Jarring notes from Uber

An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi signHigh quality musical performances are much sought after, mostly for their pleasant, aural experience. They are balm to tired souls, inspiration for the artistically inclined.

However, it does not take much to bring down the quality of the performance a few notches; something as trivial as poor acoustics or quality of equipment, could reduce a heavenly performance to ‘unbearable’. Can we imagine, if in addition to poor acoustics, the performers were out of sync, the lead musician was inconsistent and dominating, female members were side-lined and the performers only performed for their own sake.

Recipe for disaster? Well, yes certainly!

Uber has gone on with its openly discordant, brassy tunes and yet grown its presence to 70 countries and a valuation said to be close to $70b. What might explain the value and continuity of business ascribed to this dysfunctional boy band? Let us hope that the ease of hailing a cab ride does not overshadow the dark footprints of this organisation.

The organisation experiences its moment of truth with the resignation of Travis Kalanick on 20th June, though he still continues as a member of the board. Kalanick was served a letter by his leading investors, requesting for his resignation. He was persuaded to leave after hours of discussion. Several other senior members of his team have also left, and not without controversy.

In the last few months, a lot has been written about various mishaps at Uber. Its aggressive risk-taking incubated by Silicon Valley’s infamous ‘bro’ culture; its ambitious, alpha-male leader and his cohort of similarly minded managers; of various malpractices and mishandling of issues such as the rape case in India.

Some of this has been granted the garb of ‘culture’; a word that has often mystified me.

Yet, not enough to let momentous mishaps at Uber masquerade as ‘cultural’ issues! Some samples:

·             Sexual harassment, discrimination and disrespect for women employees. (On a side note, it is hard to accept that we really are struggling with this; thousands of years after our evolution from pawing apes!)

·             A bold, hands-off, flagrantly irresponsible fine print; that serves neither the drivers nor its clients.

·             Misbehaviour and gross abandon at office parties.

·             Deflecting law enforcers where its services were banned or resisted using technology and violation of privacy guidelines.

Here is a breakdown of the 215 complaints recorded by Uber, post the publication of the blog by Susan Fowler.

I believe that Uber’s multifarious failure stem from poorly defined values. It is the values that guide decisions and shape behaviours. Values which are applauded, encouraged and shared over time, become part of the cultural fabric. ‘If you hire people who lie, cheat, and steal, in time your company culture will be the same’, says Gary Petersen in this write-up.

As per this article, Uber’s employees are asked to sign-up to 14 company values. These include making ‘bold bets’, ‘being obsessed by the customer’, ‘always be hustlin’, and the need to ‘practice a meritocracy’.

Where in the grand scheme of things are the values that speak of  ‘respect for employees, irrespective of gender’, being ‘fair to the customer’ and driving an ‘open and transparent’ work environment? As Susan Fowler, an ex-employee states in her blog: ‘there was a game-of-thrones political war raging within the upper management in the infrastructure engineering organization. It seemed like every manager was fighting their peers and attempting to undermine their direct supervisor so they could have their direct supervisor’s job.’

While Uber was a poster child of Silicon Valley, it is hard to ignore the heady fumes of greed. The valley that is home to energetic enterprises that create bold new realities and and disrupt the status quo, rewards its members with wealth and recognition. However, does it have the checks and controls required to mould its clan into responsible businesses?

It is true that disruption abounds and is fuelled by Silicon Valley, we need to be abundantly clear that disruption of human dignity and breach of trust is not welcome and most definitely not part of business model. The lines need to be drawn.

I do hope that Uber has learnt its lesson and will work to renew itself.

 

© Anu Maakan 2017

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).

 

Corporate Governance: Vibrant boards define success

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Vibrant boards are attractive. They are energetic.

They are likely to drive results.

While not a barometer of effectiveness, vibrant boards are more likely to succeed as compared to dull, easily pliable and well-mannered ‘Aye! Captain’ boards.

‘Vibrancy’ may be palpable from the energy in the room, ease and independence exuded by board members, conviction in voicing differing opinions, a questioning approach to executive decision making and a sufficient degree of clarity in providing feedback on proposals put forth to the board.

A board that sits well together, brings together diverse opinions, collaborates and is able to bring individual strengths and contributions to the table is more likely to succeed in the fast paced business environment. The openness and commitment exuded by a lively board encourages all members to contribute their best.

Board members who work together, talk candidly and address difficult issues are a force. Not only are they actively addressing issues and solving problems, they are creating a cultural framework for conducting business. Slowly, the modus operandi is likely to evolve into ‘this is how we do business here’. The culture at the top often trickles down into the lower rungs of the corporation.

New board members are more likely to be driven to positive action by such a board and contribute wholeheartedly. Bryan Stolle captures it well, ‘Being a great board member means being an active evangelist in the ecosystem, sharing your network, and keeping your eyes peeled for opportunities when you can best promote the company. It also means being actively engaged.’

But are these boards always born into greatness? Or is there something more deliberate to it?

In certain instances, challenges and difficulties may have led to the creation of something of a ‘Divergent’; the next gen human or reinforced super-being. Or it may be that their powers have been re-configured after a brief period of loss!

