We learned last week that Jeff Immelt is a front-runner to be the next CEO of Uber. There are many reasons to be concerned about this possibility.
Uber has received nothing but bad news for a while now:
- There was regular sexual harassment of female employees that was ignored by HR
- Lawsuits have been filed claiming Uber’s self-driving car technology violated Google’s Waymo patents
- Claims that rapes by ride-share drivers were dominated by Uber
- Claims that Uber’s self -driving cars are unsafe
- Claims Uber price-gouges customers
- Amid claims the company culture is out-of-whack a host of execs were fired
- An Uber driver killed 6 people, wounded 2 others while picking up fares in Michigan
- Uber’s CEO is filmed berating an Uber driver
- Uber’s CEO is forced to resign as the board loses faith in his leadership
But the stakes are incredibly high. Picking the wrong person at this moment could well lead to a horrible long-term outcome. While meeting short-term needs sounds like the #1 goal right now, for Uber to succeed means putting someone in the CEO job who can guide the tech company through a decade or more of tough decisions in a fast-paced market. Other boards have suffered horribly from making this decision hurriedly and poorly.
Remember the CEO turmoil at Yahoo:
- Yahoo was an early leader on the web, first in search, content distribution, on-line sales and advertising under CEO Tim Koogle from 1995-2001.
- Due to controversies (remember when he sold Nazi memorabilia?) he was replaced by proven media exec (25 years at Warner Brothers) Terry Semel from 2001-2007. He’s the one who missed the opportunities to buy Google and Facebook.
- Worried the company needed more pizzazz to catch leapfrogging competitors, the board brought back founder Jerry Yang for 17 months (2007-2008).
- When sales didn’t improve the board brought in brash, blunt speaking Carol Bartz, CEO of Autodesk, to turn around the company (2009-2011.) After months of cost-cutting but no sales improvement, she was gone.
- In January 2012 the board hired the President of Paypal, Scott Johnson, as CEO. But 5 months later he was fired for lying on his resume.
- Amidst a need to find someone to lead the company long-term, in 2012 the board hired Google darling Marissa Mayer as CEO. She left when Yahoo dissolved.
Or how about Twitter:
- From 2007-2008 Jack Dorsey was the founder who drove growth and early funding.
- Dorsey was replaced by Evan Williams (2008-2010) who was to supply a steadier, more seasoned hand at the top.
- Looking to grow and go public, the board replaced Williams with Dick Costolo (2010-2015). Although the IPO went well, lack of investor enthusiasm led to stock weakness.
- In 2015 Costolo was replaced by the returning Dorsey. He supposedly would rejuvenate the company. Since his return the stock has dropped about 50% amidst concerns regarding insufficient user and revenue growth.
But this is not a new problem in tech. Remember the CEO litany at Apple:
- Apple’s first CEO (1977-1981) was Michael Scott from National Semiconductor, brought in to support the inexperienced Steve Jobs and Steve Wozniak. But he was unable to get along with the founders, and built a reputation of firing those he didn’t like.
- Mike Markkula, Apple’s early investor and 3rd employee, replaced Scott as CEO from 1981-1983.
- Hoping to put someone with a better pedigree, more big-company experience and a steadier hand in the top job, Markkula hired John Sculley (former Pepsi CEO) to Apple’s top job in 1983. Markkula agreed with Sculley to fire the mercurial Jobs in 1985. Sculley remained CEO until 1993, when he was removed as Apple lost the war with Microsoft for corporate desktops and sales tanked. Sculley, the much heralded, experienced corporate leader, ended up ranked the 14th worst CEO of all time by Conde Nast Portfolio.
- The board replaced him with insider Michael Spindler (1993-1996) who tried to sell Apple to IBM, Sun and Philips, but failed.
- Spindler was replaced by Gil Amelio (1996-1997) former CEO of National Semiconductor, who was considered the kind of mature, dedicated leader Apple needed. As Apple shares slumped to all time lows, he bought Jobs-owned NeXt.
- Jobs (CEO 1997-2011) succeeded in convincing the Board to fire Amelio. Jobs subsequently fired the board. The rest is well documented.
Jeff Immelt is no Steve Jobs
Clearly, Uber’s board needs to find a Steve Jobs. And by all accounts, for all his skills, Jeff Immelt is NOT a Steve Jobs. During his tenure as CEO of GE things might have been boring, but the company also lost a third of its revenues, and a third of its market cap. After more than a decade of stagnation, Immelt was forced out. It is hard to imagine he is the right person to guide Uber, a high-tech company in a fast changing marketplace filled with techie employees who want a culture of rapid growth with opportunities to build fortunes in company equity. To maintain its value Uber needs to keep growing at 20%+/year, and Immelt has no experience creating that sort of revenue success.
So what should the board look for? Last summer Chris Zook and James Allen of Bain & Co. published their treatise on how to lead high growth companies The Founder’s Mentality – How To Overcome the Predictable Crises of Growth . I interviewed Chris Zook last year, and he offered great insights that would be incredibly valuable for the Uber board now:
- Being great is hard. Most companies are focused on going from mediocre to good, far from going from good to great. Uber is the undisputed champion in ride-sharing today. The leader must be unassailable as a visionary. Someone who understands how to build a GREAT company. The last CEO may have been problematic, but he built Uber – a tremendous business success. The new leader has to be on a par with other leaders of companies considered great by the employees (and investors) or he will not be respected, and there will be more problems, not fewer.
- “Next Generation CEOs” (as Zook calls them) are flexible thinkers who can figure out the hidden core, and build on it. The incoming CEO of Marvel realized its core was story telling, not comics, and directed the company into films and other growth venues. Jobs realized Apple was more than the Mac, and tied the company to offering easy-to-use products that fit emerging mobile needs. Uber’s next CEO has to go deeper than the scandals and obvious business model to understand what made Uber the leader, and expand on that nugget of strength to keep the company growing, and beating competitors. (Software for the gig economy? Time sharing assets?)
- Blockages are what kill companies. Most big-company CEOs are great at creating organizational blockages to create stability. They tend to be numbers first, customers and technology second. They put in place middle managers with the primary job of stopping behaviors that could be problematic. They instill “no” in order to stop mistakes. Do not ever forget the Sculley/Apple experience. The next Uber CEO has to be willing to operate in a culture with few barriers, direct access from the bottom employee to the CEO, and the ability to move quickly to deal with problems rather than attempting to eliminate the possibility of problems.
- The CEO has to be willing to make big bets. Today markets move fast. Leaders have to project trends, understand where customers are headed and place big bets that keep the company on top. Think about Bezos pushing Amazon to implement Prime, and buying Whole Foods. Think about Jobs directing Apple’s massive bet on mobile and the iPod. Think about Reed Hastings making the big bet at Netflix on streaming, and more recently on original content. To be a successful leader today of a growth company is not for the timid, nor for those who want to make small, progressive bets over time. It requires vision, the willingness to make big bets and the ability to convince your employees, your board of directors and your investors to buy into that bet.
The Uber board is apparently a bit tired of their search. Perhaps that’s because they aren’t looking for the right kind of person. As Mr. Zook told me, you rarely find leaders with a “Founder’s Mentality” through a search firm. You find them already competing, offering insight, doing new things in situations where the competition is intense. Like Jobs was at Pixar, and NeXt.
The right leader is out there – we’ve seen the type in companies mentioned here, and others like Google and Facebook. But you have to search for them intensely. What seems very, very unlikely is that Mr. Immelt is “the right man for the job” at Uber today.