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STAT Part 5: Failure at Uber: adaptive innovation without preventative control

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This article is the fifth of a 5-article series on the Strategic Tensions Model for Organizational Resilience.In this series of articles, I will discuss each of the four approaches to Organizational Resilience (preventative control, mindful action, performance optimization, and adaptive innovation).

STAT Part 5: Failure at Uber: adaptive innovation without preventative control

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© 2019 David Denyer. All rights reserved.
PROFESSOR SPEAKER ADVISOR
Leadership
Change
Resilience
PROFESSOR SPEAKER ADVISOR
www.cranfield.ac.uk/oracl
www.daviddenyer.com
www.linkedin.com/in/daviddenyer/
STAT Part 5: Failure
at Uber: adaptive
innovation without
preventative control
Professor David Denyer
© 2019 David Denyer. All rights reserved.
PROFESSOR SPEAKER ADVISOR
STAT Part 5: Failure at Uber:
adaptive innovation without preventative control
This article is the fifth of a 5-article series on the Strategic Tensions Model for Organizational
Resilience. The Strategic Tensions Assessment Tool (STAT) is an online Organizational Resilience
survey. In this series of articles, I will discuss each of the four approaches to Organizational
Resilience (preventative control, mindful action, performance optimization, and adaptive
innovation). I will highlight key differences in terms of purpose, people, process, and product. I will
use real-world examples of organizational failures to reveal potential blind spots and risk factors. I
will also suggest areas for improvement.
© 2019 David Denyer. All rights reserved.
PROFESSOR SPEAKER ADVISOR
STAT Part 5: Failure at Uber:
adaptive innovation without preventative control
The case vignette
As one of the fastest-growing and most controversial start-ups, Uber drove disruptive innovation
with a business model and platform that was easier and faster, and more convenient. Yet, in
November 2019, Transport for London (TfL) announced its decision not to renew Uber's license to
operate in London. The regulator said the taxi app was not "fit and proper" as a license holder,
despite having made several positive changes to its operations. London is one of Uber's top five
markets globally, and it has about 45,000 drivers in the city. The problem in London for Uber
relates to the company's systems, which allowed unauthorized drivers to upload their photos to
other Uber driver accounts. According to TFL, it meant there were at least 14,000 fraudulent trips in
London in late 2018 and early 2019. TfL said it had identified a "pattern of failures" in London that
placed passenger safety at risk.
© 2019 David Denyer. All rights reserved.
PROFESSOR SPEAKER ADVISOR
STAT Part 5: Failure at Uber:
adaptive innovation without preventative control
The case vignette
Uber has suffered a series of protests, legal action, and disruptions in its relatively short history.
Earlier in 2019, a class-action lawsuit was filed against Uber, on behalf of thousands of Australian
taxi and hire car drivers, for allegedly operating illegally, which provided the company with an unfair
competitive advantage. They argue that Uber has an unfair advantage because they do not have
to follow the same regulations as taxis. In 2017, Uber suffered accusations about a sexist and toxic
work environment. The cascading scandals generated boardroom drama, leading to the CEO’s
resignation in June 2017.
© 2019 David Denyer. All rights reserved.
PROFESSOR SPEAKER ADVISOR
STAT Part 5: Failure at Uber:
adaptive innovation without preventative control
Failure at Uber - summary using the STAT
© 2019 David Denyer. All rights reserved.
PROFESSOR SPEAKER ADVISOR
STAT Part 5: Failure at Uber:
adaptive innovation without preventative control
Adaptive Innovation
Summary: Organizational Resilience is typically created through innovation and creating new
products, services, or markets. It is also the strategy required to resolve complex, intractable
issues both internally and to external challenges that require fundamental rethinking of the
business and culture. With this strategy, forward-thinking companies can themselves embody the
disruption in their environment. Adaptive innovation is a progressive strategy based on flexibility.
Purpose: Creative problem-solving, innovation, and learning, which are needed to both compete
in a dynamic environment and to resolve complex, intractable problems. Adapting to change by
continuously experimenting and identifying new options more quickly than others. A shared sense
of purpose helps transform the organization, creating new capabilities and/or resources.

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STAT Part 5: Failure at Uber: adaptive innovation without preventative control