This new avatar may have morphed from a tumultuous past and there may be an element of ‘design’ in its splendid form. Certain CEOs, having seen the downside of a not so functional board may have decided to take active part in the recruitment, orientation and mentoring of new board members. Says Ram Charan, in this interview, ‘Let the new CEO decide what he or she needs — their effectiveness will be heavily dependent on the people they surround themselves with.’

The chair of the board might also choose to play a role. They understand what the organisation needs to succeed and may seek out board members that fit the bill in terms of skills and cultural fit. They can provide invaluable support and information needed for such candidates to adapt and flourish in the new environment. Lets not forget, however that it is not a single member but the interplay between the members, the chair and the CEO that will make a difference.

While other factors are needed to drive effectiveness, vibrancy and dynamics of board interaction is an important starting point.

Sometimes, all that is needed is the lack of barriers.

© Anu Maakan 2017

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).

Organisational Governance & Change: Fishing for the right metric

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‘Total fish biomass varies by twofold within three regions of the Atlantic, and 8-10 fold across regions in the Pacific’, as per findings from a paper titled ‘Measuring change in fish communities: from monitoring to metrics to management’. This is part of a study conducted for the National Coral Reef Monitoring Programme. In recent years, ‘Fish Biomass’ has been used as a key metric to describe the status and trends of fish communities.

Even so, scientists involved in this study are not completely happy with the use of this metric to represent the status of a complex ecosystem. They are evaluating other metrics.

Earlier this year, France banned use of dangerously thin models, i.e. models with a low BMI. Super-skinny models will be banned from catwalk shows and advertising in France under a new law aimed at ending end the ‘glorification of anorexia ’.

Under World Health Organisation guidelines, the median body mass index for an adult population should be in the range of 21 to 23 kg/m2, while the goal for individuals should be to maintain body mass index in the range 18.5 to 24.9 kg/m2.

As seen here, BMI and Fish Biomass tell us a lot about the health of an individual and that of an ecosystem. There exist several million metrics, depending on what we want to measure and act on/ improve. However, are we sure we are measuring things optimally and not wasting precious time ploughing through mounds of irrelevant and distracting information?

Factors to consider when selecting a metric:

  • What is the metric trying to measure? Is the metric representative of what you’re trying to measure? ‘Businesses tend to measure the wrong things’, says Becher of SAP in this article in Forbes.
  • How it will be used? For example, in the example where French MPs have identified BMI as a measure, their overall objective is to combat anorexia.
  • Do the key stakeholders buy-in to the metric (for that will determine its credibility)?
  • How accurately can the metric be measured? I.e. is there sufficient data available to compute the measure?
  • Does the metric condense a considerable amount of information into one number, potentially losing a great deal of information in the process?
  • How sensitive is the metric to methodology, i.e. can its value be affected by the process used to compile the metric?
  • What are the other inter-related measures that must be examined alongside.Eg – ‘Time taken to deliver a software package’, might be meaningless if not juxtaposed against ‘Quality of the package’.
  • How does the metric impact behaviour? For example, poorly constructed incentive schemes can distort sales behaviour and encourage miss-selling and misconduct.

‘Metrics are used to drive improvements and help businesses focus their people and resources on what’s important’, says George Forrest in an article titled, ‘The Importance of Implementing Effective Metrics’.

Having scientifically designed metrics helps organisations in making appropriate decisions, measure and drive performance, deliver to expected quality standards, benchmark to competitors, focus change and improvement efforts, provide direction and shape strategy.

Not only should metrics be well-designed, they should be evaluated for ‘appropriateness and relevance’ on an ongoing basis; so as to stay aligned with changing corporate goals.

Remember that choice of metrics such as oven temperature and seasoning are imperative to getting your ‘baked salmon delight’ just right.

(*Body Mass Index (BMI) is a person’s weight in kilograms divided by the square of height in meters. A high BMI can be an indicator of high body fatness).

© Anu Maakan 2016

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).

Senior Manager’s Regime: Calling on Atlas

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Legend has it that in the war against the Olympians, Atlas and his brother Menoetius sided with the Titans. When the Titans were defeated, many of them were confined to Tartarus. Zeus condemned Atlas, the losing leader to stand at the western edge of Gaia (the Earth) and hold up The Heavens on his shoulders, as a punishment for losing.

In a similar ‘Ironie du sort’, the FCA and PRA have called on senior management within Banks, building societies, credit unions, insurance firms and PRA designated-investment firms to step-up and show more accountability (hold the earth, as it were!!). The Senior Management and Certification Regime has come into force on March 7th   2016 in the UK. The new framework has three components: Senior Manager Regime (SMR), Certification Regime, Rules of Conduct.

As an aftermath of numerous scams, market manipulations, subversive practices and regulatory fines in the financial markets, regulators are seeking to reinstate the trust between individuals and the Banks. And to contribute to evolution of improved CONDUCT.

