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Seeking Scale? It’s About People, Not Process

By Julia Aspen

New York City’s yellow cabs are a universal symbol of urban transportation. A person stepping to the curb, raising their hand, and hailing a taxi is an internationally recognized image of New York’s speed — and convenience. Visitors and New Yorkers alike know the reality isn’t quite as glamorous: poor customer service, long waits in the rain watching occupied cabs zip by, and a dearth of availability in off-hours are all part of the taxi experience. Yet for decades, a NYC Taxi medallion was a prized business asset, and safe investment. Today, fewer people take taxis than ever, and the value of those medallions is plummeting — thanks to one of the world’s most valuable tech companies, Uber.

Uber’s meteoric rise might appear to be an example of an innovative idea spontaneously catching on with users and gaining widespread adoption. The reality is that Uber’s growth is the result of meticulous planning, and a maniacal commitment to process. From their beginnings in San Francisco, Uber’s expansion into additional markets followed a carefully defined process:launch quickly and without notice, recruit drivers aggressively, and engage riders as advocates for Uber beyond the platform. They used this foundation to overturn regulations, purchase political influence, and then, once a market is cornered, to adjust the economics of the platform to optimize ridership and maximize profit. From the stealthy ambassador programs they use to infiltrate the market and bypass regulations, to the less savory practices used against competitors, it’s a tried and true process that has made them dominant around the world.

Yet, Uber’s current challenges, starting with the ousting of their founder and CEO, are well-known, and they exist in spite of the detailed processes that brought the company to its present $120 billion valuation. While that may appear incongruent at first, it’s a reflection of an important shift all companies must undergo. In their earliest stages, companies succeed based on their ability to define, scale and replicate a successful process. But, as the business grows, it is people that define success. Organizations can’t scale human beings, but they can scale the culture that guides them and makes them successful.

Uber’s challenges first erupted into the limelight thanks to an essay published on the blogging platform Medium titled “One Very, Very, Strange Year at Uber” The author, former Uber site reliability engineer Susan Fowler, laid out some of the disgusting behavior she had been subjected to at the organization. As additional revelations emergedabout internal and competitive practices, it became clear that for all of its operational success in mapping, market expansion, and pricing strategy, Uber had a decrepit culture made only worse by scale.

While the company had the right product, and the right process in place to achieve massive growth, those items weren’t tethered to a culture that could engage employees to act in the organization’s long-term interest. Developing such a framework, and installing it early, is vital.

Nathan Furr, professor of innovation and strategy at INSEAD:, observes “…most startups are chasing an idea: the founders, no matter how much they believe in their idea, are operating on a guess about an unknown opportunity with a potentially unknown solution … because entrepreneurs believe so deeply in their idea, they jump into action by investing in creating a business, building a product, and then spending the money to try and sell it.”

Nowhere in that analysis of a startup’s priorities is a mention of customers, culture, values, or the tools that cause those things to align with the commercial and product elements of the business. There is no mechanism that allows an organization to form these disparate parts into a cohesive whole more effectively than their brand story. Forcing the organization to reach consensus on why it exists, and how it will communicate that message (and adhere to it), creates a framework for the tactical processes that support growth.

Uber’s scale is an outlier. But, the challenges they face are common at all levels of growth.

Nasty Gal was once the darling of the fashion world. Founded by a 22-year old college dropout who was trying to make some money selling vintage clothes, Nasty Gal tapped into a market that was in need of a new face and voice. That dropout, Sophia Amoruso, was the rockstar behind the brand. The company started on eBay in 2006, and was run out of Amoruso’s step-aunt’s house. In less than four years, NastyGal had outgrown eBay, and was recording revenue of $10 million annually, Before long, the company was headquartered in Los Angeles, had a headcount of 110 employees, launched its own in house label, and was up to $23 million in revenue. Nasty Gal had grown through a well-defined ecommerce process, and it would be tough to dispute the operational success of Amoruso, who chronicled her success in a memoir: Girl Boss.

Yet, as more employees were brought on to the team, Nasty Gal stumbled. There was a major shift in company culture when Amoruso relinquished most of Nasty Gal’s day-to-day to operations to new CEO Sheree Waterson, “who forced a series of layoffs and ‘reorganizations’ that have made employees furious, frightened, and, eventually, led many of them to quit—about 30 people in 2014 alone, by one source’s estimate—many of them in a two-month period.”

Founders intuitively understand the emotional core of their business. In most cases, the company reflects a pain they themselves experienced, and it affords them a unique solidarity with their customers. As the company grows, though, employees lose the minute-to-minute interactions with the founder that allow the ethos of the organization to transfer naturally. And, if and when new leadership is brought on, they can move the company in a new direction without a clearly codified story that is being adhered to.

Nasty Gal was a company rooted in the empowerment of woman. Built by women — for women. As it grew Nasty Girl’s internal culture strayed from the message they were communicating externally. Former employees began to speak out, and shine a light on the ”toxic”  environment Nasty Gal had become. One employee in particular, Aimee Concepcion, filed a lawsuit  when she was terminated after being harassed for her pregnancy. This, along with stories of mass layoffs, toxic behavior amongst coworkers, and the systematic termination of other pregnant employees contradicted the story Nasty Gal had been telling to the women who helped build it into the fashion giant that it was. NastyGal filed for bankruptcy in 2016, and was purchased by Manchester-based e-retailer Boohoo.com

Airbnb CEO Brian Chesky defines culture plainly: “Culture is simply a shared way of doing something with passion.” It’s a belief that operating in an environment that instills trust in people not only brings employees together but also makes the company more stable. Effective culture isn’t just great perks or treating employees well: it’s built around shared purpose in an organization, which requires a clear, compelling brand story that is embraced by all stakeholders. Airbnb, despite scale that rivals Uber, has been able to do this well throughout their growth.

Airbnb’s careers page makes it evident that the brand has a clear story at its core. That story involves team, togetherness, and community. “No global movement springs from individuals. It takes an entire team united behind something big,” makes up part of a section titled,“Together at Airbnb”. People — not processes— are the centerpiece.

Even for the youngest startup, having the right process defined for growthis essential for success. But, as the organization grows, the founding team that intuitively “gets it” touches fewer and fewer parts of the business. The only way to keep the team moving in the right direction is to have a culture that’s oriented around the brand’s core message and story, and to ensure that’s being lived each day.

Under new leadership, Uber’s process is evolving to reflect this reality. But getting it right from the beginning could have saved a lot of trouble, and more than a few jobs. Product, process and profit drive a business forward, but,no matter what, according to Airbnb’s Chesky: “Don’t Fuck Up the Culture.”

 

Julia Aspen is an integral part of the culture at Woden. Whatever your storytelling needs may be, Woden can help. Read our extensive guide on how to craft your organization’s narrative, or send us an email at connect@wodenworks.com to discuss how we can help tell your story.