OB II - WeWork Assignment (1).pptx
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WeWork was a real estate company founded in 2010 that provided shared office spaces. It grew rapidly but faced issues including a complex corporate structure controlled by CEO Adam Neumann, who made questionable decisions. Other problems included a lack of strategic focus as WeWork expanded too quickly into new areas without coherence, and a culture of excess spending that raised viability questions. WeWork's organizational culture was characterized by a lack of accountability, high pressure, and lack of diversity. The combination of poor governance, financial mismanagement, lack of focus, excess spending culture, and dependence on external funding ultimately led to a loss of investor confidence and declining valuation that precipitated a crisis at the company in 2019.
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OB II - WeWork Assignment (1).pptx
- 1. WeWork From Unicorn to Fiasco Analyzing the WeWork Catastrophe Group No 05 Members Roll No. ANKIT KUMAR DILIP KUMAR DURGA MAYUR SHAH PRASHANT KUMAR SATISH IYER SEENA ANN SABU SRINIVASAN S. VIKIN JAIN EPGP-15A-005 EPGP-15A-019 EPGP-15A-035 EPGP-15A-052 EPGP-15A-069 EPGP-15A-071 EPGP-15A-084 EPGP-15A-100
- 2. Agenda 1. Major Events during the Evolution of WeWork 2. Nature of the Problem & Causes 3. How OB Concept Can Resolve This Situation 4. Specific Steps 5. Potential Roadblocks with these Implementations 6. Risks & Consequences of the Recommendations 7. How to Communicate the Findings and Overcome the Resistance
- 3. Major Events during the Evolution of WeWork 2018 Global Expansion with 100+ cities - Most valued company in the world with 47B $ 2016-17 Acquisitions, fundraising, rapid expansion and new launches 2015 Raised several funds from 2010-15 and valuation become 10B $ 2010 WeWork, a real estate company, founded by Adam Neumann and Miguel McKelvey in New York City 2020 Softbank control, COVID Pandemic, Decline in revenue/valuation & another layoff 2019 Rebranding, IPO, Realization of loss in 2018, CEO step down & Layoffs 2021.. Merger with Box X, Relaunch IPO Sept 2019 Failed IPO company postponed its initial public offering (IPO) after concerns arose about its business model and the company's valuation 2019 Financial struggles negative cash flow and struggled to turn a profit Sept 2019 Leadership & Corporate governance issues co-founder and CEO, Adam Neumann, stepped down from his position following a series of controversies; criticized for lack of transparency and family business model 2020 and now COVID-19 pandemic & multiple lawsuits significant impact on WeWork's business revenue; and faced several lawsuits Oct 2019 Layoffs & SoftBank bailout Announced 20% layoff & WeWork accepted a bailout offer from SoftBank
- 4. Nature of the Problems Other causes Power and Politics BANI Onion Organizational Environment (internal (Leadership, relationship amongst employees, task (Industries, Customers, human resources and general (economics, Legalities) Financial Mismanagement Over Highly Inflated Company Valuation - Failed IPO High Burn Rate & Frequent Layoffs Unproven Business Model Highly dependent on Raising Funds Highly Centralized and Cult-like Corporate Culture Aggressive Expansion Strategy Multiple Lawsuits
- 5. Causes of the Problems Other causes - Over Optimistic Vision - Lack of Strategic Focus - Poor Management - Lack of Clear Responsibilities - Misalignment of Core Values and Objectives - Unprepared for Contingencies of BANI - Vague and Complex Structure - Centralized Power & Family Business Dependence on - External Funding - Real Estate Markets - Poor Leadership - Excessive use of Machiavellian Principles Design Structural RDT Leadership
- 6. Change in Organisational Design Inter Organisational Relationships Economies of Scope Diversify services Cross Selling Partnering with other business Power of scale to negotiate Resource Dependence Improved focus Better Communication Streamlined decision-making Increased accountability Diversifying revenue streams Investing in Innovation Improve supply Chain management Agility and adaptability Employee well being Embrace ambiguity How OB Concept can Resolve this Situation Divisional Design
- 7. Apply Strategic Management Principles 03 ❖ Conduct thorough market analyses, including SWOT analysis ❖ Develop a clear and sustainable growth strategy based on market demand, profitability Strengthen Corporate Governance 02 ❖ Ensure greater transparency, accountability, and oversight ❖ Adopting best practices from agency theory Transformational Leadership Approach 01 ❖ Company's culture, Vision and Goals ❖ Fosters open communication, transparency, and collaboration Foster Organizational Resilience and Change Management 06 ❖ Effectively respond to external disruptions and market changes ❖ Implement robust risk management practices and contingency plans Enhance Customer Focus and Value Proposition 05 ❖ Conduct in-depth customer research to find the evolving needs ❖ Tailor products, services, and amenities to provide unique value Communicate Effectively and Manage Stakeholders 04 ❖ Clear and Transparent communication channels with stakeholders ❖ Understand and meet the expectations of different stakeholder groups Specific Steps
