Fixing Organizational Culture with a System Reboot
Taking our company to the next level for its 2019 edition we have faced some serious organizational culture challenges that lead us to a system reboot. This had me rethink the two companies that look like they are having the same challenges on a much higher scale: Uber and Microsoft. Their recent activities show that they are also experiencing a system reboot on their core organizational culture. Obviously I tried to put Iran and Iran’s organizations aside to learn from companies far far away!
Uber announced the appointment of a new CEO. Dara Khosrowshahi, the former boss of Expedia, has taken on the task of salvaging the reputation of the ride-sharing company and aspiring fraternity. Uber has been mired in scandals over the past few years and is positions as the pre-eminent exemplar of the strategic blind that many technology companies endure: to dominate a market it’s necessary to services at a loss. Uber towers above the competition across the world, but it does so at a cost to investors – $2 billion in 2016 and more than $645 million in the second quarter of 2017.
Yes, the technology company that’s cited as one of the most transformational startups of the mobile era is losing as much per year as Google pays to Apple in order to remain on the iPhone, a move with a clear ROI, given the contribution iPhone users make to Google’s search revenue. Turning Uber around is a huge task – its reputational challenges pale in comparison to those of its business which depends on finding ways to limit losses. It’s experimented with this in operational ways, for instance merging with Yandex Taxi in Russia, but the move to profitability is likely to depend on a momentous maneuver, such as partnering with an automotive manufacturer or deploying anonymous vehicles at scale.
Khosrowshahi’s to-do list will be long, but he might want to carve out some time to thumb through Hit Refresh, a book out last month by Satya Nadella, Microsoft’s CEO. Nadella, a long time executive at the Seattle-based company ascended to the top job in February 2014, when the company was in decline. Its products had lost their luster and the company’s internal culture has reportedly become toxic. Executives fought turf wars, sabotaging each other, and some internal practices were resented by employees; the most storied “stack rating”, evaluated teams in groups of ten – nine would pass with two given high ratings and one deemed to have failed. Nadella sought to redefine the culture while giving it a clear sense of purpose: he opened Microsoft up to working with outsiders and he’s made some big bets on technologies such as cloud, AI, mixed reality and quantum, which he thinks will define the future.
There have been missteps – the offer of unlimited, free storage on OneDrive proved unsustainable – but Microsoft has largely arrested what could have been a decline into irrelevance and has found new revenue models. Uber’s investors will be watching to see whether Khosrowshahi can pull off a similar feat at Uber.