DIGITAL TSUNAMI. Slow down and build culture

In the cruel world of Silicon Valley, there are no permanent heroes or villains. There was a time when everyone scoffed at Facebook’s plans for world dominance. Today the Menlo Park-based social media network represents 11 per cent of the market cap of all publicly traded US software companies. In 2007, Facebook was making a loss of $153 million. Ten years later, it has a net income of $10 billion. In the past Zuckerberg’s motto of “move fast and break things” was seen to be the reason why he was making losses. Today the same line is seen to be inspirational.

Meanwhile, cab aggregator Uber has ridden the full circle from being ridiculed to worshipped to demonised. As someone quipped on Twitter, “Now that Uber doesn’t have a CEO, COO, CTO, or CFO, I guess this is the closest it has ever been to a self-driving car company.” On Tuesday, even the Uber CEO resigned. Today people may laugh at Uber’s meltdown, but there is no denying that taking a company from zero to $70 billion market cap may offer insights into the leadership model. We Google stuff but we don’t Bing. We “Uber” it, rarely Ola it. Why?

Every pain point is an opportunity to build a business model. Uber discovered that taxi companies will limit the supply of taxis as the fundamental way to keep prices high. Uber did not introduce just another low-priced taxi service, it reimagined the consumer experience. The business model was a natural corollary. Once the prototype was ready, it was ruthlessly replicated.

Uber enters a country, ruffles a few feathers and then takes over. Some cities put up a fight, but the consumers encourage the lawmakers to make way for convenience. Uber now employs 10,000 full-time (non-driver) workers and operates in over 500 cities in 70 countries. Its culture laughs at people who expect work-life balance and don’t work long hours (weekends included).

Startups often have a short-term objective that drives them. It could be all about getting the next round of funding, going public or just getting to a million paying customers. But goals need to be audacious. Companies such as Uber and Facebook think of everything in multiples. Timelines are shrunk. When users complained that the customer service part of the app was slow, Uber set a goal to make it 50 times faster in a week.

During this phase, employees experience chaos and burnout. This is the business-building stage. Human Resources teams just have to ensure that they keep hiring people faster than they leave. Those who stay need to be paid. They need business builders just to stay afloat. But this is also the stage when the organisation needs to rethink its structure and boundaries of culture.

Uber’s misery is proof that people issues and culture are as important as business challenges. Startup founders must leverage HR to build culture – not just manage hiring and compensation. In a world where talent has moved centre-stage, letting culture grow like weeds in a garden is a dangerous strategy as the Uber saga proves.

In the digital business canvas, opportunities can appear and disappear in the blink of an eye. Businesses must be able to shadow the shifts in the market and respond with speed to changing opportunities. Having the right organisation structure and people with the right skill set determines the speed of the organisation. Most new businesses do not create organisational structure and processes that will enable them to execute faster.

Organisations need to have a stable base that enables them to pivot effortlessly. When the leaders take time in the early stages of a startup to lay the foundation for a strong culture, the employees know the “strategic intent” of the leaders. They can reach the same decisions that the leaders would have taken. They do not need to check back. They can respond and pivot in real time.

The strength of any firm’s culture is tested when it scales up. Away from the headquarters, can the outposts let local talent take up leadership roles while the invisible watermark of the company culture and values remain a guiding post?

Airbnb is a company that hires people who share the same values. Its hiring process is designed for this.

The first round is meant to assess how well candidates can come up with a product, develop a plan to build it, and work with team members to create it. In the second round candidates solve a real problem the team is facing, followed by up to seven 30-minute interviews with individual team members.

Finally the divisional leader and two employees carry out “core value interviews,” designed to find people who share the company’s mission. Culture fit is another reason that enables people to feel empowered in an organisation.

Startup founders spend too much time on being business builders and not enough on becoming organisation builders.

The role of HR in firms striving to win in the digital arena is to go beyond tangible elements such as hiring and payroll to organisation design and culture. When done right the payoff is speed, agility and scale.

Uber is trying to fix what it should have done when it was a company with twenty people in a garage thinking of creating a ride-sharing app.

That is when the CEO should have hired a top-notch maverick CHRO who would have implemented an inclusive culture, put in place a policy for whistle-blowing, created a diverse workforce, hired a leadership coach for Travis, and so on.

Uber has to do all of these and more.

Who knows, if it had done that it may have made them the world’s most respected unicorn yet. But wait, we do not have such an award yet, do we?

(Abhijit Bhaduri is a coach and leadership development consultant)