Dynamic Strategy and Disruptive Innovation: Snap Inc.

This report analyzes Snap Inc.'s strategy and innovation through its stakeholders, business model, and value proposition. It discusses how Snap Inc. disrupted the social media industry and offers recommendations for its continued success.

Dynamic Strategy and Disruptive Innovation: Snap Inc.
Introduction
Snapchat, one of the most used camera app products on smart phones, has been continuously
improving, attracting new users, and rising to become the most-used teen app in 2016 (Tierno
and Campo, 2005). Daily active users have been consistently growing since 2014 and have
doubled to 150 million since then. However, comparatively speaking, it has only recently caught
up to some of the giant social media websites like that of Instagram and Twitter this year – it’s
still significantly lagging behind Facebook. One thing CEO Evan Spiegel understood is that it’s
not enough to just be good nowadays, you need to be great to continuously succeed. As a result,
they needed to move towards positioning the company to take greater control of the value chain
in which they currently already are a significant part. It was clear it was time to expand, but
how? Snapchat began by deciding to rebrand itself to Snap Inc. in order to expand its image to
become more than just a messaging app. As innovative ideas emerged within Snap Inc.
headquarters, they needed to reinforce the idea that they are much bigger than a cool mobile-only
camera and messaging app. They publicly shared their intentions to grow with the slight
polishing of their vision statement and the surprise launch of their first hardware product - a pair
of Snapchat glasses called Spectacles. These smart glasses are simple sunglasses with an
integrated camera that records videos and syncs with the wearer’s Snapchat account via
Bluetooth for easy capturing and sharing (Jiang, Nunamaker and Zimbra, 2014).
Snap Inc. Stakeholder View of the Organization Model
Basing on the organization model, there are six main stakeholder’s groups in this company.
These stakeholder groups include media, customers, owners, competitors, suppliers, and
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employees. The owner’s group is identified as the main stakeholder in the Snap Inc. and provides
sufficient awareness regarding the starter of Snap Inc. who are Bob Murphy and Evan Spiegel.
All the two owners own equivalent equity of 21.8 percent in the whole organization (Snap Inc.,
2017). The two owners also won shares worth 70 percent of the voting power in the whole Snap
Inc. The CEO of the company is Evan Spiegel while its CTO is Bob Murphy. All the two owner
have the powers and can dictate over the entire performance of the organization. Another group
of stakeholder in the company are customers. It has been considered that around 150 million
consumers are use the company’s services on daily basis through application of numerous apps
from Snapchat, Bitmoji application and spectacles to send videos and images all over the world.
Competitors such as face book, Google, and Apple pose tough rivalry to Snap Inc. in the arena of
mobile engagement and advertising (Derak et al, 2016). Organizations that integrate IT and
customary corporations that deal with television print media, and radio sector also give Snap Inc.
a strong competition in the universal market. Employees also play a vital role in the
development of the organization and assist the firm to attain echo t its strategic goals. The firm
employs vastly capable staff that consist of product managers, designers, and software engineer
(Salado and Nilchiani, 2013).
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Diagram: Stakeholder View of the Organization Model
Stakeholder Analysis for the selected stakeholder groups
Since Snap Inc.’s ultimate control is under the company’s owners, it does not encounter
competitive risks from any employee from within. 21.8 percent of the company’s equity shares
are owned by the company’s ownership. There is sufficient cooperation and coordination from
other stakeholder groups that assist Snap Inc. to carry out all its operations in an operational way
(Pritchard and PMP, 2014). The conduct of the company’s ownership makes it to be the most
innovative and leading technology organization worldwide. The ownership of Snap Inc. also
increases the total revenue. This involves provision of cost saving apps and user friendly to
consumers for purposes of enhancing experience and satisfaction level for the company’s
services. The key aim of the Snap Inc.’s ownership is to develop the company’s operations all
over the world. Snap Inc.’s ownership believes that they have the ability to offer the finest image
messaging applications and multimedia messaging applications to users for purposes of sharing
images and videos in a very effective way (Grant, 2016). The potential alliances designed by the
company’s management encounter stiff competition imposed by the company’s competitors such
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as Facebook, Google, and Apple since these companies also focus on enhancing prompt
multimedia applications and messaging with the aim of attracting new customers to purchase
their products. Therefore, it is clear that the company’s owners are main managers running the
all the business processes at Snap Inc. The conduct and drives implemented by the proprietors
are important in the drive to attain every strategic objective for the company and compete well
with its rivals at the global ranking (Caniato, Vaccari, Visvanathan, and Zurbrügg, 2014)
The rivalry in the newest technology to develop more innovative and creative factors is
affecting and posing a competitive threat to snap Inc.’s staff. Good collaboration among the
workers also helps Snap Inc. to form new inventive services for its customers (Markmann et al,
2013). The innovative working environment and operational reimbursement packages for
workers encourage and motivate workers to improve their performance with the objective of
attaining each strategic goal for the company. The core goal of every worker in the company is to
form new inventive products while focusing at the improvement of the quality of apps and other
products in the market place. The vastly capable workers of at Snap Inc. have the aim of
developing creative and innovative applications as compared to competitors (Bourne, 2016). The
exceptional in work beliefs and performance assessments for each worker in fair approach
motivate the staff to work in an effective way to attain every strategic goal of the company.
Therefore, it is very clear that workers are the main stakeholders and assets in the company that
help it to realize its objectives and centers to form more inventive applications that offer Snap
Inc. a competitive advantage over its competitors in market place.
