Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
C A S E
T E A C H I N G
N O T E
17
Research in Motion:
Managing Explosive Growth*
OVERVIEW
Research and development (R&D) had been the core of the BlackBerry’s remarkable success through 2007 and
although Research in Motion (RIM) spent almost $360 million in R&D during the year, this number represented a
smaller percentage of sales than in 2006. Also, RIM’s R&D expenditures were low compared to its largest competitors
in both absolute numbers and as a percentage of sales. Explosive growth and increased competition were creating
pressures on RIM’s R&D team to develop new solutions to keep up with changes in the global smartphone market.
With 2007 revenue up 98 percent from the previous year, the team of approximately 1,400 software engineers should
have doubled—but both talent and space were getting increasingly scare. The current model of “organic” growth was
not keeping pace and the company’s engineers were feeling the strain.
The company’s chief technology officer for software, David Yach, was considering a number of alternative paths to
managing the expansion and exploiting various geographic advantages. Yach’s options for the company presented in
the case include: (1) doing what it is doing now, only more of it, (2) building on its existing and satellite R&D
locations, (3) growing through acquisition or (4) going global.
SUGGESTIONS FOR USING THE CASE
Students should find the case’s discussion of Research in Motion’s growth in the wireless communications industry
interesting because of their familiarity and daily use of mobile phones and smartphones. You’re likely to find that many
in the class are dedicated users of BlackBerry devices. The case also allows students to consider the effectiveness of
RIM’s think global, act global approach to strategy making and its ability to use location to build competitive
advantage. The central issue for students to debate is whether RIM should continue to concentrate its R&D activities in
a few locations or to disperse such activities more widely as its need for software engineers grows. We suggest
assigning the case later in your international module to illustrate how firms are able to use location to lower costs or
achieve greater product differentiation. In addition, the case forces students to consider the importance of cross-border
coordination of competitively valuable activities. The case also allows you to further drill students in the tools of
industry analysis, with an examination of the industry’s dominant economic characteristics, the strength of its
competitive forces, and underlying forces causing change in the industry.
Students who are not familiar with Chapter 7’s discussion of localized multicountry and global strategies and
approaches to using location to build competitive advantage will struggle with recommendations. The Research in
Motion case also allows you to reinforce material from Chapters 3, while illustrating important concepts from Chapter
7.
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
The Student Edition of the Online Learning Center (OLC) provides students with copies of the assignment questions
contained in this note. The list of assignment questions leads students through a thorough industry analysis and
prepares them to make strategy recommendations for selected companies. We suggest that you always direct students
to the assignment questions posted on the Crafting & Executing OLC and instruct them to use the assignment questions
to prepare for the class discussion of the case. We always instruct our students to read the case once to gain a general
understanding of the issues presented in the case and then return to the case to prepare written responses to each of the
assignment cases. We’ve found that our students who follow this approach are well-prepared to make a meaningful
contribution to the class discussion.
The case allows for a modest degree of number-crunching, and may be a good choice for oral team presentations or a
written case assignment because of its decision focus. However, the case involves more complex issues and should not
be assigned as a first written assignment or oral presentation in the course. Our suggested assignment questions are:
1. David Yach of Research in Motion has heard of your emerging skills of analysis and has asked that you assist
the company in evaluating options to sustain its innovation-based competitive advantage. The specific options
for managing its growth and expanding its research and development staff include: (1) Do what we do now,
only more of it; (2) Grown and expand existing geographies; (3) Increase acquisitions; and (4) Go global. In
arriving at a recommendation you should first examine the economic characteristics of the mobile
communications industry, the strength of the industry’ competitive forces, and identify and evaluate the
industry’s driving forces of change. Your review should also examine Research in Motion’s strategic approach
in international markets. Your recommendations should be in the form of a 2-3 page executive summary that
assesses the merit of each option for increasing the company’s engineering staff and suggest to what extent the
company should expand the geographic scope of its research and development activities. Your supporting
exhibits and executive summary of recommendations will be given equal weighting in your grade for the
written assignment.
