The Blackberry Crisis - Case Study Example

Case Study Analysis The Blackberry Crisis Source Introduction Brief Overview of the Case The Organization A global leader in wireless innovation, Research in Motion or RIM (operating under the iconic name “Blackberry” since 2013), was founded by Mike Lizaridis and Doug Fregin in March 1984. Its corporate head office is in Waterloo, Canada and operates offices in North America, Europe, and Asia Pacific. RIM 900 was the first mobile messaging device produced by RIM in 1995. It was followed by RIM 950 in 1998 . However, the first Blackberry-like mobile messaging device was only released and introduced as RIM 957 in April 2000. Following similar concept and design, RIM released its first handheld device (Blackberry 5810) to the market followed by 6710, 7200, and 7700 series of colored display Blackberry phones in 2003 . In 2004, the popularity and sales of Blackberry phones soar with the release of 6200 series and 7100 series followed by more modern 8700 series in 2005, Blackberry Pearl in 2006 and Blackberry Curve in 2007 . The Crisis - What, when, where, and why it happened? Initially, despite the growing popularity of touchscreen mobile devices from Apple, Nokia, and others, RIM prefer to ignore the threat and instead continue to develop mobile devices based on Blackberry concept and design. Consequently, Apple’s iPhone 3GS in 2010, a phone with TFT capacitive touchscreen, outsell RIM’s Blackberry Bold 9000 series. Moreover, despite the introduction of Blackberry Playbook Tablet in 2011, RIM’s market share continue to fall due to switching of Blackberry customers to more innovative and appealing Apple iPhones and Google’s Android . RIM’s situation was further worsen by the October 10, 2011 Blackberry service global outage and the decision of RIM management to remain silent despite customer outcry and imminent reputational damage. According to the report, Blackberry services such as email, web browsing, BBM, and others) were halted at around 11AM of October 10, 2001 but RIM management was quiet about it and did not make attempt to issue any public statement during the four days crisis. Consequently, millions of Blackberry users turned to social networking sites such as Facebook, Twitter, blogs, and others to voice their disappointment over the outage and RIM’s insensitivity and lack of concern to its customers. The exMedia report during the outage suggests that the cause of the problem is a faulty backup switch in RIM’s main data servers . Brief Outcome Although its CEO provided the formal apology, RIM’s first response to the crisis was made through its Facebook page eight hours after the outage but erroneous because it is informing the public Blackberry email service has been restored when it is not. Nevertheless, the crisis and furious Blackberry customers already caused 3.5% drop in RIM’s share price in Canadian stock exchange in its first day, 2% in Nasdaq , forecasted lawsuit that will likely cost the company ₤16M, significant reputational damage, continued profit loss, job cuts, and resignation of top management . Pre-crisis Signal Detection The early warning signs of the crisis include customer social media complaints and increasing media coverage of the crisis . However, since pre-crisis signal detection is about looking for signs on impending crisis , the faulty fail-over switch that in essence belongs to the preventable crisis cluster may be taken as a much early warning sign. According to , RIM admitted that the switch did not function as previously tested suggesting although the problem is technical in nature, the system is being tested regularly with human employee who in his capacity can detect, predict, and intervene to prevent the outage. Prevention Efforts RIM’s policy of have carrier partners responsible for interacting with consumers prevented the company from communicating. There were no prevention efforts made by RIM Crisis Communication Team but silence and long communication void that lasted hours after the outage. In fact, the crisis was made worse by RIM’s statement that their focus was not on communication but fixing the technical problem. . The above statement if taken as an apology by Blackberry users may damaging as according to , may be perceived as avoidance of responsibility in the crisis as RIM put the blame on malfunctioning switch rather than taking full responsibility over their maintenance failure. Moreover, RIM’s attempt to change public perception may be taken as denial strategy to remove any connection between the crisis and the organization. According to , a denial posture often involve attacking the accuser, denial, and scapegoating strategies that in this case is not attacking an accuser but denial and using the quality and reliability of the switch manufactured by another organization as scapegoat. Crisis Preparation It appears that no Crisis Management or Crisis Communication plan in RIM thus no crisis preparation was made. The absence of preparation is clearly evident in RIM’s failure to provide meaningful statement to their customers around the world, give acceptable estimate of restoration of service, admission of preventable failure, and absence of any rebuilding or diminishment strategy . According to , crisis preparation involves incessant examination of the operation and management structures in order to detect potential weakness and vulnerabilities in the system. Apparently, aside for not preparing, RIM made the wrong decision of delegating customer interaction and communication to clearly helpless partner telecom carriers. Moreover, the vulnerabilities in the system seem unidentified despite the presence of alleged RIM’s Crisis Communication Team with questionable origin (partners is responsible for customer interaction) and were left in a no win situation by focusing on the technical side of problem. By analysis, a CMS team if in existence before the crisis was clearly not effective, badly uninformed, and incompetent even in the application of the basic rules of crisis public relation . Similarly, the presence of Crisis Management Plan as mentioned earlier is doubtful including the existence of a crisis portfolio before the 2011 outage that was clearly preventable in nature and often expected in the industry . For