Enduring Business Values versus Disruptive Business Models: The Curious Case of Uber

The curious case of uber

Off the bat, I would like to say that it is easy to be wise after the fact. It is easy to sit down and pontificate over the challenges Uber faced much of 2017 and how they could have avoided it. It is easy to become an expert on the backs of the series of missteps by Uber. In writing this, I struggled with these thoughts.

But I kept having the nagging feeling that there are broader issues for us all. It was then that I realized that raising this issue was altruistic and for the greater good of all. The gnawing feeling is that this Ubergate brings to fore the titanic battle between Enduring Business Values versus Disruptive Business models.

Does disrupting existing business models subtly suggest that we can also disrupt enduring business values? Or to what extent are we allowed to disrupt existing or enduring business values in the pursuit of new business models such as Uber or Airbnb and the like?

All over the world, from MBA programmes to remote corners, people and investors are in search of the next big thing. But how much of what we have come to learn should we hold onto whilst we pursue new vistas?

This treatise is therefore a learning communique meant to stir us to answer questions that could shape the future of tomorrow’s businesses and workplaces. Several enduring or widely accepted business values suffered within our case study organization, Uber. The unfolding events created by their choices is a huge learning dossier for start-ups, venture capitalists, investors, business leaders and human resource practitioners. Clearly our learning will be enhanced with a snap review of some of those missteps by Uber.

Star Players versus Company Values Syndrome

As reported – “Fowler, a former engineer at the company, alleges in a blog post that she was sexually harassed at Uber and experienced gender bias during her time at the company. She claims a manager propositioned her and asked for sex, but she says her complaints to Uber’s human resources department were dismissed because the manager was a high performer. Uber continued to ignore her complaints, and her manager threatened to fire her for reporting things to HR, she says”

– Business Insider.

We can see at least three issues here: sexual harassment, gender bias, and star player syndrome. The Ali vs Frazier battle here may just be the Star Performer versus Business Values. But haven’t we been here before? Haven’t we outgrown situations where some employees are designated as being above organizational values and ethos? Apparently NOT.

As far back as 1998, the Harvard Business School had a case discussion titled, Rob Parson at Morgan Stanley. Rob, was a star producer hitting the numbers but who violated a lot of Morgan Stanley’s values. I still recall Prof Boris Groysberg taking us through the case at the Harvard Business School in 2007. Even then in 2007 I couldn’t help but think that it was a case that was developed that very year, because the issue it dealt with was so topical and rife.

Interestingly, another of our programme faculty at HBS then, Prof Thomas J. Delong had been in time past Chief Development Officer and Managing Director at Morgan Stanley group and he added front-row perspectives to the issue of star producers seemingly having their own set of rules.

Here is what Jack Welch said in General Electric’s year 2000 annual report,

Type 4 is the toughest call of all: the manager who doesn’t share the values, but delivers the numbers. This type is the toughest to part with because organizations always want to deliver and to let someone go who gets the job done is yet another unnatural act. But we have to remove these Type 4s because they have the power, by themselves, to destroy the open, informal, trust-based culture we need to win today and tomorrow. We made our leap forward when we began removing our Type 4 managers and making it clear to the entire company why they were asked to leave—not for the usual “personal reasons” or “to pursue other opportunities,” but for not sharing our values. Until an organization develops the courage to do this, people will never have full confidence that these soft values are truly real.”

Aggressive, Unrestrained, Exclusionary Culture

As reported – “The New York Times publishes a bombshell report that suggests Fowler’s claims were not isolated. Employees did cocaine during a company retreat and a manager had to be fired after groping multiple women, according to the report. Former employees tell the Times they notified Uber’s leadership, including Kalanick and CTO Thuan Pham, about workplace harassment” – Business Insider. Uber investors Freada and Mitch Kapor also had this to say days after the New York Times report, “Uber’s outsize success in terms of growth of market share, revenues and valuation are impressive, but can never excuse a culture plagued by disrespect, exclusionary cliques, lack of diversity, and tolerance for bullying and harassment of every form. As early investors in Uber, starting in 2010, we have tried for years to work behind the scenes to exert a constructive influence on company culture”

– NewCo Shift.