2. Research in Motion (RIM) has employed you as an analyst in its corporate offices in Waterloo, Ontario. Your
first assignment is to assist senior management in developing a plan to sustain its innovation-based competitive
advantage. The specific options for managing its growth and expanding its research and development staff
include: (1) Do what we do now, only more of it; (2) Grown and expand existing geographies; (3) Increase
acquisitions; and (4) Go global. In arriving at a recommendation you should first examine the economic
characteristics of the mobile communications industry, the strength of the industry’ competitive forces, and
identify and evaluate the industry’s driving forces of change. Your review should also examine RIM’s strategic
approach in international markets. Your 5-6 page report should assess the merit of each option for increasing
the company’s engineering staff and suggest to what extent the company should expand the geographic scope
of its research and development activities. The report should also include exhibits providing the details of your
industry analysis and review of RIM’s strategy in international markets.
ASSIGNMENT QUESTIONS
1. What are the dominant economic characteristics of the wireless communications industry? What are the
distinguishing features of the market for smartphones?
2. What is competition like in the wireless phone industry? Which of the five competitive forces is strongest? Which
is weakest? What competitive forces seem to have the greatest effect on industry attractiveness?
3. How is the wireless phone industry changing? What are the underlying drivers of change and how might those
driving forces change the industry?
4. What strategic approach has Research in Motion chosen to employ in international markets? Would you
characterize its strategy as a global strategy or a localized multicountry strategy? How has it utilized location to
build competitive advantage?
5. How important is it for Research in Motion to increase the size of its pool of software developers? What are the
different options for substantially increasing its R&D staff?
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
6. Which option for increasing the number of software developers should Research in Motion pursue? Explain how
your recommended course of action is consistent with Research in Motion’s resources, organizational capabilities,
and management preferences.
TEACHING OUTLINE AND ANALYSIS
1. What are the dominant economic characteristics of the wireless communications industry?
What are the distinguishing features of the market for smartphones?
Students should be able to identify the following dominant economic characteristics of the wireless
communications industry and the smartphone market segment of the industry.
Market size and growth rate: The number of wireless subscribers worldwide had reached 3 billion by yearend 2007. China was the world’s largest market for wireless phones with more than 524 million subscribers,
followed by the United States with 254 million subscribers and India with 237 million subscribers. Growth in
the number of subscribers by country was dependent, to a great extent, on penetration rates. In 2007, India was
the world’s fastest growing market with 60 percent annual growth in subscribers between 2006 and 2007. The
wireless telephone penetration rate in India was 21 percent. China’s wireless telephone growth rate and
penetration rate in 2007 were 18.3 percent and 21 percent, respectively. The wireless penetration rate in the
United States was 87 percent in 2007, while its subscriber growth rate was 9.5 percent.
Segmentation: The market was segmented by type of wireless phone. While most wireless phones included
features such as calendars, cameras, music players, appointment reminders, and text messaging, smartphones
integrated e-mail, voice, instant messaging, short message service (SMS), internet, music, cameras, organizers,
and global positioning systems (GPS) and other features into a single device. In 2007, smartphones represented
only 10 percent of the global mobile phone market in units. However, smartphones were expected to account
for 30 percent of worldwide mobile phone sales by 2012. The number of smartphone subscribers doubled in
2007 to about 14.6 million, while worldwide shipments increased by 53 percent in 2007 to reach 118 million.
Scope of rivalry: Students will easily recognize that competitive rivalry in the wireless communications
industry was global. However, there were some differences between countries in wireless technology and, in
some cases, loyalty to domestic brands.
Presence of forward/backward vertical integration: The manufacturers of wireless phones had not
vertically integrated into the development of wireless networks or the operation of retail stores. However, some
phone manufacturers such as Research in Motion and Apple produced the operating systems used on
smartphones. Nokia, Ericsson, Sony Ericsson, Panasonic, Siemens, and Samsung jointly created and utilized
the Symbian operating system. Microsoft also produced an operating system for smartphones that could be
adopted by phone manufacturers.
