Three Ways Snap Inc. Can Weather Its Internal Storm

Earlier this month, Snap Inc., parent company of social media platform Snapchat, announced that their longtime Chief Strategy Officer Imran Kahn resigned. While it may not come as a surprise that Kahn is moving on, considering his exit makes the ninth high-profile departure at Snap since their initial public offering in March 2017, it marks a troubling time for the once surging company.

In regards to Kahn, insiders told Vanity Fair that his departure is a symptom of a larger problem that begins and ends with CEO Evan Spiegel. In addition to a sustained dip in stock price, loss of executive talent, struggling user growth and deteriorating morale, this most recent announcement comes on the heels of Snap replacing their chief financial officer Drew Vollero with Amazon veteran Tim Stone back in May 2018.

Could this be the growing pains of an organization trying to scale and finding its footing as it competes with tech giants, such as Facebook? It’s hard to say for certain, but there are a few things Snap can and should do to calm investors and reassure users and employees that they have a business continuity plan in place amid these departures.

First, they must prioritize executive talent management internally. One of the most troubling findings unearthed by the #MeToo movement and other unplanned, high-profile executive departures like Snap’s is the absence of robust executive succession practices across organizations irrespective of size, industry sector, or ownership status. In fact, just more than half (54 percent) of the boards of global companies are actively developing CEO successors as part of an internal executive succession process, while 39 percent report having no single internal candidate who could step in to replace the CEO on an interim or permanent basis, according to a 2016 succession planning report from Harvard Business Review.

Stalled strategic planning processes, postponed capital projects, deflated morale, and rapid turnover of top talent represent just a few of the negative consequences of unexpected departures of executives in C-Suite roles. It is vital that companies have a stable internal pipeline of candidates, so they can be assessed and further developed for future roles. Furthermore, organizations that commit to development of a formal executive succession process that extends beyond the CEO and C-Suite level across multiple levels of management and critical roles achieve consistently higher market returns and talent outcomes. Many companies adopt a talent acquisition strategy by bringing in a high-profile hire from a well-respected organization, such as Stone coming on board at Snap from Amazon. However, this strategy is a short-term solution at best as the research findings on executive succession across industries indicate that external hires are unlikely to stay long.

Second, they need to determine if they are structured correctly and aligned with the business environment. As Snap evaluates its path forward, this transition time gives the company an opportunity to take a hard look at its operating structure and organization design to evaluate strategic fit and alignment with the current business environment. The executive team needs to decide if the company and its internal processes are as responsive to rapidly shifting user demands and developing capabilities are that allow talented employees—irrespective of status and title—the space to continue to innovate.

The tone for the organization is almost always set by the CEO and engaging in comprehensive organizational assessments that examine the alignment of leadership competencies and organizational capabilities to the current business environment may very well indicate a substantive change in strategic direction.

Lastly, the company needs to determine if this is the natural maturation process post-IPO or if it is signaling something bigger. Facebook went through similar growing pains after its IPO in 2012 when the stock took a downturn and then rebounded the following year. Many blamed the IPO lock-up agreement, which prohibits members of a company from selling any shares of stock for a specified period of time (usually between three to 24 months). Or sometimes the founders, pre- or post-IPO, decide that they want to focus on the creative process and shed the day-to-day operations. One can look to Google in its infancy, when it shifted its operational responsibilities away from founders Sergey Brin and Larry Page with the hiring of Silicon Valley tech veteran Eric Schmidt to serve as CEO.

Shortly thereafter, Google gradually transitioned from its famed ‘20 percent time’ policy for supporting the creative endeavors of its talented workforce. It’s quite possible that the executive team changes occurring at Snap are a signal that the company is redesigning its executive management structure—including Spiegel’s role—to align with the company’s current strategic priorities. As is often the case with executive teams that must evolve and realign with new competitive realities, a formal executive development and coaching process is critical for assessing and developing the leadership competencies requisite for growing the company. The early results are encouraging, as recent reports suggest that Spiegel has engaged in a personal coaching program intended to enhance his effectiveness as CEO and that of the top executive team.

But if Snap can ease investor concerns by demonstrating that it’s capable of identifying, developing, and retaining its top internal talent and high-potential leaders and realigning its operating structure and organization design, the company may be able to weather the current storm. And they may just have a compelling story to tell about it.

Read more: How CEOs Can Effectively Navigate Through Change