A REVIEW OF UBER’S MAIN PHENOMENON: BAD LEADERSHIP PRACTICES

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STRATEGIC AND VALUE MANAGEMENT WRITTEN ASSIGNMENT
A REVIEW OF UBER’S MAIN PHENOMENON: BAD LEADERSHIP PRACTICES
ABSTRACT
In 2017 Uber has faced a lot of problems such as unfair treatment of employees, stolen
technology from its key investor Google, the resignation of staffs, loss of customers led by
the delete Uber campaign and Travis Kalanick, the founder of Uber being caught arguing
with an employee. All these issues have led the company to have such a bad reputation and
face criticisms for three months (January until March). I have divided the report into four
parts. The first part is the introduction which gives the company’s history, and I have used the
business model canvas to explain the key activities of Uber and how the company makes its
revenues. Also, I have identified the main problem which is poor leadership practices, and I
have given a rationale as to why it is the main issue also how it relates to strategic and value
management. The second part is the review of literature which discusses the topic leadership,
and the key theoretical models I use Swot Analysis, Balance Business Scorecard, Stakeholder
analysis and the gap analysis. The fourth part includes recommendations, summary and then
the conclusion.
1
Introduction
This chapter gives a background on Uber, and the main activities are identified using the
Business Model Canvas. Also, I explain the main issue which is bad leadership practices and
give a rationale as to why it has been stated as the main problem and also how it is essential
to strategic and value management.
Uber-Company Profile
Uber is a highly innovative transportation company which was launched in San Francisco,
USA in March 2009 by Travis Kalanick and Garret Camp. According to (Uber.com,2017),
The company requires both the drivers and the passengers to have access to the Uber app to
be able to avail the services.
From black cars, Uber managed to introduce Uber X, in July 2012 and Uber pool in August
2014 to simplify transportation.
According to Hartmans and Mc Alone (2016), the company that initially started its business
in the USA has spread over 556 cities in the world and now operates in 77 countries. Apart
from transportation services the company also delivers food with its service known as Uber
eats.
Business Model Canvas
Figure 1 Uber’s Business model canvas
Key Partners Key Activities Value
Proposition
Customer
Relationship
Customer
segments
Drivers
Local
authoritie
s
Finding
drivers
Balancing
both the
demand
Less
waitin
g time
Secure
rides
Highly
automate
d
Passenger
s
Drivers
2
and supply
of rides
Cash
free
Key resources Channels
Uber
applicatio
n
Routing
Price
Online
Uber
Mobile
App
Cost Structure Revenue
Salaries for drivers
Sales marketing
Investments in technology
Cost per journey
Distance streams
Other brands like Uber x and Uber
Eats
Source: (Oakley,2016) adopted from the works of Osterwalder and Pigneur, (2010)
From the above business model canvas, it is evident that Uber's customers are either
passengers who want rides and drivers who want to drive (Oakley 2016) also the relationship
between Uber and its customers are highly automated as communication takes place online.
The company has added value proposition by bridging the gap between customers and
drivers. Customers no longer have to waste time calling for taxes they can easily do this
online. Also, drivers no longer have to fear as the company ensures that it gets them
customers(Juggernut,2015;2017). Also, the company's key partners are drivers and various
local authorities. The company cost includes salaries for drives and investments in
technology.
Furthermore, the company can generate revenue by charging costs per journey and also per
distance and through other businesses such as Uber X, and Uber Eats. (Funk,2015).
Thus the company's business model helps to provide a general view of the main activities that
are undertaken by the firm.
3
Main Business Phenomenon
The main business problem facing Uber is bad leadership. According to (Myers,2017) even
though the company has managed to grow tremendously over the years, it has been criticised
particularly in the way it treats employees in the and how the firm addresses issues.
According to (Kraemer, 2017) employees at Uber are unable to voice their problems to the
top management. In 2017 alone a female engineer Susan was sexually harassed, (Lee, 2017;
Levin,2017; Burns, 2017) and when reported the issues she was threatened to be fired.