Technology/innovation: Industry growth was spurred primarily by technological innovations in wireless
phone and smartphone capabilities. Innovation in the industry was directed toward capitalizing on the
convergence of internet and wireless capabilities.
2. What is competition like in the wireless phone industry? Which of the five competitive forces
is strongest? Which is weakest? What competitive forces seem to have the greatest effect
on industry attractiveness?
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
Rivalry among competing sellers: A very strong competitive force
Competition among rival makers of wireless phones centered on innovations that would allow phone providers
to offer a variety of voice and data services to consumers. The industry was moving toward convergence
among devices and the latest versions of wireless phones, and specifically, smartphones offered much of the
functionality of an internet-enabled PC. New versions of phones were expected to be easier to use and offer
expanded communication and productivity capabilities.
The bargaining power and leverage of buyers: A strong competitive force
Wireless providers such as AT&T, Sprint, Verizon, and T-Mobile had considerable leverage in their
negotiations with wireless phone manufacturers. Wireless providers carried a broad line of phones for
consumers to choose from, but were not required to carry all brands and models of phones. This ability to carry
a small number of phones at each price point increased the ability of each wireless provider to bargain for good
prices.
However, students will probably recognize that wireless providers had far less ability to negotiate for low
prices and other favorable terms with the producers of smartphones. Business users (and to a growing extent
consumers) were likely to choose a wireless provider based upon the availability of a preferred model of a
smartphone. For example, many business users and consumers were highly attached to their BlackBerry, Palm,
or iPhone and chose a carrier based upon the availability of such a phone.
Bargaining power and leverage of suppliers: A weak to moderately strong competitive force, but bargaining
strength varies by type of component
Suppliers of commodities such as resins, fasteners, and memory chips used in the assembly of wireless phones
had little leverage with their negotiations with manufacturers. However, the providers of operating systems
likely had more negotiating power in their dealings with wireless phone manufacturers. Manufacturers who
were not part of the Symbian alliance had few choices in operating systems other than Microsoft’s Windows
Mobile OS or Google’s Android operating system.
Competition from Substitutes: a weak competitive force
Students are likely to be avid users of wireless phones and text messaging and suggest that consumers have
few good substitute choices for wireless telephones. Such a conclusion is subject to debate, but it is important
to recognize that this analysis focuses on the wireless handset market and that wireless providers are the buyer
of such devices. There are no substitute devices for wireless handsets that wireless providers might consider.
Threat of Entry: a weak competitive force (a moderate to strong force for the smartphone segment)
Entry into the industry is limited to those possessing strong technological capabilities and an established brand
name in consumer electronics. Apple was able to enter into the market for smartphones because of its
technological skills and its success in the digital music player industry. Students will use their own personal
knowledge of the wireless telephone market to suggest most of the companies possessing necessary
capabilities to hurdle the industry’s barrier to entry have already entered the industry. However, many
producers of wireless telephones do not offer smartphone models. It is very likely that all manufacturers will
offer smartphone models as convergence among devices continues and the market for smartphones grows.
Overall Assessment: Students should conclude that the wireless phone industry is an attractive industry for
incumbents with strong competitive capabilities. The smartphone segment of the industry is particularly attractive
and presents good opportunities to earn above-average profits. However, students should anticipate that
profitability in the smartphone segment will decline as others enter the market and competitive rivalry grows
stronger among the makers of smartphones.
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
3. How is the wireless phone industry changing? What are the underlying drivers of change
and how might those driving forces change the industry?
Students should be able to identify the following driving forces of change in the wireless communication industry.
Technological innovation. Rapid advancements in the capabilities of wireless telephones were quickly
bringing about the convergence of communications, media, business software applications, and entertainment.
Smartphones allowed users to connect to the Internet via wireless networks to securely access e-mail, instant
messaging services, and web, database, and other computer applications—see case Exhibit 3. As the
capabilities of smartphones advanced, business users were less tethered to their desktop computers and laptop
computers. Smartphones could also access the Internet for non-business purposes such as checking the
weather, bidding on an item at eBay, or checking sports scores.