instance, RIM acknowledge that the failover function of the switch did not work as tested thus technical error, preventable by standard, and attributable to RIM’s poor maintenance practices . Since crisis management in RIM is left to its carriers, its silence during the crisis according to can be considered RIM’s tactic. Moreover, RIM according to seems uninterested in responding to crisis and ignorant of the fact that keeping customers up to date is critical to business. The first recommendation to RIM is to create a crisis management plan and associated policies, procedures, and structures . The second recommendation is to perceive event, determine critical uncertainties, improve signal detection, and focus on operation issues and emerging threat . The third recommendation is to improve its crisis communication strategy by taking responsibility over crisis communication, create and train a CMS team that understand the importance of crisis planning, swift communication, reputation, and use of social media . Crisis Event Trigger Event The crisis was triggered by a core switch failure within RIM’s infrastructure resulting to a large backlog of data and outage of critical Blackberry services. However, the crisis was actually triggered by RIM’s silence over the issue, erroneous message posted, and irrelevant messages sent by its CEO on social media days after the outage . By analysis, reputational damage will not occur of RIM immediately inform and apologize to its Blackberry consumers. Similarly, the communication crisis at this point seems controllable through a sincere apology. For instance, apology according to is a crisis communication strategy to reduce damage reputation by admitting and taking responsibility for the crisis incident. However, RIM’s three days silence, delayed formal public statement, and the statement putting the blame on technical side of the crisis destabilized the opportunity. This is because statements focusing on technical matters or failure of a given device seems dubious and may be interpreted as insincerity and non-admission of responsibility over the Crisis Recognition The crisis was not recognised immediately as evidenced by significant delays in crisis communication. It is not clear whether the Crisis Communication Team advised management about the crisis but evidence suggest that they failed to collect information, anticipate the impact of RIM’s silence, and public apologies focusing on technical issue . Media Relations RIM does not have good media relations thus most media coverage are negative. The four days service outage received significant media coverage mostly detailing the technical issue and RIM’s poor communication with its customers . Crisis Containment The service outage lasted for four days but the reputational damaged caused by communication crisis will likely take years to repair. The crisis response was never effective including the efforts used for reputation management through Facebook posting that seems inconsistent, inaccurate, and irrelevant . There was no clear contingency plan but RIM’s apology strategy manifested in statements like “We apologize to our customers for any inconvenience and we’ll continue to update you as new information becomes available” and a video of RIM Co-CEO Mike Lazaridis asking forgiveness and claiming full responsibility for the crisis. RIM clearly followed up concerns in the later part of the crisis but the outcome of the crisis severely affects its reputation and sales, and requires longer rebuilding . The first recommendation is for RIM to devise a strategy that can help the organization take appropriate actions during crisis such crisis recognition and crisis containment strategies. The second recommendation is for RIM to recognize the importance of communicating with stakeholders at this stage . The third recommendation is for the CMS team to learn how to sell a crisis to management and the means of collecting crisis-related information including strategies for containment, reputational management and recovery . Post Crisis The RIM’s Crisis Manager is well aware that the crisis is over but the reputational impact of the 2011 communication failure is still evident in RIM’s deteriorating marker share and financial condition. The company is still experiencing significant losses in sales in 2012 and reported falling market share in the United States at 3.1% in January 2014 . Figure 1 - Blackberry U.S. Market Share in 2014 RIM undoubtedly learned that lesson that crisis management is critical to business while the impact of bad reputation is much greater than they expect. There is no indication that RIM is ready for the next crisis but evidence suggest that the company is still in crisis and experiencing continues decline in both sales and profitability . The company do scan and monitor their situation as the once leader in smartphone technology has put itself up for sale since 2013 . The first recommendation is for RIM to continue re-building its reputation until stakeholders are left with a positive impression . The second recommendation is to learn from the previous crisis and protect its reputation with an effective crisis management system . The third recommendation is for RIM to improve its crisis communication further by focusing on customer needs and issues that may lead to another crisis . Brief Summary of Findings Case study analysis suggests that the four days worldwide Blackberry services outage developed into a major crisis due to RIM’s ignorance of crisis communication and inability detect early warning signs and lack of preparation. Moreover, there is no indication that RIM applied Coomb’s 3- Stage Communication model or any crisis management strategy in the 2011 services outage. In fact, there is no evidence to suggest that RIM posses any formal crisis management structure, adequate knowledge in crisis communication, and attempt to carry out systematic communication and reputational repair. In conclusion, RIM’s crisis communication failure and subsequent reputational damage resulted to a number of negative effects such as decreasing market share, financial losses, job cuts, and others. Develop and maintain a Crisis Management System that incorporates an effective crisis communication strategy. Reference List Read More