Some highlights of the Senior Managers Regime

  • It focuses on individuals who hold key roles and responsibilities in relevant firms.
  • The SMR will require firms to allocate responsibilities to senior managers and to assess their fitness and propriety on a regular basis.
  • Between the FCA and PRA, 30 prescribed responsibilities are defined.
  • Senior Manager approval applications to the regulator will need to include a ‘Statement of  Responsibility’.
  • A ‘Manager Responsibility Map’ is to be created outlining key areas that need management attention.
  • The statute imposes conditions and time limits on approvals of senior managers.
  • Chairmen and non-executive directors will be included as “Senior Management Functions“. ‘They will be explicitly held to account for boardroom decisions, and deemed potentially culpable for poor decisions as executive directors’, as per the EY paper titled Senior Managers on the hook.
  • The roles classified as ‘Senior Managers’ would include the likes of Chairman of the Board, CEO, CFO, CRO, Heads of Business area, Head of Internal Audit, Chairmen of Risk and Audit committees, Chief of compliance,  amongst others.
  • Where a senior person is found to have committed misconduct, regulators may impose an unlimited fine or ban the person from certain types of functions.
  • The length of time that the regulator can take disciplinary action against a Senior Manager has been doubled from three to six years.
  • For instances of reckless misconduct, leading to insolvency of a bank a person guilty of offence is liable to an unlimited fine and/or upto seven years in prison.

In his evidence to the Treasury Select Committee in September 2013, the FCA’s chief executive Martin Wheatley observed that it was “hard to nail and individual against responsibility because matrix organisation structures and committee decision making means that individuals can always defuse responsibility.” Such a regulation is likely to impact across the rungs of the organisation, as ‘accountability’ is cascaded to the ‘next in chain’, once it is so identified.

As is evident, the rules cover a fairly large ground and seem to want to raise accountability and drive higher standards of personal conduct. The bar has definitely been raised.

It remains to be seen how long the identified Atlas’ will carry the weight of the Earth, i.e. the ‘assigned responsibility’. Would they soon become unwilling to take bold decisions and start to look for unsuspecting Hercules to pass on the load?

 

© Anu Maakan 2016

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).

Satanic dances in the financial markets

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Contrary to the beliefs of many, Satan is not the opposite of God.

According to the bible, Satan was a cherub created by god. However, some time before the creation of mankind, Satan rebelled against God and took one third of the angels with him into rebellion.

Rebelling angels

Regular rumblings in the financial press  indicate to me that some of the rebelling angels, a.k.a. Satan’s followers are still at large and flourishing in the power rooms of banks/ financial institutions.  Some recent headlines:

Deutsche Bank in record $2.5bn fine over interest rate manipulation
FCA fines Barclays £72m for poor handling of financial crime risks
Five global banks to pay $5.7 billion in fines over rate rigging
£20 billion British Money Laundering scam goes through Eastern Europe, Ends in HSBC, RBS, UBS and Citibank

Whether it is LIBOR manipulation, wrong selling/ indiscrete sales practices, subversion of market practices, poor monitoring of financial crime/ laundering ‘dirty’ money, or another exotic cocktail; it is clear that the situation in the financial markets is far from comfortable.

Conduct Risk and Organisational Culture

A plethora of rules, regulations and guidance have been issued by the regulators. Yet, the pro’s have found the loop holes, broken the rules and engendered instability in the financial markets.

In 2014 alone, the FCA brought in a record £1,471,431,800 in fines, more than twice the previous year. It is now clear that that purely focusing on the establishment of rules without focusing on outcome for the customer / stakeholder will not be effective.

‘Maybe it has always been the case but it appears that when the dust settles and the enquiry is over the causes of the failure boil down more often than ever to culture’, says Peter Richardson – paper on ‘Risk Culture’, Institute of Risk Management.

The importance of conduct risk has been raised by the financial crisis.  A few thousand regulators cannot assume the responsibility for the manipulative conduct for the millions employed in the sector. Individual conduct is sharply in focus.

Organisational Culture

The culture of the organisation significantly influences individual conduct. Senior executives and directors of the organisation have a key role in setting the tone.  There is good chance that their behaviour would influence that of the employees.

Culture is formed by the repeating behaviour patterns, although individuals may also perceive culture differently based on the practices and ethical standards of the division they work for. Organisational artifacts and symbols also impact organisational culture.

Remuneration and Conduct

Improper remuneration structures incentivise poor conduct and unnecessary risk-taking. It is fairly well known that for too long, banking staff have been paid for doing the wrong things. Rewards will need to be rationalised and balanced with penalties for failure, if the precedent is to change.

Cult following                                                                                                                                                     

Members of the LaVey’s church in California are said to invoke Satan not as a supernatural being, but as a symbol of man’s ego. They live by the Satanic statements and are focussed on the ‘self’ as the centre of their universe. All morals and values are seen as subjective human constructions.

Whether or not there is value in their beliefs, or a place for such a cult, whether or not it is really representative of the larger society; it is apparent that in the financial markets, the dangerous dance with Satan continues.

Will someone stop the music?

© Anu Maakan 2016

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).