Preface: I am currently in a business strategy course for my Masters of Information Systems at BYU, and we are to write “journal entries” from time to time reflecting how our learning in the classroom applies in the world. Well I wrote this up and liked it so much that I thought I’d put it on my real blog, instead of just the throw-away one I’ve started to keep all the other entries in. It’s a cursory overview, so if other business-oriented people would like to comment or discount the views presented here, I would welcome it. But hopefully it is an interesting view on Michael Porter’s types of strategies, and how not applying them is dangerous.
RIM announced Friday a 59% drop in quarterly profit, a continued indication that the company is in dire financial straits, even though the co-CEOs believe they will be able to pull off a revived victory before the end of the year. Many in the industry acknowledge RIM’s downward spiral over the last few years, and many wonder if anything might stop it. But how did RIM get into such a predicament? There have been no HP-like corporate scandals, no rogue traders, and no massive natural disasters to throw it off course. Millions of businessmen and businesswomen, as well as consumers, still use their products.
Could the answer be that a lack of clear strategy has caused the dismal performance we are seeing today? Let’s analyze RIM in the framework of Michael Porter’s definitions of types of strategies and see where the company lies.
Porter, in his seminal HBR article “What is Strategy?,” clearly points out that a strategy is not simply being better or more efficient than your competitors. Instead, “competitive strategy is about being different” (Porter, 64). And how can a company establish a set of activities that differentiates it? By one of three broad means: having a variety-based, needs-based, or access-based strategy.
1. Variety-based Strategy
A variety-based strategy is employed by a company that produces a subset of products or services, generally through using a different set of activities. Porter gives the example of Jiffy Lube providing only oil change services to customers, detailing that it “specializes in automotive lubricants and does not offer other car repair or maintenance services… Its value chain produces faster service at a lower cost than broader line repair shops” (Porter, 66).
What products and services does RIM produce? They are in two general markets: enterprise email relaying and mobile phone production. Do either of these show signs of being a subset of a broader set of activities that could give RIM an advantage?
Over two decades ago when RIM was founded, the ability to page someone (and later email them) and have them receive that page or email instantly was a technological feat that many businesses around the world found essential to their day-to-day functioning. Even up until just a few years ago, having email pushed to you (as opposed to pulled, the typical, slower method) was a service offered almost exclusively by RIM. However, nearly all email clients and smartphones now support or emulate this type of functionality, and so what used to be RIM’s key selling point has now become diluted and common across all providers. This used to be a key element to RIM’s strategy, but their competitors have caught up with them.
Second, RIM’s phones also used to be rather unique in the market, providing larger displays and the ability to type emails and browse the web from any location. With the advent of the iPhone and all smartphones since, RIM’s BlackBerry phones have fallen far behind. One unique BlackBerry feature that is not mirrored in many other phones is the tactile keyboard, which some people like much better than on-screen keyboards. In a way, this particular subset of phones, those with physical keyboards, is serving a particular market need, but RIM does not have any particular activity that sets the production of this apart from its competition.
RIM seems to have invested deeply in a variety-based strategy in the past, but this strategy has since been duplicated and superseded by its competition. Unless it can come up with a new subset of products or services, it cannot continue to hold on to such a strategy and expect to succeed.
2. Needs-based Strategy
Michael Porter also discusses a needs-based strategy, one which he defines as the position of “serving most or all the needs of a particular group of customers” (Porter, 66). He mentions that this is similar to what most see as traditional market or segment targeting.
RIM used to produce phones that were heavily targeted to and used only by business professionals. Most common consumers didn’t need the constant inflow of emails 24×7, nor did they want to pay the extra fees for the service. Business professionals needed several features: the ability to instantly receive and reply to all messages securely , the ability to check on Internet resources, the ability to have a secure, remotely wipeable device, and the need to have a high-use cell phone. RIM catered to all of these needs very well, and while this aspect of strategy might not be as strong as the previously mentioned variety-based strategy, it certainly helped them to obtain the lion’s share of the business mobile market.
Unfortunately again for RIM, their competitors have struck with equal and often more compelling solutions to the same issues, giving both business and IT professionals more appealing and easy-to-use products. All smartphones can now receive all enterprise email, and the BlackBerry’s web browser is a laggard these days compared to iOS and Android browsers, leaving a painful experience for those still using RIM’s phones. Other enterprise-specific needs are also covered well by competitors these days, so RIM’s strategic advantages have disappeared.
3. Access-based Strategy
Finally, has RIM played into an access-based strategy before? Has it targeted customers in a specific “customer geography or customer scale” (Porter, 67)? Not really—its customers are all over the globe, and everyone from a one-man shop to a corporation with tens of thousands of employees can use the service. Therefore, we can conclude that RIM in the past has not pursued an access-based strategy (though perhaps it may now wish to consider it, given that its other two strategies have been deconstructed).
While the maker of the CrackBerry is trying to pull out some wunderstops with the introduction of the very me-too PlayBook tablet (which lacks any sort of distinguishing feature or specific target market) and the promise of a new phone operating system (too little too late?), it is clear that a lack of recent innovation has led to a lack of current, viable strategy. While RIM was the king of enterprise mobile communication until just a few years ago, thanks to a strong variety-based and a decent needs-based strategy, the company is floundering to find a clear differentiation in today’s market. Businesses have to find a way to “be different,” as Porter said, and being different by being worse doesn’t count.
- Porter, Michael. “What Is Strategy?” Harvard Business Review, November 1996, 61-78
Being different also means being different in a way that matters to buyers and/or users. Samsung made a fridge with an internet-connected TV screen because it would be cool? No market demand, no differentiators, etc.
Good point Eric. So is RIM fulfilling any “different” niches that actually have demand? Not that I can see.