Lessons from Uber: Leadership Always Beats Innovation

I love Uber.  Haven’t taken a cab in about three years.  The amount of innovation coming out of this entrepreneurial, rapidly growing company – and the significant and profound shift in business model for the human (and maybe non-human) transportation industry it inspired – is impressive.  Much like Amazon is transforming retail, Apple is transforming electronics and communication, and Google is, well, transforming everything, Uber not only transformed, but essentially created a new industry to move things around.  Their proficiency in innovation isn’t disputed.  But their proficiency in leadership is.  And what created their remarkable success the last few years, sowed the seeds for their possible demise: free-wheeling, cavalier leadership that resulted in a win-at-any-cost culture that likely isn’t sustainable.  In the end, Uber’s superiority in innovation may lose to its failures in leadership.

 

From an Associated Press story last week:

 

“Under [CEO] Travis Kalanick’s leadership, Uber’s ‘Animal House’-style business plan was to grow as quickly as possible, steamrolling regulators while flouting the rules of workplace conduct.  Behavior at the male-dominated company didn’t seem to matter.  Riders embraced the app-based ride-hailing system as an inexpensive, easy-to-use alternative to taxis, and still do today.”

 

But the impacts of a free-wheeling, “Animal House-style” business plan caught up with the company this year.  Uber has been overwhelmed with several significant challenges: lawsuits that involve sexual harassment of employees, a federal investigation of possible criminal acts to avoid local transportation regulations, claims of willful discrimination, and allegations of intellectual-property theft.  Brian Fung of the Washington Post last week stated: “The controversies have resurfaced a debate over Uber’s hard-charging internal culture and the consequences of its win-at-any-cost attitude to business and regulation. And they’ve culminated in a massive shakeup at the top of the company, with co-founder Travis Kalanick taking a leave of absence and then resigning as chief executive days later.”  About 20 other senior leaders have also left the company over the last few months.

 

Uber’s board now realizes that its incredible success over the last eight years is at perilous risk.  Customers are leaving in droves (there’s even a social media campaign, #deleteUber, which spread like wildfire); the brand has suffered some significant damage; Justice Department investigators are closing in on possible action for avoiding regulations; lawsuits are starting to pile up.

 

Jennifer Chatman, business professor at Cal-Berkeley: “Even though Kalanick was driving performance, the company is not sustainable in this form.  The company is quite vulnerable to very, very expensive lawsuits. He couldn’t stay.”

 

And Ferdinand Dudenhoefer, director of the Center for Automotive Research at the University of Duisburg-Essen in Germany put it this way: “When you’re at war with customers, employees, service suppliers, you can’t build up a business model, and Kalanick was at war with everyone.”

 

Not exactly the best way to build a culture that lasts.  The issues, perhaps obviously, all stem from poor leadership.  Kalanick had an incredible vision; he was tenacious in growing the company; and he was hell-bent in succeeding at nearly any cost.  His focus on action is admirable; in fact, many senior leaders could learn a thing or two about his quick, decisive action.  But his disregard for rules and possibly laws; his disrespect of people (employees and customers); and his neglect of building a culture that would sustain performance over time became his undoing.  Perhaps he doesn’t have those skills within him (though I would argue all leaders can learn).  But even if that is so, he should have realized his shortcomings and built a team around him that could take Uber to the next level – from a high growth, entrepreneurial company to a more mature, solidly performing company.

 

Bill George, the retired CEO of Medtronic and now faculty member at Harvard Business School (and who was the opening keynote at PEN’s annual PENworks conference in April) said on CNBC last week: “Travis is a brilliant entrepreneur…but it was clear they were headed for trouble.  They created a chaotic, kind of baroque culture…[so] right now they need a stable, very strong leader.  Their potential is unlimited, but they need an executive who can take it to the next level.  You can’t have a [successful] company without [good] leadership.”

 

That last sentence captures it all: organizational performance is almost perfectly correlated with effective leadership.

 

(By the way, if you’re interested in downloading and viewing Bill George’s keynote on authentic leadership from PENworks, visit here – it’s worth the 45 minute investment!)

 

So how does a company like Uber – or any organization, for that matter – create, grow, and sustain good leadership?  What can we learn from in the wake of Uber’s leadership and cultural challenges?

A little over a year ago, I offered insights on how to improve leadership effectiveness (The Secret Sauce of Leadership: 9 Traits that All Good Leaders Have, May 2016).  The nine traits are based on research from Harvard Business Review and Forbes.  Given the situation at Uber – and the overwhelming importance of leadership in creating organizational culture and sustaining organizational performance – I think those traits are worth repeating.

Great leaders:

