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.

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.

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.

Failure at Uber - summary using the STAT

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.

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.

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.

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.

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.

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.  

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

If you would like a PDF copy of our report Introduction to the STAT, please connect and send me a message via LinkedIn.

About David Denyer

David Denyer is a highly cited author, engaging keynote speaker and an inspiring educator. He is a Professor of Leadership and Organizational Change, as well as a Commercial Director, at Cranfield School of Management. He runs the Organizational Resilience and Change Leadership Group. David is a trusted advisor to the leaders of some of the world's most renowned companies and government organisations. He helps them to understand issues, identifies their specific needs and then works with them to produce solutions that bring immediate improvement to their business. David also runs the Leading Organisational Resilience Programme at Cranfield, which is consistently rated as one of the world's top providers of executive development.