Uber's Biggest Problems Are Not in the Headlines Is it too late for Uber to survive its internal storm, or will its new CEO prove to be the hero it needs?
By Andrew Medal Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
It has been several weeks since Dara Khosrowshahi succeeded Travis Kalanick as Uber's CEO. In that time, the deluge of negative headlines has not stopped. More lawsuits have been filed, as well as more accusations of discrimination and misogyny. Even if Khosrowshahi has an overblown hero complex, he must be wondering what he signed up for.
Uber is in chaos to a degree that few companies ever find themselves. It is the largest privately held tech company, with a brand that is internationally recognizable, and because it has become part of global culture, their consumers care about the headlines. It does not help that the vultures are circling -- Lyft is actively working to grab jaded Uber customers, and reporters are scrambling to break the next Uber scandal.
But Uber's biggest problem is not one that consumes the headlines. Uber has a culture problem.
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"Corporate culture is indelibly linked to an organization's brand," Deb Gabor writes for Fortune. She goes on to say, "When your culture is in distress, so is your brand. It's been well acknowledged that Uber has a sick corporate culture that's persisted unchecked by leadership for many years."
A sick corporate culture can become malignant when under constant pressure, as Uber has been for the last year. Resurrecting the organization from its tailspin will require visionary leadership that firmly grasps how to invigorate teams of people far from headquarters and redirect attention to the future.
Aviv Shahar, founder, and CEO of Aviv Consulting, described the tailspin problem in terms of winning and losing to me over a chat in my Facebook group for entrepreneurs. "Uber has a winning problem. Yes, they are still the number one ridesharing company in the world, but the Uber team has been rocked by successive scandals for so long that it will need help getting its mojo back. You act differently when you're winning, and it is time for Uber to start winning again. Today's shape-shifting environment is so competitive that no company is secure at the top. An industry leader that loses the wind in its sails can only coast for so long before it loses its grip on the market. Khosrowshahi needs a plan to score some early wins."
Kalanick, for all his faults, was a winner. In five short years, he built a global empire, conquered adversaries, advanced new technologies and is credited for jump-starting a whole new kind of economy -- the sharing economy. But Uber is short on wins right now. Even its initiatives such sa self-driving cars and Uber Rush are falling on hard times.
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Khosrowshahi, if he is to be successful, needs to pull off a miracle. Is that a reasonable expectation? Actually, yes it is, and the best CEOs do it all the time. Steve Jobs returned to Apple in 1997 and released the iMac in 1998. Dan Hesse introduced "Simplify Everything" to save Sprint in 2008. Henry Ford, one of the original American business titans, doubled salaries in 1914, ignoring critics who said the move would bankrupt the company. In moments of crisis, good executives know how to create a win and change the narrative.
It goes without saying that your average executive would rather face a sales problem or a branding problem than the "raging dumpster fire" that is Uber right now. Solving the problems of culture and morale require finesse and thoughtful listening. It will also require taking calculated risks because Uber cannot afford to become a muted bureaucracy right now either.
"The new CEO will not succeed if the impending culture changes denude its startup mentality," Shahar asserts. "The new leadership team must be comfortable playing at the edge, making calculated tweaks to make Uber a more inclusive workplace as well as one that embraces independence, initiative and innovation. It is not the only tech company navigating that minefield. Succeeding will necessarily include changing the conversation and casting a vision for a new future that the whole team can create together."
Related: 17 Things You Need to Know About Uber's New CEO Dara Khosrowshahi
Uber's biggest problems are internal, but it does not have long to set those issues straight. Its external problems cannot wait forever, and those are not just the lawsuits and PR scandals. Uber is facing stiffer competition from rival companies at home and abroad, tighter regulations in Europe, and even revamped taxi companies trying to win back market share. Investors are not as bullish as they were a year ago and want to know what the exit might look like. Worst of all, the arms race to launch a self-driving fleet could bankrupt whoever comes in second place almost overnight.
It goes without saying that Uber will face those challenges with more agility and confidence if Khosrowshahi can first succeed in revamping the company's culture.