Similarly, the CEO was caught on camera arguing with an employee
overpayments(Economist.com, 2017) which prove that employees, when aggravated, cannot
get solutions to their problems. Again Carson, (2017) notes just after a few months in the
company vice president, Jeff Jones resigns because the way Uber operates is against his
morals (Bradshaw 2017; Swisher and Bhuiyan, 2017). This implies that while the company
has managed to expand over the years, it has failed in the way it maintains its relationships
with employees and the way that the firm does things.
Rationale as to why poor leadership is the main business problem at Uber
According to (Hook, 2017) Uber has been in a series of problems in 2017. Which include
lawsuits for still operating in countries where it has been banned, the CEO supporting Trump
which led to a campaign of deleting the Uber's app, sexual harassments of a female
employee, the resignation of employees, Also, stolen technology from Google and the Ceo
Travis Kalanick being caught on camera arguing with an employee overpayments. All these
issues have caused unrest among the workers at Uber notably, Jeff Jones who decide to
resign. According to (Kollewe, 2017), the vice president stated that the way the company
handles things is against his leadership values. This points out that the way the top
management runs the company is unethical. Also, (McCormick, 2017; Kravets, 2017;
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Kollewe, 2017; Swisher and Bhuiyan2017; Bensinger, 2017; Kalman,2017) all reported
Travis Kalanick admitting to leadership help to change the way he runs the company.
How Is Leadership Important to Strategic and Value Management
A good leader is the one who can influence his followers to do the right things. Companies
are expected to create value for different shareholders and stakeholders. Firms can do this
only with the right leader in place. (The Balance, 2017) Argues that the values that a leader
believes in highly contribute to the way in the organisation's function. That is to say, the right
leader should be able to align his actions with the core company’s values and missions, and
this has to be passed on to his followers as well. (Capon,2004; Cherry 2016).
Additionally, leadership plays a great role in how strategies of company’s work.
LITERATURE REVIEW
Leadership
In the words of Kirkpatrick and Locke, (1991) leadership is the process whereby followers
are motivated by the leader to contribute towards the achievement of common goals.
Leadership theories include Great man theories which view one man as the only leader, trait
theories that characterise a leader according to certain traits such as honesty, hardworking,
etc.(Schilling,2009).Also, other theories are behavioural theories, situational theories,
contingency theories, transactional theories and transformational theories(Yukl,2002).In the
words of (Burns,1978)the most common type of leadership theory practised today in
organisations is the transformational theory which was popularised by James McGregor.
Transformational leadership is whereby leaders and followers help each other in building a
high morale by motivating one another towards achieving goals and behaving
ethically(Naylor 2004; Amanchukwu, Stanley and Olube,2015).
To be a good leader, one must possess certain traits such as honesty, focus, transparency,
authenticity, openness’s patience, etc. (Bornstein, 2016). Thus a good leader is expected to
5
influence followers positively and to guide them by ensuring that they behave ethically
(Donaldson, 2001).
However, leaders do fail to practice the right kind of leadership by indulging in such things as
poor employment treatment, which then leads to the darker side of leadership otherwise
termed as poor leadership.
In the words of (Ashforth, 1994 and Schilling 2009), poor leadership practices in
organisations can range from such things as discouraging employees from voicing their
grievances, underpaying workers, gender inequality, being aggressive towards employees,
abuse of power, breaking organisational rules to satisfy personal. On the other hand, however,
it is to be noted that employees as well can contribute the leader to acting in an unusual way
such as not being able to meet targets, playing politics in organisations, abusing co-workers,
etc. (Padilla, Hogan and Kaiser 2007). Thus for an organisational to be able to function well
and meet its goals both employees and employers must engage in ethical behaviours and must
be ready to accept responsibility for their actions. (Slattery,2009).
Leadership and Culture
Organisational culture is a collection of beliefs on how organisations do things. According to
Schein (2010), the organisational culture was mainly for new employees as a way of
familiarising themselves with the organisation. On the other hand, however (Lok and
Crawford,2004) argue that organisational culture acts as the basis of identifying what is
wrong and right in a given setting. Thus employees and employers share certain values, and
any breach of such a value has an impact on an organisation as a whole.