Again, I thought that the world had gone full circle through costly mistakes to reach the conclusion that ‘your culture matters’. In  2002, Louis V. Gerstner, who served as chairman and chief executive officer of IBM from April 1993 to March 2002 and oversaw the salvation and turnaround of the behemoth IBM, said “Until I came to IBM, I probably would have told you that culture was just one among several important elements in any organization’s makeup and success — along with vision, strategy, marketing, financials, and the like… I came to see, in my time at IBM, that culture isn’t just one aspect of the game, it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.” – Who Says Elephants Can’t Dance? (2002).

Organisations from the brick and mortar days of doing business such as Unilever, GE, Xerox as well as new generation tech businesses such as Microsoft, Google, Zappos, Apple have spent inordinate amounts of money, time and effort to keenly cultivate an inclusive positive culture that their executives and managers can be submitted to. These organisations built company cultures based on enduring values. Systems and leaders are then raised to sustain it. Where a values-based culture is king, teamwork reigns – the sum being greater than the parts. Where a values-based culture is king, the feeble are protected. Where a values-based culture is king, leaders show restraint.

Relegated and Unimportant Human Resources

As reported: “Uber had an HR department, but it apparently was broken, according to Fowler’s account. Recode later reported that Ryan Graves, head of operations, was essentially in charge but didn’t really take the responsibility seriously. Renee Atwood, who served in the head of HR role before Liane Hornsey, reported to Ryan Graves and not Kalanick—unlike most other positions at the ride-hailing giant”.

– Mashable

So many human resources related issues suggests to me that HR didn’t have the importance that forward looking companies accord it. Issues such as absence of workplace harassment policies/procedures; faulty hiring and weak background checking; uncoordinated and non-definitive response to workplace harassment; reactionary hiring practices; high undesirable staff turnovers; hiring strategic staff from competition; and a litany of others are some of the tell-tale signs.

With the kind of early investments gotten by Uber it would have been easy for them to have a well-staffed human resource department . . . if they’d wanted to. Or does disruption suggest that HR is an unnecessary expense? Anyone following the Uber story will know they have since corrected this error by hiring Liane Hornsey to head HR and Frances Frei to oversee leadership and strategy development.Liane was once Vice President, People Operations for Google and Frances was, until recently, a Professor at Harvard Business School.

Today it is Uber, tomorrow it might be . . . Except a more complete message

From the reports, there is data that suggests that many other enduring business values suffered under the Travis-led Uber. For example, there was insufficient care for exemplary leadership; too much power was incorporated in the co-founder and CEO; signs of executive hubris; etc. It is however heartwarming to hear of the many strides being undertaken by Uber to rise out from under the rubble.

It would be to Uber’s credit that we all learn from their missteps. In every corner of the world there is a conversation around disruption. Entrepreneurs, venture capitalists, investors, business leaders, human resource practitioners, college students and governments are in the middle of the discussion. But is the conversation not one-sided? The present messaging subtly suggests that disrupting existing business model licenses us to disrupt enduring business values.

The present messaging suggests by omission that you can disrupt enduring business values just as you are disrupting business models. Remember that what is left unsaid strengthens what is said. Should disrupting existing business models mean we should also disrupt enduring business values? No! We learn from Uber that that is counterproductive.

The purpose of disruption is to unlock hidden value by creating new business value chains, some through the substitution/omission of existing players and others through the creation of new partners. It is not disruption for the sake of it. As we search and pursue opportunities for disruption, we should leverage on the lessons of the past. Our mantra should be: disruptive business models with enduring values. We must signpost this more complete message. Thank you Uber.