Features October 7, 2010, 5:00PM EST

RIM's BlackBerry: Failure to Communicate

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Research in Motion's market capitalization pales in comparison with Apple's Data: Bloomberg

Management experts have long called a co-CEO structure a recipe for infighting and ineffectual leadership. Yet few consider it a source of RIM's problems. The twin structure does make for some odd work-sharing. Balsillie jokes that they're both so maxed out they could use a "tri-CEO" and concedes the division of labor isn't clear-cut. When an issue needs immediate attention, they trade e-mails to decide who'll handle it. "You play these little games where you try to suggest it to the other guy first," he says. "'I'm really busy, can you handle it?' It's like, dang! You know one of us has got to, and the last thing you want is more work."

Over time, each has carved out a distinct role. Lazaridis, the silver-haired founder and mastermind behind RIM's technology, is the face of the company to the tech world. A man who has hosted dinners for Stephen Hawking and poured a big chunk of his wealth into forming the Perimeter Institute for Theoretical Physics, he is regarded as both the visionary and the pragmatist who loves to talk product. "We build professional products," he says. "The more you use them, the more you love them. We don't blow anything out of proportion....Our whole messaging is authentic. Those aren't actors in our commercials. We've always stayed true to ourselves."

Balsillie, by contrast, is a former accountant and self-described "quant jock from Peterborough who doesn't quit." His after-work interest is public policy, which led him to create the Centre for International Governance Innovation in 2001 and the Balsillie School of International Affairs, while also serving on a U.N. panel on global sustainability. He's better known in the U.S. for his interest in ice hockey, having unsuccessfully bid twice to bring ailing National Hockey League franchises from the U.S. to Canada.

For both men, the challenge is to sell the world on a single coherent message. Some analysts say RIM needs to do more to cast itself as the killer brand for business, emphasizing its unique advantages. In an era of growing identity theft and privacy concerns—one in which mobile payments may soon become the norm—security is a powerful attraction. "They know what works, and they don't compromise on that," says Kevin Burden, who leads the mobile services practice at ABI Research. "In some ways, it's refreshing to see a company stick to its beliefs. It's a huge misperception to say the BlackBerry platform itself is archaic." The issue, he says, is marketing: "They have to be fresh and new but familiar."

The challenge of adapting a winning formula is hardly unique to RIM. Sarah Kaplan, a professor of strategic management at the University of Toronto's Rotman School of Management, points out that many companies have faltered because they got locked into a system that worked—for a while. "The leaders don't have a mental model to change their way of thinking," she says. Having the technological edge is rarely enough to guarantee sustained success, and most companies wait too long to address incipient threats. Given RIM's insistence on downplaying Apple and claiming that all is well, it's fair to ask whether Balsillie and Lazaridis have spent enough time debating alternate views. Some wonder whether their Ontario headquarters is too far removed from the intense competition of Silicon Valley. "You need a high-conflict, high-respect organization to change the game," says Kaplan. "If there's any issue with being north of the border, it may come down to a fear of conflict."

There certainly appears to be a geographic divide in how RIM is viewed. More than 90 percent of Canadian analysts rate RIM a "buy," while only half of their U.S. counterparts do. Paul Taylor, chief investment officer of BMO Harris Private Banking in Toronto, says some U.S. investors balk at the notion that an isolated Canadian company can be at the forefront of technology. Balsillie acknowledges the disconnect between RIM's performance and investor sentiment, arguing that "it's almost unprecedented." He can't understand why the rest of the world doesn't get it. "The business is doing well and we've got it under control, and wait and see," he says. "What you've got is a true dichotomy of architectural views of mobility here."

That, or maybe a bad connection. Charles Golvin of Forrester Research (FORR), for one, sees promise in RIM's recent efforts to promote its brand—from sponsoring tours of rock bands such as U2 to developing TV ad campaigns. "There's tremendous passion out there for RIM, and the PlayBook is an opportunity for them to change their perception in the marketplace," says Golvin. "The question is whether they can get their story out." Basillie may even be aware of the problem. At one point in his meeting with Bloomberg Businessweek, he stops and looks around the room, then asks, "Am I communicating O.K.?"

With Arik Hesseldahl and Douglas MacMillan

Brady is senior editor at Bloomberg Businessweek in New York. Miller is a reporter for Bloomberg News.

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