Research in Motion

Introduction

Since its humble beginnings in 1984, Research in Motion has come a long way. By 2008, with a market capitalization of close to 70 billion, it was poised to become one of the largest companies in Canada and the stage was set for it to become a near monopoly in world mobile communications market. RIM's product - Blackberry had taken the world by storm (pun intended, since Blackberry Storm is one of RIM's most profitable product), and the word "crackberry" had become synonymous with the workaholic professional. Yet, as the mobile telephony market for professionals started showing promise, RIM found itself besieged numerous competitors all over the world. RIM had a distinct first mover advantage in the market and was well known for its ultra-secure enterprise software. However, this advantage was rapidly eroding in the face of high R&D investments from RIM's largest competitors such as Nokia, Apple, and Microsoft. This was problematic as it foreshadowed the question of whether or not RIM was well positioned to continue to meet expectations, deliver award-winning products and services and maintain its lead in the smartphone market. Oftentimes, Wall Street expectations for technology driven companies were also linked to the technology spend and RIM was clearly not ahead of the game in terms of this metric. Just to maintain status quo, it was clear to RIM's CTO, Mr. David Yach, that he would need to hire 1,400 software engineers in 2008. Essentially, Mr. Yach faced the unenviable task of having to select the best options to deliver the growth expectations of RIM. These options included: (1) doing what they did, only more of it, (2) building on their existing and satellite R&D locations, (3) growing through acquisition or (4) going global. In this paper, we will examine the pros and cons of these options in the light of the capabilities at RIM and discuss the options that would be strategically most suitable for the company.

Industry Competition and Dynamic Capabilities of RIM

Dynamic Capabilities of a company incorporate three aspects: Sense, Seize and Transform. There is strong evidence that RIM was excellent at sensing the market and seizing the opportunities as they came along. Unlike Kodak where we saw instances of cognitive inertia, RIM was able to sense the desires of both, the professional consumer for sophisticated smartphones and corporations for secure systems to handle emails. RIM was then able to seize this opportunity by positioning its "push technology" to deliver emails and other data and at the same time capturing the market for smartphone devices by developing a range of sleek blackberry products that would appeal to the professional consumers. However rapid growth implied that RIM would now have to seriously transform its entire business. With 2007 revenues up 98% YoY, the team of 1400 software engineers was severely short-staffed and required at least as much new talent to drive engineering innovations and technological advances required to maintain current growth rates and profit margins.

Furthermore, by 2007, the competition in the smartphone industry was heating up and Motorola, Sony Ericsson, Nokia and Palm had products vying for market share. Apple's entry into the arena with its iPhone completely changed the paradigm. For the first time, RIM's market leadership in the smartphones segment was seriously threatened. Furthermore, Apple was also trying to position itself into the professional consumer market by investing in developing secure data service technologies similar to RIM. At the same time, Microsoft, the 800 pound gorilla was ready to dip into its war chest to develop better push technologies for mobile email. Google with android was also entering into the fray and it appeared that RIM may lose its first mover advantage in the industry to the up-and-coming imitators. The only feasible way to survive and grow in the face of such strong competition was to improve the services that RIM provided and this meant expanding its base of competent engineers and software developers.

In addition to the reasons cited above for increasing the pool of software developers, it was also important to note that RIM's technology spend was somewhat dictated by Wall Street expectations which based future earnings on the level of R&D spend as a fraction of revenues. RIM's core competency was its enterprise software which it bundled with its own blackberry hardware as well as licensed out to other companies such as Nokia, Motorola, Samsung and Sony Ericsson. For this reason software development formed a major activity and core competency at RIM. Consequently, RIM which was largely owned by institutional investors was under pressure to add more software developers to ensure that the Wall Street analysts did not downgrade their expectations for the company's growth.

All through its history, RIM has been a strong innovator, and had sensed the market and seized opportunities. However as it grows, it is important that RIM transform itself rapidly so that it does not lose this advantage to the follower-imitators but positions itself to gain a strong market share (See Fig. 1).

Options for RIM to increase its pool of developers

As the case discusses, there are four main avenues by which RIM could increase its pool of software developers:

1) Optimizing their current strategies: Culturally RIM has been a very collaborative and vibrant culture. Although the company grew 10 fold in 7 years, the growth was centered in Waterloo with the University of Waterloo representing a large pool of new recruits. This naturally kept the culture at RIM very communal (Fig. 2 - green) which allowed for extensive collaboration in the R&D groups. Expanding the recruitment programs at University of Waterloo and sending global scouting groups to bring in talent to Waterloo is