CNV3-I1-3-Leadership

It is not very uncommon that many leading businessmen and rising start-up entrepreneurs circumvent governance and ethics to earn short-term gains.  The business world has witnessed numerous instances whereas big successful leaders have fallen from the top with shameful injuries.  In India, two notable incidents resulted in SEBI charging and punishing Ramalinga Raju of Satyam Computers and Subrato Roy of Sahara Group for their disgraceful misdeeds.  Leaders many times indulge in mis-governance and unethical practices in their insatiable quest to usurp their rivals.  The desire to nudge others to get into number one position at times becomes addictive.  The men at the helms, often, tend to ignore the future consequences resulting in patronizing undesirable practices.  Ramalinga Raju’s manipulation of accounts to enhance share values of the company and Subrato Roy’s propensity to garner unaccounted money to accumulate more funds still remain fresh in the minds of financial investors.

International taxi aggregating company Uber and its founder Travis Cordell Kalanick got embroiled in controversies in the recent past.  Kalanick a well admired techno-savvy entrepreneur, who founded Uber, had to resign CEO position on account of alleged unethical practices.  Uber’s senior executives reported having developed insidious software that could delete all data from the host country if governments attempt to capture data for any investigations.  Uber as a successful taxi aggregator nursed the lofty ambition of rolling out driverless cars much before Elon Musk’s Tesla cars.  On investigation, it was found Uber had hired a top executive from a rival company who stole trade secrets from his past employer.  World over, Uber got many admirers in the form of taxi travellers, drivers and other operators because the firm has indeed made many regular day-to-day travellers’ journey quite easy.

Imagine a typical traveller’s earlier life in the city like Mumbai.  Hailing a taxi for a short distance was an ordeal task.  Private taxi drivers often refuse to take passengers; and much to the chagrin, these unprofessional drivers demand exorbitant fares. The conditions of the taxis were pathetically unclean.  This was the daily chores of Mumbai taxi hailers before the arrival of taxi aggregators like Uber and Ola.  Around the globe, many cities like Mumbai must have witnessed the same ordeals.  And, therefore, regular taxi users have given big thumbs up to all professional online taxi start-up companies.

Kalanick and his team have solved miseries of million travellers.  But they failed to live up to the ethical standards to take the company to the next level.  Sometimes, following certain principles and ethics could be quite frustrating and intriguing.  Narayana Murthy, the founder of Indian software giant Infosys Ltd, has recounted many of his struggles to come out from unscrupulous Indian customs officials at the time of importing computer hardware machines.  Narayana Murthy and his co-founders faced plenty of ethical dilemmas at many critical decision points.  But legend says they were very strong in their ethical conduct and practices at times losing short-term gains.

Back in Uber’s case, it looks like the firm’s hunger for growth has preceded many ethical practices.  Instances reported when Donald Trump declared his devious foreign policy of banning entry of people from selected Muslim countries; many taxi operators boycotted their services from airports in support of mass protests again Trump’s anti-Muslim policy. Uber allegedly misused this occasion and reportedly informed all passengers around the airport that it has done away with surge pricing policy to accommodate travellers.   The Surge price policy is a scheme used by Uber and other competitors to increase the fare at peak time whereby the company charges the higher price to accommodate desperate travellers.

Competition among the same industry becomes intense when each one tries to nudge the other player from the dominant position. Tactical aggression and strategies are indeed essential requirements for all successful companies.  But when the tactics and aggression raise ethical issues, the same tactics and strategies will impede the growth.  While millions benefit globally from Uber's services, strategic thinkers and governments are concerned about its shady practices. When Uber faced another competitor Lyft in the US, Uber booked numerous taxis of Lyft and cancelled the trips to damage its operations.  Also, Uber allegedly poached many Lyft drivers much to the annoyance of Lyft’s key investor Peter Thiel.

Globally, Lehman Brothers, Enron and many companies have paid a huge price for their unethical practices Thereafter many leading B-Schools have brought in Ethics and Governance courses in their curriculum architecture predominantly to imbibe ethical values.

It is natural to admire any technology disruptor who alleviates the miseries of many consumers by bringing a new product.  Kalanick was such a celebrity who enjoyed stardom status among millions. Suddenly all these alleged stories have thrown mud on his face.   A leader plays a vital role in steering his company with ethical practices.  Industry analysts suspect Uber could not have done all these misdeeds without the blessings of Kalanick.

A bad example for budding business leaders!

Dr.C.Babu - Director, Durgadevi Saraf Institute of Management, Mumbai