Last week, I fielded an inquiry from a New York Times reporter asking if I would like to

comment on the apparent change of heart (and strategy) underway at Uber. You know, the new
kinder, gentler Uber the Uber that is eager to collaborate with local governments, and to
calculate its contribution to sustainability and to getting cars off the road, the one that is serious
about beefing up its safeguards on access to rider data. At first blush, this was a highly unlikely
subject for me to weigh in on: I am just about the only person I know who is not gaga over the
Uber experience. Nor am I a fan of its pugnacious approach even to regulations as outdated as
those governing the taxi industry what CEO Travis Kalanick has called Ubers stance of
principled confrontation.
While I was an unlikely commentator from one perspective, I was well-suited from another. I am
a firm believer that companies need societys permission to grow, and it would appear that Mr.
Kalanick and the management team at Uber are coming to this realization as well. This notion of
permission to grow did not originate with me. I first picked it up in correspondence I was
fortunate enough to have carried on with Alfred Chandler (yes, that Alfred Chandler) almost 20
years ago, in the course of writing a book. This was a good old-fashioned exchange of
typewritten, snail-mailed letters Dr. Chandlers preferred medium. He and I were discussing
Wal-Marts prospects, as I recall, and whether the company could succeed in resetting our
collective understanding of the size that a retailer could attain. So what were the limits to its
growth: Adequate labor pool? Attractive retail locations? Sizable acquisition targets? Proximity
of adjacent planets? He wrote in one of those letters (How I wish Id kept it!), Companies need
societys permission to grow. Mind you, this was well before Wal-Mart management rolled out
its kinder, gentler vision (Save money. Live better.).
Companies need societys permission to grow. We see this demonstrated both in the antitrust
courts and in the courts of public opinion. The most extreme proof of this axiom is, of course,
our reaction to unreasonable monopoly, as expressed in the breakup of the Standard Oil group
in the first decades of the last century. There are abundant examples across the intervening years:
following World War II, Dow was forced to share its proprietary processes for manufacture of
magnesium and synthetic rubber, setting the company back a decade in the view of company
officials. DuPont was forced to dissolve its patent-pooling arrangements with foreign chemical
firms and disgorge its cross-holdings in GM stock, devastating both its top and bottom lines. And
in more recent experience, of course, we have witnessed the seemingly never-ending antitrust
battles of Microsoft and the constant, uneasy attentiveness of Facebook management to the data
privacy concerns of its users. The management teams of all of these companies became aware
sooner or laterof a simple, compelling truth: When society withdraws its permission for a
company to grow, that growth can stop dead in its tracks.
Today we call the withdrawal of this permission reputation risk how favorably a companys
motives, impact, and agency are regarded by important external constituencies. A good
reputation can lead to a whole host of benefits; a bad reputation, on the other hand, can lead to a
loss of customers, disengaged and unmotivated employees, and shareholder dissatisfaction.
Whatever form Ubers risk management dashboard takes, it is clear that the reputation risk
hazard lights have been flashing red for some time now. Conflicts with government, here and
abroad; legitimate, frightening concerns over rider safety; data privacy violations these are the
kinds of risks that Dr. Chandler was warning us about, risks that by their nature flare up

suddenly, unexpectedly and painfully. At the very least, they pose a huge distraction to
management.
And on this issue of management distraction, and organizational maturity, it is instructive to
remember that Uber is impossibly young for all it has achieved. The company is only five years
old (only five years old!), with thousands of employees, tens of thousands of drivers, a $40
billion valuation and global growth ambitions. The company is like an adult in an adolescents
body, and so it is unsurprising that they should be suffering these growing pains. They have a lot
of growing up to do and in a hurry.
It seems fairly clear from the recent shift in strategy that this young management team has
concluded that the last thing it needs is rearguard battles with regulators and customers when the
road ahead presents such enormous challenges. And make no mistake, the immediate future for
Uber promises to be much, much harder than the recent past. Their business model is in full
view, ready to be copied; they have spawned a whole host of aspiring disruptors coming up
underneath and seeking to topple them; and the investors who have bestowed such a rich
valuation on the company will be incredibly sensitive to any bumps in its growth performance.
Oh, and their employees particularly their most valued employees have ample alternative
employment options. Given the choice, would you work for a pariah?
If Uber were a case study, it would fit perfectly in the course we teach at HBS, called Building
and Sustaining a Successful Enterprise, because we are watching in real time as the
management team digests a lesson that has been learned time and again by successful enterprises
before them. If you had to distill our teaching down to a couple of sentences, they would read as
follows: In order to build a successful enterprise, you need to have a remarkably well-integrated
business model and capability set, focused on an important job that your customers are trying to
get done. In order to sustain that success, however, you need the wisdom and humility to adapt
when the capabilities and behaviors that earned you your initial success will no longer take you
where you need to go. Calling that turn is the lonely, necessary lot of the leader.
So has Uber management spotted the inflection point early enough? My guess is that they have,
and heres my reasoning: Wed know it was too late if the question werent so engagingif
wed all moved on to Lyft or Sidecar or any one of the dozens of similar upstarts. The fact that
were all somewhat surprised by this new conciliatory stance of theirseven wondering if it was
really necessarysuggests that theyve likely gotten the timing about right. If the Uber
management team truly understands that theyve outgrown the behaviors that served them well
as an upstart, and theyre able to develop a new set of skills and behaviors more suited to the
requirements of their current scale and future ambitions, then they might still have the ability to
surprise us with how fully they have earned the permission that we have granted them, and with
the impact that they can have on the world.

