Steady Hands Steering through Perilous Roads

Context

In challenging times, Uber CEO Dara Khosrowshahi deftly shifts gears from a “peacetime” to a “wartime” strategy. He adapts his approach to the changing business climate and puts the pedal to the metal.

Khosrowshahi has steered Uber’s once-combative culture onto a more ethical and collaborative path, which has not only boosted profitability but also lifted the company’s morale.

What defines Dara Khosrowshahi’s leadership style as a WarTime CEO?

Real-Life Story

Dara Khosrowshahi stepped into the driver’s seat as Uber’s CEO in 2017, following the dramatic exit of founder Travis Kalanick. Kalanick had undoubtedly accelerated Uber’s rise as a global ride-hailing behemoth, but his tenure crashed under the weight of scandals surrounding Uber’s aggressive culture and dubious ethics.

Under Kalanick’s leadership, slogans like “Always Be Hustlin’” and “Principled Confrontation” fuelled a high-octane, cutthroat environment that revved up unethical behaviour and fanned the flames of a toxic workplace culture, including harassment and bullying.

Khosrowshahi inherited a company that was not just dented but on the verge of a full-blown wreck. Allegations of sexual harassment and a hostile work environment were rampant. Meanwhile, Uber’s relentless pursuit of growth had piled up legal troubles and sparked public outrage, epitomised by the viral #DeleteUber campaign.

Now at the helm, Khosrowshahi needed to navigate a treacherous path – repair Uber’s tarnished image while keeping the business afloat in a fiercely competitive market. He was tasked with tackling entrenched issues of sexism and a glaring lack of accountability within the organisation, a legacy left behind by his predecessor.

At the same time, Khosrowshahi faced a regulatory minefield, with Uber’s operating licences in key markets under constant threat. His approach called for a sharp U-turn from the company’s previous adversarial stance, favouring more cooperative engagement with governments.

Uber introduced core principles to overhaul its organisational culture, including prioritising the customer; ownership and accountability; and valuing ideas over hierarchy. Most importantly, he nurtured a bottom-up culture, where employees played an active role in shaping new norms, ratified through extensive voting and feedback. This cultural shift was a breath of fresh air, reinvigorating employee trust and morale since they felt their voices truly mattered.

But Khosrowshahi’s leadership wasn’t just about culture. When he took over, Uber was haemorrhaging money, reporting losses to the tune of US$4.5bn, and its plans for an IPO seemed like a pipe dream. To make matters worse, legal battles and mounting regulatory fines, especially in London where Uber’s licence was hanging by a thread, weighed heavily on the company’s bottom line.

Khosrowshahi tackled Uber’s financial and operational troubles head-on with a toolbox of solutions. He applied the brakes on reckless spending, cutting nearly 20% of the workforce, and exited unprofitable markets to slim down operations. By selling off non-core ventures like its self-driving unit, he redirected Uber’s resources towards profitable areas, ensuring the company was on a more sustainable path.

Shifting the company’s strategy from “growth at all costs” to sustainable profitability, Khosrowshahi managed to balance price hikes while improving margins.

PostScript: Uber’s turnaround under Khosrowshahi can be chalked up to a few pivotal factors: cultural transformation, profitability, and strategic divestments. Khosrowshahi prioritised building a more inclusive, ethical workplace, which not only rectified past wrongs of harassment and toxicity but also boosted employee morale and public perception. Meanwhile, his shift towards sustainable profitability put Uber on track for long-term success, achieving profitability for the first time in August 2023 through cost-cutting measures and a razor-sharp focus on core operations.

Key Lessons

1) Cultural transformation fuels long-term success

Khosrowshahi understood that repairing a toxic workplace culture was critical to rebuilding trust and morale. By fostering an inclusive, collaborative environment, he turned a combative atmosphere into one where employees felt empowered and valued, leading to a more sustainable business.

2) Regaining trust through transparency and accountability

Khosrowshahi recognised the importance of repairing Uber’s tarnished reputation. By shifting towards ethical practices, engaging cooperatively with regulators, and instilling accountability across the organisation, he helped restore public confidence and stabilised the company’s standing in key markets.

3) Embracing tough decisions  

Khosrowshahi didn’t shy away from making difficult calls, such as reducing the workforce by nearly 20% and exiting certain markets. WarTime CEOs like him are prepared to make hard – sometimes unpopular – decisions for the long-term health of the business.

4) Valuing sustainable growth over expansion at all costs 

Khosrowshahi shifted Uber’s focus from rapid, unchecked growth to a strategy of sustainable profitability. WarTime CEOs balance aggressive expansion with the need to solidify the business foundation, ensuring the company can thrive in the future.

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Until next week, may the force be with you.

Kevin

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