RIM Is an Ongoing Lesson in Management Failure

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Having watched Nokia self-destruct because of executive incompetence, the higher management of Research In Motion (NAS: RIMM) should have been alert that a similar fate could befall other handset manufacturers.

But a side effect of arrogance, as was seen with Nokia, is to remain stubbornly blind to what is happening around you. The fact that RIM's price plummeted 75% in 2011 and its lamentable approach to new products -- its PlayBook is a notable disaster -- should have been warning enough for RIM's joint chairmen and its board of directors.

What also surprises me is that RIMs non-executive directors and institutional investors let this down-sliding continue for so long without sweeping away the management responsible for this debacle.

Only now are the chief architects of RIM's downfall, co-Chairmen Mike Lazaridis and Jim Balsillie, being positioned for removal having been widely criticized in recent years for their lax approach to driving the company forward. Perhaps the weight of Lazaridis and Balsillie being the second and third-largest shareholders in RIM proved to be a barrier to accepting the dire state the company was heading for.

Altogether, RIM is in a very sorry position for a company that was once a benchmark for product innovation and the delivery of services that delighted its subscribers. If market chatter is to be believed, then the notion that RIM may license its forthcoming BlackBerry 10 operating system software to companies such as Samsung, HTC, and others could indicate that someone within RIM is trying to stop the rot.

There are even rumors that RIM will be sold -- but who would buy it, and for what reason?

There are three players with the necessary resources and ecosystem to withstand the rigors of competing in the smartphone sector: Apple, Google, and Microsoft. RIM has lost its highly lucrative corporate email niche to other platforms that now offer much more, and RIM has proved it cannot compete with the pace being set by these three industry heavyweights.

What RIM cannot afford to do is take a "head-in-the-sand" approach. It must face reality -- that Nokia moment, perhaps -- and realize the world has moved on and take the radical and harsh decisions necessary for RIM to survive.

But I fear that the existing management will attempt to stifle any internal insurrection and continue to muddle along in their prescribed manner -- striding purposely sideways, blinkers firmly attached.

This article originally published here. Get your wireless industry briefing here.

At the time this article was published The Motley Fool owns shares of Microsoft, Apple, and Google. Motley Fool newsletter services have recommended buying shares of Google, Microsoft, and Apple and creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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