Recent changes only confirm that the company remains in denial
We are quoted in this week’s cover story of Maclean’s on the RIM fiasco. Regular readers will know that Finlay ON Governance has been on this story for several years and has long predicted the kind of stock meltdown and leadership turmoil that has rocked the company. The co-founders’ decision to step aside from the co-CEO slot, but not out of the boardroom, and the appointment of an insider to CEO with an old-guard director moving up as chair of the board, do not change our views.
The Maclean’s piece presents a good overview of some of the failures but is a little short on the root cause, which we have long contended is RIM’s dysfunctional system of corporate governance. Here are some further thoughts on that subject and why the recent management changes are unlikely to produce the results investors would like.
The fact that RIM’s top management and board could take so long to come up with so little just shows how far out of touch they remain. It’s obvious that Balsillie and Lazaridis wanted their guy in the top spot and do not grasp why shareholders were looking for more than a marionette whose strings they can pull any time.
What is really alarming is that independent directors think this will work, when a clean break with a strong new CEO at the helm, plus a fresh outsider as board chair — unaccompanied by RIM’s bulging baggage of failures — should have been brought in. Of course, any new CEO worthy of the title would have insisted that Balsillie and Lazaridis depart the board, as was the case at Yahoo recently. It will take a few more tries, and several new shocks, before the company actually gets it right — if it ever does.
Separation complexes are unfortunate in dogs. They are a disaster in company founders who can no longer read the market or the wishes of their investors. The new insider CEO is not the solution. Nor is the appointment of Barbara Stymiest as the so-called “independent” board chair. We were among the first — and long before it became fashionable — to openly call for this kind of change. But putting a long-time enabler of RIM’s governance problems in charge of the board is a little like promoting a sleeping sentry to captain of the guards.
RIM’s boardroom is located in Waterloo, Ontario, but as far as investors are concerned, these changes only confirm that it remains firmly footed in denial.