Uber: From technological innovation to resignations and management scandals

UK, August 3, 2017.-  Last July publish in this Blog a case of successful management like Apple. In August I bring a business case with less success: Uber. The technological giants carry out negotiations that appear in all business schools. Some are examples of management to study and draw positive conclusions when managing multinationals. However, business failures sometimes also serve to draw conclusions from what should not be done. Uber has a dubious reputation in many countries because he enters as “an elephant in a hardware store”. I say this with all due respect, of course. I read this information from the New York Times that seems to me the most fair to Uber’s business reality:

Travis Kalanick stepped down as chief executive of Uber, the ride-hailing service that he helped found in 2009 and built into a transportation colossus, after a shareholder revolt made it untenable for him to stay on at the company. Mr. Kalanick’s exit came under pressure after hours of drama involving Uber’s investors, according to two people with knowledge of the situation, who asked to remain anonymous because the details were confidential.

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Earlier on Tuesday, five of Uber’s major investors demanded that the chief executive resign immediately. The investors included one of Uber’s biggest shareholders, the venture capital firm Benchmark, which has one of its partners, Bill Gurley, on Uber’s board. The investors made their demand for Mr. Kalanick to step down in a letter delivered to the chief executive while he was in Chicago, said the people with knowledge of the situation. “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight,” Mr. Kalanick said in a statement.Uber’s board said in a statement that Mr. Kalanick had “always put Uber first” and that his stepping down as chief executive would give the company “room to fully embrace this new chapter in Uber’s history.” An Uber spokesman declined to comment further.
The move caps months of questions over the leadership of Uber, which has become a prime example of Silicon Valley start-up culture gone awry. The company has been exposed this year as having a workplace culture that included sexual harassment and discrimination, and it has pushed the envelope in dealing with law enforcement and even partners. That tone was set by Mr. Kalanick, who has aggressively turned the company into the world’s dominant ride-hailing service and upended the transportation industry around the globe.

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Mr. Kalanick’s troubles began earlier this year after a former Uber engineer detailed what she said was sexual harassment at the company, opening the floodgates for more complaints and spurring internal investigations. In addition, Uber has been dealing with an intellectual property lawsuit from Waymo, the self-driving car business that operates under Google’s parent company, and a federal inquiry into a software tool that Uber used to sidestep some law enforcement. Uber has been trying to move past its difficult history, which has grown inextricably tied to Mr. Kalanick. In recent months, Uber has fired more than 20 employees after an investigation into the company’s culture, embarked on major changes to professionalize its workplace, and is searching for new executives including a chief operating officer. Mr. Kalanick last week said he would take an indefinite leave of absence from Uber, partly to work on himself and to grieve for his mother, who died last month in a boating accident. He said Uber’s day-to-day management would fall to a committee of more than 10 executives. But the shareholder letter indicated that his taking time off was not enough for some investors who have pumped millions of dollars into the ride-hailing company, which has seen its valuation swell to nearly $70 billion. For them, Mr. Kalanick had to go. The five shareholders who demanded Mr. Kalanick’s resignation include some of the technology industry’s most prestigious venture capital firms, which invested in Uber at an early stage of the company’s life, as well as a mutual fund firm. Apart from Benchmark, they are First Round Capital, Lowercase Capital, Menlo Ventures and Fidelity Investments, which together own more than a quarter of Uber’s stock. Because some of the investors hold a type of stock that endows them with an outsize number of votes, they have about 40 percent of Uber’s voting power.

And as my admired Michael Porter said: “The competitive strategy is to be different. It means the deliberate selection of a set of distinct activities, to deliver a unique mix of value”.

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