Balsillie and Lazaridis step down

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Iain Marlow has been watching Waterloo-based tech giant Research In Motion (RIM) for the better part of a year, and still the company managed to surprise him.

When it was announced Sunday night that RIM co-CEOs Jim Balsillie and Mike Lazaridis, were stepping down from both their posts as co-CEOs and as co-chairs of the board, even Marlow, a telecommunications reporter for the Globe and Mail whoโ€™s been covering RIM throughout the turmoil itโ€™s faced in 2011, was slightly taken aback.

โ€œObviously we knew that there was going to be some governance changes coming down the line because there was a board report on [RIMโ€™s] governance structure that was supposed to come down the pipeline in late January,โ€ said Marlow. โ€œBut no one really saw this coming out of it.โ€

While Marlow did say there was some expectation for Balsillie and Lazaridis to step aside from at least one of their two roles, he acknowledged the shock some might feel when Thorstein Heins moved into the CEO role and Barbara Stymiest took over as RIMโ€™s new chair of the board.

Balsillie and Lazaridis are often credited with โ€˜putting Waterloo Region on the mapโ€™ by growing RIM into a tech giant and as Marlow puts it, โ€œinventing the smartphone business..โ€ According to Ian McLean, president of the Kitchener-Waterloo chamber of commerce, it certainly doesnโ€™t mean itโ€™s time for Waterloo Region to panic.

โ€œThereโ€™s no question theyโ€™re hugely important,โ€ he said. โ€œYou look at the things they have done, theyโ€™re clearly the cornerstone of our tech community, but letโ€™s not forget we have a huge tech sector now. They have helped produce an environment of innovation and entrepreneurial spirit thatโ€™s produced 800 startups and technology companies.โ€

Though confident that RIMโ€™s CEO shakeup and even its turbulent 2011 year, which saw mass layoffs, plummeting stock prices and the drastic reduction in the price of BlackBerry Playbooks, does not warrant cause for concern for the region, McLean didnโ€™t shy away from how much the company, and its now-former chief executives have done for the development of Kitchener-Waterloo.

โ€œThey obviously have a tremendous impact. They employ a lot of people and they are a huge contributor to the economy,โ€ he said, going on to highlight the key roles Balsillie and Lazaridis have played in providing funding for the Perimeter Institute, the Centre for International Governance Innovation, as well as the two local universities.

McLean was confident (and reports earlier in the week indicated that) that kind of charitable work would continue, he is also confident in the general turnaround of RIM.

โ€œIโ€™m very positive about the future of RIM,โ€ said McLean. โ€œTheyโ€™re still growing hugely in other markets and thatโ€™s another thing that sort of gets lost in this. This is a North American story, [RIM is] still growing in Africa, in Asia, in parts of Europe, so theyโ€™ve got tremendous growth potential in some really fast growing markets.โ€

Marlow, however, though not completely dismissive of the idea, isnโ€™t as confident about RIM returning to its former prominence.

โ€œThe deck is stacked against RIM right now,โ€ he said. โ€œI think if youโ€™re looking at it in terms of a market leadership position, thatโ€™s kind of a long shot, but the smartphone game has changed โ€ฆ itโ€™s now all about sharing growth and fighting for a piece of the growth, kind of like it is with the wireless companies like Rogers and Bell.โ€

While arguments both for and against the recovery of RIM abound, the markets have not reacted well to Sundayโ€™s CEO change. RIM shares dropped ten per cent in Heinsโ€™s first day on the job, followed by a three per cent drop Tuesday.
This has prompted much debate over whether the mild-mannered Heins, an inside hire, being promoted from chief operationg officer, was the right choice for the job.

โ€œItโ€™s unclear what RIM couldโ€™ve done by bringing in a kind โ€˜rock starโ€™ CEO,โ€ said Marlow of Henisโ€™s appointment. โ€œObviously, heโ€™s not a Steve Jobs kind of guy who spins off these crazy quotes. Heโ€™s a very cautious, very operational kind of guy โ€ฆ I think itโ€™s just kind of a โ€˜wait and seeโ€™ game now.โ€

As for Balsillie and Lazaridis, according to Marlow, it became clear they had over-stayed their welcome and it was time for them to step down. However, he also said that having Lazaridis still heavily involved in the technical innovation side of the company and Balsillie remaining a member of the board will have benefits for RIM moving forward.

However, Marlow concluded that in the fast-moving telecommunications business, essentially anything can happen.

โ€œThe remarkable success of Android really shows how quickly things can change,โ€ he said. โ€œObviously the narrative for RIM over the past year has been incredibly brutal. But I already think thatโ€™s changed a little bit, from the [Consumer Electronics Show] in Las Vegas to now, there seems to be a little bit more positive spin surrounding the company.โ€


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