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Chaos at Uber: The New CEO's Challenge

Student’s Nmae

College

MG800: Strategic Management

Instructor’s Name

June 27, 2021

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Chaos at Uber: The New CEO's Challenge

Part I: Introduction and Brief Background of Uber

Uber Technologies, Inc. is an incorporated American multinational company that

provides a peer-to-peer ride-sharing transportation services through its platforms. Such services

include ridesharing, ride service hailing, food delivery, couriers, freight transportation, and a

micromobility system with electric bikes and scooters. It is headquartered in San Francisco, but it

has its operations and presence in over 700 cities globally. Since its inception in 2009 by

Kalanick and Garret Camp, the company has experienced rapid growth over the years due to its

adaptability to changes, savvy marketing ploy, and its services being priced lower than the

traditional cab companies.

Mission Statement

The mission statement of Uber is “Transportation as reliable as running water,

everywhere for everyone” and its vision statement is We ignite opportunity by setting the world

in motion” (Mission Statement Academy, 2019). Uber makes statements that concern the welfare

of individuals and how good things occur to individuals if they are enabled to move to make

their dreams happen. It's through the movement where opportunities come up and become a

reality. With the help of Uber Technologies, Inc, billions of people have connected in different

parts of the world through a simple button tap on their gadgets (Kreutzer, 2019). The values

adopted at Uber Technologies, Inc are “we build globally, we live locally, we customer-

obsessed, we celebrate differences, we do the right thing, we act like owners, we persevere, we

value ideas over hierarchy, we make big bold bets” (Uber Technologies, Inc., n.d.).
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Apart from helping individuals to commute between two points, the company is looking

to make future promising to its clients and ease road and air urban transport, assist in making

food orders faster and affordably, remove the existing barriers to healthcare, creation of new

solutions in freight bookings and help companies in catering for better employee experience in

travel-related matters. Additionally, the safety of individuals is crucial no matter the position

they occupy in a car. The company is committed by applying technology to ensure safety. There

have been partnerships with the advocates of safety for the development of advanced

technologies & systems aimed at the creation of a safe world that will facilitate easy and safe

travel.

SWOT Analysis

Strength

 Brand equity: Recognized globally, presence in over 48 countries

 Low fixed investment: Does not require high-fixed investments or infrastructure

 Dynamic pricing: Correlated with demand and supply, beneficial to drivers too

 Adaptive: Adapts very well to business conditions and a smart marketer

Weakness

 Highly dependent on manpower: drivers are the face of the company

 Highly dependent on internet: dependent on internet connection ● Caters only to

tech savvy consumers

 Low barriers to entry

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Opportunities

 Increasing internet penetration: expand to developing countries that are advancing

technologically

 Alternate transport: launching 'uberchopper', while looking for other transport

medium

 Poor government transport: for overpopulated or rural areas that don't have access

to public transportation

 Entering another market: launching support for movers and packaging by simply

adding another feature on the application, also going into car rental by locating

them around the city with the application as well.

Threats

 Unclear government regulations: legal status

 Low margins: Uber receives high margins, however, their drivers at the moment

don't so it could sway them to drive elsewhere

 Customer retention: Due to the nature of the competitions, any monetary

advantage can sway the customers and drivers from Uber.

 Unorganized market: Taxi drivers and other companies can revolt against this

unorganized market and could affect it directly

Part II: Analysis

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Question 1. How would you describe the crisis at Uber? What grade would you assign to

Uber’s board of directors based on actions it has taken in the past or is now taken in the

aftermath of that crisis that could appease Uber’s stakeholders? Explain.

In general, I would describe the crisis at Uber as ethical scandals since most of their

issues come from ethical issues. The crisis at Uber, Inc. started in January 2017 where more than

200, 000 users/Uber customers participated in the #DeleteUber campaign and deleted uninstalled

their Uber accounts because of the Uber’s undermining action. The movement came about after

drivers tried to do business at JFK airport during a taxi strike organized by The New York Taxi

Workers Alliance. Drivers were protesting against President Donald Trump's executive order,

which prevented travelers from seven majority Muslim countries from entering the US.

