CHAPTER 3
How to Think About Leadership Accountability

If you and I met, one of the things you would immediately notice is that I always have a notebook with me. I’m always jotting down notes—from meetings with clients, internal meetings with my teams, and my latest aha moments. I also keep notes digitally, but my physical notebook is my go-to device. I keep all my notebooks, and when I started to conduct my research for this book, I realized that I had 15 years’ worth of notebooks. As I dug into them and read each one, I discovered that I had, on average, two meetings per week with leaders from companies all over the world—that is almost 1,500 meetings in total. When I distilled the insights from these notes, it became clear to me how everything led up to my thinking about why leadership accountability matters. In the next section, I will briefly describe what I have learned from all those meetings and client projects, and how over time they’ve helped form the core ideas of my life’s work.

The Timeline of Leadership Challenges

After analyzing my notes, I immediately saw how leadership challenges evolved and changed over time. There were five broad themes that surfaced (see Figure 3.1). Let’s explore each of them in more detail.

The figure shows the timeline of leadership challenges. From left-to-right, the first point is labeled as “Leadership becomes a business issue,” the second point as “Companies begin to take an integrated approach to leadership development,” the third point as “Leaders need capabilities to deal with change and ambiguity,” the fourth point as “Companies shift their business models and strategy,” and the fifth point as “Leadership accountability becomes a critical business challenge.”

Figure 3.1 The Timeline of Leadership Challenges

1. Leadership Becomes a Business Issue

For many years, one of the challenges I repeatedly saw in my client conversations was that senior executives were not paying attention to leadership within their companies. Some delegated it exclusively to the human resources function because it wasn’t something they considered to be strategic. However, my colleagues and I began to observe several trends that would have a significant impact on organizations. The more prominent ones were the shift in workforce demographics, the increase in global competition, and the impact of new technologies. These trends were going to challenge organizations from a talent perspective—from succession management to leadership development and employee engagement. In 2005, my colleague David Weiss and I published the book The Leadership Gap. It served as a rallying cry to help organizations begin to think about leadership more strategically.

2. Companies Begin to Take an Integrated Approach to Leadership Development

As senior executives became more enlightened about this business issue, they began to see leadership in a more strategic way. I found that they then started to scrutinize their internal organizations’ leadership development practices. Many didn’t like what they saw. At the time, many organizations had fragmented offerings—coaching programs, assessment tools, succession planning, and leadership programs, all implemented in a piecemeal fashion. Everything was disconnected, and nothing aligned with the business strategy. I remember meeting with the global head of leadership for a large financial services organization. She was new to her role, and in her first three months she reviewed the company’s leadership practices. She discovered that the company had amassed close to 40 different leadership models. In the end, the company had no consistent set of leadership expectations for all leaders. She said in the meeting, “I need your help to get us from 40 frameworks down to one.”

Organizations needed help to learn how to think about leadership development in a more integrated manner. In 2007, we released another book, Leadership Solutions. My co-authors, David Weiss, Liane Davey, and I presented a unified framework called The Leadership Pathway. It helped companies think about all aspects of leadership development in a more integrated manner. Organizations began to have success with these ideas. Then something happened that changed everything.

3. Leaders Need Capabilities to Deal with Change and Ambiguity

In 2008, the financial crisis hit. Most companies were fighting for their very survival. They had to cut costs. Investment in leadership development slowed down or stopped entirely. Moreover, I found that some companies, especially those with a more strategic and long-term perspective, actually increased their stake in leadership development. They did so because they believed that they needed to support leaders during a tough time.

We had many organizations reach out for ideas on how to help leaders lead through a dramatic period of change, uncertainty, and ambiguity. Many clients admitted that most of their leaders had never experienced anything like this before. All they knew was leading in good times with a strong economy. Now their world was turned upside down. Many people lost their jobs. Those who remained were under tremendous pressure to deliver results under challenging circumstances. The financial crisis also put a big spotlight on corporate scandals, corruption, and bad leadership behavior. Everyone realized that leaders were not living up to high standards of behavior. The problem was pervasive in business and across society.

4. Companies Shift Their Business Models and Strategy

As things began to settle down after the financial crisis, I noticed another couple of trends start to emerge. First, the financial crisis was a huge wake-up call for many companies and their leaders. The business environment in which they operated had changed for good. The financial crisis wasn’t just an economic blip but a fundamental transformation. New challenges became apparent—digital disruption, regulatory changes, competitive pressures, and increasing customer demands. Many of my clients needed to redefine their business models and strategies and take their organizations in very different directions.

I also started to see my clients realize that their shifting context had direct leadership implications. They needed their leaders to step up in significantly different ways than they had in the past. I began to hear the term inflection point a lot. I learned that when a company is at an inflection, everything comes under a microscope, including talent. The clients I spoke with said, “We need our leaders to be stronger than they’ve ever been, but they are not.” More of my clients were starting to express frustration. By this time, they were all investing in leadership development again, but they didn’t feel that they saw stronger leadership from their leaders. What was going on?