Growth in demand for smartphones. Demand for smartphones was not only driven by business users, but
consumers who wished to access secure e-mail, text messaging, and the Interent via a wireless device. The
growth in demand for smartphones was prevalent in countries throughout the world.
Apple’s entry into the markets for smartphones. Apple’s launch of the iPhone in June 2007 had ratcheted
up the race for technological leadership in the wireless communications industry. The iPhone was rated very
highly for its functionality and was an instant hit with many consumers because of the popularity of the iPod.
By year-end 2007, Apple held a 27 percent market share in the North American smartphone market.
Students should conclude that the driving forces in the wireless communications industry will aid leaders in the
smartphone segment since demand in that segment is expected to grow rapidly. However, competitiveness in the
segment is dependent on a relentless pursuit of innovations keyed to improving functionality and further enabling
the convergence of voice, data, and media. Apple’s entry into the segment also requires that smartphone
manufacturers be concerned with product styling and marketing tactics designed to appeal to consumers.
4. What strategic approach has Research in Motion chosen to employ in international markets?
Would you characterize its strategy as a global strategy or a localized multicountry strategy?
How has it utilized location to build competitive advantage?
Students should be able to easily classify Research in Motion’s competitive strategy as a focused differentiation
strategy. The company does not produce a broad line of electronics or wireless communications devices, but has
focused on converged smartphones that include the features such as voice, e-mail, instant messaging (IM), short
message service (SMS), camera, recorder, and a QWERTY keyboard. Even though a growing number of
consumers have begun to abandon traditional cell phones for BlackBerry models and other smartphones, it is
important to note that BlackBerry’s success was built on a focus on business users.
The company’s differentiation was built upon its push e-mail architecture, ease of use, and security and reliability.
The company had over 100,000 BlackBerry enterprise solution, which would incur substantial costs and
inconvenience of switching to another provider. These enterprise users are likely to become brand loyal and adopt
newer BlackBerry models for both personal and business communications.
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
The company’s strategy does not vary by geographic region and should be recognized as a global strategy.
Research in Motion has pursued a Think Global, Act Global strategy whereby BlackBerry devices were
standardized to the extent possible between geographic regions. The company has concentrated its R&D activities
in a few locations to exploit collaboration among engineers working on projects related to radio frequency,
hardware and software design, audio and display improvement, antenna design, circuit board design, power
management, industrial design, and manufacturing engineering. Most of its engineers were located in Waterloo,
Ontario. The company expanded its reach for highly capable engineers by adding two more locations in Canada
(Ottawa and Mississauga), several in the United States (Dallas, Chicago, Atlanta, Seattle, and Palo Alto) and one in
England. However Waterloo remained its principle location and the focal point of its recruiting efforts. Table 1
below provides an overview of what activities have been concentrated in Waterloo and those that are dispersed
across various geographic regions.
Table 1 Geographic Concentration of Research In Motion’s R&D Activities
Waterloo
Ontario
Other
Canada
United
States
University Recruiting
Major CE
Minor CE
Minor CE
Non-core OS Research in Satellite Design
Offices/Secondary Design Hubs
Major CE
Minor CE
Minor CE
Minor FE
Core OS Development in Satellite Design
Offices/Secondary Design Hubs
Major CE
Minor FE
Major FE
Major FE
R&D Related Activities
Major Acquisition Candidates
Western
Europe
Major CE = Major current emphasis
Minor CE = Minor current emphasis
Major FE = Major future emphasis
Minor FE = Minor future emphasis
5. How important is it for Research in Motion to increase the size of its pool of software
developers? What are the different options for substantially increasing its R&D staff?
It is possible that not all among the class will have the same understanding of the urgency of the situation. You
might wish to challenge students to consider the implications of the problem by asking “What are the implications
for RIM if it does not ramp up its R&D quickly?” or “How big is the competitive threat of rivals surpassing RIM’s
innovation-based advantage?” Students should bring up details from case Exhibit 6—RIM is being outspent not
only in terms of percentage of R&D/sales, but in absolute dollars as well. Nokia, Microsoft, Motorola and other
competitors are poised to outspend RIM on innovation. What kind of threat does this pose for RIM? The students’
understanding of the urgency will shape the strategy that they select moving forward.