Responding the first crisis, Uber posted an email in its newsroom, stating his opposition to the

travel ban and plans to compensate drivers. That post was titled "Standing up for what's right."

and 'Standing up for the driver community," about steps the company will take to aid drivers,

including creating "a $3 million legal defense fund to help drivers with immigration and

translation services."

On February 21, 2017, the company announced it has launched an internal investigation

into its workplace culture after ex-engineer Susan Fowler wrote a blog post about her experience

of gender bias and sexual harassment at Uber. In her post, the Stanford computer science

graduate claimed that: Her manager propositioned her and other female Uber workers for sex,

HR said the manager in question would not be punished because it was his first offence and he

was a high performer, HR ignored some of her other complaints and lied to her about it being his

first offence. Then, Google's parent company Alphabet ‘s self-driving car arm Waymo filed a

lawsuit against Uber for theft of trade secrets and intellectual property lawsuit. Weeks later,
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Levandowski founded self-driving-truck startup Otto, which Uber later acquired. Uber disputes

the claims and alleges that the company was simply trying to slow down competition.

Before the crisis, Board of Director does not concern about the issue of the company, put

all responsibility in Kalanick and let him raise a lot of problems. Amidst a series of scandals,

they found themselves divided; therefore, an internal fighting occurred. When series of scandals

came, Board of Director got in a trouble, they still kept silent instead of facing with the problem.

After the issues got so far, they made decision to fire Kalanick – this was actually an effective

decision. This is because the new CEO had learned from the breach and publicly apologized for

the hack and promised to work hard, as well as tried to earn the trust of the customer by changing

the way of doing business, and put integrity at the core of every decision. Culture change is

possible, but the CEO has to be part of the change rather than part of resistance and cannot

merely pay lip service to that change. In other words, culture and administration needed to

evolve.

Question 2. How would you assess Uber’s corporate culture prior to the arrival of CEO

Dara Khosrowshahi?

Corporate culture is “the shared values, ingrained attitudes, and company traditions that

determine norms of behavior, accepted work practices, and styles of operating” (Thompson et

al., 2020). Furthermore, the importance of a company culture is “because it influences the

company’s actions and approaches to conducting business” (Thompson et al., 2020, p. 348). It is

decisive to the long-term success or failure of the business. However, Uber’s corporate culture

was in turmoil before CEO Dara Khosrowshahi arrived. Therefore, it would better analyze the
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problems in Uber’s corporate culture and find a way of solving Uber’s Chaos. Uber’s corporate

culture was evaluated by critics that Uber’s corporate culture like “a system that encompasses

sexual misconduct and ethical behavior” and was considered as “bro culture” to facilitate

management- concealing sexual harassment in the workplace and cut down on ethical

perspectives. To order to prove, managers of Uber were constantly reported for unethical

conduct toward their co-workers, especially sexual harassment which is much more serious. In

detail, Susan Fowler, who is one of the former software engineers, made the allegation public

with her account of sexual harassment, discrimination, and extensive sexism inside the company.

The human resources totally ignored her complaint, even when propositioned by her manager.

Her action inspired other women in Uber’s company, which led to 200 claims of sexual

harassment against the company side. It can be seen that women felt unfair treatment at the

company, so women came forward with their own stories. Furthermore, one Uber’s manager,

who was fired, was told that at a company retreat in Las Vegas, he had groped some female

colleagues. Another manager allegedly intimidated an ineffective employee by hitting him in the

head with a basketball baton. Seriously, Kalanick, an old CEO of uber, reportedly instructed

employees at a company party on the ground rules and having co-worker sex. Besides that,

Kalanick was caught on a dashcam video scolding an Uber driver for questioning him about the

company's treatment of the driver that raised human rights issues in the company.

