Thursday, June 15, 2017

Uber: 14 Bosses, One Corporate ‘Game of Thrones?’

Ride-hailing firm will turn company reins over to group of senior executives while CEO Travis Kalanick regroups.


By Greg Bensinger and Kelsey Gee
The Wall Street Journal
June 15, 2017

The decision by Uber Technologies Inc.’s chief executive to take an indefinite leave of absence will put management of the world’s most valuable startup in the collective hands of more than a dozen managers—a challenging structure for a company that has favored a strong central leader and pitted executives against each other.

The ride-hailing firm said Tuesday it would turn the company reins over to a group of 14 senior executives while CEO Travis Kalanick regroups following a punishing half-year of scandals and setbacks, capped by the death of his mother in a boating accident that left his father seriously hurt.

The recent exits of Mr. Kalanick’s effective second-in-command, Emil Michael, and the previous deputy, Jeff Jones, and of several other direct reports to the CEO have left Uber with no real line of succession.

The company now has made the unusual choice of having Uber run by the heads of legal, human resources, communications, products, operations and other units.

“A committee is very implausible,” said Joseph Bower, a Harvard Business School professor emeritus of business administration. “You can’t make decisions that way.”

Mr. Kalanick, in his note to staff announcing his leave, said “I will be available as needed for the most strategic decisions, but I will be empowering [the committee] to be bold and decisive in order to move the company forward swiftly.”

An Uber spokesman said the company has “a strong leadership team including veterans who helped make the business what it is today, and new talent who are helping to drive the changes we’re committed to making.”

Uber has been grappling with accusations of sexism and sexual harassment and on Tuesday rolled out reforms to upend its workplace culture after a months-long investigation led by former U.S. Attorney General Eric Holder.

Mr. Kalanick said he would take the time off “to become the leader that this company needs” and to grieve for his mother.

Adding to the complexity, the company is seeking a laundry list of executives, including chief operating and chief financial officers, general counsel and a marketing chief. Board Director David Bonderman stepped aside Tuesday after making a sexist remark during a company all-hands meeting. There is little precedent for Uber’s transition of power in the corporate world, but some management experts say the closest approximation is “Game of Thrones,” the television show depicting mythical fights for control among several clans.

“If your bet is that Travis will come back, you want to show that you’re his man or woman,” said Sydney Finkelstein, a management professor at Tuck School of Business at Dartmouth College and author of “Superbosses: How Exceptional Leaders Master the Flow of Talent.”

The history of business successes where rule is split between more than a single CEO is spotty. Oracle Corp. has been operating with co-CEOs since 2014 when Larry Ellison relinquished the top job—the stock is up about 13% since then—and Samsung Electronics Co.remains the top global seller of smartphones by market share under three CEOs.

At other companies, the results have been less stellar. BlackBerry maker Research In Motion Ltd. battled investor discontent for years over its co-CEO structure and ultimately put in a single leader, though the business still plunged into irrelevance.

Similar co-CEO arrangements at Citigroup Inc., Martha Stewart Living Omnimedia Inc. and Workday Inc. were quickly scuttled.

Last year, Whole Foods Market Inc., too, eliminated the co-CEO structure after six years. Amazon.com Inc.’s Zappos unit has been experimenting with an unusual management philosophy called Holacracy, in which titles and bosses are eliminated, since 2013. But the structure sowed confusion and when the shoe seller offered severance in 2015 for those who wanted to quit, 14% took the offer.

Rarer still are firms led by committee. Watch and jewelry maker Cie. Financière Richemont SA has been operating without a CEO since Richard Lepeu stepped down in March.

Top executives report into the chairman and decisions are made by consensus. DPR Construction has senior leaders rotate through an eight-member management committee. Employees at those firms have said committees can sometimes make decisions painstaking and cause infighting.

At Uber, the transition will be particularly tricky since Mr. Kalanick has structured the San Francisco company to funnel big day-to-day decisions through him, say people familiar with the matter.

Mr. Kalanick, known for his relentless and punishing will to win, was also reluctant to be challenged as CEO and could lash out at what he felt was insubordination, these people say.

Without a central leader, executives may jockey to be atop the heap in deference to Uber’s 14 leadership principles, which include “always be hustlin’” and “toe stepping.” (Mr. Holder’s recommendations included reformulating those principles.)

Uber said it would divide the management committee into four units: business; people and organization; product and engineering; and legal safety and policy and communications.

The 14 executives include Rachel Holt, Andrew MacDonald and Pierre Dimitri Gore-Coty, the heads of operations in the U.S. and Canada; Latin America and Asia Pacific; and Europe, Middle East and Africa, respectively.

Also included are Ryan Graves, the first Uber CEO, a board member and senior vice president of operations; CTO Thuan Pham ; Chief Security Officer Joe Sullivan ; communications and policy chief Jill Hazelbaker ; product-management head Daniel Graf ; chief of self-driving vehicle development Eric Meyhofer; product leader Jeff Holden ; HR boss Liane Hornsey ; and Chief Legal Officer Salle Yoo.

The group also includes two new additions to upper management at Uber: David Richter, who was promoted just this week to fill Mr. Michael’s role, and recent hire from Harvard Business School, Frances Frei, a senior vice president of leadership and strategy.

Mr. Finkelstein of Dartmouth said he expects two or three managers to rise to the top of Uber’s new committee of leaders, and that there may be a division in the company’s top ranks between those who support Mr. Kalanick’s vision for the startup, and those who prefer to steer it in new directions. “The ones that campaign to bring him back, or discretely seek his advice, may see an opportunity to take over while the CEO is in the penalty box,” he said.

“Having two people making joint leadership decisions is a big mistake for companies, but 14 is setting up a war for succession,” Mr. Finkelstein said. “If there’s no CEO, all of these people know they’re candidates for the job.”


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