Question

This part of the Uber continuing case focuses on Chapter 14 and covers principles related to power, influence, and leadership. This continuing 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 continuing case and respond to the questions that follow.

Situational approaches to leadership tell us that effective leadership depends on the situation at hand. This was surely the case at Uber. Uber’s first CEO, Travis Kalanick, used a leadership style that propelled the company to the top of its industry. Unfortunately, his style created problems over time, resulting in his being replaced by Dara Khosrowshahi, a leader with a very different style. Let’s explore the leadership approaches used by Kalanick and Khosrowshahi.

Kalanick Led Uber to the Top

Kalanick took advantage of Uber’s highly ambiguous operating environment. Uber’s workers were willing to follow him from the start due to his use of legitimate, reward, coercive, expert, and referent power. Kalanick also displayed a lot of task-oriented leader behaviors. Some examples:

• Initiating structure. Kalanick focused on performance above all else and fostered an environment in which employees should do whatever it took to gain market share and grow the company. He encouraged risk-taking and gave managers permission to begin operating in new markets as long as any laws they were violating weren’t being enforced. Even when the company’s lawyers began urging Kalanick to balance his desire for innovation with the need for compliance, he continued to encourage managers to focus on growing the business. Kalanick also gained a reputation as a micromanager. If he wasn’t happy with the company’s numbers in a particular city, he would get in touch with the location’s managers directly to set higher growth goals and/or figure out ways to edge out the competition.

• Transactional leadership. Uber’s employees knew they had to perform in order to be rewarded. By 2017 Uber’s culture had grown to one where performance meant numbers, and the only people deemed “top performers” were those working 70+ hours a week—including nights, weekends, and holidays. Kalanick also created an environment where workers’ bad behaviors were ignored as long as they were performing, as evidenced by widespread allegations of Uber’s senior management ignoring sexual harassment complaints.

Things Changed: A Different Style of Leadership Was Needed

By the time former attorney general Eric Holder and his law firm released 13 pages of recommendations for Uber on June 13th, 2017, Kalanick had lost respect from both his workers and the public. In their report, Holder’s committee recommended that “Uber focus on four prevailing themes with regard to taking the following remedial measures: tone at the top, trust, transformation, and accountability.” These four themes all point to Uber’s need for a different kind of leadership than Kalanick was providing—something Uber’s investors clearly agreed with as they demanded his resignation just days after the recommendations were released.

Kalanick obviously had a hard time changing his leadership style to fit the situation. He was known as a rule-breaker, innovator, and a market disruptor. He also acted first, then asked forgiveness for his behavior later. What Uber needed now was someone who could: (1) work with regulators to set precedent and craft rules, (2) refine and stabilize the company and its image, and (3) repair Uber’s damaged relationships.

Uber CEO Dara Khosrowshahi Used Power Right From the Start

Uber’s disillusioned employees needed a leader they could respect as both an industry expert and, more importantly, a human being. Here are some of the reasons Dara Khosrowshahi was able to quickly gain the respect of many of Uber’s workers:

• Referent power. By the time he took over as Uber’s CEO, Khosrowshahi had earned a reputation among his peers as someone who was well-liked and well-respected. Burke Norton, a former Salesforce and Expedia senior executive, said “Dara is the smartest, most passionate and thoughtful executive I’ve worked with in 25 years,” praising Khosrowshahi’s “super high integrity” and calling him “a phenomenal leader—the kind of leader whom people would follow into a burning building.” His cousin Ali Partovi said Khosrowshahi was a perfect choice to lead Uber out of its current firestorm because he “is such a statesman and has been that for decades,” adding that “when he speaks up, people listen to him.” Khowrowshahi had also consistently earned CEO approval ratings over 90% during his time at Expedia.

• Expert power. Khosrowshahi’s work as Expedia’s CEO also gave him the expertise that Uber needed. Arvind Bhambri, a professor at the USC Marshall School of Business and expert on CEO transitions, said that Khosrowshahi’s experience was highly relevant and transferable to Uber’s situation, citing the overlap between Uber and Expedia and adding that “He’s done deals, he’s worked with strong personalities, he’s managed a high-growth company.”