List the options on the board and take a quick vote to see how many teams have chosen which strategy.
Alternately, the instructor could also select a class member to come forward and present their option to the class,
noting the pros and cons on the board.
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
Either way, have the representative for each option explain their rationale for selecting a particular course of action.
Make sure they also articulate why they didn’t choose a particular option. If no groups have selected one of the
options, solicit feedback as to why no one chose to pursue this strategy. You may have several groups that decide
to pursue all options simultaneously. Have these groups discuss how they foresee RIM would implement all of
these programs. What are the risks of pursuing everything?
Once all of the pros/cons are on the board have the class debate why their preferred course of action is the “right”
solution. A partial list of pros/cons that you may expect students to offer is listed below.
Option 1: Do what they are doing now, only more of it
Pros:
RIM is currently successful in its local recruiting strategy. They have the best and brightest from the nearby
University of Waterloo, many of whom come in as part of a co-op program.
Organic growth has contributed to RIM’s young, entrepreneurial engineering culture
RIM could expand recruitment activities to other universities in Canada and increase frequency and intensity
of recruitment efforts domestically
RIM could recruit at technical universities around the world; establish research network from which to draw
new talent
Expanding existing recruiting efforts would be the easiest option to implement
Relatively low cost alternative
Fits with existing mentality and culture at RIM
Maintains strong alignment with elements of RIM’s existing strategy: value proposition and core activities
Cons:
Slow way to grow (one employee at a time); this approach will not generate 1,400 new hires quickly
Insular; recruiting only from University of Waterloo might eventually stifle innovation
Current software engineers already feeling the strain; need immediate solution
Organizational development department does not have in-house expertise; will have to ramp up to recruit from
other universities and geographies
Local talent pool is running dry; competitors are sweeping in to snatch talent
Relatively low cost of recruitment efforts could be offset by need to bring new recruits to Waterloo and offer
competitive perks
Especially complex if they are going to offer immigration services
Does not align with RIM’s stated goals of expanding consumer base and global reach of BlackBerry platform
or RIM’s stated product/market focus
Option 2: Grow and expand existing geographies
Pros:
Current North American facilities are located in areas with ample talent and quality technical universities
Lower cost than setting up brand new research centers
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Slightly easier to retain culture
Cons:
Satellite locations (e.g. Ottawa, California) are not fully integrated into RIM culture; communication patterns
and practices would need to be adjusted
“If you are not here, you are not visible” mentality
Engineers in other locations also feel “less important” as they are not working on the core product, but rather
product enhancements or adaptations
Trade-off in cost of engineering talent in Waterloo vs. California or elsewhere in North America
Need to ensure that they have an overarching strategic R&D plan that divides what location will be responsible
for what product or what process
Keeping software developers all in one location helps foster innovation and protect intellectual property;
decentralization contributes to bureaucracy, which is the antithesis of RIM’s successful start
Not sure if RIM is “following the talent” — are there smarter places to go? Other Waterloo’s out there?
Option 3: Increase acquisitions
Pros:
Faster way to acquire talent; if you buy the company, you buy its people (e.g. could be 200 to 2,000 people all
in one shot)
Can bring new technology and new ideas into the organization
Depressed economic climate in the United States has left several smaller firms and competitors vulnerable for
takeover; could get “bargain”
May make some markets more open to RIM products/services (e.g. Europeans favor home-grown solutions.
