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RIM, Yahoo: Knowing When to Fold or Hold

The {complink 6518|Yahoo Inc.} board of directors isn't getting roaring applause from investors for its appointment of PayPal president Scott Thompson as the Internet search engine provider's new CEO. After the announcement of Thompson's appointment, Yahoo's stock price fell 3 percent on Wednesday and continued the decline in pre-market trading on Thursday. Investors, it seems, don't much like the move, nor do they see it as a panacea for whatever ails Yahoo.

It isn't about to get a ringing endorsement from me here, either. Thompson might turn out to be Yahoo's much-desired savior, but there's no denying the extensive damage that has been done to the company by the dithering of the board of directors and their inability to take difficult decisions in the past. It has lost significant ground to Google in the search engine market, and it's failed to expand into other market areas where it could leverage the millions who visit the site daily.

Yahoo didn't have to be in this position. The company is troubled today partly because co-founder Jerry Yang didn't recognize a great deal when one landed on his lap. This is the bottom line: Yahoo should have sold itself to Microsoft when it had the opportunity four years ago. In February 2008, Microsoft offered to purchase Yahoo for approximately $46 billion. Yahoo declined the offer and has since been stuck in a rut. Today, Yahoo has a market value of about $19.7 billion, about where it was when Microsoft made its offer in 2008.

{complink 4644|Research In Motion Ltd. (RIM)} has a lot to learn from Yahoo's experience. Hopefully, it isn't too late for the Canada-based BlackBerry phone maker. Just as the best deal that could have led Yahoo out of the murky waters was turned down by Yang, RIM has reportedly also declined overtures from Amazon and Microsoft. (See: 6 Strategic Options for RIM.)

The muddle RIM is in was a creation of its co-chairmen and co-CEOs Michael Lazaridis and James Balsillie. Lazaridis founded the company in 1984 and with Balsillie built a great company that once dominated the smartphone and enterprise messaging markets. Unfortunately, neither seems to understand how to migrate the company to a new level. Rather than carve out a definitive growth future that may involve some sort of partnership, they are holding on tightly to a sinking ship and desperately grasping for flotsam to help it stay afloat in the middle of the ocean. Help is nearer, though, even if it may have to come from nearby and bigger vessels — competitors, telecom partners, or even new entrants into the market, including Amazon.

What RIM needs is a new direction and a drastic change of course, but are the current CEOs able to provide this — even if this might result in their departure — or will they rather hold on tightly to the bitter end? The company faces major challenges: Its products aren't as hot as they were, rival designs are selling faster, the enterprise market it once dominated is being attacked (successfully) by Apple and Android-device makers, and the window of opportunity for making a deal is closing, slowly but surely.

This is why Yahoo's appointment of a new CEO, years after it received a great acquisition offer, can serve to remind RIM shareholders and directors that there is a time “to hold 'em” and a time to “fold 'em.” Just in case they don't know, here's a part of the lyrics from Kenny Rogers's “The Gambler.” I hope RIM's co-CEOs get it:

    You got to know when to hold 'em,
    Know when to fold 'em,
    Know when to walk away,
    Know when to run…

RIM may not need to fold, but, as the the song continues:

    The secret to survivin'
    Is knowin' what to throw away
    And knowin' what to keep.

I am interested in your thoughts on what RIM should be throwin' away and what it should keep.

33 comments on “RIM, Yahoo: Knowing When to Fold or Hold

  1. Barbara Jorgensen
    January 5, 2012

    The advice from the song is classic and applies to every decision imaginable. Too many great companies have failed because of management's ego or insistence they are right and everybody else is wrong. That's what boards are directors are for — a reality check. Sounds like it might be time for RIM's top management to walk away…or at least consider some of the criticism being levelled at them

  2. Anna Young
    January 5, 2012

    @Barbara, that's correct the song applies to every decision making process imaginable. More importantly it is more or less sounding a wakeup call to RIM's board of directors to wake up and decide on the future of the company's direction before it becomes too late.