• Practice civility: Alan Colberg, CEO of Fortune 500 company Assurant, states that leaders need to be courteous, treat everyone with respect, and practice common decency.  Really, this comes down to practicing the Golden Rule of “doing unto others…”  Glenn Llopsis in the Forbes research/article says that respect “reverberates and multiplies” and that employees “want leaders who respect and value their teamwork and individual contributions.”  When leaders demonstrate civility, they are leading not just from the head, but the heart.
• Have integrity: Colberg claims that leaders should “do the right thing,” maintain high levels of professionalism, and actively live and demonstrate ethical behavior.  In fact, having high ethical and moral standards was the #1 leadership skill in the Sunnie Giles HBR research and the premier trait for Colberg.  Llopsis claims that, while there is a tendency for leaders to tell only half the truth to protect their people and reduce uncertainty, “leaders that are honest on the frontend avoid creating unnecessary disruption and division in the workplace on the backend.”  Trust is the foundation of relationships, and relationships are the foundation of leadership.
• Are conscientiousness and accountable: Colberg claims that good leaders are eager to make their (and others’) work better, to continually seek ways to grow and improve.  Good leaders don’t cut corners, and they don’t delegate too much – they don’t avoid adversity and they don’t push off problems they should handle themselves.  Llopsis states that accountable leaders are the most respected and admired: “when leaders protect their employees and ‘have their backs,’ they will want to do the same for their leaders.”
• Show vulnerability: good leaders know their strengths and admit their shortcomings.  As Llopsis says, leaders don’t have all of the answers, nor should they act as if they do.  Employees appreciate and respect leaders who recognize, understand, and admit their own limitations, weaknesses, and opportunities for improvement.  They are humble, honest, admit their mistakes, and they are sometimes labeled “down to earth” because they are well-grounded and relatable with their people.  Leaders who understand their own vulnerabilities will appreciate and show compassion for others’ vulnerabilities.
• Communicate effectively: good leaders set specific, clear vision and goals. They get to the point, avoid jargon, and are clear and consistent in their messages.  Good leaders know that specific, clear communication is what prevents unexpected surprises, ambiguity, frustration, rework, and waste.  It also builds transparency and trust.  Good leaders, according to Giles, also communicate often and openly, which “creates a feeling of succeeding and failing together” as a team and builds a strong foundation of connectedness.
• Empower their people: good leaders trust their people.  They provide the skills, tools, and resources needed for their employees to be successful, and they create the environment that allows them to achieve that success.  They empower their people to make decisions and to learn (not to be blamed or punished) for their failures.  They know that empowerment leads to self-sufficiency, innovation, problem solving, mastery, and purposeful work.  They also know that it leads to having an engaged workforce, and ultimately more satisfied and engaged customers and better organizational results.
• Embrace learning: According to Giles and the HBR research, good leaders have flexibility to change opinions, are open to new ideas and approaches, and provide safety for trial and error.  In short, good leaders create an environment for personal and organizational learning.  They take intelligent risks (and encourage and reward others for doing so); they embrace professional learning and development; they withhold initial judgment, value diverse ideas, and invite new ways of doing things; and they welcome failure as a way to learn and improve.  They know that good leaders develop themselves, but great leaders develop other great leaders.
• Are authentic: employees want leaders to be themselves – to be who they a really are and to have consistency and harmony between their values, their messages, and their actions.  Authentic leadership requires having honest, transparent relationships.  It centers on trust, transparency, inclusiveness, and fairness.  As quoted by Kevin Kruse in a different Forbes article from 2013, authentic leaders are self-aware, genuine, mission- and purpose-driven, focused on results, and focused on the long-term.
• Serve others: While the concept dates back to biblical times, the phrase “servant leader” was first used by Robert Greenleaf in the 70s.  Servant leaders ensure that others’ high priority needs are being served first – they focus on the growth and well-being of others and the communities (and organizations) to which they belong.  They practice humility; they think about what’s best for others and the organization before what’s best for themselves; they share power and responsibility; and they are collaborative and participative rather than dictatorial and authoritarian.  They lead quite literally from a position of platonic love, not fear.

 

I’m guessing that if Kalanick focused on any number of these leadership best practices, his – and Uber’s outcome – would be very different.  And I’m certain that if any other organization focuses on practicing these nine traits with its leadership team, success will follow.

Earlier this week, PEN hosted a workshop focused on the best practices in organizational leadership (“Accelerating Leadership Performance,” delivered by Good Leadership Enterprises; the next offering is July 18 in Sioux Falls). Good Leadership’s CEO, Paul Batz, concludes that employees expect leaders to consistently do four things, which he labels the “cornerstones of good leadership”:

 

• Reward excellence
• Live generously
• Promote fairness
• Spread positivity

I think the four very much relate to the nine synthesized above (positivity relates to civility, living generously to serving others, fairness to accountability, and so forth).  Batz claims that leaders who live those four principles – and blend what he calls the “Seven F’s” (Faith, Family, Finances, Fitness, Friends, Fun, and Future) into their personal and professional lives – will “live with less stress and lead with less fear.  They are more attractive to customers and are more magnetic to the best talent.”  In short, they are good leaders with good intentions and great skills.  And he claims that they usually lead teams and organizations that have better outcomes and results.

 

Leadership is all about people – building, nurturing, and sustaining long-term relationships to achieve collaborative impact.  If Uber can transform to a culture of leaders that embrace that principle, they have a chance to survive.  If they don’t, the company’s days may be numbered.  A good reminder for all of our organizations.

 

If you want to improve your – and your organization’s – leadership, consider attending PEN’s first-ever leadership retreat: August 14-15 at the Grand Superior Lodge on the beautiful North Shore.  The retreat will focus on best practices in effective leadership, innovation, and world class service.  It is intended for leaders (at all levels) and teams from all types and sizes of organizations; it will be facilitated by Dr. Bryan Williams of B. Williams Enterprise LLC (formerly of Ritz-Carlton Hotel Company), the dynamic closing keynote of PENworks 2017.  The retreat is Monday afternoon (and evening reception/dinner) and Tuesday morning.  Space is very limited.  More information here.

 

What other insights do you have regarding good leadership traits?  Participate in a discussion on this topic: visit our LinkedIn group to post a comment.

 

Never stop improving!

 

Brian S. Lassiter

President, Performance Excellence Network

www.performanceexcellencenetwork.org

 

Catalyst for Success Since 1987!

 

Photo credit dukeintegrativemedicine.org, brooksgroup.com