Establishing an R&D location in Europe may help penetrate this market)
Cons:
Acquisitions take a long time to negotiate, often a year or more: may not meet immediate need
Great potential for a culture clash (e.g. if you buy ex-PALM employees, you also buy their existing corporate
culture, which is likely to clash with RIM’s culture given their competitive start)
Acquisitions are very expensive both in terms of upfront capital, as well as training and on-boarding costs;
most do not create value
RIM has no experience integrating large numbers of employees after an acquisition
Option 4: Go global
Pros:
India, China and other countries are an available and ready source of qualified, lower cost, highly skilled labor
Proximity to market allows for faster and easier adaptation of products to local market needs; gateway to
markets with highest growth in smartphone subscribers
Foreign R&D labs can be a source of new ideas and innovations
Foreign governments are offering incentives for investors to set up in R&D parks
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
RIM has the available cash flows that could be invested in going global
Cons:
United States government laws against exporting encryption codes; U.S. government is RIM’s largest client –
RIM cannot afford to take any action that might endanger this relationship
Intellectual property protection concerns are a critical barrier: RIM cannot afford to lose its competitive
advantage that comes from its proprietary source code
No first mover advantage; not in market leader position moving into emerging markets
No infrastructure to access foreign business customers
High internal resistance to off-shoring
No experience in managing global research network; no internal infrastructure to do so, no internal expertise
No plan for how to go global: What kind of R&D site/network/structure should RIM set up?
Large potential for culture clash — at both national and organizational levels
Expensive both in terms of upfront capital, as well as training and onboarding costs both abroad and at home
Won’t solve the problem in the near term
At this point, it should become clear that as the options progress from 1 to 4, so do the complexities, trade-offs and
the risks. However, so do the potential rewards — continued explosive growth, sales and subscriptions of the
BlackBerry. As it stands, RIM has 41 per cent of the North American smartphone market, but it only has 11 per
cent of the global market. The global market for smartphones was approximately $120 million in 2007 but
expected to grow to $1 billion devices by 2012. In the end, RIM essentially has only one decision to make: (1) stay
a local Canadian success story or (2) take on the challenges inherent in competing in a global marketplace.
6. Which option for increasing the number of software developers should Research in Motion
pursue? Explain how your recommended course of action is consistent with Research in
Motion’s resources, organizational capabilities, and management preferences.
Students may be divided on the best approach to increasing the number of software developers at Research in
Motion, but regardless of their recommended approach, they must demonstrate that their recommendations are
consistent with RIM’s resources, capabilities, and management preferences. An overview of considerations that
should accompany student recommendations is as follows:
Resources. The company is in good financial health. Students who have examined case Exhibit 2 and prepared an
analysis similar to what is shown in Table 2 will see that net income, in particular, has seen very healthy growth
and that RIM has also been able to reduce its cost of sales as it expands. They may also point to the doubling of
revenues projected for 2008 or that revenues have grown more than 10-fold since fiscal 2004.
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Table 2 Research In Motion’s Common Size Consolidated Statements
of Operations, 2004 - 2008
For the year ended March 2008
(Projected) March 2007
Revenue
March
2006
March
2005
March 2004
100.0%
100.0%
100.0%
100.0%
100.0%
48.7
45.4
44.8
47.1
54.4
Research and development
6.0
7.8
7.7
7.6
10.5
Selling, marketing & admin.
14.7
17
15.2
14.4
18.2
Amortization
1.8
2.5
2.4
2.7
4.7
Litigation
0.0
0.0
9.8
26.1
5.9
22.5
28.0
35.1
50.7
39.4
Income before income taxes
30.1
28.3
23.3
4.9
8.0
Net Income
21.5
20.8
18.1
15.2
8.7
Cost of sales
Expenses
Expenses Subtotal
Calculated from case Exhibit 2.
However, analysis of case Exhibit 6 discloses that RIM’s R&D spending for the year ending March 1, 2008, which
was almost $360 million, dropped to 6 per cent of sales and is down from a high of 10.5 per cent in 2004. This is
less than half of what some of RIM’s largest competitors are spending on R&D as a percentage of sales (e.g.
Microsoft spends 14 per cent, Motorola 12 per cent, etc.). More importantly, RIM’s R&D budget is very small in
absolute numbers when compared to Nokia’s $8.2 billion, Microsoft’s $7.1 billion and Motorola’s $4.4 billion.
While RIM is showing tremendous growth and profitability, it is up against some industry heavyweights that are
poised to outspend RIM on product/service innovations. RIM is also currently short 2,100 R&D engineers of which
1,400 are in Yach’s software group, threatening to put the company even further behind.
