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Thursday, June 30, 2011, 06:15 pm PT (09:15 pm ET)

RIM forms committee to investigate CEO roles as exec's open letter calls for change

Faced with strong pressure from investors and an open letter from an anonymous executive calling for a new CEO, BlackBerry maker Research in Motion has agreed to establish a committee to look into the company's executive and board roles.

RIM said in a statement Thursday that the committee would make recommendations on a corporate structure after completing its study, Reuters reports.

The decision is part of a deal with activist shareholder Northwest and Ethical Investments, which had filed a proposal for a vote on the issue. The mutual fund company, which owns close to 500,000 shares of RIM, has agreed to withdraw the proposal in light of the committee's founding.

The committee will consult NEI in "developing the specific terms of reference for this mandate" and will issue its report by January 31, 2012. RIM's board will have 30 days to respond.

An open letter

RIM's announcement comes the same day that BGR published an open letter allegedly from a "high-level" employee at RIM addressed to the company's Senior Management. Speaking frankly, the executive calls for radical changes to the company's strategy and management.

"I have lost confidence," the open letter begins. "While I hide it at work, my passion has been sapped. I know I am not alone — the sentiment is widespread and it includes people within your own teams."

"We simply have to admit that Apple is nailing this and it is one of the reasons they have people lining up overnight at stores around the world, and products sold out for months," the letter continued. "These people aren’t hypnotized zombies, they simply love beautifully designed products that are user centric and work how they are supposed to work."

The executive went on to note that rival mobile operating system Android has a "major weakness" in that it will always lack "the simplicity and elegance that comes with end-to-end device software, middleware and hardware control."

"Rather than constantly mocking iPhone and Android, we should encourage key decision makers across the board to use these products as their primary device for a week or so at a time — yes, on Exchange!" the letter continued.

The letter called new "heavy hitters at RIM" in software management, noting that competitors Apple, Google and Microsoft are "three of the biggest and most talented software companies on the planet." The executive described RIM's software teams as "demotivated" and "working crazy hours and still far behind."

The executive took a page from Apple CEO Steve Jobs' playbook and called for RIM's strategy to also focus on "the things you decide not to do."

"On that note, we simply must stop shipping incomplete products that aren’t ready for the end user. It is hurting our brand tremendously. It takes guts to not allow a product to launch that may be 90% ready with a quarter end in sight, but it will pay off in the long term," the letter read, pointing to Jobs' iconic 1997 keynote "for tips."

The letter pleaded with RIM's management to focus more on developer relationships and less on appeasing carriers and vendors. "There is no polite way to say this, but it’s true — BlackBerry smartphone apps suck," the executive wrote. "Even PlayBook, with all its glorious power, looks like a Fisher Price toy with its Adobe AIR/Flash apps."

"Developing for BlackBerry is painful," the source said, comparing RIM's development platform to a "rundown 1990's Ford Explorer" and Apple's to a "shiny new BMW M3…just such a pleasure to drive. The letter also quipped that "Canadians are too nice," claiming there is no accountability at the company.

The letter also took issue with the company's focus on Adobe Flash and multitasking in its products. "25 million iPad users don’t care that it doesn’t have Flash or true multitasking, so why make that a focus in our campaigns? I’ll answer that for you: it’s because that’s all that differentiates our products and its lazy marketing."

The alleged executive characterized recent questioning of the company's dual-CEO structure as "warranted" and called the partnership between RIM co-CEOs Mike Lazaridis and Jim Balsillie inefficient. "Maybe we need our [former Google CEO] Eric Schmidt reign period," the letter's author suggested.

"Overconfidence clouds good decision-making," the letter continued. "We missed not boldly reacting to the threat of iPhone when we saw it in January over four years ago. We laughed and said they are trying to put a computer on a phone, that it won’t work.

"We should have made the QNX-like transition then. We are now 3-4 years too late. That is the painful truth… it was a major strategic oversight and we know who is responsible."
"Perhaps it is time to seriously consider a new, fresh thinking, experienced CEO. There is no shame in no longer being a CEO. Mike, you could focus on innovation. Jim, you could focus on our carriers/customers… They are our lifeblood."

The letter concluded by asking the company's management to "reach out to all employees" on how to make RIM better. "We’re all reading the news and many are extremely nervous, especially when we see people get fired. We need an injection of confidence: share your strategy and ask us for support. The headhunters have already started circling and we are at risk of losing our best people."

A quick response

The Waterloo, Ont., company quickly responded to the letter, finding it "difficult to believe" that an executive in good standing wrote the letter. "Regardless of whether the letter is real, fake, exaggerated or written with ulterior motivations, it is fair to say that the senior management team at RIM is nonetheless fully aware of and aggressively addressing both the company’s challenges and its opportunities," the company said.

RIM admitted that the company has recently concluded a "major business and technology transition" that took longer than expected. According to the company, the company has left behind a period of "hyper growth" in order to streamline its operations "to allow it to grow its business profitably while pursuing newer strategic opportunities." The smartphone maker sees itself as "in a solid business and financial position" with $3 billion in cash and no debt.

The company recently announced layoffs as sales, prices and profits have plummeted. Analysts described the company's recent financial performance as "when a disaster turns into a nightmare" and a "one-trick pony" whose one trick no longer works.