The Missing Link At Uber: Ethics, Innovation, & Conscious Capitalism

By Jeff Cherry 

For the last few months at the Conscious Venture Lab, we’ve been having discussions about Uber. The “uber” successful transportation app has changed the way we think about getting around in cities, and the innovation has already turned the brand into a verb. In fact, I Uber all the time. Despite its success, there has been a significant backlash against the company that speaks to something much deeper than the competitive ire of local taxicab drivers.


An Uber Mess

The media and regulators have not been good to Uber lately, yet the ride sharing service’s customers continue to propel Uber’s profit margins upwards. Can the company’s fortunes continue to rise amongst this scrutiny and pressure? Of course they can, but for me this begs the question of, how much better could the company be, how much more value could it be creating if only it paid as much attention to innovating on its cultural model as it has on its competitive model?

Those who drive their own cars, take public transportation, or rely on “old-fashioned” (read: regulated and thoroughly insured) taxi cab services may have only had a passing familiarity with San Francisco-based Uber before the company started making headlines for all the wrong reasons. Naturally, taxi drivers, who are strictly regulated and are Uber’s most direct competitors, have voiced plenty of disdain for the startup. Much worse, alleged sexual assaults in Chicago, New York, Boston, and Delhi have called into question the safety concerns involved with taking rides with strangers.

And the basic issue of whether Uber’s services are even legal has locked the company out of countries like Spain and Belgium, cities like Hamburg and New Delhi, and the state of Nevada, where Uber has been banned. Add to the mix accidents where Uber drivers were under- insured, and the company is facing a recipe for disaster if it doesn’t make some changes - or at least respond to these legitimate concerns with a bit more maturity and a little less arrogance.

Uber’s PR response to these incidents has been underwhelming at best. Technically, it has made some minor additions to the app like a safety checklist for riders in Boston and Chicago reminding riders to make sure the license plates and driver match the one they requested upon arrival. In other words, Uber has lobbed the responsibility of safety back to its customers.

But Uber’s worst offense of all came to light during the recent tragic events in Sydney, when a terrorist took 18 people hostage in a café. The 16- hour ordeal ended with two hostage deaths and four others injured - and Uber making more money than ever, thanks to its “surge pricing” model. During the day, as panic-stricken Sydney residents tried to flee from danger, Uber’s prices surged to as much as $100 per ride - quadruple the company’s normal rate. Instead of apologizing, Uber defended itself, saying the price surge was not gouging and that its purpose was to attract more drivers to the scene.

"Truly successful companies are great because they’ve found a better way to create value for everyone and a better way to treat all of their stakeholders."

 

The Real Price of Innovation

For the record, I’m not attempting to write another article just to bash Uber; it has made itself an easy target and that’s been done. Honestly, I think the company will eventually get this right. But the long list of offenses by Uber represents more than just bad behavior - it represents bad business. Sure, the company has disrupted the transportation industry, but it seems this “disruption” has come without a sense of organizational ethics. It’s my belief that innovation, unmoored from organizational purpose or ethics, leaves space for many bad things to happen. This seems to be the case with Uber and, as such, its experience gives us a case study from which to investigate how purpose and profit tied together can create truly world- class companies.

Innovation for innovation’s sake has been a longtime driver for Silicon Valley. However, simply being innovative is no longer enough - the winners of the future will be those companies that understand how to engage all stakeholders by “out-behaving” the competition.

Even innovation that helps solve societal problems like road congestion and carbon emissions (which Uber certainly can affect with products like Uber Pool) will begin to fall flat if companies don’t also understand that social capital, driven by ethical behavior and the power of real relationships, will be an incredible driver of value in the future.

This is the power of Conscious Capitalism. When we as businesspersons endeavor to deliberately create purpose-driven and stakeholder- focused companies; when we do the incredibly hard work it takes to become conscious leaders and build a corporate culture that is authentic, transparent, empathetic, and engaging; in other words, when we remove the blinders of shareholder centricity, not only can we be more innovative, but those innovations come with ethical leadership that consistently pushes the organization to elevate the humanity of our stakeholders, not treat them with disdain and disrespect.

As a participant in the entrepreneurial ecosystem, we see too many start- ups chasing investment capital and building lean business models, but not considering the tenets of Conscious Capitalism as they strive for growth and innovation. They fail to grasp what seems to be an emerging truth, that purpose and social capital will be the true value drivers in the future.

The backlash against Uber is real, and the company isn’t handling it well because it doesn’t seem to understand this idea. So far, its response to the issues mentioned above has been ham- handed. It is as if the company believes the innovation itself should suffice. As societal forces continue to influence how we decide what companies to work for, buy from, partner with, invest in, and allow into our communities, innovation itself simply isn’t going to be enough to create great and enduring companies.

Truly successful companies are great because they’ve found a better way to create value for everyone and a better way to treat all of their stakeholders. This is not simply about the regulatory backlash that Uber is facing. Some of that is driven by competitive fears and it is clear that Uber is a fierce and formidable competitor for the taxi market. My advice to the taxi companies is to do a better job and rise to the challenge of competition - it always makes us better. Some may say Uber is trying to skirt regulations, but it’s my belief that that situation will find its own remedy.

As an early-stage investor and director of an accelerator, I spend an inordinate amount of time thinking about how we integrate training on ethics, purpose, culture, authenticity, and transparency into the work we do with our portfolio companies. It’s my belief that venture investors and the growing accelerator industry need to start thinking about these issues as well. Once the negative headlines have been made and the lives of real customers and employees have been affected, it’s much too late for a company to try to “correct” its way back to being a good company. The mindset of Conscious Capitalism needs to be baked into startups - their people and their culture - from the very beginning. Uber profits just aren’t enough - we should be striving for uber ethics, too.


Jeff Cherry is the Founder and Executive Director of the Conscious Venture Lab, an accelerator and VC fund for conscious entrepreneurship. He is an evangelist for the transformation of capitalism, attempting to bring whole brain thinking into the realm of business creation and a more human-centered form of investing. www.consciousventurelab.com 

This article appeared in Issue 2 | Spring 2015

To see more stories like this and features on innovative disruptors such as Chip Conley, Kimbal Musk, Plum Organics, Rocky Mountain Institute, and more - purchase Issue 2 online!

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