leadership
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Outgrow the CEO: Leadership at a cost?

This week we have seen Travis Kalanick resign from Uber after being pressured from 25% of shareholders (being the major VCs) with 40% of the voting rights. These investors have taken the drastic measure of pushing the CEO out to protect their investment.

 

Over 15 rounds of investment Uber has taken on $12Bn for a valuation of roughly $70Bn. Uber has gross bookings of $5Bn and net revenue is and of this Uber retains 25% of the fare. With $70Bn dollars in valuation at stake, these investors have a lot riding on the success of ride sharing. What led to this leadership change?

 

Being ambitious does not always make friends

In order to grow you need to take customers from somewhere. In doing so someone has to lose a customer, it is called competition. When a business as large as Uber grows as fast as Uber in so many markets (60 countries with car transport, food delivery and even competition for drivers) you are going to bump against a lot of resistance.

 

The incumbents don’t lead

We do not see the incumbents in any marketplace taking the initiative. It is always the ‘new kid on the block’ that has to bend or break the rules that govern how the game is played. Uber now operates in 82 countries and over 660 cities. They have faced resistance from taxi companies and regulators as they enter each city and there are now a number of examples that show how this tension can be navigated. Each hard fought by both sides, but all lead by Uber.

 

Set goals that stretch you

We are all about to do up our business plans for next financial year (or at least I hope you are). And in these we will outline hopes for where and how we will acquire new customers, and how many customers we will win. If we wish to lead our business to real change these goals need to be ambitious. Not just 5% here or there, this can be achieved through what you do and how you do it.

 

Look over the horizon

Goals in excess of 25 or even 50% require you to take your business in whole new directions and develop new ways of doing things. With the tools outlined in last week’s column, these tools exist for many businesses but you have to go looking for them. Uber is not playing to win the car transport market, they are playing to win transport in a driverless vehicle age.

 

People and culture matter

Much will be written about Travis and his time at the head of one of the world’s most iconic disruptors and now a household name. Much of that media will talk about sexual harassment claims and aggressive management, neither of which can be condoned. But while the style hasn’t been right, the business has done a lot of things well. A strong board, clear goals, strategic influence on policy and focused execution in cities it plays in.

 

But growth at any price is not the goal. Yes, the company has grown at an outlandish pace. But the reason the CEO has now been changed is that the leadership of people and the culture did not keep pace with the commercial growth, and that is just as important.

 

As a brand Uber has as many fans as it has detractors and the reaction from industry and the market alike is a great case study for change in all our industries.

 

Written by Mark Jones, Managing Director