The case stresses that R&D is the heart and soul of the organization and a key driver of internal growth. RIM’s
intellectual property, patents, source codes and designers are all important resources. Other resources include
RIM’s relationships with enterprise clients (over 100,000) and major network carriers (over 270 carrier
partnerships in more than 110 countries). RIM also has deep partnerships with competitors through the BlackBerry
Connect Licensing program and a strong ecosystem of program developers (e.g. Facebook and Guitar Hero III).
Organization Capabilities. The case also discusses how the R&D function at RIM is geographically
concentrated, with Waterloo as a hub for core development activity and satellite offices, primarily in North
America, working on product and technology customizations to the core platform. The organization is not currently
structured to take on global expansion. The case alludes to some of the types of R&D expansions that RIM may
consider, from simple “market-seeking” expansion of production (e.g. outsource the design and manufacturing of
non-critical components) or processes (e.g. testing or documentation) to more complex international technology
centers that collaborate with local universities and public research centers. If students have recommended that RIM
should expand its locations in North America or globally, they should also discuss how the company should ensure
cross-border coordination of its R&D activities.
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Case Teaching Note 17 - Research in Motion: Managing Explosive Growth*
If RIM goes global, they also need to consider whether they should build their own facilities abroad and hire their
own people, or if they should acquire existing firms. The decision about if and how to go global will depend on the
students’ understanding of the following:
The significance of R&D relative to RIM’s success thus far; can RIM loosen its hold on BlackBerry’s source
codes? What will this mean in terms of RIM’s value proposition? Its ability to remain competitive in the long
run?
The degree to which RIM may have areas of weakness in its home-based innovation system that can only be
acquired by seeking complementary strengths outside of Waterloo.
The extent of coordination needed to transfer the knowledge from the home base to the satellite locations; the
potential threat of technology leakage, copyright infringement, etc.
The trade-offs between the different types of R&D collaborations from satellite laboratories to contract R&D
sites to more equal partnerships
Management Preferences. How ready is RIM to implement the strategic change required to compete in the
global smartphone marketplace? The case provides several clues that management is reticent to expand outside of
Waterloo and would prefer to keep all R&D in one central location. In terms of mindset, management is only now
gaining an awareness of the need to change existing strategies.
EPILOGUE
As of April 2008, RIM had announced that it planned to maintain most of its core R&D in Ontario—Waterloo, Ottawa
and Mississauga. Yach suggested that R&D are really two separate issues—research and development—and that RIM
remained committed that the research should stay close to home, but is willing to look at moving the development to
other locations. In parallel, RIM also announced the creation of a $45 million R&D center in Bochum, Germany, as a
first step to penetrating the European market. In reality, Yach admitted that he will likely be pursuing all four options
simultaneously and that he will be facing the same situation in January 2009.
Continued growth factors at RIM include (as released in RIM’s Fiscal 2008 Annual Financial Information investor
report, May 2008, and other press releases):
In December 2007, RIM announced it was opening its U.S. headquarters in Irving, Texas
In 2007, RIM added 80 new carrier and distribution channel relationships, increasing its partnerships to 350
carriers in 135 countries
As of March 1, 2008, RIM’s R&D team consisted of approximately 2,900 employees; total employees had
grown to 8,387
On May 12, 2008, RIM launched its new BlackBerry Bold Smartphone (its first in the 9000 series)
In December 2008, RIM’s total BlackBerry subscriber accounts had increased to 21 million. The company
expected to add an additional 3.5 million subscribers by the end of its fiscal year in March 2009.
You can visit Research in Motion’s investor relations site at www.rim.com/investors to access its latest financial
reports and press releases
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This teaching note reflects the thinking and analysis of the case authors, Diane Mazuits, Professor Rod White, and Professor Paul
Beamish, all of the Richard Ivey School of Business, University of Western Ontario. We are most grateful for their insight, analysis and
contributions to how the case can be taught successfully.
CTN 17-11