5. Leadership Accountability Becomes a Critical Business Challenge

As I began to see the same patterns with client after client, I knew in my gut that there was something else happening. At the same time, there were plenty of headlines suggesting a problem with leadership. Whether it was political leadership at all levels of government or corporate leadership at the most senior ranks, leadership was becoming disgraceful. Studies continued to confirm that trust and confidence in senior leaders and our institutions, in general, were in constant decline.

That’s when I realized that the problem companies were facing was about leadership accountability. Organizations had too many people in leadership roles who didn’t fully appreciate or understand what it meant to be a leader. All of this was quite understandable given all the changes and turmoil that companies and their leaders had faced during and after the financial crisis. However, as things settled down post-recession, we needed to do a leadership rethink.

This “re-think” led me to write The Leadership Contract. It came out in July of 2013, and the ideas immediately resonated. Since that time, the book has spread around the world. I’ve continued to have hundreds of conversations with leaders like you, hearing about the leadership accountability challenges that they face. I’ve learned about the frustrations people have with the disappointing leadership demonstrated by their CEOs, boards, and executive teams. In addition, many people have also expressed frustration about middle managers, often described as the “layer of clay” in organizations because they impede change and strategy execution. There were also frustrations with front-line leaders because they didn’t know how to lead teams and be good managers. Then there were countless discussions about approaches to leadership development. There was widespread recognition that the traditional ways of developing leaders were becoming less and less effective, and leaders were looking for a new way forward.

What I also learned through all these discussions is that organizations approach accountability differently. Some take a direct, heavy-handed, and even fear-based approach: “YOU shall be accountable!” Of course, this is often met with resistance and resentment, especially if the senior leaders themselves do not model accountability in how they lead. In these instances, accountability becomes uninspiring and demotivating. Then mediocrity seeps into an organization, creating a more serious problem to solve.

On a personal level, I’ve had very different experiences with accountability. I’ve been lucky to work in environments where everyone is committed to stepping up, taking ownership, and working together to deliver results. When you are in this kind of environment, accountability is inspiring. You don’t need your leaders to demand accountability because they demonstrate it in how they lead. It can also be vicarious—you look at how your colleagues show up, and they motivate you. You then feel an obligation to do your part to achieve success. Those who struggle or are unwilling to be accountable stick out from everyone else. In turn, they either join in, leave, or are asked to leave. I believe this will be the key to drive stronger leadership accountability in organizations—doing it in a way that inspires people, rather than evoking fear, resentment, and animosity.

Let’s continue to explore these ideas as we look next at how you need to think about leadership accountability. We will start by using the experience of Uber, during a particularly challenging six-month period in early 2017 that saw a tremendous upheaval in the company.

A Turbulent Six Months at Uber

As you may know, Travis Kalanick and Garrett Camp started a company called UberCab in 2009. They were pioneers of the new “sharing economy.” Their business was built on a simple yet powerful idea—a ride-sharing company that enabled anyone to start earning an income by helping people get a ride from one destination to another.

The company quickly became a Silicon Valley darling. Everyone loved it. It was cool to be a customer. Even cooler to work there. Everything was going great until early 2017 when, almost overnight it seemed, things came to a screeching halt. A series of events unfolded that damaged the company’s reputation, and eventually led to Kalanick being kicked out as its CEO and, in the process, experiencing a very public fall from grace. Let’s review some of the highlights of what transpired.

In January 2017, Kalanick joined a business advisory council set up by the newly elected U.S. President Donald Trump. It would turn out to be a wildly unpopular move with Uber’s young core users.1 A few weeks later, the company was left reeling from an explosive blog post from Uber software engineer Susan Fowler.2 Her blog post, published on February 19, 2017, was entitled “One Very, Very Strange Year at Uber.” In it, she detailed a toxic culture of sexual harassment at the company. She shared her personal experiences of the inappropriate treatment and behavior of many of the male managers. When she complained to human resources, they ignored her. Fowler’s blog post went viral, and Uber was justifiably under attack for its culture of sexism and toxic masculinity. The next day, Uber retained Eric Holder and Tammy Albarrán, partners in the law firm Covington & Burling LLP.3 Their job was to conduct a thorough and objective review of the issues raised in Fowler’s blog.

Maybe the mounting stress was too much for Kalanick. A few weeks later, a video surfaced where he was caught on dash cam in an argument about fares with Uber driver Fawzi Kamel.4 Kamel was driving Kalanick and proceeded to express his frustration with Uber’s fares and changing pricing policies. Kalanick maintained his composure for most of the discussion but eventually began to lose his patience. He accused the driver of not taking personal responsibility for his situation, preferring instead to blame others. Things got a little heated, and Kalanick darted out of the car. Now, under normal circumstances, this video probably would not be a big deal. However, in light of all the other issues going on with the company, it just added fuel to the fire that was already starting to burn out of control. Kalanick apologized for his behavior and treatment of Kamel. He publicly admitted that he needed help.

Unfortunately, things got worse for the company.

Other crises emerged. For example, a self-driving car crashed in Arizona, and the company temporarily suspended the experimental program.5 A lawsuit alleged Uber had stolen trade secrets from Google in its rush to develop self-driving car technology.6 As all these things started to come out, a downward spiral began to take hold.

