Uber– Is it actually losing its grip on the wheels?

The name ‘Uber’ is a reference to the commonly used adjective “uber” meaning ‘topmost’ or ‘superb’. When this “superb” company starts incurring steady losses after reaching a valuation of nearly $70 billion in a span of only eight years, investors are bound to question out of sheer desperation and anxiety. Combine this desperation with the grinding work culture of Silicon Valley, and the result would be a massive endothermic time bomb which is constantly ticking, lethal enough to destroy even the biggest of corporate giants. Share prices of Uber’s private stocks have dropped about 15 percent, with the company’s overall valuation set to fall by a noticeable margin by the end of the year. Unable to show any further patience, on the 20th of June, five of Uber’s major investors handed Mr. Travis Kalanick, then CEO of Uber, with a list of demands, including his resignation before the end of the day. (Source: The New York Times)

Many were shocked at the abrupt resignation of the man who had turned the company into an industrial titan in a matter of just eight years. Travis Kalanick, a visionary and a successful entrepreneur for many years, with the reputation of a ruthless conqueror, is at the heart of the Uber saga. He made Uber a global force through aggressive expansion. However, the uncontrolled aggression and ambition made Kalanick ignore some of the operational problems that began to surface within the organization. Though Uber did a great job in terms of growth, the company had started crumbling from within.

With numerous sexual harassment and abuse cases looming over the company, along with allegations of the presence of a sexist culture, one of the reasons for a fall in share value was a phase of bad public relations, and repeated investigations. When one of the employees, Susan Fowler, published a blog detailing her unpleasant experience, it was like the final nail on the coffin. But things aren’t always what they seem. On the surface, the resignation might look like the result of a moral awakening alone. As per certain media articles, however, for many investors and the Board of Directors of Uber, the ultimate goal was the issuance of an IPO, so that the investors get a chance to cash-in at the highest possible value. The resistance from the CEO might have been a reason behind Kalanick’s resignation (or termination). If this is true, such a wide contrast in the ambitions of the Board and the CEO reflects a major gap in terms of good governance.

A good corporate governance structure, which has the ability to identify and eliminate problems with efficiency, should be good enough to protect a company from potential disaster. The same theory applies to the situation Uber currently finds itself in. Along with allegations of bad employment practices with respect to women, Uber also lacked a sustainable governance structure. To grow quickly, Uber maintained a completely decentralized structure, which majorly lacked supervision. Regional managers were given independence to make decisions in the best interest of the company, and were hardly questioned in spite of repeated complaints, pushing them even further in the wrong direction.

Though such a structure facilitates faster growth, it lacks the element of sustainability, the absence of which could prove to be venomous in the long run. The situation only got worse. Many executives, including some that Kalanick trusted to be close to him, resigned. Emil Michael, Uber’s SVP and a close confidant of Kalanick was one such top executive. Former Uber President Jeff Jones resigned just six months after joining, stating it was “not the situation he had signed on for”. The cracks in the wall were not only evident, they were steadily widening.

The next question in the saga is: What will Uber become without Travis Kalanick as CEO? Though Kalanick remains an influential figure within Uber, in spite of not being the CEO anymore, it is important to find a suitable replacement if the company wants to reach the heights of success it aspires for. After facing federal lawsuits, several allegations and investigations, the most important step for Uber in the current situation is to regain its reputation and establish accountability towards its stakeholders. It would be of utmost importance to identify a leader for the organization who can initiate a cultural and structural revamp. Whether Uber can bounce back or not would depend on the inclusion of sustainable measures in the operations, along with growth-oriented policies. Though it hasn’t been decided whether Uber will eventually issue an IPO, a change in the structural methodology is inevitable. Centralization and monitoring of operations is of grave importance during times of controversy and disintegration.