Organisational leadership, on the other hand, has been defined by (Kotter and Hesket1992;
Mosley, Megginson and Pietri,1996; House et al.,2004) as the process whereby followers are
influenced to achieve goals successfully.
6
Organisational culture and leadership closely related with each other as a good leader would
ensure that the right rules and regulations govern an organisation and guide employees into
doing the right thing (Yukl,2002; Kouzes and Posner,2006; Bass 1990). Furthermore, (Deal
and Kennedy, 2001; Wilson,2001) argue that to be successful a company must have right
strategies and these can only be possible with a good leader in place. Thus to ensure better
organisational performance a good corporate culture and leader must be in place. Thus a good
leader influences a positive culture, and a bad leader leads to a toxic work culture (Brewer
and Selden,2000).
Frameworks applied
Business model canvas
In the words of (Joyce and Paquin,2016) The business model canvas also known as the
(BMC) was developed by Osterwalder and Pigneur in 2010, as an important tool to give
insights about the business.
According to O’Neill, (2015), the business model canvas is a tool used by entrepreneurs to
aid them in understanding the elements that exist in their business. Additionally, (Osterwalder
and Pigneur,2010) state that a business model helps users to have a clear picture of the
activities of the firm and also facilitate in value creation.
Swot Analysis
According to Zack (1999), the Swot analysis is one of the oldest methods of analysing a
firm’s strategy. It deals with finding strengths, weaknesses, opportunities and threats and
emphasises into turning threats as opportunities and weaknesses as strengths.
Also, it has been stated by (Wheelen,2000) that swot analysis helps the company to improve
its decisions making and to make use of the available resources to its advantage to facilitate
growth.
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Thus this tool is helpful for a company to have a basic knowledge of what it is capable of
doing and identify areas in which it can improve.
Balance Scorecard
The balanced scorecard was first developed by Kaplan and Norton, in 1992 as a tool to
enable organisations to measure their performance financially, internally, towards customers
and shareholders(Harmon,2009).In the words of Kaplan and Norton,( 2001) the balanced
scorecard helps organisations to find areas to improve on by measuring their performances in
various aspects. Secondly, it helps firms to formulate strategies that will add up to effective
growth of an organisation as a whole regarding operations and expected
outcomes(Frost,2007). Furthermore, the balanced scorecard has proved to be successful to
more than 100 companies who have used it(Madsen,2015). Also, Kaplan and Norton, (2001)
add that the balanced scorecard has helped to fill up the gaps of traditional finance tools thus
providing better solutions for companies adopting it.
Stakeholder Analysis
Stakeholder analysis helps firms to understand the interests and how various important
stakeholders such as customers, the general public, employees, investors to the
business(Crosby,1992). Furthermore, Bryson, (2004) states stakeholder analysis enables firms
to find suitable ways of creating and adding more value to various stakeholders
Gap analysis: According to(Mindtool.com,2017), gap analysis is a framework that is used to
help companies to analyse their current state and to match it with their future state and find
possible shortcomings so as to solve them. Also, it helps companies to know what they lack
then work towards solving them.
