The controversy surrounding Uber and those claims of its being a toxic "boys-club" culture finally culminated last week: As everyone now knows, the company's founder and CEO, Travis Kalanick, resigned.
Known for his aggressive, brash, larger-than-life personality, Kalanick had led the company to quick success -- but at what cost? And was it worth it? Uber's and other cases of bro-culture behavior have led to a larger conversation in Silicon Valley about the damage that “brilliant jerks” can inflict.
After all, aggressiveness is an important trait for startups. Yet, at the same time, an attitude of “win-at-all-cost” must be tempered by respect --- not just for employees, but also for customers and the community. Simply put: When the values of winning and respect conflict, respect should rule.
Startups have a massive advantage over established companies in this regard: They don't have a legacy business they need to protect. But they also have a significant disadvantage: limited resources and, typically, entrenched opposition, plus the rigors of a regulatory wall built up around the company's market.
As a result, the standard playbook for a startup calls for it to disrupt an established market with a solution that sneaks in under the regulatory radar; this usually entails a material economic advantage over the legacy approach. Such startups find it easy to win over customers who feel disenfranchised because of cost or service-quality issues with the established vendor.
Challenges, however, remain: "Winning" takes a compelling vision, single-minded focus, courage and perseverance, as well as a force of will that can overcome obstacles.
Unfortunately, these valuable characteristics of startup founders are often mixed with less laudable traits: an unwillingness or inability to listen, a win-at-all-cost attitude and no small amount of ego, or hubris. Critically, young leaders often surround themselves with people who lack the experience or strength to reject inappropriate behavior in the boss. Worse, these associates may use their leader’s poor example as their own model for acceptable behavior.
Where things really go south is if the startup is successful in the marketplace and with its investors. In that type of scenario, questionable leadership behavior is often excused as a “necessary winning ingredient” and feeds on itself, creating a pervasive toxic culture as the organization grows.
No one wants to tell the boss.
No one feels empowered enough at that point to tell the boss that he or she is exceeding acceptable norms; and in any case, the leader usually won't tolerate critical dialogue in the first place.
He or she also may not be up to criticism, personally: Finding a balance between brashness on one hand and respect for others on the other takes experience, maturity and the ability to listen.
Not that startups that initially tolerate brilliant jerks are doomed. Here are some best practices -- behavior-moderating tactics, actually -- which, in my experience, lead experientially and demonstrably to better results.
Institute gender diversity in leadership.
With gender diversity in leadership, it is far less likely that a company will develop bad culture. In short, the company puts women in senior positions. Women seldom tolerate the bro-culture behavior born of the locker room. Back when I was at IBM, I recall how all the inappropriate behavior exhibited by my male colleagues (myself excluded, of course!) came to an embarrassing halt when we got our first female boss.
Make smart moves with your chain of command.
First off, separate the chairman and CEO positions. Give the CEO a strong coach who can guide the company's culture development without interfering in the running of the business.
Also: Consider a two-in-box CEO structure to give your new CEO the comfort of a peer sounding-board for advice and counsel. When Business Objects was acquired in 2008 --and when, as CEO of the company I became a member of SAP’s executive board -- I learned the wisdom of this strategy.
The strategy went forward in the context of SAP’s corporate governance system. We had a great structure for collaborative and engaged decision-making. SAP's co-CEOs acted as co-chairs of the executive management group, with one focusing on product and the other on field matters. While this perhaps slowed the decision cadence, it provided a check on these individuals' respective egos and was excellent in terms of generating alignment and focus.
Make “respect for the individual” a core business value.
Ask employees and customers for feedback on their perception of the company’s performance on this point. "Respect" means: taking the time to understand different views, tolerating constructive dissent, giving people a chance to speak up, delegating authority and responsibility, having objective measures for the health of the company culture and not destroying people’s self-esteem by delivering negative performance reviews in a public setting.
This was a lesson I learned as a junior leader in a very experienced management team at IBM. It would have been easy for my seniors to ignore or denigrate my feeble efforts at participation, but I was never made to feel inadequate. When I was wrong, they took the time to explain why. Forty years later, I still consider this my most impactful learning experience.
Remain aware of feedback.
Invite outsiders on to your board.
Have a strong, diverse, and independent board of directors that looks beyond the business results. In the long run, poor company culture will destroy even the best strategy. In start-ups, the board usually consists of founders and investors. When an outsider is introduced -- perhaps a partner or a customer -- that move brings a new perspective on the business and its culture.
The older the company, the higher the ratio of independent outside directors it should have. I founded Visier in 2010 to transform business analytics, starting with the HR function. Initially, our board was composed of two founders and investors. However, in 2014, we asked the chief human resources officer (CHRO) of one of our most sophisticated customers to join the board.
This was Gabrielle Toledano, then the chief H.R. officer of Electronic Arts. Today, Toledano is chief people officer at Tesla. With this impressive background, she has been able to help us look at our business from the outside in, providing a vital perspective.
Plan on a CEO transition.
Finally, develop a 5-to-10 year CEO transition plan. CEOs over time tend to become overconfident, start believing their own PR and stop listening. When that happens, it's time for the CEO to go. I see this in myself -- and I continuously have to force myself to open my ears and eyes to how others see the company and our culture. Thankfully, in our culture, telling the CEO that he "has no clothes" is a normal daily practice!
Despite the advice I lend here, I never want to come across as holier than thou; I am far from perfect. But I have been a successful business leader for more than 40 years and hope that this experience gives me some credibility to express an opinion on the issue of leadership behavior.
The effort a leader puts into establishing a culture of respect within the company will be reflected in the relationships developed with customers and he greater community. And relationships are key to helping set the organization up for long-term success, in good times and bad.