Monday’s exit of Uber SVP Emil Michael, Tuesday’s exit of board member David Bonderman, and CEO Travis Kalanick’s announced leave of absence on the heels of harassment and discrimination accusations may signal that the company is turning over a new leaf. But it’s likely just a smoke screen to obscure the fact that Uber isn’t addressing the real issues: It’s a company with a sick culture, led by a toxic CEO.
Uber’s board says it’s adopting the recommendations of former attorney general Eric Holder, who conducted a comprehensive investigation into the company’s culture amid allegations of harassment and bullying. Since the CEO sets the tone for how a company’s entire ecosystem—from employees to customers to investors—perceive and experience its brand, Kalanick should step aside altogether to ensure that Uber doesn’t end up a slow-motion car wreck.
It’s been fairly well acknowledged that founder-led companies outperform others. A growing mountain of research indicates that these companies are more innovative, have stronger brand equity, and maintain stronger bonds with their employees. This is due in part to the strength and authenticity of their corporate cultures and their ability to attract and retain top talent. There have been numerous studies by universities, analyst firms, and investment banks that underscore that point.
A 2016 Harvard Business Review article revealed that organizations with leaders who indoctrinate employees to their ideas, purpose and reason for being are far more sustainable and financially viable. Founder-leaders give their companies a sense of purpose. They bring to the table a love for the details of a business. They often anoint employees with the ability to create change on the front lines—they adopt an owner’s mindset, which makes them act quickly and take responsibility for successes and failures. Employees tend to bond with their company’s founder, match his or her behavior and values, and are often more willing to go to the mat to deliver on their founder’s vision.
But what if that founder is toxic, and his intent isn’t exactly clear?
It’s currently unclear whether Emil Michael’s departure from the company was involuntary. However, speculation about his exit is both morbid and exciting. The hiring of a new brand leader from Apple (AAPL) (who also happens to be a woman of color) and the appointment of Frances Frei, a well-known Harvard Business School professor and leading voice on organizational transformation as its SVP of leadership and strategy—with no apparent job description or staff—to partner with Uber’s HR leader as a leadership coach appear to be mere window dressing, and not what the organization really needs to turn itself around amid assertions of bad behavior throughout the company’s ranks. While these bold moves might indicate a desire on Uber’s part to undo aspects of a culture that encourages and rewards cutthroat competition, unchecked sexual harassment, and a general lack of concern for employees and contractors—it may be too little too late.
Branding is about bonding with customers so deeply that it creates irrational loyalty: where customers are so fiercely loyal to a brand that they would feel like they were cheating on it if they were to choose an alternative. Irrational loyalty is almost always a ticket to certain financial success: Companies that create this condition are able to reduce customer acquisition costs, increase customer lifetime value, and charge premiums for their services and products, according to leading brand research firm Millward Brown’s annual BrandZ Studies. Brands that have ascended to this level are those that are very transparent about their values and align them with those of their customers.
In Uber’s case, its hiring and management practices and public behavior have exposed its values in a very public way. Not only have they introduced lawsuits and government investigations, they have caused customers to defect from the brand. While the ridesharing industry continues to commoditize, it will be crucial for Uber to take good care of its brand, or it may forever be known as a cautionary tale about Silicon Valley bro culture.
In a brand strategy career spanning multiple decades, I have never seen a company led by a toxic founder to be capable of the seismic culture shift on the magnitude of what Uber needs right now. In my mind, Uber has two options: 1) Have current CEO Travis Kalanick and other members of the leadership team step down permanently, and bring in a new leader to repair the brand, or 2) Find a larger corporation to absorb it. Even amid new ridesharing entrants and a host of me-too brands, the Uber brand remains the gold standard, with the largest operating footprint and an estimated valuation of more than $70 billion, which is higher than 80% of companies on the S&P 500.
The company has significant infrastructure, a strong network of drivers and riders, and unrivaled brand awareness (the word Uber has even become a verb:“We’ll Uber home tonight,”) that could be of value to a larger company as it seeks a foothold in the personal transportation market. And, as Uber races against competitors like Google (GOOG) and Ford Motor Company (F) to crack open the driverless car market, it will need the strength of a healthy brand relationship with consumers to give it an edge.
So, if Uber is really serious about changing, CEO Travis Kalanick needs to go. As long as Kalanick’s values remain on display, the Uber brand is in grave danger. You only get one chance to create a winning corporate culture, and Uber might have blown it.
Deb Gabor is the author of Branding is Sex: Get Your Customers Laid and Sell the Hell Out of Anything, and founder of Sol Marketing.