May 21, 2024

No acting CEO at Uber, no problem?

Uber has bucked convention from the outset, so it wasn’t entirely surprising when, earlier today, company cofounder and CEO Travis Kalanick announced that he’s taking a leave of absence from his San Francisco-based ride-hailing juggernaut —  without naming an interim CEO or disclosing a return date.

Instead, Kalanick told employees, the company will be run by his direct reports. Meanwhile, owing to the results of a probe led by former U.S. attorney general Eric Holder — who was hired to look into allegations of harassment, bullying, and discrimination at the company — some of Kalanick’s responsibilities will be shared or given outright to other senior executives when he does return.

Of course, it all begs the question of how long a 12,000-person company that’s valued at between $60 billion and $70 billion can operate without an active CEO.

Jeffrey Pfeffer, a renowned professor at Stanford’s Graduate School of Business who has written extensively about organization theory, suggests the answer is, pretty long, particularly given that Kalanick will still have his hand in executive decision-making.

“My sense is that most of what Uber has done is to ‘signal’ that they are changing,” says Pfeffer. “Whether they are [truly implementing change] is another matter.”

Consider: If there are disagreements between sales and operations, who will settle them? If one of Kalanick’s direct reports threatens to quit or takes another job, who has the authority to fill that role? Assuming Uber’s COO search continues, who is doing the interviewing? If it’s Kalanick — who said today that he’ll “still be available as needed for the most strategic decisions ” — then he’s not really taking a leave.

Still, Uber had to do something, says one well-known crisis communications expert who asked not to be named. “As long as Travis was in the CEO role, the company would continue to be the focus of media attention and would be likely the focus of criticism. I think this maneuver puts an end to it, because the focus of all that media criticism is now gone.”

Uber’s move isn’t entirely unprecedented — though it comes close. Pfeffer notes, for example, that it’s not uncommon for CEOs to take a leave of absence, pointing to Oscar Munoz of United Airlines, who took a leave of absence in 2015 to have a heart transplant, and who returned to the role in 2016.

Another CEO who recently took a leave of absence: Ron Wainshal, the CEO of the commercial aircraft leasing company Aircastle, who was granted time away in January to focus on his health (and who announced yesterday that he’s now resigning entirely to “focus on a speedy recovery”).

Of course, both Munoz and Wainshal stepped aside for medical reasons. Jeff Cohn — a succession planning expert at the New York-based leadership development firm Elevate Partners —  says he has never before seen a CEO step aside when there wasn’t a medical reason for it.

“Perhaps it has happened,” says Cohn. “But I can’t think of any high-profile situations where a board has encouraged its CEO to step aside in the context of becoming a better leader.”

There’s a reason for that, says Cohn, who claims it “doesn’t work. You can take a week-long executive leadership course on empathy or resiliency, but you don’t develop these skills in weeks or months. It takes years to address fundamental leadership issues. Anything else is window dressing.”

In fairness, says Pfeffer, Kalanick has likely been “knocked a little off kilter” by the unexpected passing of his mother in a boating accident late last month. “Surely that “profoundly affected his family, on top of all the media blitz,” he notes.

Yet a far stronger motivation for Kalanick not to name an interim CEO, presumably, is to minimize the possibility of a power struggle upon his return. Says Pfeffer, “His return is more certain as there is no one ‘in the role.’”

Only time will determine the impact of that decision. For his part, Cohn thinks it’s a mistake. “Leading from the shadows when you’re such a powerful founder —  it won’t work. [Kalanick’s direct reports] will always be second-guessing themselves now and wondering what Travis would do in a particular situation. Even if he’s not physically there, they’ll be wondering if they have to get his approval. It’s a terrible way to lead.”

Ultimately, says Cohn, “I think the board and even Travis will figure out that they need to get an interim CEO in there.”

Pfeffer disagrees wholeheartedly.  “Yes, some senior friends of Travis are gone, and some people he hired have left.  But my forecast is for the company to push along.  Some things with respect to the culture, and particularly their treatment of women — and customers — will and should change,” Pfeffer says. “But Uber is going to be Uber, mostly because it is actually not that different from many of their brethren.”

Either way, it seems increasingly likely that unless Kalanick has a massive charge of heart, it may prove impossible for dislodge him from his role. Not only does he have a famously hard-charging personality, but he has super voting rights that protect his position. As the New York Times reported this morning, Kalanick has also separately established a mechanism through which he garners more control every time an employee sells some shares.

That kind of foresight is what’s turned Uber into such a valuable company; it has also rendered Uber’s influential board members somewhat powerless.

“Ever since the Steve Jobs saga at Apple, Silicon Valley founders have tried to make sure they won’t have a similar experience,” Pfeffer notes, “and for the most part, they’ve done exceptionally well at that.

The idea that a strong founder like Kalanick would be be pushed aside? It was always far-fetched, says Pfeffer, adding: “Ms. Holmes still runs Theranos, in case you didn’t notice.”

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