RIM's Board As Bad As Its CEOs - InformationWeek

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Commentary
1/4/2012
08:33 AM
Eric Zeman
Eric Zeman
Commentary
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RIM's Board As Bad As Its CEOs

RIM's board, reportedly preparing to oust co-CEOs Mike Lazaridis and Jim Balsillie, should look at its own mistakes.

Research In Motion's board of directors is preparing a shake up the BlackBerry-maker's governance structure as soon as the end of the month, according to the Financial Post, a Canadian newspaper. The general reaction to the news across the Web following the report was "about damn time." However, the board's actions may be too little too late.

The action comes as RIM faces increasing pressure from investors for change. RIM's stock dropped 75% during 2011. Investors have a right to be angry. The number of missteps taken by co-CEOs and co-chairmen of the board Lazaridis and Balsillie are too numerous to count.

The most recent gaffe is a significant delay in the company's planned next-generation smartphone platform, BB 10. Instead of launching new phones by the second quarter of 2012 as promised, it now looks as though the new platform won't be ready until the end of the year. RIM's co-CEOs say the delay is due to the availability of certain processors, though some insiders claim differently.

Worse, time and again Lazaridis and Balsillie have demonstrated that they are completely out of touch with the pace of innovation and change within the dynamic smartphone market. They are in complete denial about the problems facing RIM, and continue to point to a brighter future that never seems to appear.

[ Find out 5 Mobile Things That Won't Happen In 2012. ]

RIM's CEOs have been under pressure since before the middle of 2011, when the PlayBook tablet launched. By June, investors were calling for change. Lazaridis and Balsillie were somehow able to quell a potential investor revolt by agreeing to a review of the company's governance structure. That review is set to offer its recommendations by the end of January, and could effect change within days or weeks once it is complete.

Anonymous sources cited by the Financial Post suggest that Lazaridis and Balsillie will be stripped of their co-chairman roles and the company will appoint a single chairperson (believed to be Barbara Stymiest, an independent director who joined RIM's board in 2007).

This is a start, but it doesn't go nearly far enough. Boards are typically in charge of hiring/firing CEOs. Lazaridis and Balsillie have managed RIM straight into the ground with warmed-over new smartphones, delayed launches, and botched products. I can't imagine any other CEOs keeping their job with such a track record.

If RIM's board doesn't also seek to replace the co-CEOs with a single, new leader, they aren't acting in the best interests of RIM's investors. That makes them just as culpable for RIM's performance as Lazaridis and Balsillie, in my book.

According to our Outlook 2012 Survey, IT should expect soaring demand but cautious hiring as companies use technology to try to get closer to customers. Also in the new, all-digital issue of InformationWeek: Inside Windows Server 8. (Free registration required.)

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Number 6
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Number 6,
User Rank: Moderator
1/5/2012 | 8:38:38 PM
re: RIM's Board As Bad As Its CEOs
Good analysis, Eric, although I've done enough research into CEOs and boards to know that melgross's comments are correct. The interlocks and social ties between CEOs and directors, most of which are CEOs themselves, are notorious for having more to do with CEO compensation and hiring-termination decisions than actual business performance.

Take a look at the outragious golden parachute Bob Nardelli walked away with from Home Depot, which director Ken Langone continues to defend. Or look how good Enron's board was at representing the stockholders' interests.

A little D&O insurance and you-scratch-my-back-and-I'll-scratch-yours... remember who sets outside director compensation... goes a long way to ensuring the continuing slow death spiral of most underperforming public companies. It has little to do with the actual technology and business.
ANON1237925156805
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ANON1237925156805,
User Rank: Apprentice
1/4/2012 | 10:47:20 PM
re: RIM's Board As Bad As Its CEOs
How about Respect Isn't Merited? Rapid Innovation Missing? Risking Imminent Meltdown? Or maybe the initials will change to RIP???
melgross
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melgross,
User Rank: Ninja
1/4/2012 | 10:18:11 PM
re: RIM's Board As Bad As Its CEOs
As we should all know, boards are as subject to the whims of the CEO as otherwise. If the Chair is a founder, and has palpable power deriving from stock ownership, (s)he is more powerful than the CEO. But in a case such as this, where the CEO's are founders, with 10% of the stock, the Chair isn't as interesting a position. How many of the board members WEREN'T appointed by these two guys? Therein lies the power structure. Little that they don't want to happen will happen.

If we do see a change in the chair, it will be cosmetic, little else.
Chris Spera
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Chris Spera,
User Rank: Apprentice
1/4/2012 | 4:23:52 PM
re: RIM's Board As Bad As Its CEOs
Yep, Eric. You're right on the mark here. I've also laid out a 3 step plan, outlining what RIM's Board needs to do. You can see it here:

http://www.informationweek.com....
monkeysaidwhat
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monkeysaidwhat,
User Rank: Apprentice
1/4/2012 | 3:29:14 PM
re: RIM's Board As Bad As Its CEOs
RIM = Really Incompetent Management, Ridiculously Inexcusable Maladroit, Retroactive Innovation Maneuvers, Redundant In Market. Take your pick.
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