- 8. ❖ Limitation of finance and right skilled people. ❖ Finance to implement the change. ❖ Time and effort required. Resource Constraints ❖ Identifying right individuals, to align with organisation's vision and values. ❖ Identifying and recruiting leaders. ❖ Identifying necessary skills & experience. Leadership Transition ❖ Taking accountability. ❖ Changing deeply ingrained cultural norms & values. ❖ Emphasize financial discipline. ❖ Customer centric approach. Cultural Shift ❖ Shift in customer preference ❖ Uncertainties and competitive market. ❖ Economic conditions ❖ Changes in regulations. External Factors ❖ New leadership approach. ❖ Strengthen corporate governance. Resist Change ❖ Strategic management practices. ❖ Old way of working and socializing. Potential Roadblocks with these Implementation ❖ Trust and Credibility. ➢ Investors ➢ Employees ➢ Customers ❖ Previous failures and controversies. ❖ Transparency in actions. Rebuilding Trust & Reputation
- 9. Apply Strategic Management Principles 03 ❖ May lead to analysis paralysis ❖ Implementation risk and increased collaboration may lead to delays Strengthen Corporate Governance 02 ❖ Too much disclosure of information ❖ Increase cost of compliances Transformational Leadership Approach 01 ❖ Resistance to change from employees and other stakeholders ❖ Loss of talent as leadership style may not be universal Foster Organizational Resilience & Change Management 06 ❖ Immediate response may be myopic; will affect vision ❖ Additional resources may have to be pooled in to create buffers Enhance Customer Focus & Value Proposition 05 ❖ Customer needs evolve rapidly; no one size fit all strategy ❖ Competitor response may erode value proposition with too much disclosure Communicate Effectively & Manage Stakeholders 04 ❖ Increased PR costs ❖ Information overload may hamper key issues to be identified Risks & Consequences of the Recommendations
- 10. How to Communicate the Findings and Overcome the Resistance Target Messaging ❖ Customized Message to All Stakeholders ❖ Financial Reports and Variance to be reported to Investors ❖ Increased Networking and ecosystem development ❖ Deals with landlords need to be restructured Comm. Channels ❖ Incentives Referencing ❖ Social Media Buzz ❖ Publishing Online Reports of Budgets 360 o Feedback ❖ Build Robust 360o Feedback Mechanism ❖ Building Trust and Stakeholder Engagement ❖ Regular Feedback Data Analysis ❖ Use of empirical data to garner insights. Stakeholder Management ❖ Develop Strong Investor Relationship Teams ❖ Encourage Learning and Build a Team to have Strict Quality Processes
- 12. APPENDIX
- 13. WeWork, a real estate company was founded in 2010 that provides flexible office spaces for freelancers, startups, and established businesses. The company grew rapidly, attracting billions of dollars in investments and achieving a valuation of $47 billion at its peak. However, in 2019, the company's IPO was cancelled, and its valuation plummeted, leading to a crisis in its leadership and operations. The organisational issue that led to the failure of WeWork may include a complex corporate structure, with Adam Neumann serving as CEO, giving significant control over the company and its decisions, which could have led to conflicts of interest and a lack of transparency. Further, it may include Adam Neumann’s leadership issues who was seen as a charismatic but erratic leader who may have made questionable decisions, such as trademarking the word "we" and investing in companies that had no clear connection to WeWork's core business. Other issues like a lack of strategic focus as WeWork expanded rapidly into new markets and business lines without a clear strategic focus led to a lack of coherence in the company's operations and made it difficult to scale the business sustainably. WeWork’s culture of excess as it was known for its lavish spending on office spaces, perks, and events. This led to a culture of excess that may have contributed to the company's financial difficulties and raised questions about its long-term viability. WeWork's organisational culture was characterised by a cult of personality, a lack of accountability, a high-pressure environment, a culture of excess, and a lack of diversity and inclusion. These cultural issues contributed to the company's financial difficulties and made it difficult for WeWork to build a sustainable business model. Therefore, we want to analyse how the combination of factors, including poor corporate governance, financial mismanagement, a lack of strategic focus, a culture of excess spending, poor culture, & leadership issues, and in view of resource dependence theory, its high dependence on external funding, real estate markets, and reputation led to a loss of investor confidence and a decline in the company's valuation. Executive Summary