Company: UberConcepts which can be covered: Organization culture,corporate governance Corporate governance includes rules and processes that governthe control and functioning of a company.
It involves balancing the interestsof stakeholders such as shareholders, customers, vendors, government, and thelike. Board of directors play a crucial role in creating and influencing thecorporate culture. The Board often includes internal members such as thefounders, executives and independent members who are included in the Board fortheir vast experience of directing other companies. A company is known to have bad governance when it toleratesor supports illegal activities. Selection of not so established auditors,resulting in publishing of faulty financial results, the inappropriatecompensation of executives are also instances of bad governance. When the boarddoes not put efforts to protect the interests of the minority shareholdersalong with the majority shareholders results in bad governance.
A company demonstrates good governance when it is transparentabout its framework of operation with stakeholders. Moreover, a company withgood governance is fair to its shareholders. Shareholders while investing oftennot only look at profits but also a company’s corporate governance. UberUber showcased failed corporate governance time and again. AForbes article dated Dec 05, 2017 is rightly titled “Uber’s Uber Breach: A Stunning Failure In Corporate Governance AndCulture”.
Uber currently faces five criminal probes from the JusticeDepartment. It faces an intellectual property battle from Waymo, Alphabet Inc.with respect autonomous driving technology.
Apart from these, Uber is fightingcivil lawsuits in various countries. Uber is also accused of using a softwareto spy on competitors and elude regulators. Further, Uber is being investigatedin Asia for bribery.What drove a company, valued at $70 billion today, in such amessy situation? With notoriety become synonymous with Uber, is the leadershipat Uber responsible for its state today? Does organization culture play acrucial role driving the health and success of a company? The report presentsanswers to these questions and illustrates failure of corporate governance andorganizational culture.
Uber was initially founded as UberCab in 2009 by cofounder ofStumbleUpon, Garett Camp and founder of Red Swoosh, Travis Kalanick. Kalanickgives full credit of the idea to Camp by saying, “Garett is the guy whoinvented that shit” at an event in San Francisco. Camp always ponderedupon ways to decrease the fares of luxury car services and making themaffordable by sharing the cost among people which gave rise to the idea ofUber.Uber launched its mobile app services in San Francisco in2011.
Initially the application was only for hiring a black luxury car for afare that was 1.5 times of a taxi. Ryan Graves who was hired after respondingto a tweet became the first CEO after the launch.
Soon after 10 months Kalanicksucceeded Graves as CEO. Ryan became the company’s COO.UberCab changed its name to Uber in 2011 because of risingcomplaints from local taxi operators. The company hired physicist,neuroscientist and machinery expert to identify demand for hiring cabs.In 2012, CEO Kalanick realised, Uber will require in-house legalassistance and roped in Salle Yoo. One of Salle’s initial assignments was toanswer the question as to whether Uber should ignore taxi regulations.
Duringthat time many start-ups in San Francisco like Sidecar and Lyft Inc. werecoming up with more complex business models. Kalanick complaint these companiesof breaking the law but all of it went in deaf ears. He then asked Yoo to helphim in preparing a framework which is legal.
Later in 2013, Kalanick’s view of the law changed. He triedto expand rapidly while facing many blowbacks in the process. The companyfollowed its CEO’s orders and operated to outperform its competitors whereverthe rules were not actively enforced.Uber’s staff found an innovative way of outperformingcompetitors by convincing the drivers of competitors to drive for them. Uber’soffice in Sydney developed a program called Surfcam which swept competitor’sdata to find out how many drivers are there on their system and theirlocations. This software was mainly used on Grab which was Uber’s maincompetitor in South-East Asia.
On the similar lines staff team at San Francisco also createdanother software known as Hell. It helped Uber in locating Uber drivers in thecity at any given moment. The legal team observed that since the laws onscraping data were unclear in US so they went ahead with the software and sweptLyft’s data.The investigation by federal authorities need to be creativeand find ways of prosecuting the company because as per co-director of HarvardUniversity’s Berkman Klein Center for Internet and Society, Yochai Benkler,whatever regulations Uber has violated, none of them comes under explicitviolations.Uber also signed for Greyball, which tagged selectedcustomers and showed them different version of the Uber app.
The company alsoapplied the same approach with law making bodies by helping Uber driversavoiding tickets. The software is under scrutiny of Justice Department. Uberalso settled allegations over privacy concerns under Federal Trade Commissionfor a tool called God View.Kalanick always wanted Yoo to be ‘more innovative’ and alsomentioned the same in her first performance review. Yoo realised that the legalissues existing in Uber are altogether different for her, ones she has neverexperienced ever. But at the same time it made her feel liberated because shecould tackle these issues her way without worrying much about the bestpractices.
However, at times she failed to challenge Kalanick and otherdeputies whenever they had difference of opinion.