Uber CEO finds out what it’s like to be an Uber driver

by Rita Gunther Mcgrath: Associate professor at Columbia Business School.
CEOs make a lot more money, have a lot more autonomy and enjoy a lot more control, than the people working for them. The danger is that they can develop incredible blind spots, lose the trust of their people and generally look like the A**holes my buddy Bob Sutton talks about. One antidote? Take some time on the front lines of your business.

Over the years, I have had my quibbles with Uber’s business model. Their use of massive amounts of free money to subsidise both riders and drivers, their bullying localities into depriving licensed cab services from income and their notion that network effects will give them a lasting advantage have all led me to question its business model.

But, hey, here’s a place where Uber’s CEO, Dara Khosrowshahi, gets major brownie points in my eyes. He took a page out of the playbook of the worlds’ most successful retail leaders and decided to put himself on the front lines of the customer experience. He decided to become an Uber driver! Wow, that’s taking a major step forward into understanding what’s going on at the ‘edges’ of his business.

Project Boomerang

Post-pandemic, attracting and retaining drivers has been one of Uber’s biggest challenges. Riders were back, ready and willing, but drivers? Not so much.

As Khosrowshahi told the Wall Street Journal, “I think that the industry as a whole, to some extent, has taken drivers for granted,” He hadn’t driven on Uber before because it wasn’t his biggest priority - drivers had always been in abundant supply. The pandemic-fueled labour shortage forced a company-wide introspection, he said, to “re-examine every single assumption that we’ve made.”

Carol Chang, Uber’s head of driver operations, is credited with coming up with the idea of having executives at the company, beginning with the CEO, experience first-hand, what their drivers were going through. In a mind-blowing 227 page presentation, she pointed out that the company was its own worst enemy. As the Journal reports, she outlined how the company’s three competing objectives of keeping costs low, avoiding legal risks and attracting drivers had created what she called a “triangle of death,” paralysing Uber’s ability to do more for workers. The company would be unable to move forward if it rigidly stuck to all three of these goals.

So Khosrowshahi started, as one does, by buying a used Tesla. He then signed up as a driver, with the moniker “Dave K.” That was just the beginning of a series of unsettling discoveries of how difficult the driving experience is for his company. He admits to being ‘surprised’ at how many issues the company creates for its non-employee, at-will workforce.

Low pay, clunky software, tip baiting, rude passengers and more

For starters, the sign-up process was different, depending on whether you wanted to drive people around or deliver food. It was “clunky” by his own observation. Once you signed up, navigating unfamiliar restaurants (who themselves were often in experimental mode) was a challenge. Sometimes, while a driver was en route to a pickup, the next pickup would take over the software, basically erasing the instructions for the first ride the driver was actually on! And – surprise! – sometimes the app would combine orders from a single restaurant without notifying the driver that he or she would have to make multiple stops.

Once the CEO personally had these experiences, operational improvements followed. He’d spend his weekends delivering food, then outline potential improvements with screen shots and suggestions to his team. His experiences served to convince him that Uber “had to fundamentally change how we built our product and do it faster than our competition.”

The sign in process was designed to make it easier to switch between food delivery and driving people. Drivers were provided with videos that outlined how they should navigate the restaurants and make it easier to do their jobs. And trips involving complex logistics – such as multiple stops – were clarified.

A bigger problem, and one that isn’t solved yet, is something called “tip baiting.” To get a driver motivated to deliver food quickly, customers would enter large prospective tips in the app, only to cut the amount after the job was complete. That one is tricky – people don’t want to be forced to give a large tip in advance before they know whether the service will be provided adequately.

When he went from food pickups to driving actual passengers, the experience only got worse. For starters, he couldn’t see the drop off locations and estimated pay for a given trip in advance, making it impossible as a driver to know whether a trip was worthwhile. When he rejected a few pickups, the app punished him by taking away the ability to see where he was being directed. He found that so personally frustrating that it became a mandate for drivers to be able to see where a trip would take them and pick and choose accordingly. This isn’t a new problem for companies providing people with rides – destination discrimination has been a perennial problem in places like New York for decades. To no one’s surprise, making the destination transparent for drivers has now become a top corporate priority.

Other executives who drove found other issues that turned out to be straightforward to fix. Uber’s maps, for instance, looked great in the office. Under the glare of bright sunlight? Not so much.

Riders also behaved badly in ways that took Khosrowshahi by surprise. They’d gab on their phones, talk about personal issues or even blab about confidential company topics as though he wasn’t even there. And riders have a lot of power, even when they misbehave – a driver’s rating can be on the line with every drive taken. Even the CEO of the company admits to nervousness that a bad experience could blemish his ratings.

More importantly than cosmetic changes, Uber’s executives also renewed a focus on safety. The app’s directions were reprogrammed to avoid left-hand turns at dangerous intersections. They are also experimenting with video recordings of the car’s interior, recognising (if a little late) that drivers are rightfully concerned with their own safety when being exposed to the public at large.

New front lines

Khosrowshahi’s experience as an Uber driver gave him a new perspective. As he said, “Historically, we’ve always put a premium on the rider experience.” But being a non-founder CEO has allowed him to challenge old decisions. Uber needs to win the “hearts and minds” of drivers, too. This has made a competitive difference. Lyft, Uber’s most significant direct competitor has been taken by surprise, belatedly copying Uber’s driver-friendly policies and cutting staff in an attempt to catch up. The company has just announced layoffs totaling 30% of its staff.

So this is all good for Uber, but….

It doesn’t address the underlying structure of the gig economy workforce, in which drivers feel they are just cogs in a merciless algorithmic machine. As recently as last month, reports of unfair treatment of drivers have attracted attention by interest groups, politicians and regulators. A report looking at California data found that ride-share drivers wages were the equivalent of illegally low – sometimes as low as $4.10 per hour, and far less than the theoretical $11 per hour drivers would make were they to be classified as employees.

A report published in the New York Times found that New York City ride-share drivers now earn less than their taxi-driving equivalents. Protests and very public objections to Uber and Lyft’s employment practices are becoming commonplace. And, a recent study found, one in six Americans has had some direct personal exposure to the working practices of the gig economy. Sergio Avedian, senior contributor at industry blog The Rideshare Guy, observed “The only reason to be involved in the gig economy is the flexibility,” referring to policies that let rideshare drivers set their own hours. “Uber’s not going to do that and give you employment rights. If you put health insurance, Social Security taxes and other benefits in, Uber will go to zero.”

Riders have become hooked on cheap rides, public transportation has suffered, and gig economy workers seem to be bearing the brunt. While a CEO empathising with his workforce is without a doubt a good thing, will it be enough to preserve the structure that makes money-losing ride share companies profitable? The verdict is still out.

Useful resources:
Rita Gunther McGrath
Rita McGrath works extensively with leadership teams in Global 1000 companies who wish to develop their capability to drive growth.
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