Managing Explosive Growth
Within the business paradigm, it is often ironic that at times the old Confucian maxim of “be careful what you ask for, you may get it,” becomes true. The goal, of course, for any organization is to grow and prosper. However, there remains quite a fine line between slow growth, managed growth, and the explosive growth of a product or service. All have their merits and problems — if growth is too slow and expenses to bring to market too high, the company fails; if growth is exponential, it may require additional infusion of capital, staff, and a rapid ramping of manufacturing — sometimes without adequate planning, and products are produced without sufficient quality control or not shipping fast enough to keep up with consumer demand. The goal, of course, is that elusive middle ground of managed growth, strategic planning, and tactical implementation.
Case Study – RIM Technology (Research in Motion) is a in 1995 and shipping some of the first models of what would become the famous Blackberry in 1998. RIM reported almost $15 billion in income for 2010, making it one of the top telecommunications companies globally, still holding about 11% of the global market (Sweeney, 2009). For years, the Blackberry devices were the premier choice of the business world, able to channel email and connectivity in a way no other device at a similar price could. Continually pressured to “do more,” though, by the mid-2000s RIM faced a business conundrum — what to do about explosive growth. Because it was not just the Blackberry platform that was growing so quickly, the very idea of an ultra-competitive marketplace complicated matters. RIM could not just be content with it market share, any lack of competitive zeal and it would likely lose what gains it had already made, which were considerable. RIM had already been embroiled in patent litigation with a number of companies who were trying to utilize its technology for their own use and, as recently as January, 2010, Motorola suing RIM for ostensibly infringing on some of Motorola’s technology for Wi-Fi and power management (Patel, 2010).
Market Demands- Blackberry’s two real advantages were its ability to integrate with network servers of all kinds for group email and the ability to seamlessly utilize SMS technology to allow users to communicate with others with the same capability. In the United States alone, we find:
US Mobile Content Market = 68.7 million text users
86% of individuals over 16 own a mobile phone
There are almost 300 million phone users
240 include MMS capability
Despite freedom of cost, 70% of users actively use text phones.
Figure 2 — Total U.S. Messaging Users
With this kind of volume increasing each year, RIM faced several choices when deciding upon ways to remain an aggressive player within the market. There are always, of course, limitations in funding, production, distribution and internal staffing that must be considered. Any of the options would require new and innovative team members. With several options, a few of their choices included:
Improve line, but improve it quicker — the Better Unit Option — RIM has a campus recruiting program as well as a fairly successful networking approach to finding talent. However, to quickly improve and become more competitive, RIM could increase its recruitment globally, ramp up its HR options, and find individuals who were more cutting edge in research, engineering, and design. This would allow RIM to find individuals from other countries and also to take a more global approach to training and staff development. Hire the “best and the brightest” to rapidly reenergize the organization and product line.
Grow existing lines and existing customers — Instead of trying to grow rapidly, RIM could target its current user base and simply solidify their needs by using market research to contact them and find ways to improve and maintain market share while retaining talent in the current geographical model. This model would be more conservative about hiring and wages, and would of course allow for some expansion, but keeping most of the R&D in Waterloo, Canada. This would also retain more control over the design and marketing of the product for those in the organization who prefer to manage each instance and aspect of the organization from a Central –( field mentality.
Aggressively target Global Market — This approach would be two pronged: 1) Move some of the work on the product away from Canada and establish core research centers around the globe and, 2) increase the overall skillset and employee depth by establishing not just customer service, but actual design and management centers globally. This would follow such competitors as Symbian, Nokia, and Motorola, who found that wages were so low in many Asian locations that they could afford far more employees with high levels of talent and innovation (Research in Motion, 2008).
Recommendation – Three factors come into play when recommending the appropriate direction for RIM’s issue: 1) Fiscal issues, 2) , 3) Competition and cannibalization within the industry. Fiscally, the company projected a substantial Net income, so there are funds available for expansion; market share protection is vital within an industry that is changing rapidly; competition is intense — if RIM does not innovate, it will fall by the wayside.
Therefore, based on the above factors, it seems reasonable that the company would take a more global approach while still retaining a sense of who they are and how they got to the current level of success. Rather than relocating facilities, even R&D in Europe and the United States, for instance, where costs are dramatically higher; consider China, Indonesia, and Singapore, even some of the less volatile areas in the Middle East. This would attract a more global talent base, while at the same time, allowing RIM to move more rapidly into the global marketing and distribution sector without sacrificing its current customer base. Additionally, establishing core satellite bases globally would allow more innovation to occur — particularly with the way technology allows subgroups to communicate and interact. RIM might also realize greater savings in the Asian market with better margins on manufacturing and shipping; certainly the Asian markets are heavily flooded with Apple and HTC products, it would not hurt to have marketing, sales and distribution offices aggressively pushing at increased sales.
Research in Motion: Managing Explosive Growth. (2008). Ivey Management Services. Cited in:
Patel, N. (January 22, 2010). Motorola Asks ITC to Ban Blackberry Imports. Endgaget.
Cited in: http://www.engadget.com/2010/01/22/motorola-asks-itc-to-ban-blackberry-imports/
Sweeney, a. (2009). Blackberry Planet: The Story of Research in Motion and the Little Device
That Took the World by Storm. Tonronto, on: John Wiley Canada.