PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Uber Failure and the Primacy of Company Culture

By at 5 July, 2017, 4:51 pm

by Susan Solovic-

One of my favorite Despair Demotivator posters is titled Mistakes” and it pictures a sinking ship with the tagline: It could be that the purpose of your life is only to serve as a warning to others.

It’s not a new idea. In one of the oldest books in the Bible, Deuteronomy, it says, “You will become an occasion of horror, a proverb, and an object of ridicule to all the peoples to whom the Lord will drive you.”

I’m wondering if that’s how Uber’s former CEO, Travis Kalanick, has been feeling lately. After a long series of startling public revelations about Kalanick’s bad, boorish, and sometimes contemptible personal behavior, the young gun had to resign in shame.

He first tried the standard “leave of absence” ploy to buy himself some time and get positioned to retake the helm. However, it seems that investors wouldn’t stand for it and they soon pushed him out.

Bad boy, bad culture

I’m sharing this story because it illustrates a flip side of the “company culture” story we have often told on these pages. I’ve pointed you toward a variety of companies, praising their positive culture, and making the important point that culture starts at the top and has to be carefully cultivated.

The culture at Uber has, apparently, been the opposite of positive. Currently it’s being categorized as Animal-House-Meets-Unicorn-Tech-Startup. The label most observers are giving its culture is “frat boy.”

Kalanick famously ripped into an Uber driver like a spoiled brat and, of course, the video made its way onto the Internet. An internal memo from Kalanick outlining the do’s and don’ts governing inter-employee sex-capades on a company outing was also published on the social media. This kind of behavior from the top sets the tone for the rest of the team.

The bottom line

While a healthy culture can do a lot to position a company for success, a bad culture can set it up for failure and this is what investors were beginning to see.

Writing for Tech Crunch, Connie Loizos details how Uber’s value on the secondary market is slipping. While investors have given it a $68 billion value (on paper), actual secondary market trades put it at $50 billion.

Further, as Uber’s fortunes are sinking, things are looking much brighter for its main rival, Lyft. Loizos reports that the Avis of ride sharing recently received $600 million in new funding.

Quick question: Do you think the leaders at Lyft have learned a few things as they’ve watched Uber self destruct? I think they have and I’ll fall off my soapbox if I ever hear of similar transgressions at Lyft.

Universal lessons

You should learn some things from Kalanick’s travails as well:

-Be cordial, friendly, supportive, and encouraging to employees, but don’t cross any line that would make your behavior unprofessional.

-There is no such thing as private correspondence today. Kalanick – and President Trump – have learned this the hard way.

-Be tough, but don’t be a jerk.

-Don’t abuse your position or think that you’re too big to fail (or be replaced).

Fail on any of these and you can do severe damage to your company culture, and this damage will eventually bleed over into your potential for success.

Don’t make yourself a living warning sign.

Susan Solovic is THE Small Business Expert and Advocate for the Small Business & Entrepreneurship Council.  Her forthcoming book, THE Once Percent Edge, will be published in January 2018.  For updates and sneak peeks of the book’s content, please click here. Susan is an award-winning serial entrepreneur, New York Times, Wall Street Journal, Amazon.com Top 100 and USA Today best-selling author, media personality, and attorney.  To learn more about Susan and the small business resources she provides, please click here.

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