This story was amusing. BlackBerry had a pretty severe service outage, lasting 3 days.
I wonder if that has anything to do with this?
Research In Motion will shed around 2,000 employees this week, in yet another indicator of the company’s battered state.
In July 2011, RIMM fires 2000 people. (RIMM is the corporation that owns BlackBerry.) In October, their servers stop working. Is it a coincidence?
It’s pretty obvious what happened. RIMM fired 2000 people. Did they fire the 2000 least qualified workers? Did they fire the people who actually knew how to keep the servers running?
Suppose you’re a middle manager at RIMM, and you’re ordered to fire a subordinate. Do you fire your friend? Do you fire the guy who actually gets the work done? Obviously, you fire the competent guy before your fire your friend.
If the middle management is able to distinguish between competent workers and dead weight, then firing people can boost profits. When middle management is insane, the most skilled workers are the ones who seem like dead weight.
In a large corporation, the incentive is for a middle manager to do what’s best for himself, instead of what’s best for the whole organization. Therefore, middle managers will fire competent workers before their friends, if they’re ordered to fire someone.
There is an important difference, between computers and the rest of the economy. For other areas, you can coast off past success and get complacent. For example, Coca-Cola would have to really make a huge mistake, to lose their market position. Even if Coca-Cola’s management is unqualified fools, they get to keep their market share. For computers and software, you have to keep improving or you lose customers. There are many fewer barriers to entry in software, than in other areas of the economy.
BlackBerry’s management is content to coast off their past success. They’re losing market share to the iPhone and Android. BlackBerry’s management is acting like they have a monopoly, while they’re in a very competitive market.
That’s the problem with the economy. If you fire a lot of people, you boost short-term profits. However, you wind up firing the people who actually know how to make things work. The incentive is to boost short-term profits, while destroying long-term value.