Question

Uber Case This part of the Uber cumulative case focuses on Chapter 8 and covers principles related to organizational culture and structure. This cumulative case’s real-world application of management knowledge and skills is designed to help you develop critical thinking ability and realize the practical power of sound managerial skills for solving problems in your job and career. Read the cumulative case and respond to the questions that follow. Uber’s organizational culture consists of the shared, taken-for-granted assumptions that its members hold and that determine how they perceive and interact with their environment. The culture of a startup is strongly influenced by the values and beliefs of the founder, who tends to hire people who fit this perspective. The Evolution of Uber’s Culture Uber’s founder and former CEO Travis Kalanick had been described as “ego personified”—aggressive, persistent, brash, irreverent, indomitable, even bullying—and Uber’s culture during his tenure reflected some of these characteristics. Former employees recalled a frat-house environment where key accomplishments were celebrated with chest bumps and men participated in push-up contests at their desks. The company’s aggressive culture “spilled out at a global all-hands meeting in late 2015 in Las Vegas,” the New York Times reported, where “between bouts of drinking and gambling, Uber employees used cocaine in the bathrooms at private parties, . . . and a manager groped several female employees. . . . One employee hijacked a private shuttle bus, filled it with friends, and took it for a joy ride.” Uber’s culture is also reflected in the company’s treatment of its drivers. For example, the company advertises a 25 percent commission rate from rides, but if you include Uber’s booking fees, it may actually be earning more than 40 percent. Critics also complain that Uber has employed a global “bait-and-switch,” in which the company lures drivers—who are contractors, or what Uber calls “partners,” and not employees—with attractive fares only to extract ever-larger commissions, as well as invest in driverless technology. Indeed, in one highly publicized incident, Kalanick was captured on video heatedly arguing with a driver, Fawzi Kamel, about lowering prices on fares, which Kamel said hurt drivers’ incomes. Kalanick strongly disagreed, slammed the car door, and told the driver to take responsibility for his own behavior. (Kamel rated Kalanick a 1 star out of 5.) Uber’s new CEO, Dara Khosrowshahi, does not like the culture fostered by Kalanick. Uber had 14 “cultural values” under Kalanick, and it displayed these all over its San Francisco headquarters. Employees were expected to represent these values, which included toe-stepping, principled confrontation, and to “always be hustling.” Khosrowshahi decided to foster culture change by soliciting input from employees and by displaying a more considerate leadership style. “He didn't come in guns blazing,” said Jessica Bryndza, Uber’s global director of people experiences and employer brand. “He came in listening.” Khosrowshahi was convinced that the “culture and approach that got Uber where it is today is not what will get us to the next level.” “One of the first things we did when I started was to crowdsource what Uber employees thought our new cultural norms should be,” Khosrowshahi told CNET. “These norms came from the bottom up, so employees can feel invested and committed to them, rather than having to follow strict directives from the top.” He accomplished this task by soliciting input from employees. They submitted 1,200 suggested values, which were in turn voted on for inclusion more than 22,000 times. Uber developed eight cultural norms based on this crowdsourcing process. These include celebrating differences, encouraging different approaches, and being customer-obsessed. They also include a statement that seems to embody the new leader’s values: “We do the right thing. Period.” These changes represent a significant change in Uber’s culture. However, Khosrowshahi will have to prove that his changes are permanent and reflect sincerely held values in order to win back customers who have deleted Uber’s app, according to the Seattle Times. Uber’s Organizational Structure Unlike organizational culture, which is informal, organizational structure is formal—it is the formal system of task and reporting relationships that enable the company’s members to achieve its goals. Uber’s organizational structure under Kalanick was highly hierarchical, with him yielding tremendous power and micromanaging the ride-hailing giant. There will be significant changes under Khosrowshahi, according to John Dudovskiy of Research Methodology. “Mr. Khosrowshahi will attempt to fix [Uber’s] organizational culture as part of his grand plans to turnaround the business . . . specifically, de-layering of organizational structure may be introduced, removing certain levels of management in order to make the business more flexible to respond to the changes in external marketplace.” Structural changes are also being made via Uber’s board of directors. The board voted to change the company’s overall power structure in October 2017. The measure stripped early investors, such as Kalanick, of some of their influence. Specifically, the board removed special 10-1 voting power carried by stock heavily owned by these early investors. This means that the former CEO’s ability to sabotage or impede changes at the company are diminished.

Today, is Uber more of a mechanistic or organic organization? Why?

Answer 1

Uber is more of an organic organization because of its flexible and decentralized structure followed by its current CEO. Khosrowshahi follows the culture of getting input from employees and displays a more considerate leadership style. He made the employees participate in forming the cultural norms instead of having them formed by the top executives. This made the employees feel more responsible towards following them. There is a flat communication with horizontal interaction and decentralization in decision making. The culture of the company is flexible and adaptable to change.