How can a business with one of the biggest IPO’s ever have got it so wrong?

Uber as a case study for culture:  

One of the key traits of an innovation culture is the acceptance of failure as a learning point rather than a cause for censure. That may be of some comfort to the Uber leadership team who have at times had to face the fact that they may be presiding over a culture which is less than ideal. 

Accusations of harassment and discrimination were followed by a less than edifying video of CEO Travis Kalanick arguing with his driver. Add in further revelations concerning Greyball, an evasion device deployed in cities which have yet to authorise the Uber model, and the impression is very much one of a culture gone sour. 

To his credit the Uber CEO has stepped up and apologised to his employees, promising a full investigation and admitting that he could do with some help in developing his leadership style. Whether the actions taken will be sufficient or a case of too little too late only time will tell but the Uber story is one which should act as a warning to other CEOs of fast growth organisations. 

Uber made its mark by trying to do things differently, by leveraging available technology alongside a decentralised structure in order to capture market share. That it has been successful in its ambition can be seen by the way it has spread across the globe. In a way, Uber is the classic innovation organisation, disrupting the established marketplace through trying to deliver a service in a different way. 

The culture that worked so well at the beginning will not necessarily always be right for your business 

However the aggression of its business model, the desire to ‘always be hustling,’ has perhaps led to a culture which is less than ideal. Over recent months Uber has seen a backlash not only from its own employees but also from customers and regulatory authorities. Rather tellingly, whilst Uber used to be a proud innovation badge on a CV, recent reports have commented that those looking to move on from the organisation now see a period of employment with Uber as a negative point in their job history. 

The difference between innovation and invention 

In our book ‘Building a Culture of Innovation’ we comment that the difference between invention and innovation is that innovation looks to solve a genuine problem, adds real value to the customer and drives growth for the creator. But underlying all of these factors is the expectation that the innovation culture will be strong, inclusive and ethical. When the culture is less than ideal then no matter what the product, how ostensibly valuable it may be, sooner or later the culture will pull the organisation down. 

Culture is hard to change but certainly not impossible 

The Uber hierarchy had taken the first step by admitting that something needs to change. It may not be easy; as other leaders found to their cost following the banking crisis, once you have set a team of employees loose to deliver results no matter what the cost then it is not always easy to rein them in and change course. That’s not to say that culture change is impossible, merely that it may require some tough talking and tough decisions over the next few months. 

Taking the lead on culture change 

Culture change starts with an honest appraisal of where the organisation is now. Only then can CEOs and leadership teams sit down and redefine the culture, setting goals and expectations, values and behaviours. Transforming culture is not a click your fingers and it is done exercise, it takes hard work and a structured approach. Most importantly the leadership team has to demonstrate the new culture in their every behaviour and action. To do otherwise is to demonstrate that the change is merely cosmetic and can be ignored at will. 

Accepting that there is a problem is the first step, seeing that problem as a learning point and a driver for change will really demonstrate whether a company is sincere about change through innovation or simply looking to profit regardless of the cost to others. 

Can we add this? It was one of 5 things that are mentioned in this article as having an impact on the Uber IPO… 

Driver dynamics 

Uber doesn’t have a great relationship with its drivers as it stands, and the company assumes that dynamic is about to get worse. “We expect driver dissatisfaction will generally increase,” Uber said, as the company’s push to improve the bottom line leads to a reduction in some of the incentives provided to drivers. Uber will pay drivers to complete a certain number of trips in a given time period. 

Uber also admitted the obvious in its prospectus: If it were forced to classify its drivers as actual employees rather than contractors, that change would weigh on its financials. Employees are entitled to legal protections around wages and overtime. Companies don’t have to offer their contractors those benefits.