4 Fix-It Lessons From Uber's Overhaul When startups grow as quickly as Uber, bad habits tend to seep into the foundation. But the meteoric rise and subsequent turbulence at Uber provide valuable lessons for entrepreneurs who might not fully understand their customer base.
By Michael Ray Newman Edited by Dan Bova
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The strong flow of corporate chaos at Uber has produced a leadership vacuum with threatening brand implications. As reported by The New York Times, the ride-hailing giant named Dara Khosrowshahi as its new CEO in August, hoping the former Expedia leader can right the ship. Uber desperately needs a fresh start given the stain of recent allegations of widespread employee harassment, intellectual property disputes and criminal investigations.
Notwithstanding those sordid struggles -- some of which remain unproven -- Uber remains king of the startup mountain. Axios reports that Uber's gross bookings surged to $8.7 billion in the second quarter of 2017, giving the company an adjusted net revenue of $1.75 billion. Khosrowshahi faces a delicate balancing act of correcting the problems plaguing the company without undermining its strong business model.
When startups grow as quickly as Uber, bad habits tend to seep into the foundation. In those early stages, some leaders sacrifice culture in favor of soaring profits. But the meteoric rise and subsequent turbulence at Uber provide valuable lessons for entrepreneurs who might not fully understand their customer base.
Related: Uber's New CEO Takes a New Approach, Apologizing for the Company's Past Mistakes
A tale of two customers
Traditionally, a customer is a person who pays money to receive a good or service. But every company also has internal customers -- its employees -- who deserve equal care and attention.
Uber kept its accelerator on cruise control for a long time by dominating a niche with minimal competition. The tech startup launched with significant weaknesses: Users could not tip drivers, the fare structure seemed arbitrary, and rider experiences were far from consistent. Still, Uber's solution to a core transportation problem was sufficient -- at least for the short haul. Then came Susan Fowler's blog post about the company's tolerance of sexual harassment, and the facade of a sterling startup came crashing down.
Generally speaking, neither internal nor external customers care about small bumps in the road as long as a company is on the right track. Victories tend to mask problems, but issues inevitably bubble to the surface once you suffer a few noteworthy losses. Once the veneer of corporate success is gone, employees lose faith in their brand and customers can no longer hold their noses.
Uber neglected its employees as leadership focused on growth. Keep in mind that entrepreneurs do not build businesses; they build people and give them tools, and then those employees build the business. Uber failed to adequately care for its employees, and the consequences of that negligence might reverberate for years.
Related: Uber's Biggest Problems Are Not in the Headlines
How entrepreneurs can inspire and unify employees.
Entrepreneurs can learn a great deal from Uber. Although the company has achieved enviable financial success, it appears likely that the brand would have reaped an even stronger performance by fostering a trust-based culture for its employees.
To avoid a similar predicament, entrepreneurs should consider creating a confident, coherent culture through four strategies:
1. Reward top performers, and set high standards.
According to MRINetwork's 2016 Recruiter & Employer Sentiment Study, 72 percent of candidates would be willing to change jobs for improved advancement opportunities. People who are hungry for personal growth will fuel the success of your company.
Some business leaders are hesitant to invest resources in employees out of fear that they will turn around and leave the company. While some turnover is natural at any company, it should not deter you from training your high performers. The workers who absorb the knowledge and stay with your company will become integral to the success of your organization for years to come.
Seek out ambitious people who have complementary skill sets. When someone falls short of expectations consistently, you have to be willing to cut your losses and move on. You will eventually cultivate a team of workers who will keep one another accountable and productive.
2. Allow leaders to bring in new teams.
When a sports franchise hires a head coach, the owner allows the new coach to bring along a team of assistants to help spread the new culture. Startups should follow the same rule, allowing executives to redesign leadership roles as they see fit.
Great leaders separate successful companies from also-rans. Deloitte Insight's Global Human Capital Trends report found that 89 percent of companies believe leadership is "an important or very important issue."
New leaders can inject life into stagnant teams by making fast, rational decisions based on data and performance. No one can leverage office politics with an outsider. Create an environment where merit supplants tenure by giving your leaders leeway to reform teams as needed.
Related: Why a C-Suite Shakeup Is Exactly What Your Company Needs
3. Listen to people, and care about their problems.
Employees want to feel like partners in success. A strong company culture is certainly good for morale, but it can also bolster your bottom line. A team of researchers studying workplace culture and performance found that companies that are able to engage and motivate employees tend to enjoy more sizable profits.
No one wants to receive criticism in a negative environment. Avoid spreading bad feelings by connecting with your employees through personalized messages. Email is perfectly fine, but you might also consider less formal platforms such as Facebook and Slack. When employees receive direct messages from the CEO or founder of their company -- whether to solicit feedback or to check on a personal issue -- they feel like a valued member of a strong team. Those small interactions add up quickly, motivating teams to become unified, productive powerhouses.
4. Encourage competitive collaboration.
When top performers are free to work together across department boundaries, productivity skyrockets. Inspired workers bounce ideas off of their colleagues, and bad fits quickly weed themselves out.
A recent study by the Institute for Corporate Productivity found a strong correlation between collaboration and performance: Companies that encourage teamwork among employees are five times more likely to be high-performing than those that do not prioritize cooperation.
Create competitive collaboration by tearing down the cubicle farms separating departments. Design opportunities for cross-functional teams to brainstorm ways to address recurring issues both within the company and outside of it. As employees learn to trust beyond their usual circles, they will form bonds that can carry your company through hard times.
Every founder dreams of Uber's success and dreads dealing with its failures. While the natural inclination is to focus on external customers as your company takes off, the effort required to set up your internal team for success is well worth the investment. Take the time to create a unified force, and your company will be able to emulate the ascendance of Uber without any of the associated headaches.