Stakeholder category identification and generic strategic programs for each of the
four selected stakeholders
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The owners at Snap Inc. can be categorized in a group of high interest and power in the
company’s operations. The approach employed in this group is that it requires to be handled
under maximum caution and close management (Bourne, 2016). Additionally, an aggressive
approach requires to be achieved in this group since the approach make the most of its impact in
the company through minimization of threats. Snapchat offers users an opportunity to interact
with their friends without leaving a large digital footprint. Users are thus free to express
themselves without worrying about the potential repercussions of sending something that may
not be considered acceptable if posted on Facebook or other social media (Caniato, Vaccari,
Visvanathan, and Zurbrügg, 2014). Snapchat does not have “hearts” or ‘likes’ features or other
acknowledgement features. Further stating that users do not face repercussions for judgment or
societal pressure for the content they generate. They can send a picture knowing that it will
disappear from the record within seconds. In addition to the drawing feature, Snapchat has
added color filters, geofilters, texting, and lenses to enhance the communication experience. It
also has built in a content platform known as Discover in which users can view snippets of news,
sports highlights, etc. created by different media companies. Snapchat, in 2015, experimented
with peer-to-peer payments through Snap cash. Users can transfer money to friends within the
app that they already use to communicate with their friends. It is a future indicator that Snapchat
is trying to become a “one-stop shop” for interacting with friends. Snapchat heavily targets teens
and young adult demographic. These ‘millennial’ are a combination of technology savvy yet
have a desire for more intimate social connections makes them the ideal target for a fun and fast
app like Snapchat. Comparatively, Facebook has expanded from its original user base of
University students to encompass across all generations, the company has faced declining
numbers for onboarding younger users. Snapchat, on the other hand, has gained a large following
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with the teenage/millennial demographic, with almost a 100 million active users. As a social
media platform, Snapchat is a revolutionary technology. Previously, consumers needed to store
and preserve photos and videos, and with Snapchat the user no longer needs to store information.
Also in Snapchat’s case, competitors do not exist currently despite companies like Facebook and
Instagram trying to move into this space of ephemeral photo technology. In conclusion, Snapchat
does not fully meet Christensen’s disruptive technology definition, but does show that it is a
revolutionary disruptive technology.
Disruptive technologies display the following three characteristics according to Clayton
Christensen create new market by introducing new kind of product or service, new product or
service costs less than existing products or services, and new product performs worse than
existing products when judged by performing metrics than mainstream existing customer values.
Eventually, the technology catches up and addresses these concerns. Snapchat exhibits both the
first and third characteristic of disruptive technologies; the company has introduced a new type
of product that performs all functionality required within one application as well as had
performance that was initially worse (picture quality taken) in 2011, and improved the
technology where in 2015 consumers do not have performance concerns. However, with the
second characteristic, new social media services also enter at a free price typically. Snapchat is
unable to enter at a cost less than free into the marketplace that other competitors can. Most
photo taking applications available on smartphone applications are also available for free, but
Snapchat offers additional capabilities that are not available for the same price point. For this
characteristics, Snapchat is on the same level as the rest of the marketplace. Even though
Snapchat does not meet the three characteristics defined to create disruptive technologies, the
company’s new business model coupled with network effects and value proposition have found a
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way to change (or disrupt) the social media industry. The below figure displays how Snapchat
does create a value proposition for users of social media compared to traditional models.
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Snapchat stripped off or de-emphasized some of the attributes that existing social media
users had come to expect. Before Snapchat, Facebook dominated the social networking world
with its optimized newsfeed to showcase updates from “friends,” as well as its paid
advertisements that caused brands to flock to the site. Snapchat changed the attributes of sharing,
stripping off the history that existed with every user and replacing it with functionality that
allowed a user to send a photo to be viewed momentarily and then disappear. There was no risk
or repercussions for sharing. On top of this, unlike Facebook, who used complex algorithms and
collected large amounts of user data to ultra-target users, Snapchat chose a very different
approach. Spiegel knew his user base was tired of being flooded by brand marketing, and so he
offered a unique value proposition, simply by not taking the same monetization approach as
Facebook. By leaving out features that collected user data for targeting capabilities, he
understood that less was more to the user base he was looking to target (De Brucker, Macharis,
and Verbeke, 2013). Second, Snapchat was simpler to use. For one, Facebook required multiple
steps to send photos (opening a message, attaching a photo, filtering a photo, sending to a
specific audience, etc.), whereas Snapchat let users complete the process seamlessly.
Furthermore, Facebook was focused on all possible modes of communication with the
community (i.e., private or public communication, photo communication, text communication,
sharing of articles, etc.), whereas Snapchat intentionally made photos and videos as the sole
ways to communicate. Snapchat focused first on photos, got the functionality right, and then
evolved with its user base by adding features to the photography (e.g., filters, drawings, and
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text). Then when the user base was ready, Snapchat included videos and Stories. This highlights
how Snapchat decided to take a run approach by innovating continuously and realizing that
doing less in the beginning allowed it to evolve over time as its users demanded. Third, cost was
lower to users. While both applications were free, Snapchat cost less to users because a user took
less risk using the application.
Conclusion
From the report, it is concluded that network effects occurs when the desired behavior of
an individual depends on the average actions of others. Technology is a natural environment for
these types of network effects, when a new product is introduced into the technology space, it is
dependent on how many other individuals are using the product as well. Snapchat is no exception
to these network effects, where the more users that use the application the more additional users
want to start using the product. Even though Snapchat relies on network effects from platform
restraints, Snapchat continues to gain more users each day and an increasing amount of content
that is being shared over the application.
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