Lessons from Uber: belonging means membership, not ownership

Uber: because your day belongs to you” runs the jaunty brand strapline.

Dara Khosrowshahi, the new CEO of Uber, might be wondering if his day will ever belong to him for quite some time.

As he takes on the challenge of steering the chaotic company into some kind of stability, a sense of belonging is a very good place to start.

His appointment is confirmed morning in an email to staff published on Uber’s website. To their credit, the Directors agreed that staff should hear the news first before it went public. (Though it was leaked within minutes of Sunday’s decision)

Today Dara Khosrowshahi begins his leadership as CEO with an ‘All Hands’ meeting with staff, who have been encouraged to bring their questions.

Khosrowshahi has been called the ‘dark horse’ of the race: his name had not featured alongside the public discussion of other candidates, including General Electric Co.’s Jeffrey Immelt Hewlett Packard Enterprise Co.’s Meg Whitman.

In an interview to Bloomberg at Expedia’s headquarters in Bellevue, Washington he said 

“Are there difficulties? Are there complexities? Are there challenges? Absolutely, but that’s also what makes it fun. I am not in this to coast.”

Encouraging for employees, his first comment speaks of pride in membership:

“I’m in it to get my hands dirtybuild a team and do something that people will look back on with tons of satisfaction.”

He also addressed one of the core culture challenges head-on:

“Diversity is an issue within technology. You look at the problem and solve it one step at a time. You solve it by first recognizing it and then working it. It requires real candor and real honesty.”

A great way to endorse his appointment. Candour is indeed the critical ingredient: but only the strongest leaders know how to promote it.

Behind the last few weeks’ board-room angst to appoint a new CEO, apparently, previous chief exec and founder, Travis Kalanick had been asserting his remaining 16% voting rights, to pressure those in his camp to reappoint him to the board. 

Ownership, clearly, means much more to Kalanick than membership.

But as the white smoke went up from the Silicon Valley Vatican, no such luck for the founder.

A legacy of toxic culture and loss-making performance

The culture challenges that have dogged the companies’ progress have been firmly ascribed to Travis Kalanick.

For the new CEO, the culture-poison seems so deep rooted and the challenges so endemic that any change in standards, principles, habits and practice will be neither fast nor easy.

How does this affect performance? After all, customer seem to have shifted allegiance to Uber swiftly and in droves?

Culture affects performance in many ways, the critical ones here are: decision-making, risk-management, ethics and morale. 

Despite healthy revenue growth, in seven years the start-up has still failed to make a profit, though has reduced losses by 11%.

Culture, and performance, lived up to the values stated by the founder, which included “Always be Hustlin’ ” and “Principled Confrontation”, the consequences include a current legal case between the founder and Benchmark Venture Capital, one of the biggest investors, due for review this week, and a potential breach of bribery and corruption ethics, as well as disgruntled employees, drivers, customers, cities, peers, competitors, investors – and performance.

What on earth, they must all wonder, do we belong to?

Culture challenges of Uber proportions

A quick rundown includes the bitter case against Uber by a former senior employee Susan Fowler earlier this year. Her experience of extensive gender discrimination and sexual harassment was eye-watering, unfathomable from a leading-edge 21st century business: a stark contrast with the upbeat ‘there when you need us, affordable, safe and efficient’ message that has persuaded customers to adopt Uber in cities across the world. 

This was echoed in reports (and even bragging) of a macho culture, including the infamous ‘Miami letter’ email from Kalanick to employees in 2013, advising employees on sex rules for a company celebration.

The frat-boy bravado may have seemed part of a high-octane new start-up: but the encouragement from leadership fuelled behaviour that hurt employees, reputation and promoted decisions that go beyond dodgy ethics into lasting damage.

Who cares about culture? Well, investors.

Investors DO care about culture: it affects their return on investment and wider impact of the business and its reputation.

Early Uber investors, Mitch Kapor and Freada Kapor Klein, articulated their concerns – investment, business and moral – in an open letter in February, published on Medium, LinkedIn and a wide array of coverage. They laid down the gauntlet, to fix the culture or lose investors’ confidence. 

“We are speaking out publicly, because we believe Uber’s investors and board will rightly be judged by their action or inaction. We hope our actions will help hold Uber leadership accountable, since it seems all other mechanisms have failed. As investors, we certainly want to see Uber succeed, but success must be measured in more than just financial returns.”

Not only did the Kapors place a firm requirement for responsible business leadership, they also reinforced the inevitable tarnish on the sense of belonging to Uber for everyone involved:

“Uber’s response to this particular crisis will be defining for the company, so the stakes are high to get it right. Current, past and prospective employees will be watching, as will drivers and entrepreneurs and countless others, including these investors.”

They offered tools, practical experience and the support of Kapor Capital’s extensive network. 

Their commitment runs deep. As responsible – and highly profitable – investors,  they have taken a firm stand for years on improving diversity and inclusion in the tech industries. They set up the Kapor Centre, a place of guidance and nurture on all aspects of entrepreneurship, to enable access and fast-growth of top talent – wherever that talent comes from and in whatever human form.

Meanwhile, Uber went from bad to worse to catastrophic. 

The headlines read like an unfortunate game show challenge: 

“How low can your business go?!” 

More reports of macho targets, recriminations, summary dismissals and rapid resignations. 

An investigation led by a law firm resulted in the firing of more than 20 Uber employees after the firm received 215 claims of sexual harassment discrimination, bullying, and  a Molotov cocktail of bad practice. 

A backlash from cities who didn’t approve regulation but Uber apparently tried to evade with secret-weapon tech ‘Greyball’.

A high profile lawsuit against Google who accused Uber of nicking driverless-car technology.

Challenges for drivers, even cars going up in smoke recently as Uber has knowingly leased fire-prone cars to drivers in Singapore.

In March Jeff Jones quit as President, after only a few months in the role, citing incompatible culture and beliefs.

“It is now clear, however, that the beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber, and I can no longer continue as president of the ride-sharing business” 

Board response and the Covington report

Uber’s board, under pressure from investors, commissioned former Attorney General Eric Holder and his law firm to investigate the culture

In June they published a crisp 13 page report with clear findings and recommended actions. The ‘Covington Repot’ is shared publicly. 

Today the board can tick off one task from this list: appoint a new CEO.

When Travis Kalanick himself resigned there was some relief, laced with cynicism, about how much difference this would make, in a culture so deeply-toxic.

So where can Mr Khosrowshahi begin?

At the very heart of the business, that pumps all behaviour, business and commercial performance:

Ethos.

Ethos is more than a list of values. It’s a code of belief that guides behaviour, decisions and daily habits of leaders and everyone who belongs to the organisation. Point IV of The Covington Report recommends “Reformulate Uber’s 14 Cultural Values”

The paragraph is incisive on why this matters, and the importance of a process inclusive of employees and with leaders demonstrating new values in action. Sound advice. But there’s something missing, and it’s important: people and belonging, human connectivity. 

This is beyond legal compliance, or neat brand positioning. Belonging goes further, into commitment, accountability and performance.

We recommend company-wide participation in establishing a new core ethos, expressed in clear values, with shared ownership, and visible practice.

Take time and care: it’s urgent, but it’s delicate. And neither employees, drivers, cities nor investors have any tolerance left for more cultural failure.

Uber needs to develop a sense of belonging that reflects membership by all those people involved. 

Leadership, as Uber’s new CEO has already shown, means sharing that sense of belonging.