  3. bolaji ojo
    January 5, 2012

    Venture capitalists and Day Traders are better at investing without emotions. They cash in their profits at predetermined levels and exit at predetermined loss levels. They understand this is about making or losing money and don't get involved in who founded what etc. Company founders, on the other hand, feel like they are losing their baby when they have to part with the enterprise. The board of directors usually step in at points like this. That's why what's happening at RIM is so difficult to comprehend.

  4. _hm
    January 5, 2012

    Anna: This is peculiar dilema for founders. After crreating great empire, it is very difficult to let it go. If you were founder and CEO, what would you do? Will you let it go?

     

  5. mfbertozzi
    January 6, 2012

    This is good Bolaji, at the early stage, usually, founders are same people in charge of running the company for both technical and business matter, but once “the baby” is growing, it should be wise, as their attitude, to go away. On the other hand, especially during current financial crisis, the presence of people have founded the company, could represent, for investors, a positive aspect for providing funds.

  6. FLYINGSCOT
    January 6, 2012

    If the founding fathers of a company are too emotionally involved to satisy the needs of shareholders the shareholders should either bring in “unemotional” management or let the company go private again if the deal is possible.

  7. Anna Young
    January 6, 2012

    @_hm, to answer your question, I understand the dillemma confronting founders and CEOs of these organisations and I'm sure it is an unbearable and heart wrenching decision and position to be to let go of your pet project, your dream, your baby. I think it should be an achievement for any CEO or Founders to allow a capable hand(s) carry on with this dream and seeing it flourish. If this action will essentially bring about the betterment of the company, absolutely yes. Which would you prefer, a sinking ship or one where letting go will turn the business around?

    Now, with reference to RIM,this is a company that's achieved great success with its unique services e.g messaging service etc,and has reaped and still reaping financial rewards for its shareholders and all.This alone isn't sufficient to keep the business afloat. I think to carry on the successes of this company, the board of directors need to come up with a quick decision – a decision that will change its current position and outlook in the market place.

  8. Anna Young
    January 6, 2012

    @FlyingScot, true if the shareholders are nolonger satisfied and are unable to ascertain the benefits and rewards  from their investments, due to clouded judgement on the Founder's part or the CEO, It's the board of directors role to meet and make the necessary decisions based on facts and figures. I hope and I'm sure this is what the board of directors of RIM are currently  deliberating – next step forward.

  9. Eldredge
    January 6, 2012

    It sounds like they may be folding their co-chair CEO structure, which is probably a good move on two levels – structure and personnel. It is unfortunate that it has to come to painful management changes, but certainly isn't unusual.

  10. Eldredge
    January 6, 2012

    The news reports are also indicating that RIM is prepared to license their operating system, to help generate revenue> this seems like agood move also, because they can benefit from the sale of competitors products.

  11. bolaji ojo
    January 6, 2012

    Eldredge, The step towards licensing the RIM OS to rivals may be one good action too late. The update to that operating system has been pushed out so why would a rival want to license the use of an already stale product. What RIM could do is offer its Blackberry Messenger (BBM) and the technology behind its proprietary and secure messaging system. That will certainly attract some interest. It might even position Blackberry OS as a viable alternative to both Apple iOs, Google Android and Windows OS.

  12. bolaji ojo
    January 6, 2012

    RIM's co-chairmen and co-CEO system is infantile. What happened?  The two officers (Michael Lazaridis and James Balsillie) couldn't agree on who should have the bigger office? What did they do? Split the corner office? It sounds more like two kids arguing over who should have the bigger piece of the pie. What's even more mindboggling is the fact a board of directors is presiding over this situation.

     

  13. Eldredge
    January 6, 2012

    I assume they are also considering those options, if they have gauged the marketablility (or lack thereof) for the current OS. Haven't seen enough detail to determine.

  14. Eldredge
    January 6, 2012

    Well, regardless of whether the relationship between the co-CEOs is good or bad, it deson't seem like a responsive management structure. Maybe it also indicates that they are afraid to makea decision, which isn't a good situation either.

  15. Anna Young
    January 6, 2012

    @Eldredge, RIM's management changes is a good move. Merely replacing the co-chairs (Mike Lazaridis and Jim Balsillie) is a wise move, however, would it bring the quick expected turn around? I very much doubt this. I think further management restructure is still required.

