The Rise and Fall of "Uberization"

Businesswoman using cell phone

As Uber became the poster child for digitalization over the last few years, the call from Mercer clients has been: “How do I Uberize my business?” Has the shine finally worn off this cheeky challenger, or are we waking up to the true challenge of operating tomorrow’s business in today’s environment?

As I am sure you’ve heard, Travis Kalanick has been ousted as CEO of Uber. This comes on the heels of controversy over workers’ rights in the UK and sexism claims in the US. Closer to home – for me here in Hong Kong – 22 Uber drivers have recently been arrested for lack of compliance. For a company that’s leading the charge, we’d expect the path to be littered with challenges, but serious questions are now being asked about the sustainability of Uber’s culture. And there is a broader question at hand regarding how ready we are to embrace digital business models at the government level. This won’t be the first of the new challenges to how we do business, so what does this mean for the quest to digitize and what lessons will this next chapter in “Uberization” add to the story?

5 lessons for digitizing your business:

  1. Take a chance now, and ask forgiveness later. It’s easy to get caught up in the negative press around their recent troubles, but let’s not forget that Uber disrupted an industry through always-on technology that delivered unprecedented traveling convenience. In addition, Uber is providing work to a swath of the population that might not have an opportunity to contribute so readily – students, returning mothers, retirees, etc. – and this is material. Uber would not have been built without the vision and chutzpah of its leader. The tenacity and confidence to capture a new reality propelled the business forward and they didn’t take no for an answer when faced with trouble. Scale and speed matter in a digital world. And this attitude not only secured first mover advantage, but built coverage fast by identifying complimentary needs in society.

2. What got you here won’t get you thereThe leadership skills needed for a startup are vastly different from those required of a business that is established. With the rapid growth of digitally-enabled business models, we may need to rethink the roles needed at the top of the house as the traditional Board structure might also not be quite right to maintain a new company’s momentum. Tech leaders and business visionaries are critical to pivoting quick and growing rapidly, and we need to create space for them to continue thriving when we bring in seasoned functional experts.

3. Culture is the fabric of change. Culture starts with the leader, but preferred ways of working need to be embedded in the fabric of the organization to ensure success past the founder’s reach or tenure. Near-term growth needs to be balanced with future success and this is where diversity, inclusion, and innovation matter. The key is to retain the best parts of the company’s “origin story” while shedding the values that are no longer congruent with the type of business it has become or wants to become.

4. Reputation costs are complex. There is speculation that Uber’s recent changes at the management level are being driven by a desire to protect their valuation given a future IPO. This may be true, but the cost of reputational damage is already being felt. Today Uber is no doubt paying over market value to retain their top talent. Mid-term, any shift in value (when private) and shares (when public) will hurt investor confidence; and longer-term, failure to attract the best talent or update Talent Management systems to reflect a new value structure will stunt its growth.

5. Keep the customer at the heart of change. Uber built its reputation on disrupting the existing business transport model. Customers have flocked to Uber’s convenience of ride-hailing and direct payment model – it’s a blueprint others are now emulating (Lyft, Didi Chuxing, Careem). Remaining relevant rests on constant customer insights, because if the service/product delights your customers, you understand their digital journey, and you are ready to adapt and pivot to meet their future wants and needs, you will likely be afforded a long leash.

Kate Bravery
by Kate Bravery

Global Advisory Solutions & Insights Leader at Mercer

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