The truth is unacceptable to assess Uber’s corporate culture prior to the arrival of CEO

Dara Khosrowshahi. “Bro culture” within the company tends to prioritize young men over other

employees in the company, creating an environment for harmful behaviors. This actually creates

a hazardous, unfair, unethical, and even illegal work environment. Uber failed apparently,

especially the human capital since the corporate culture was so terrible like that although the
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human capital is the most important thing worth investing in a company. Obviously, when a

company can create a friendly, fair, innovative, and creative corporate culture, it can have the

opportunity to increase employee efficiency and creativity, from there, the employees will devote

themselves to the business. Uber’s crisis not only came from inside the company about internal

division but also had a backlash from society when the scandal was widely spread because it

concerns social and legal issues, both feminism and human rights. To be illustrated, because of

the accused of undermining a taxi union strike, more than 200,000 users responded to the

#DeleteUber campaign by uninstalling their Uber accounts. It can be seen that the scandal of

Uber appeared from the concentrative all power in the board. The board, especially the CEO, had

unwell-behaved with the company and employees. Experts thought that the root of Uber's

problems was weak corporate governance, marked by a chase for growth, the Kalanick cult, and

the company's failure to address issues at the workplace. They felt that Uber's board of Directors

did not care about governance and let Kalanick run the company his way as long as it's profitable

and the growth is achieved. Although Kalanick has helped the company go up and make a profit

for Uber, the corporate culture under the era of CEO Kalanick was chaos with mistakes in the

management of the company's board, which made the work environment worse and reduced

employees’ productivity.

Question 3: What does incoming CEO Khosrowshahi need to prioritize in building and

upgrading Uber’s culture?

The appointment of Khosrowshahi, who described himself as a "warrior," at a time when

Uber was struggling with a series of crises reached its peak when CEO Travis Kalanick left. As

it’s said, Uber old culture value is often referred to as toxic. Therefore, to develop and improve
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Uber's culture, the top priority for CEO Khosrowshahi decided to recruiting new talent and then

to change the business. Some goals also include strengthening stakeholder relationships, working

with a splintered board and implementing changes to corporate governance, and regaining the

confidence of its investors, employees and customers. Firstly, culture begins with employees.

Khosrowshahi himself emphasized that it was extremely necessary to recruit new talent,

especially a Chief Financial Officer, as well as to be a Chairman to assist him in running the

Board. Khosrowshahi said “One of the first things we did when I started was to crowdsource

what Uber employees thought our new cultural norms should be”, "These standards have come

from the bottom up, so employees can feel invested and committed to them rather than having to

follow strict top directives." By soliciting input from workers, he accomplished this mission.

Secondly, Customer centric, communicating with locals, becoming more accountable to the local

economy. Since Uber is a forum for a shared economy, the customer/community is the most

important part of their business. Earning customers trust is crucial for Ubers’ business model to

success. This would produce a new brand identity that is customer-centered, responsible for

social issues and optimized environment for consumers, not just about inhuman companies

continuously looking to scale and achieve profit. Lastly, possession and improvement of defects.

This is the basis for any problem solving. In order to solve it effectively, you have to recognize

the problem. Owning the failures in the past and trying to correct those issues would not only

gain the trust of the consumers, but also prepare a positive attitude to deal with the issue as

critically as possible.

Question 4. To what extent have Khosrowshahi’ efforts to transform Uber’s corporate

culture, at least thus far been the result of centralized vs. decentralized decision-making?
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During the era of Kalanick, centralized decision making was to blame for Uber’s

corporate culture, which can be summed up as sexual harassment, discrimination, a corporate

theft lawsuit, defiance of government regulations, and reports of misbehavior. The corporate

governance fiasco, underrated crises about inappropriate behavior and the boardroom drama

were some of the main reasons leading to Uber’s departure of trust and quality. It was the

previous board directors (especially Travis Kalanick, the founder and the last CEO of the

business) to ignore the importance of detailed research in employee’s behavior, legal issues and

undermined driver accomplices, which self-induced Uber to the current difficult situation in

different nations. The new CEO, Dara Khosrowshahi, inherited the responsibility to inaugurate a

new era for Uber.

