Why is Uber struggling?

What’s behind the issues at Uber?

Uber is in trouble. From sexual harassment to embarrassing outbursts from the CEO to a mass exodus of key employees, Uber is struggling.

It’s not uncommon for startups that reach any level of scale. Uber raised over $11 billion and has a valuation ranging from $20 billion to $69 billion. They’ve been successful at scaling.

However, growth is never smooth, linear and up to the right. Never. Ever.

Not for Uber and not for your company.

The details are almost always different, but the dynamics that growth and success cause are always the same.

I have no inside knowledge of the Uber situation. However, I can tell you a bit about what may be happening based on my experience working with countless venture-backed high-growth companies.

SOWING THE SEEDS OF DECAY

What works at one stage of business usually sows the seeds of decay in the future.

Uber needed to be uber aggressive (no pun intended) as a startup. They had to aggressively fight legislation and long-established cab companies. They were the underdog. They excelled.

The aggressiveness, paired with success, can make a company feel untouchable. Hubris becomes the issue, not the strategy.

We often have an extensive strategy for the future to change. However, we execute based what worked in the past.

My Personal Experience Sowing The Seeds of Decay I had a similar issue when I was the COO and CFO of company we eventually grew to $1 billion in annual revenue. We created an entrepreneurial culture of independent, geographical offices. They competed against each other. This philosophy worked great as a small, growing company. The healthy level of competition grew our company, quickly.

However, at a higher-level of scale, this actually sowed the seeds of decay. Our growth stalled.

When we grew, the separate geographical offices became uber competitive with each other. The offices went to the extreme. Instead of healthy competition, offices now withheld information from other offices. They became territorial. It was now everyone against everyone.

The very thing that makes us successful, we protect. However, it typically sows the seeds of our decay.

As a naive, young COO, I deconstructed the very thing that made us successful. Once I did, our growth took off again.

If you’re curious: we still had a competitive compensation plan but took measures to break down the walls of ruthless competition. We encouraged sharing of information and best practices. We moved to more shared services.

Uber is probably experiencing something similar. The very thing that made them successful (being aggressive as the underdog) is probably sowing the seeds of decay.

BUSINESSES LOOK LIKE THEIR LEADERS

Once again, I don’t know the Uber CEO. I only know what is public about him. I even reached out and offered to help with a recent issue.

However, his public behavior has been aggressive. He curses and had an emotional outburst caught on camera.

Just like people look like their long-time spouses, companies look like their CEOs. Employees see what leadership looks like and unconsciously emulate.

It turns out there is a scientific reason older couples look alike. It’s because they unconsciously emulate the facial expressions of each other after being together for a long time. This repetition literally causes older couples to form similar facial muscles. The similar facial muscles make the couple look similar.

The CEO is no different. Subtly, the behavior is rewarded that matches what the CEO would do. It’s not intentional, but it happens. This builds the organizational muscles similar to the CEO. In turn, the company starts to look like the CEO.

It’s amazing but true.

Muscles often need to be atrophied and others built.

The tone at the top sets the tone for the rest of the culture.

What’s next for Uber?

Once again, I have no inside knowledge about Uber. But what I know is no organization performs at a 9 or 10 with leadership at a 5 or 6. I’m not discrediting the current CEO but almost all CEOs need help at some point in their career.

It appears the CEO is taking a step away from the business. Frankly, that might be the right move from the board at this time.

If Uber wants to succeed, they will need leadership that performs at a 9 or 10. They’ll need to address what is sowing the seeds of decay.

It will be difficult. But Uber has employees and customers that depend upon the business to figure it out. With the right leadership, they can.

Originally published at dandoadvisors.com on June 14, 2017.