THEORETICAL ANALYSIS OF UBER AND THE MAIN PHENOMENON
Figure 2: Swot Analysis
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Strengths Weaknesses
Brand equity
Lower operational
cost
Higher growth
rate
Lower prices
Unique pricing
strategy
Heavily dependent on
the internet
Dependent on drivers
Usefully for
individuals with the
internet
Poor leadership
Poor corporate
culture
Opportunities Threats
Growth in
developing
countries
Electric cars
Increasing in
valuation
Government
restrictions
Customers changes in
brand preference
Threat of new
entrants in the market
Source: Bhasin 2017
According to Bhasin,(2017) Uber has a good brand image and is growing fast in different
parts of the world. Also, the company has introduced lower prices and fast services for
customers making it easier to get rides and reach destinations on time. However Uber’s
business model makes the company highly dependent on drivers and the internet as
communication between drivers and customers takes place on the Uber platform’s (Mba
Skool-Study,2008) On the other hand, Uber has to work on some weak areas such poor
leadership and adhering to the rules in countries where restricted. Also, it has to make further
investments in self-driving cars to satisfy its customers more (Goh, 2014)
Balance Score Card
Figure 3: Balanced Scorecard
9
Financial Perspective Internal analysis
Increase revenue by increasing more
customers both drivers and
passengers
Improve human resources to reduce
turnover
Train drivers
Customers Growth
Adding more value to customers by
more publicity
Prioritising safety of Customers by
training drivers to behave ethically
Enter new markets
Diversify
Be more transparent by not avoiding
taxes
Financial perspective. Uber is doing well financially. Reports from (Edwards, 2017)
revealed the company’s profit for the q4 of $1.6 billion. On the other hand, over profits were
slightly affected when the company sold its business to Didi Chuxing in 2016 which slowed
down bookings in China (Moon, 2017). Conversely Newcomer (2017) argues that even
though profits have made there seem to be losses as well. Thus to balance the financial side
the company needs to maintain a good image in the society so as to get more customers for
itself which will help to boost finances.
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Making
transportation
reliable for
everyone and
being the number
one preferred
transportation
Growth. The company has managed to grow its business over 77 countries also it has
diversified to the food industry by introducing Uber eats there seems to be a balance. The
company can still grow by proper investments in selfless driving cars which were a failure
earlier.
Customers. It has managed to maintain customers. However, the company lost
customers during the delete Uber campaign. Therefore, it is important for the company to
involve in more corporate responsibility schemes and also to be ethical in the way it operates
these includes paying taxes in countries where it has not been paying.
Internal. Losing key employees who are a problem, bad relations with investors. The
company should try to focus more on implementing different various leadership styles such
as transformational that will ensure that employers and employees work better with one
another. Also, foster good relations with investors.
Gap analysis of Uber.
There is a gap between Uber's present culture and its future goals. The company has big
issues one of them being leadership which is a result of a poor corporate culture. According
to (Weissman, 2017), some of the company values encourage workers to betray each other to
succeed. Also, the company had admitted to having an aggressive culture as a way of
ensuring people get their jobs done. This implies that the company does not have the right
values and also has a human resource problem as it is the responsibility of the human
resources department to ensure that employees work in a safer environment where they
support each other and not try to work against each other (Bratton and Gold, 2001). Thus, to
bridge the gap that exists between Uber’s present situation and its growth change in culture
must take place. The company should first aim at changing its culture by making sure that its
policies protect its employees also an informal way of communication can be helpful for
employees to voice out their problems. On the other hand, however, change must be driven
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by the top management it is, therefore, vital for the top level management to accept that the
company needs to change if it wants to grow further. (Lamb,2013)
Stakeholder analysis of Uber.
The key stakeholders of the company are customers the general public, drivers, employees,
the government, and shareholders. The customers expect to expect to reach their destinations
safely, and on time, the government expects compliance with rules, the general public expects
the company to behave ethically. While the company has managed to do so, it has failed to
meet the expectations of its employees. Employees are interested in being treated fairly to be
able to perform well. Therefore, if the company wants to grow further, it has to ensure that it
takes care of its key partners who are the employees.
Limitations of model’s used
Business model canvas. Even though the business model canvas provides an
understanding of the business operations and the way firms can create value, (Viki 2014;
Coes,2014) argue that a little emphasis is given to the environmental sustainability and social
value creation and is more towards generating profits for the business.
Also, it has been argued by (Kraaijenbrink and Advies Training, 2012) that the business
model excludes the important elements of the business such as the mission vision and
strategies which are key to any business growth and also it does not tell the business about
the key competitors and how competition can be limited.
Thus to efficiently other models can be adopted to understand the business better and to
analyse it (Duane,2017).
