherry-picking his past predictions to highlight only the ones that turned out to be right.
I'm not sure if it's related to their troubles, but their corporate structure has always seemed odd to me. Starting with the whole "co-CEO" role, which seems like an experiment that hasn't quite panned out.
as a former multi-year employee of a formerly glorious company that fell victim of its self-denial to recognize a paradigm shift i can say that employees can blame only themselves.
Yeah, I agree. The parent post makes it sound like there is some other force in a company that can be blamed other than the employees. I suppose someone might say "management", but to me it's all the same.
From what I've seen, many companies do not listen to their employees, especially as they get larger. RIM in particular strikes me as a company where its employees have no voice.
Wasn't there an open letter from a senior staffer at RIM just a few days ago, which spelt out the problems on the ground and what needed to be done about them in brutally honest fashion, which was promptly brushed under the carpet (or not) by RIM PR? It seems like the rank and file staff at RIM get it, but the top level management don't, which is a sufficient condition to know how the story ends.
I was thinking of the same thing when I read this. To be fair, one of the letter's suggestions was that they hold people accountable for failed products. Excerpt:
"Just because someone may have been a loyal RIM employee for 7 years, it doesn’t mean they are the best Manager / Director / VP for that role"
If things would be as easy as that, flip to Android and compete with the rest... to the bottom. How would you differentiate yourself vs HTC, Motorola, etc?
What if the Chinese android handsets comes up with cheap mobile phones similar to BB hardware interface (the golden keyboard, you know that BB users love BB because of the keyboard).
Switching to Android makes RIM an average company like everybody else.
It's a perfectly viable strategy. Combine your peanut butter (hardware design, workflow, bb messaging, etc) with proven chocolate (android smartphone technology) and try to make something that preserves the unique qualities your company is known for while keeping pace with the competition on other features (high quality mibile browsers, games, etc.)
I know several people who still use blackberries because they are fundamentally superior for certain business needs. But that's just an extreme corner of the market, ultimately people will make due with other options that are "good enough" in order to take advantage of other benefits.
As far as the lowest common denominator problem, if you think htc, samsung, and motorola are in a race to the bottom then maybe you haven't been paying attention.
Samsung in on pace to become the #1 seller of phones in the world and the #1 seller of smartphones in the world. I don't have access to their numbers since they're a private company, but from what they report their revenue and profits dwarf that of RIM.
Most Asia-based manufacturers can have lower cost than any North America-based manufacturers. Just ask Broadcom whether they're feeling the heat from Taiwan-based manufacturers.
Race to the bottom doesn't necessarily mean a bad thing if you can produce the cheapest alternatives. But it is bad if you can't do that.
So by the same logic, Porsche and Ferrari should stop making gasoline powered cars with 4wheels in a race to the bottom with kia/hyundai - and switch to 6 wheel cars powered by waterwheels?