Khosrowshahi’s Leadership Style at Uber

Khosrowshahi displayed a lot of relationship-oriented leadership behaviors after taking over as Uber’s CEO. Here are some examples:

• Consideration. Khosrowshahi’s peers described his leadership as attentive and approachable. “He listens very carefully, he doesn’t take copious notes, but he remembers things,” said Sunil Shah, who worked alongside Khosrowshahi as a VP of engineering at Expedia. Khosrowshahi made public commitments to repair damaged relations with Uber’s drivers. He took turns working as an Uber driver himself, listened to drivers’ concerns, and used their feedback to refine Uber’s app into one that provided a more user-friendly experience and a faster payment process for drivers.

• Empowering workers. Khosrowshahi believed in empowering his team. He said he believed the best way to manage Uber’s growth was to “put the right people in the right places and then you trust them to do the right stuff. It requires a very strong core culture and our core culture is one about being different it’s about valuing the employee and then trusting them to do the right thing for the company and so far it’s worked for us.”

Khosrowshahi Used Transformational Leadership

Examples of Khosrowshahi’s transformational leadership:

• Inspiring workers. Khosrowshahi’s former Expedia employees referred to him as “visionary” and a “thought leader.” One former worker felt “a lot of hope and optimism” when they started at Expedia due to the passion and sense of innovation that Khosrowshahi and the other executives seemed to exude. In discussing concerns over passenger safety in light of events that had taken place under Kalanick’s leadership, Khosrowshahi expressed his vision for regaining the public’s trust, saying “The predators in life look for dark corners. Our job is to tell the world that Uber has its lights on.”

• Expressing high ideals. Khosrowshahi has encouraged young people at the forefront of their careers to “go to a place that is making a difference in the world.” In discussing his decision to leave Expedia for Uber, he said “This is a company that I believe is important for the world. This is a company that is providing opportunities for 3 million driver partners all around the world and I believe that we will be a fundamental part of transportation and mobility in cities everywhere.” He was also praised for his support for reunification of separated immigrant families. Khosrowshahi and his mother and siblings were separated from his father for six years after immigrating to the U.S. during his childhood, and he expressed his support for immigrant families passionately and publicly in 2018. He pledged company money, encouraged employees to donate and speak out, and deployed Uber’s legal team to partner with law firms that were working pro bono to assist with family reunification efforts.

1. Kalanick’s way of leading was one that focused on doing whatever it took for his company to succeed, or ________ power, whereas Khosrowshahi’s way of leading is focused on growing and inspiring employees, or ________ power.

Multiple Choice

• socialized; personalized

• personalized; minimized

• maximized; socialized

• personalized; socialized

• socialized; minimized

2. One influence tactic that Khosrowshai is able to rely on for getting buy-in from Uber employees is ________, which is centered around his effort to listen to and make changes based on employee feedback.

Multiple Choice

• inspirational appeals

• consultation

• exchange

• ingratiation

• coalition tactics

3. Which interpersonal trait is most exemplified by Kalanick’s willingness to push managers to operate illegally as long as laws in a particular city weren’t actually being enforced and allowance of bad employee behavior as long as it was cancelled out by good performance?

Multiple Choice

• extraversion

• Machiavellianism

• emotional intelligence

• narcissism

• psychopathy

4. When it comes to empowering employees, both Kalanick and Khosrowshahi have ways of doing so, albeit two different ways. Kalanick was only focused on leading for ________, whereas Khosrowshai does so in many ways while primarily focused on leading for ________.

Multiple Choice

• competence; self-determination

• meaningfulness; competence

• progress; meaningfulness

• self-determination; progress

• self-determination; competence

5. According to the revised path-goal theory, into which of the eight leadership behavior categories does Khosrowshahi’s ability to listen to the needs of employees most directly fall?

Multiple Choice

• achievement-oriented

• path-goal clarifying

• value-based

• work facilitation

• supportive

Answer 1

Q1) Answer is - d) personalized; socialized

Kalanick used personalized power i.e. anti-social , coercive, purely result oriented without any concern with the employees well-being.

Khosrowshahi's focus is socializing, ensuring employees are benefited along with the company, relationship building with employees and parterns etc.

Q2) Answer is - b) consultation

Consultation involves listening to employees and making changes based on their feedback.

Q3) Answer is - b) Machiavellianism

Deviating from rules and compliance to achieve self goals through deceipt, manipulation and exploitation.

Q4) Answer is - c) progress; meaningfulness

Kalanick's primary focus was progress and achievements whereas Khosorowshai's focus is meaningfulness.

Q5) Answer is - e) supportive

Listening to employee needs and preferences falls under supportive leadership category in the revised path-goal theory.