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Business 101: when the going gets tough, fire the CEO. Usually companies that have lost a chunk of market share or have plummeting stocks need a martyr to keep their shareholders’ faith. But Pandora CEO Joe Kennedy bucked the norm yesterday and stepped down when their stock price was soaring and profits looked good. Kennedy said:
“As part of our Board discussions of the road that lies ahead, I reached the conclusion and advised the Board that the time is right to begin a process to identify my successor.”
According to the news release, Pandora made more than $427.1 million in 2012 ($255.9 million from mobile) and holds 70% market share of Internet radio. Pandora’s stock is also up by 20 percent according to Digital Trends. Music streaming is a growing industry, with both YouTube and Apple announcing their intentions to enter the market. The future of Pandora is bright, so why is Kennedy leaving the company?
He could be taking a page from millennials where it’s no longer the norm to stay with a company for several decades. In the modern era, 91 percent of workers expect to stay with a company less than three years. (Forbes defined millennials as those born between 1977 – 1997 and calculated that they will have more than 15 jobs in their lifetime.)
Declining loyalty in the workplace has become a two way street. Companies outsource to save money and avoid investing in long-term employee benefits like pensions while employees view job positions as stepping stones until something better comes along. While it’s easy to believe that millenials keep advancing until they get a corner office, there’s really no reason for them to settle down once they’re there. Joe Kennedy has proven that.
It makes sense that CEO turnover is high in the tech world. Companies that have only been around for 15 years – like Pandora – consider themselves veterans in the industry. With the Internet industry constantly evolving and growing, businesses have to keep adapting and even reinventing themselves to stay ahead of the competition. Sometimes having a new captain at the helm can bring in new ideas to keep a company on top.
Unlike products like washing machines, tech products can fall out of vogue within months. Daily Deal sites peaked in popularity two years ago and have since been dropping like flies. In 2011 alone 170 daily deal websites shut down because business don’t see them as lucrative marketing tactics and consumers think the novelty has worn off. Groupon sacked CEO Andrew Mason last week in an attempt to become popular again.
Tech giants are ushering in a new era in company loyalty. No longer is job hopping limited to lower-level employees and no longer do CEOs leave only when the going gets tough. Joe Kennedy leaving could be great for Pandora’s future, not because he was bad for the company, but because a new brain with new ideas can be great for it.