Monday, February 27, 2017

Can Uber Recover?

By now, everyone has read about the serious problems at Uber.  On February 19, former Uber engineer Susan Fowler published a blog post in which she described serious transgressions by managers at the firm, including sexual harassment.  Soon, newspaper accounts documented a culture that appeared to be out of control.   CEO Travis Kalanick has tried to address the situation, though his early moves have been met with criticism.  He appointed a panel to investigate the situation, but people have objected by noting that all three members are essentially "insiders" at the firm.  Kalanick himself has been criticized for comments in the past that have contributed to the dysfunctional culture.   

Can Uber recover from this fiasco?  Will there be lasting damage?  I see several potential long term negative consequences for Uber.  First, Uber will have a challenging time attracting top talent moving forward, particularly highly successful female engineers and managers.   Why would they wish to work for a firm with this reputation?  Talent acquisition and retention will be a problem for Uber, no matter the promise of financial rewards that they may offer.  Second, investors may begin to scrutinize Uber more closely.  Will they tolerate the huge losses and be as patient as they have been while Uber forsakes profits for aggressive growth?  Third, will corporate governance change?  Will the Board members begin to recognize their own vulnerability here, and will they start asking tougher questions?  Management could face a very different environment in future Board meetings.  

How can Uber recover?  They have to address multiple issues very quickly.  First, they have to insure that the outside review truly is objective.  Perception is reality.  If people perceive the current appointees as insiders who cannot be objective, it will be difficult to persuade people that the conclusions of the review are valid.  Second, they must confront and remove employees who engaged in unethical or even illegal behavior immediately.  Now is not the time for second and third chances.  People have to be held accountable.  Third, Uber must address how it evaluates and rewards employees.  Excusing the inappropriate behavior of brilliant jerks must end.  People must be evaluated and rewarded not simply on the results they achieve, but how they go about achieving them.  Fourth, Kalanick must address his own behavior and past comments.  He has to acknowledge his own culpability in molding and shaping this dysfunctional culture.  Moreover, he has to be very transparent as the review is conducted and changes are made.   Next, the company must address various informal rituals (the push-ups, for example) that have evolved over the years at the firm.  Are these rituals productive?  Should they be stopped? What new rituals should emerge?  Finally, Uber has to redefine the core values for which it stands.  The company is known for its 14 cultural values.  The company has to take a hard look at those values.  Are they the right values?  Have the current values enabled some unintended, but dangerous, behaviors and attitudes?   The company needs to think hard about the message that each value sends... and recognize the ways in which it has enabled bad behavior on the part of many managers. 

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