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Wednesday, June 14, 2017

Travis Kalanick’s temporary leave of absence won’t save Uber’s brand, experts say

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Travis Kalanick

  • Experts say Uber’s brand has been severely damaged.
  • The company’s attempt to shake up its management culture have not gone far enough to move consumers.
  • Brand consultants  are urging the ride-sharing firm to replace CEO

It’s been a rough couple of months for Uber, and there may be no respite in sight.

On Tuesday, Uber released the results of an intensive months-long investigation into its corporate culture to its employees, including recommendations for how the company can fix its image problems. Uber also limited some of CEO Travis Kalanick’s responsibilities at the company, who announced that he was taking a leave of absence. 

But the company’s response may be too little too late, said branding experts, and Uber’s spate of crises over the past few months, including allegations of sexual harassment and discrimination, privacy and data concerns and a leadership overhaul, may have permanently dented its brand.

Uber hasn’t responded to Business Insider’s request for comment. 

“Reporting is one thing, making real change is another–Uber really has to blow itself up and start over if it has any shot at being a respectable brand that consumers trust, and feel good about using,” said Chris Allieri, founder and principal of public relations firm Mulberry & Astor. “Kalanick on an indefinite leave of absence is a start, but termination would’ve sent a stronger signal that they’re truly serious about making real changes.”

Uber’s brand is “sinking”

An inflection point for the brand was former Uber employee Susan Fowler’s blog post from February, which raised serious allegations of sexual harassment and discrimination at the company, said Matt Rizzetta, CEO of brand communications agency North 6th Agency.

“After that point, it was either sink or swim and unfortunately for Uber, it is sinking,” he said. 

“Their brand perception is absolutely terrible,” said Cindy Gallop, former chair of the ad agency BBH and founder and CEO of Make Love not Porn. “Consumers today do not tolerate outrageously egregious behavior by brands, just because the product delivers.”

Since Fowler detailed her experience of a male supervisor soliciting her for sex and human resources repeatedly shrugging off her concerns in February, Uber has continued on a downward spiral, making headlines for all the wrong reasons.

Apart from several other reports of an overly sexist culture at Uber, the company’s business ethics have also been brought into question. Not only did Uber try to secretly deceive authorities with its “Greyball” tool in some cities, but a former executive also reportedly obtained the medical records of a rape victim in India. 

All this has taken a toll on the brand, while ride-hailing rival Lyft has gained. Consumer perception researcher YouGov BrandIndex gives Lyft a score of 4, its highest rating ever. Uber currently has a score of 1. 

Not only has Lyft overtaken Uber in terms of perception, but it has also gained an awareness boost.

FILE PHOTO: A Lyft driver from Sacramento, responds to a ride request on her smartphone during a photo opportunity in San Francisco, California February 3, 2016. REUTERS/Stephen Lam/File PhotoBlame it on the company’s culture, said Erich Joachimsthaler, founder and CEO at brand consulting firm Vivaldi Group. “All these instances may seem like isolated incidents, but they all have one common denominator,” he said. “And that is its flawed culture, which starts at the top.”

Uber initiated a big leadership shakeup leading up to the release of the report, with Emil Michael, its chief fundraiser, resigning on Monday. And last week, the company fired more than 20 people after a separate investigation looked into 215 complaints of sexual harassment, discrimination, and other bad behavior at the company. It also hired Apple Music marketing executive Bozoma Saint John as its first chief brand officer. But to tide over its brand crisis, observers said, it needs to show some serious commitment. 

Uber needs to go much further

For Gallop, that means accepting moral responsibility and publicly apologizing to drivers, employees, board members and consumers, being receptive to solutions and suggestions from staffers and customers on how to fix their culture, and ultimately, pushing through a leadership overhaul.

“All of this needs to happen sequentially in order for them to demonstrate that they’re seriously committed to change,” she said. “They need to appoint a whole new leadership, which means firing and replacing Travis. But judging by the company meeting, the first step isn’t happening, and we wait to see whether they make any request to the employees for the second step, which I’m willing to bet they won’t.”

Allieri echoed Gallop’s views, calling for Kalanick to step down for good. “Firing 20 plus senior employees is a start, but what about the CEO? He is a big part of the problem,” he said. “He needs to go. He needs to go now. And not come back.”

If Uber wants to pull some sort of turnaround, it needs to treat its drivers better, said Allieri, as that will give it a first line of defense with hundreds of thousands of brand loyalists defending its moves. It would also help if it communicated to all its customers via the app, with clear steps it’s taking to overcome its problems. It should also launch a community relations effort–one to help communities, not just market to them and do crisis communications. “Above all, they need to grow up as a brand,” he said.

Addressing its organizational mess will help the company turn its attention to bigger issues, said Vivaldi’s Joachimsthaler. Competition is increasingly heating up, both in terms of ride-hailing competitors as well as autonomous cars. With Uber left scrambling to deal with structural and cultural issues, it detracts from these bigger objectives. 

“All of this has been distracting the board from the real challenges they have, which is the competition and profitability,” he said. “They have been left paralyzed.”

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June 14, 2017 at 12:47AM

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