THE GIG ECONOMY: CULTURE COUNTS
Date: March 15, 2017
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ORIGINALLY PUBLISHED ON MENG ONLINE – VIEW HERE 

Most of us have experienced some part of the Gig Economy―either participating in a company that provides independent contractor work (a “gig”) or purchasing products or services from an independent representative of a company based on gig staffing.  The Gig Economy offers the instant “plug and play” solution from either vantage point―company or hire―sign-up, install an app, and you’re basically ready to go.  It’s based on new technology after all.

But is it only technology?  Take Uber, for example.  Over the last few months, consumers―i.e., potential and current customers―have been party to the steady drip of Uber public relations mishaps that are redefining the brand.  And while company evangelists and technology insiders might value the culture that CEO Travis Kalanick created (along with one of the most successful Silicon Valley start-ups), most customers did not nor did they care.  Customers were interested in the service―and most recently, service issues.

 

The ROI of Culture and the Gig Economy

Yet, at some point a company’s culture―defined as “a company’s tone, operating style, standard of behavior and invisible hand that guides the firm”―does matter in the long-term health of the brand.  In 2015, Duke University’s Fuqua School of Business conducted a comprehensive study of ways that corporate culture drives profitability, acquisition decisions, and the ethical behavior of employees.  This study is one of the only to quantify company culture as well as its impact from an investment, earnings, and management perspective.

The survey reviewed data received from over 1,800 CEOs and CFOs in more than 1,400 U.S. and Canadian companies.  In doing so, it found that effective company cultures “are less likely to be associated with short-termism, unethical behavior, or earnings management to pad quarterly earnings,” as quoted from Shiva Rajgopal, Accounting Professor at Columbia Business School and collaborator in the Fuqua study.  In short:

  • 90+ percent of executives said culture is important at their firms.
  • 78 percent said culture is among the top five things that make their company valuable.
  • 92 percent said they believe improving their firm’s corporate culture would improve the value of the company.
  • 46 percent of CEOs would not make an offer on a potential acquisition if the culture was not closely aligned with their own.

However, for a company’s culture to be effective, the leadership must continually demonstrate its values in everyday dealings.  The study summarizes executives’ concerns―“executives caution time and again that the company has to ‘walk the talk’ and live the values espoused for the culture to be effective.“

 

Culture Beyond a Start-Up Mentality

Culture is a long-term proposition that is determined early on.  Uber boasts a culture defined by “Fierceness” and “Super Pumpedness”―a “do whatever it takes” mindset towards success. These points have been the company culture since inception and the CEO message which took Uber from start-up to industry disrupter and global brand.  At the same time, this bravado and attitude that helped the company to succeed now needs to evolve into solid leadership that takes the brand to the next level of growth and maturity.

Uber encountered “speed bumps” along the way to this next stage of growth.  In late 2016, Uber started to lose key executives, including its head of Artificial Intelligence and its head of products.  In addition, a #DeleteUber campaign was launched in late January 2017 due to:  (1) furor over the CEO’s role on President Trump’s business advisory council, given many Uber drivers are immigrants; and (2) Uber’s attempt to profit from a taxi protest over Trump’s immigration ban.

On February 19, 2017, former Uber engineer, Susan Fowler, alleged harassment and sexism at Uber via a blog post that went viral and prompted a widely reported internal investigation.  On February 23, Google’s Driverless Car Division (Waymo) filed a federal lawsuit alleging that a software engineer took the secrets of its self-drive technology to Uber.  A few days after that, on February 28, a video went viral that clearly showed Uber CEO Travis Kalanick arguing with an Uber driver for complaining about payment.

The Uber bottom line and brand are being impacted adversely by all of these events―and this brings investors into the conversation about culture.

Uber Market Share Decline

It’s rare for the dots to be connected so succinctly when it comes to a conversation about corporate culture.  The example with Uber and culture serves as a testament to the pace at which business is evolving and the impact of technology in that evolution.  In addition, there is a lesson here regarding the vital nature of understanding the importance of company culture beyond the start-up phase and in a Gig Economy.  How can your core values evolve with a more mature business?  What are the cultural milestones?  Is the corporate culture allowing for honest feedback and listening?  Are there communication processes in place that allow for quick assessments to be made that can trigger adaptation and change?  Every company needs to address long-term implications of its current culture and the ways that the culture will evolve with the company.

Technology can propel a brand to great heights, but the culture that underlies the brand can either support or undermine the people who bring that brand, and its experiences, to life.

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