Uber: In urgent need of ethical leadership

What kind of leadership is emerging at Uber, the so-called conventional taxi killer?

For many users Uber looks a sure thing—a disruptive technology promising to improve the hiring experience and even make it cheaper.

It’s a personal-car service aiming to get a client a car in less than five minutes. Pull up the app on your smartphone and theoretically a Mercedes, Jaguar or BMW shows up.

You get in and out of the car and no cash changes hands,” says Uber CEO Kalanick. [1]UBER CEO

But as with so much business these days, the “how” is just as important as the “what.”

Recent actions and public pronouncements from Uber’s senior management are highly questionable in terms of ethics and business practices.

uber v lyftFor example, Uber’s CEO Travis Kalanick reportedly admits to trying to torpedo funding efforts of his biggest rival, Lyft.

In a profile of him for Vanity Fair, he is quoted as saying his company tried to put off investors raising money for Lyft. [2]

In August Uber was revealed as employing dubious tactics by sending so-called brand ambassadors to order Lyft rides undercover and then persuade the drivers to defect to Uber. Uber is said to be arming teams of independent contractors with burner phones and credit cards as part of its sophisticated effort to undermine Lyft and other competitors.

Uber requests rides from Lyft and other competitors, recruits their drivers, and takes multiple precautions to avoid detection. The effort, which Uber appears to be rolling out nationally in the US and possibly elsewhere has already resulted in thousands of cancelled Lyft rides and made it more difficult for its rival to gain a foothold in new markets.

Uber calls the program “SLOG,” and it’s a previously unreported aspect of the company’s ruthless efforts to undermine its competitors. [3]

survival of fittestAll good knock about stuff you might think. Isn’t that what capitalism is all about, let the fittest survive? Maybe, but Uber won’t last if it’s ethics continue to come under such constant scrutiny.

For example, the company is facing criticism for how it treats journalists after one of its executives, Emil Michael, said the start-up was willing to spend a million dollars to pry into reporters’ personal lives.[ 4]

Meanwhile, the situation worsened recently when online publication Buzz Feed said one of its reporters was tracked by an Uber Technologies Inc. executive without her permission. Uber is now investigating that manager.[5]

One of the major investors in Uber excuses the current ethical chaos as somehow acceptable: Shawn Carolan, a partner at Menlo Ventures and a board observer comments:

“People don’t appreciate how stressful it is to grow at that speed; it’s just crazy. They aren’t sleeping and, absolutely, they are making mistakes, but generally they are very ethical and working very hard.”

booberYet Uber’s unethical behaviour cannot stand it in good stead for its long term survival.

For example in an interview in the March GQ, CEO Kalanick referred to his company as “Boob-er.”By that he meant running Uber had helped him meet girls.

If ethics starts at the top, then tone at the top certainly matters a great deal. Kalanick clearly needs some help with what it means to be an ethical leader, setting an example for his growing empire. [6]

According a report by the normally rather cautious Bloomberg:

“He can behave, gleefully, like a feral frat boy dreamed up by Ayn Rand; his mission statement runs to some variation of “you know, push a button and get around San Francisco like ballers.” [7]

The perception Uber is both a bully and an unethical enterprise is hardly based on just one or two unpleasant pieces of irresponsible remarks. For instance the company has also been accused of pushing drivers into subprime loans and had to deal with class action suits over tip-skimming.

uber tipsIn 2013 a group of jilted drivers pursued claims that the company hijacks portions of its drivers’ gratuities and refuses to reimburse them for fuel and other expenses.

The judge allowed the action to proceed, and also ruled drivers in other states could join the suit. The lawsuit also challenges Uber’s practice of telling passengers that the gratuity is included and not to tip the drivers.[8]

On a more personal note it’s reported a woman named Gabi woke up on her 26th birthday and discovered the 20-minute Uber ride she took the night before, on Halloween, had cost her over $360, leaving her unable to pay her rent. Apparently she then posted a plea on the crowdfunding site “GoFund.Me” desperately asking for help. It worked. She raised $512 in 12 hours. [9]

In the US at least these complaints have not slowed Uber’s progress. Because it offers a disruptive technology, creates jobs and is innovative, lots of people are turning a blind eye to what is going on. There is considerable admiration for a company that is shaking up what is a sclerotic market for taxis, both in the US and elsewhere.

Which is why it is so strange Uber needs to indulge in apparently unethical behaviour, driven from the top. If the technology is that good, according to conventional market wisdom the company is likely to prevail.

“…the fact is, Uber seems to consider itself above rules and repercussions. And in some ways, it may be.
E.Greenhouse, Bloomberg, Nov 20 2014

So far Uber appears to be getting away with increasingly questionable business ethics, and behaviour which long term will not serve the company well. A CEO of a leading outplacement firms puts the issue in a broader perspective:

“You have these CEOs that don’t have much filter and get in trouble….But unlike in the old days, it’s hard for things to get buried in the age of blogs, Twitter and Reddit. There is much less ability to wipe the slate clean.” [10]

For the moment Uber looks like the classic case of short termism driving a company to do bad things. Longer term this won’t work, and if the Uber brand is to survive Kalanick and his senior colleageus need to brush up on what ethical leadership means in the 21st Century.

 

Thanks to A.L. for suggesting this post

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