12
Swot Analysis. Although Swot analysis has been useful for more than 30 years now, it
has faced several criticisms from various researchers in the field of strategy and
management.in their research (Helms and Nixon, 2010) advised the model to be scrapped out
at it tends to lead the firms into making poor decisions and underperforming. Valentin,
(2011) who states that this tool is shallow and doesn't give room for the company to focus on
the most important element as all the elements in Swot as included as equally important
eliminating the choice of prioritising. Consequently, Oreski, (2012) states don't include
quantitative aspects relate to the firm such as financial information; it is rather more focused
on qualitative analysis and skills that people possess.
To be able to strike a balance between a better understanding of an organisation it has been
suggested by (Kurtilla et al. 2000) that swot analysis can be used together with the Analytic
Hierarchy Process to improve the quantitative information is the strategic management
process. Furthermore, it has been suggested by (Churchill,2010; Winston,2017) that a firm
can use tools like Scope planning, Soar which enable the firm to analyse its competencies,
resources and provide solutions on how it can sustain in the short as well as long-term
competition.
Thus while Swot has been useful over the years, it is a basic tool, and one has to be able to
use additional methods such as five porters, Enneagram model, meta model to provide a
better analysis of the firm.
Balance Score Card.There has been a number criticism against the use of the balance score
card. Kraijenbrink Advies and Training, (2012) argues that the BSC excludes the external
environment and focuses more on the internal aspects. Also, (Atkinson,2006) argues that
while the focus is to help managers to improve performance, it does not emphasise on the use
of identifying the key success factors which are helpful in improving performance.
13
Stakeholder Analysis. (Savage, 1991) argues that this tool has always to be updated by the
Company.Furthermore, (Crosby,1992) argues that it might be costly for the firm as the firm
has to conduct the analysis on a continuous basis also it is difficult for the organisation to
meet needs of all stakeholders.
Gap Analysis. Gap analysis helps the company to identify different opportunities but does not
provide steps on how it can grow(Sharma,2003). Also, Gap analysis doesn’t tell a business on
how to overcome competition or gain competitive advantage(Reed,2017). Furthermore, using
gap analysis is limited to short term strategies as uncertainties such as technological changes,
government restrictions, etc. are likely to occur in the long run. (Emery, 2017;
Mindtool.com,2017).
Recommendations
To help improve Uber's leadership practices and their corporate culture. I propose The
following recommendations:
To promote unity among top management and employees. This will help to ensure
that both the top management and employees work together as a team to achieve
organisational goals.
A safer working environment for employees where they are free to express their views
and problems that they are likely to face.
The top management must initiate a change in the way the company handles
situations by introducing new policies that protect the worker's welfare and
communicate this with other employees regarding any change proposed for its
implementation. To achieve this, there needs to be a clear plan in mind which is to set
new values and regulations which go hand in hand with the vision and mission of the
company (Kousez and Posner,2006). In addition to setting values, the top
management must ensure that employs are aware of a change in the way things are
14
done and training to be provided to ensure that everyone behaves in accordance with
the new regulations. (Ozcelik, Langton and Aldrich,2008).
Uber needs to revise its human resource policies to ensure that it can accommodate
the needs of its employees as such when issues are reported employees get right
solutions instead of ignoring their problems. (Watt, 2008).
The company needs to change its autocratic leadership style to transformational.
Summary and Conclusion
Uber as a company although it has managed to capture a lot of markets. It has been hit hard
by crises in 2017 mainly because of poor leadership which has led to the loss of employees
also creating a bad reputation for the company. I have used Swot Analysis, Balance
Scorecard, Stakeholder Analysis and Gap to analyse the main problem. Key suggestions
include changing corporate culture by forming new values, changing hr policies so that
employees can talk to the management and get their issues sorted. Unity among employers
and employees to ensure a better working environment and also support from the top
management as change cannot take place without initiation from the top management.
To conclude good leadership is essential for the growth of any organisation as a good leader
will be able to ensure that he influences his employees to perform better and in an ethical
manner. Thus it is important for organisations to have better leaders to guide them towards
achieving their goals and aloes towards adding more values to key shareholders, stakeholders,
and the general public.
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