SM: What is Ed Colligan’s area of expertise? EB: He contributed a lot in the marketing front of the company. That was his main contribution. Ed was a first time CEO. The board felt he could preserve the innovation skills that had characterized the success of the early Palm days as well as Handspring, while at the same time providing the operational focus.
The company did not do very well after this transition, not because Ed was a bad leader – he had very good people leadership skills. Rather, the company suffered from what I call the 3M syndrome. They were so concerned making sure the Treo 650 and subsequent products would be reliable, that they would have an acceptable return rate, and so on, that this became the sole focus of the company. We attracted people who we thought could deliver these skills and much like at 3M, when they got their GE trained CEO, a lot of the creativity suffered.
SM: Productivity was good, but Innovation was poor. Difficult tension to resolve! EB: From the end of 2005 through the 2007 timeframe, there was an intense focus on program management; a lot of derivative products were created. We added carriers and continued to grow rapidly. The difference is that the smartphone market was no longer a brand new market. It had competitors. Even though we were filling out the line, we were not filling it out with great, breakthrough products, and competitors were closing in. We were growing revenues, but margin started to come under attack by others.
Companies like RIM kept executing extremely well; they were introducing more products and increasing their attractive form factors much faster than us. RIM started to pull ahead. We did not think that we could continue to support these margins because we had to invest more in innovation. Even though we were a $1.5+ Billion company, we did not have enough critical mass to pour into innovation.
Frankly, I was disappointed by the productivity of the existing team in terms of delivering even derivative products on time, within the budget. I would characterize this period as sort of wading through. There was growth, and it was generating cash, and we certainly had good market share, but we were by no means breaking out.