The following are key focuses which Khosrowshahi took to guarantee that basic

leadership was brought together, and everybody's voices were heard in terms of centralized

decision making: (a) Lending an ear to the needs of everybody - Khosrowshahi held a close

meeting with the essential motor of Uber - his driver accomplices. He paid attention to their

issues, their needs, their limitations and so on. This was never done in an organized manner

before, and unquestionably never by a top C-level executive of the company; (b) Hiring a new

set of executives – In October 2017, Khosrowshahi appointed Tony West, a former federal

prosecutor, from PepsiCo as Uber’s new Chief Legal Officer. Barney Harford, the former CEO

of Orbitz, an online travel site, was assigned as Chief Operating Officer at Uber after working as

a senior advisor to Khosrowshahi at the firm; (c) Falling in accordance with guidelines – One of

the most infamous rumors that Uber had to deal with was the quantity of conflicts Uber ignited

with different administrative bodies over the world. London is a renowned model, where the

permit to work for Uber was renounced because of different principles being "mocked".
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Khosrowshahi admitted any place they bumbled, made harmony with the administrative bodies,

and began the way to fix. By maintaining good relationships with administrative bodies and

guaranteeing rules are pursued, he made it possible for Uber to work with no hazy areas over the

globe.

After Khosrowshahi, Uber’s corporate culture was the result of decentralized decision

making: limited voting power, new code of conduct “values over hierarchy”, new set of C-

executives, extended Board of Directors. The Founder and former CEO of Uber was limited in

their power in the organization, while eight new cultural norms were introduced replacing the 14

values first introduced by the predecessor Kalanick, in 2019. There are also some changes to

enhance the service quality of Uber. Customers now can get access to their ride history

information, which is scrambled and verified on a square chain. They are offered with various

options such as the way to pay (cash or credit card), the driver’s language, the kind of vehicle, or

pets that are permitted. Technology such as chipping away activities is also included in order to

guarantee safety of the journey.

Question 5: What specific additional actions could Khosrowshahi take that would make an

even greater contribution to turning things around Uber? How might these actions dovetail

with long term interests of Uber’s stakeholders?

To make a greater contribution to turning things around Uber, Khosrowshahi not only

have to swipe and fix all issues in the pass but change completely both corporate culture and

ways of management. Apart from adjusting corporate culture, Khosrowshahi will be obligated to

consider the following aspects: Firstly, he should raise Uber’s image among customers because
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more than 200,000 Uber customers deleted Uber's app over the course of the last weekend in

January as part of the #DeleteUber movement. There are several solutions for that object. To

show the company’s efforts to change, Khosrowshahi should have public speech to explain, give

out the apology for victims and commitment to change the company. Secondly, Uber should

build the relationship with drivers. Uber's business model relies on a cadre of drivers’ right

across the globe. These "employees" have become a part of the overused and quintessential

definition of the so-called "gig economy." In essence, they aren't really employees. They are

part-time contractors. According to data provided by Earnest, Uber drivers earn on average $364

per month. Granted many of them are supplementing their income through Uber, the company

still has a way to go to improve relations. Thirdly, he should focus on foreign potential market

only in the short-term. Because on the crisis time, there are too many problems to solve, he might

not have enough time to take care difficult market. Therefore, he should choose where Uber

should enter or withdraw. Every CEO aims to maximize stakeholder’s wealth by maximizing the

profit. Therefore, all activities have tendency to raise the company’s profit. In terms of internal

organization, this gains employees’ trust, reduce employee turnover costs, reputation-damaging

costs and avoid case of investors’ capital withdrawal. In terms of external factors, the company

may recruit high quality candidates, build the trust from customers which leads to brand loyalty.

When these positive results come, more investors desire to invest. On having more funds, it is

easy for Uber to expand their size and assess more broad view of customer segmentation, which

will increase its competitiveness with the rivals.

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References

Kreutzer, R. T. (2019). Vision, Mission and Goals. In Toolbox for Marketing and Management

(pp. 33-48). Springer, Cham.

Mission Statement Academy. (2019, July 12). Uber Mission Statement 2019 | Uber Mission &

Vision Analysis. Mission Statement Academy. https://mission-statement.com/uber/

Thompson, A.A. Jr., Strickland, A.J., Gamble, J.E., & Peteraf, M.A. (2020). Crafting and

Executing Strategy: The Quest for Competitive Advantage – Concepts and Cases (22nd

ed.). United States: McGraw-Hill Education.

Uber Technologies, Inc. (n.d.). About us | Uber. Uber Technologies, Inc.

https://www.uber.com/us/en/about/