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.

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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 Customer Customer

Proposition Relationship segments

 Drivers  Finding  Less  Highly  Passengers

 Local drivers waiting automated  Drivers

authorities  Balancing time

both the  Secure

demand rides

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 and supply  Cash

of rides free

Key resources Channels

 Uber  Online

application  Uber

 Routing Mobile

 Price App

Cost Structure Revenue

 Salaries for drivers  Cost per journey

 Sales marketing  Distance streams

 Investments in technology  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).

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Thus the company's business model helps to provide a general view of the main activities that

are undertaken by the firm.

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

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the company is unethical. Also, (McCormick, 2017; Kravets, 2017; 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).

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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

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.

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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.

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.

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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.

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.

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THEORETICAL ANALYSIS OF UBER AND THE MAIN PHENOMENON

Figure 2: Swot Analysis

Strengths Weaknesses

 Brand equity  Heavily dependent on

 Lower operational the internet

cost  Dependent on drivers

 Higher growth rate  Usefully for

 Lower prices individuals with the

 Unique pricing internet

strategy  Poor leadership

 Poor corporate culture

Opportunities Threats

 Growth in  Government

developing restrictions

countries  Customers changes in

 Electric cars brand preference

 Increasing in  Threat of new entrants

valuation 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
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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

Financial Perspective Internal analysis

 Increase revenue by increasing more  Improve human resources to reduce

customers both drivers and turnover

passengers  Train drivers

Customers Growth

 Adding more value to customers by  Enter new markets

more publicity  Diversify

 Prioritising safety of Customers by  Be more transparent by not avoiding

training drivers to behave ethically taxes

Making

transportation

reliable for

everyone and

being the number

one preferred

transportation

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 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.

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

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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 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

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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).

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

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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.

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

14
 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 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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