Research In Motion co-CEOs Step Down

Last night, Research In Motion announced their co-CEOs, Mike Lazaridis and Jim Balsillie have stepped down from their positions. I found the news via @CNBC tweet. RIM has had a very rough 2011 and since the emergence of the iPhone, they have yet to reclaim their previous glory. This is not to say that the iPhone blew the BlackBerry out of the water – instead, RIM didn’t move at the faster pace of the market to produce better software and phones to compete. At the end of 2011, investors, news commentators/outlets, and the public were calling for major change in the company. Most felt that the change should come from the top. Thus, it is no surprise that Lazaridis and Balsillie have “decided” to step down.

According “RIM Has a New CEO, But Does It Have a New Game Plan?” by Jon Fortt of CNBC.com and “BlackBerry maker’s CEOs hand reins to insider” by Alastair Sharp of Reuters.com, Thorsten Heins is the new CEO. Sharp reports Heins is “a former Siemens AG executive who has risen steadily through RIM’s upper management ranks since joining the Canadian company in late 2007”.

The plan for RIM is not clear. Fortt (CNBC.com) reports that Heins doesn’t plan to change much. Fortt quotes Heins saying:

“I would tell investors that this change already has happened on the product side, and might not be what the public was demanding. But you cannot just fall for public opinion because sometimes the Street is right, sometimes the Street is wrong. We have to do what is right for the company”.

Sharp (Reuters.com) reports “Heins said he would push for more rigorous product development and place a greater emphasis on executing on the company’s marketing and development plans.” Also, Sharp reports Heins is searching for a new Chief Marketing Officer “to improve advertising and other communication with consumers.”

A new marketing strategy is a vital step for RIM to embrace a new image along with a new CEO. If Heins really did make the statement reported by Fortt, he just made his first PR mistake. This new CEO announcement is suppose to breath life into RIM, not make the audience think things will stay the same. Things should only stay the same if it’s working and whatever strategy RIM was on for the past year failed. The Reuters article gives me some hope that RIM is moving towards some change for the better.

Customer service, Social Media, and Outsourcing

Last night, I finally watched “Customer (Dis)Service” by CNBC. Evident by the title, the special was about customer service, its evolution, its problems, and the process, good or bad. The special premiered more than a week ago, so, first let me apologize for being late on this commentary. I found a lot of it relatable and also sympathetic for both customer representatives and customers. Obvious things were discussed – people want excellent service regardless of price, social media has given the customer more power and businesses quicker feedback, and that sometimes people, both customer and representative, have bad moments.

There was one very informative portion of the show. The program explained the training program for outsourced call centers, specifically a call center in Delhi, India. The program reports that businesses give these reps little information regarding the service/product. There was a moment when a rep was being filmed during a live call. A customer wanted a definitive answer to when his computer would be fixed. The rep did not have an answer; all she could do was repeat, “the parts are on order”. The customer got frustrated and asked again if he could get an answer. The rep got nervous but couldn’t do anything but repeat herself. The customer asked to speak with a supervisor. The rep responded she didn’t have one. According to CNBC, in call centers, like the one represented, reps are not allowed to “escalate” calls aka send customers to supervisors. The result was that the customer was infuriated and the rep was stuck repeating herself.

Hostess Files for Bankruptcy

Hostess has filed for bankruptcy for the second time in the last few years. The last time they filed was in 2004 and was out of bankruptcy in 2009. “Hostess returns to bankruptcy over pensions” from Reuters.com reports from the court papers that “Hostess’ declining financial performance, crippling legacy costs associated with its pension plans and massive debt levels” are causes of the filing.

The company reports $860 million in debt, $981.6 million in assets and $1.43 billion in liabilities. The article reports that Hostess stated “it does not expect disruptions in the manufacturing and delivery of its products during the bankruptcy process”. The company has also stated that they have failed at attempting to sell parts of its business to other similar companies.

Fortunately, Hostess sales pastries, which are short-term, inexpensive products. Their customers are guided by appetite, which is not effected by the company’s bankruptcy. If this were a tech company, some customers would be wary to purchase an expensive, long term product from a bankrupt company knowing the product could be discounted and the company may not be in a position to offer customer service or honor warranties. After the finances are figured out, Hostess could still have a substantial brand to use.

Bank of America is Looking for a New Image

Bank of America is experiencing a “new day” and wants others to know also. “Bank of America puts advertising account on review” by Rick Rothacker of Reuters.com reports that Bank of America is seeking an advertising agency to restructure its advertising image. The company has put “its advertising account up for review” and “notified advertising agencies of its plans on Wednesday and expects to make a decision in April”. The notification stated, “it’s a ‘new day’ at the bank, despite ‘ongoing challenges we are addressing’”.

The article reports the last “advertising review” was in 2006 but the financial crisis has happened since then. Being one of the bigger banks in the U.S., Bank of America’s image has suffered greatly especially from “government bailouts, a falling stock price and an ill-fated attempt to implement a $5 per-month debit card fee last fall”.

The Nook Costs Too Much for Barnes & Noble

During the holiday retail season, the Nook sold well but has created a loss for Barnes & Noble. “Barnes & Noble Seeks Next Chapter” by Jeffrey A. Trachtenberg and Martin Peers of WSJ.com reports, the company announced that they could lose more money than expected and considering spinning off the Nook into its own business. Most would not spin off a successful aspect of their business, but the cost of making and advertising the Nook is causing the company to lose money.

The article describes the cost:

“Developing, manufacturing and promoting e-readers and tablets requires heavy upfront spending… spending on advertising has more than tripled since 2009… to promote the Nook, the retailer returned to national TV advertising in 2010, after a 14-year hiatus, buying spots on popular programs such as ‘American Idol’”

The result of such cost is that “[the company’s] earnings before interest, taxes, depreciation and amortization—a critical measure of earnings—fell to $163 million in the fiscal year ending April 30, 2011 from $281 million in fiscal 2010”