  • 1. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR Leadership Change Resilience PROFESSOR SPEAKER ADVISOR www.cranfield.ac.uk/oracl www.daviddenyer.com www.linkedin.com/in/daviddenyer/ STAT Part 5: Failure at Uber: adaptive innovation without preventative control Professor David Denyer
  • 2. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control This article is the fifth of a 5-article series on the Strategic Tensions Model for Organizational Resilience. The Strategic Tensions Assessment Tool (STAT) is an online Organizational Resilience survey. In this series of articles, I will discuss each of the four approaches to Organizational Resilience (preventative control, mindful action, performance optimization, and adaptive innovation). I will highlight key differences in terms of purpose, people, process, and product. I will use real-world examples of organizational failures to reveal potential blind spots and risk factors. I will also suggest areas for improvement.
  • 3. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control The case vignette As one of the fastest-growing and most controversial start-ups, Uber drove disruptive innovation with a business model and platform that was easier and faster, and more convenient. Yet, in November 2019, Transport for London (TfL) announced its decision not to renew Uber's license to operate in London. The regulator said the taxi app was not "fit and proper" as a license holder, despite having made several positive changes to its operations. London is one of Uber's top five markets globally, and it has about 45,000 drivers in the city. The problem in London for Uber relates to the company's systems, which allowed unauthorized drivers to upload their photos to other Uber driver accounts. According to TFL, it meant there were at least 14,000 fraudulent trips in London in late 2018 and early 2019. TfL said it had identified a "pattern of failures" in London that placed passenger safety at risk.
  • 4. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control The case vignette Uber has suffered a series of protests, legal action, and disruptions in its relatively short history. Earlier in 2019, a class-action lawsuit was filed against Uber, on behalf of thousands of Australian taxi and hire car drivers, for allegedly operating illegally, which provided the company with an unfair competitive advantage. They argue that Uber has an unfair advantage because they do not have to follow the same regulations as taxis. In 2017, Uber suffered accusations about a sexist and toxic work environment. The cascading scandals generated boardroom drama, leading to the CEO’s resignation in June 2017.
  • 5. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control Failure at Uber - summary using the STAT
  • 6. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control Adaptive Innovation Summary: Organizational Resilience is typically created through innovation and creating new products, services, or markets. It is also the strategy required to resolve complex, intractable issues both internally and to external challenges that require fundamental rethinking of the business and culture. With this strategy, forward-thinking companies can themselves embody the disruption in their environment. Adaptive innovation is a progressive strategy based on flexibility. Purpose: Creative problem-solving, innovation, and learning, which are needed to both compete in a dynamic environment and to resolve complex, intractable problems. Adapting to change by continuously experimenting and identifying new options more quickly than others. A shared sense of purpose helps transform the organization, creating new capabilities and/or resources.
  • 7. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control Adaptive Innovation People: People believe that the organization is dynamic and that the environment is unpredictable and uncertain, and results are short-lived. People work together to create novel solutions and respond to new situations and demands. Solutions are driven by experiments, discoveries, and inventions from numerous places in the organization. People disrupt conventional thinking and challenge the commonly accepted understanding of the underlying problem. Innovation requires people to experience and observe the situation from multiple viewpoints, listen to dissident voices, and encourage divergent perspectives on issues.
  • 8. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control Adaptive Innovation Process: The organization has a flexible structure and stimulates the performance and creativity of its employees. Decentralized organizational forms with low levels of hierarchy (e.g., networked, loose, project-based, ad hoc structure) are continually adapting to changing situations. The excitement and anxiety of working in this context are understood, and people are supported to tolerate the uncertainty and challenge of their work.
  • 9. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control Adaptive Innovation Product: Exploring new markets, capabilities and technologies, and business models. Being a first-mover or disrupting existing markets/industries is crucial. Providing products that continually redefine state of the art and render competitors' offerings obsolete. The new and innovative products and services are often 'better, smaller, faster, trendier, and cheaper' than previous products and services. It creates a continuous stream of innovation that is in demand with both loyal and new buyers.
  • 10. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control Adaptive Innovation At its best: Creative thinking and problem solving by people drawing on multiple perspectives and taking risks in a safe environment. Collective strategic action with productive interactions coalition formation, negotiation, and compromise. Systems-wide changes across borders and boundaries; multidimensional and fundamental differences. Blind spots and risk factors: Organizations can begin to cut innovation and control expenditure and resources when faced with uncertainty, known as a threat-rigidity effect. The pressure to continually provide novel products and services can lead to relatively incremental enhancements being passed off as innovations and displeasing customers. Without preventative control, people can take excessive risks, and the lack of structure can lead to unnecessary work, inhibited communication, and functional silos. Without performance optimization, the decentralized system can be inefficient, with much duplication of resources and activities. Without mindful action, the organization can lose sight of changes in the environment and the customer's specific demands.
  • 11. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control Adaptive Innovation Areas for consideration: Increase preventative control by clearly defining roles and responsibilities, introduce a formal planning process with budgets and audits and develop procedures, and ensure regular monitored. Increase performance optimization by rethinking and redesigning the way work is done to better support productivity, efficiency, and quality. Increase mindful action by encouraging a ‘healthy uneasiness’ about what might go wrong. Enable people to deal with problems and empower them to act.
  • 12. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR STAT Part 5: Failure at Uber: adaptive innovation without preventative control The STAT Series In the five articles in this series, I discuss each of the four approaches and will highlight key differences in terms of purpose, people, process, and product. I will use real-world examples of organizational failures to reveal potential blind spots and risk factors. I will also suggest areas for improvement. Articles in this series: STAT Part 1: An Introduction to the Strategic Tensions Assessment Tool (STAT) STAT Part 2: Failure at Thorp (Sellafield): preventative control without mindful action STAT Part 3: Failure of CTO (anonymized): mindful action without performance optimization STAT Part 4: Failure at Kodak: performance optimization without adaptive innovation STAT Part 5: Failure at Uber: adaptive innovation without preventative control
  • 13. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR David runs the Organizational Resilience and Change Leadership (ORaCL) Group at Cranfield University, which works in three areas of expertise: developing leadership capability, designing organizational change and building organizational resilience. We are world-renowned researchers, impactful educators, engaging speakers, and trusted advisors to organizations across all sectors. We are an experienced group of academics and practitioners from different disciplines and backgrounds who share a passion for ideas, problem-solving, and translating knowledge into action. We act as an information hub and community builder, connecting an extensive network of external experts, industry leaders, public officials, and researchers with interest in organizational resilience, change, and leadership who want to share experiences, exchange ideas and collaborate to work through complex challenges. Visit The Website
  • 14. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR Be the FIRST to receive news, articles, insights and event updates from the Organizational Resilience and Change Leadership (ORaCL) Group. Signing up is EASY! Simply fill out the online form and we’ll be in touch! ORaCL Bulletin
  • 15. © 2019 David Denyer. All rights reserved. PROFESSOR SPEAKER ADVISOR daviddenyer@cranfield.ac.uk