  16. Anna Young
    January 6, 2012

    @Bolaji, It's obvious this is probably the cause of misdirection within the organisation. If two can't work together, then it's best they tender their resignation. I think it's time for this change. It is owed to the company's shareholders.

  17. Anna Young
    January 6, 2012

    @Eldredge, It's good the company is considering various options. It is still a speculation that RIM has agreed to licence its software to Samsung Electronics co.ltd and HTC corp. This indicates the urgency of situation facing RIM. Would review to license its software a good move? I really don't know. Plus it's not been confirmed yet. What is crucial at this stage for RIM, is the urgency to decide on the next probable direction.

  18. itguyphil
    January 6, 2012

    And they have features that other vendors want. So why not benefit from it in these dire moments?

  19. _hm
    January 6, 2012

    @Anna: Sometime person becomes possive for quite ccomplex reasons. He/She may not pass controls to his own children. In hindsight, this may be normal life cycle of most business empire. They may last few decades and after that they succumb to new entrants. RIM has not so long period due to nature of its field.

     

  20. t.alex
    January 7, 2012

    This is strange. Why would anyone license RIM OS when they can get Android OS for free?

  21. Ariella
    January 8, 2012

    @_hm may be due to the endowment effect.

    @Anna, I like the application of the song lyrics to your argument. I once did a post in that vein on businesses using social media using the song “Getting to Know You” from The King and I.

  22. Jay_Bond
    January 9, 2012

    I think at this point RIM's best bet is to merge or be sold to another company or to license out its OS and products. One of the nest things RIM has going for it is their mail service. No other platform allows multiple email accounts to be managed and work efficiently like Blackberry's. For this reason alone my wife, who has upwards of 8 different accounts because of work and personal email, can't get rid of her Blackberry to get another OS. If another platform could utilize the email service and give great features, my wife and many other Blackberry users would be on board in a heartbeat.

  23. Wale Bakare
    January 9, 2012

    @t.alex, dont you think RIM's distinctive features of BBM such as end-to-end security worthy of valuable asset? And besides, if consumers of smartphones are more security concious, Blackberry users may have increased in numbers. RIM's OS security feature, i think more trusted compare to Android OS.

  24. Anna Young
    January 9, 2012

    @Ariella, Thanks. Lol I just thought it might cut the long story short by adding lyrics from Kenny Rogers song to support my point.

  25. bolaji ojo
    January 9, 2012

    Ariella, You and Anna Young seem to be having so much fun on this subject of supply chain and lyrics, I would like to commission you both to write a blog each on the lessons the electronics industry can learn from songs. Lyrics only, please and deadline? Not, “when the saints go marching in. . . “

  26. Anna Young
    January 9, 2012

    Jay_Bond, I agree Blackberry's email account is unparalleled. The multiple mail service offered by Blackberry is the reason my family and I couldn't get rid of our blackberry phones. I think it's best RIM merge with similar company.

  27. Anna Young
    January 9, 2012

    @Bolaji, Lol!

  28. Ariella
    January 9, 2012

    @Bolaji, a challenging assignment, but it could be fun, especially as a collaborative effort!

  29. JADEN
    January 17, 2012

    I don't know if RIM has ever realized that they have been distrupted in the smartphone market and are doomed to see their market share erode to irrelevance.  They need to consider what their core competence is and keep it.  If RIM had the right leadership and perhaps embraced just one CEO rather than two, it could take this opportunity in turbulent times to change, evolve and grow.

  30. Anne
    January 17, 2012

    RIM could still recover, they just need a radical strategy that can work for them.  The need to focus on their strenghts and get someone capable to sort out their product map.

  31. JADEN
    January 18, 2012

    @Eldredge,

    They may be afraid to make decision if they don't know what to benefits. The board has to analysed their structure and consider the various benefits of reshuffling their leadership and appointing a new head, the two CEOs also have to relinguished their current positions in the company's board.

  32. Eldredge
    January 18, 2012

    @Jaden – You are right, and they haven't been very fast in making any decisions. But it does seem obviouds that some sort of change is needed.

  33. t.alex
    January 18, 2012

    Wale, you are right. I am not so aware of this feature. This definitely matches the needs of business people.

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