How Uber Changed The Way They Hire

With a little introspection and fine-tuning of the interview process, Uber found the right people
to accelerate its growth.
By Gwen Moran

As Uber worked on disrupting the transportation market with its technology-based approach to
catching a ride, the company needed good people fast.
So, the management team did what most companies do. They recruited through various channels,
found suitable candidates, and interviewed them. Three to five interviews and a series of typical
behavioral questions later, theyd make a hiring decision.
But soon, head of global operations Ryan Graves, who was overseeing much of the personnel
growth, found this approach wasnt cutting it. He wasnt getting candidates who had the best
combination of skills needed to contribute to Ubers growth in an "intense" work environment.
At the same time, the company was rolling out a lean growth model and getting a better
understanding of the skills needed to find the best talent. It was time to tinker with the process to
get the right people.
Creating a team model
As Uber grew, the team relied on a three-pronged leadership model in each new city. A general
manager heads up the team and is in charge of the businesss growth there. Graves saw that his
most successful market heads were entrepreneurial, agile, and knowledgeable about the culture
and quirks of their regions. The GMs are supported by a community manager that handles
marketing, social media, and local business development, and a driver operations manager
oversees driver relations and ensure that theyre on the road where and when they need to be.
Instead of asking fluffy tell-me-a-time-when kinds of questions, we just put people in scenarios that will
most closely resemble the job that they will do.

From there, teams are built out based on the needs of the city. The Los Angeles team might need
more people focusing on media, movie and television partnerships that you wouldnt find in
Minneapolis, Graves says. This model also gives teams more clarity in hiring because theyre
looking for specific skills and regional knowledge.
"Most of our teams are from the cities where they work," Graves says. "Its not just, Lets
evaluate this as a customer, but its more like, These are my people, this is where Im from,
[they are] like my family and friends. So theres a cool mirror about the city team cultures
relative to the city that they serve," Graves says.
Changing the interview
Charisma, humor, and charm can go a long way in an interview, but at its core, Uber is an
engineering company fueled by data, Graves says. The team needed people who were
comfortable with analyzing the multiple data points that the company pulls from various sources,

including its apps and software platforms. These range from driver utilization and efficiency to
supply levels and underserved city regions.
"Use your imagination. Were probably measuring everything," he says.
Successful Uber employees also have a very strong work ethic and thrive in high-pressure,
dynamic situations. Graves realized they would have to dig deeper to make sure candidates had
personalities that could handle the pressure instead of "tweaking out in that environment," he
says. With those realizations, the interview process started to change.
discount peoples previous experience but put a heavy premium on their ability to solve the problems
that your business has.

"Instead of asking fluffy tell-me-a-time-when kinds of questions, we just put people in scenarios
that will most closely [resemble the] job that they will do and then create a real-world and realtime conversation that gives us an insight to their ability to handle problems on the fly," Graves
says.
While the Uber team wont disclose specifics about the exercises, they do put candidates in realworld situations by using exercises and tests that gauge both creativity and analytical thinking.
The exercises can be highly quantitative in nature, and make candidates think through real-world
business problems.
Graves says these changes has upped its hiring game and helped them zero in on exactly the right
people to fuel its growth because they have the skills to solve the challenges Uber faces. That has
helped the company grow to more than 600 employees in 80 cities in 30 countries. Graves says
that when it comes to finding the right people, the key is to find your own hiring process instead
of following someone elses.
"In our business, we have a combination of creative and analytical. Its very hard to find those
people who have a mix of kind of left and right brain but plenty of businesses need different skill
sets. I would say discount peoples previous experience but put a heavy premium on their ability
to prove to you in the interview process that they have the right skill sets to solve the problems
that your business has," he says.