In late May 2017, the company announced that it had lost $708 million in the first quarter alone. The head of finance left the company.7 By now, industry analysts were starting to question everything about the company and its operations.

Kalanick was under tremendous scrutiny, as was Uber’s culture. It became clear that under his leadership, the company had developed a toxic culture, one that was aided and abetted by executives and even HR leaders throughout the company. It wasn’t just the sexism and sexual harassment either, although that alone would certainly have been toxic enough. Aggressive behavior was core to Uber’s corporate values, which included phrases like “Meritocracy and toe-stepping,” “Don’t sacrifice truth for social cohesion,” “Always be hustlin’,” and “Principled Confrontation.”8 Performance reviews at the company ranked employees against one another and linked those rankings to compensation, creating a dog-eat-dog atmosphere at every level.9

In early June 2017, the company announced that it had hired Frances Frei, a senior associate dean for executive education at the Harvard Business School.10 Her job was to help fix the broken culture and develop its leaders and managers. On June 13, 2017, the company released a report outlining 13 comprehensive recommendations based on the internal review conducted by Holder and Albarrán of Covington & Burling LLP. The recommendations covered a broad range of critical activities, from realigning Kalanick’s responsibilities, to hiring new executives, using performance management to hold senior leaders accountable for their behavior, challenging the board to embrace more oversight of the CEO and executive team, reformulating the organization’s existing values, improving diversity and inclusion practices, conducting mandatory leadership training for senior executives and other leaders and managers, and improving the HR function of the company. Then the company fired 20 employees after an internal investigation revealed 215 complaints about everything from discrimination to sexual harassment and bullying.

Also, on June 13, 2017, Kalanick announced he was taking a leave of absence from the company. Seven days later, he resigned as CEO after receiving several personal letters from board members who had revolted against him. The day-to-day management of the company was turned over to a committee. However, there were issues here as well. The Wall Street Journal described the culture among the senior executives as a real-life Game of Thrones.11 Individuals jockeyed for status and influence while Kalanick pulled strings from behind the scenes. When this happened, senior executives were distracted with their political games and no one was left to pay attention to running the company.

Things grew even worse when the exodus started happening. A parade of senior leaders left the company.12 It appeared as though things were out of control and the Uber house was not in order. The messy situation also meant that potential outside hires approached for the COO and CEO roles publicly withdrew their names from consideration.13

Arianna Huffington, a member of the Uber board, would proclaim the “new Uber” would stop hiring “brilliant jerks.”14 In late August, the company announced Dara Khosrowshahi, former CEO of Expedia Inc, as the new Uber CEO.15 Immediately, Khosrowshahi set the tone as a more mature and measured leader, committed to transforming the culture of the organization and restoring faith in its future.

In many ways, this story came to an end in December 2019 when Kalanick severed his ties with the company he founded. He sold all his shares and stepped down from the board. He announced he was going to focus his energy on new business and philanthropic endeavors.

New York Times technology writer Mike Isaac shared an interesting reflection on the company in his book Super Pumped: The Battle for Uber.16 In an interview promoting his book, Isaac explained that one of the most important purposes of the book was to show that company culture is vital from the very beginning of a start-up. He then said it needs constant attention, or things can get gnarly and out of hand, as they did at Uber.17 To me, that’s a good synopsis of the Uber story.

What did you take away from this story of Uber’s remarkable six months? What were the leadership and culture issues that plagued the organization? In what ways could things have turned out differently for Uber? Let’s explore some of these questions.

Leadership Accountability—Why It Matters

The story outlined above is rather dramatic, even unbelievable in many ways. The number of things that went wrong in a six- to seven-month period was staggering. In the end, Uber’s challenges weren’t random. They all seemed to unravel in a short period, but in reality, they had been taking hold for years. Why did this all happen, and could it have been avoided?

My intent here is not to criticize or condemn. Instead, it’s to use this brief and very public period in Uber’s history to draw valuable lessons for you and your organization. We will do this by taking a systemic view of the situation and considering things from the perspective of the CEO, the board, the senior executives, managers, and the HR function. Each plays a role in either enabling strong leadership accountability to take hold or impeding it from happening at all. Let’s explore these ideas further.

  • The Role of the CEO. In the case of Uber, one could easily say it’s all about the leader and blame Kalanick. As the famous saying goes, “a fish rots from the head first.” There is some truth to this perspective. Kalanick set the tone from the top. As a charismatic CEO and cofounder, many of his employees adored him. When he resigned, over 1,000 of them sent letters supporting him and showing their disapproval of his departure from the company. Even considering everything that unfolded, employees still admired him. To his credit, he did establish a company that disrupted an industry. He was the visionary founder of a real Silicon Valley “unicorn.” The hype surrounding him and his company was considerable. However, the aggressive culture and the inappropriate behavior on the part of Uber leaders and managers were known and, in many ways, even celebrated. To say everything that happened to Uber was a result of Kalanick would be inaccurate. He needed to be more accountable at a personal level and to set the tone of accountability for the rest of the organization.
  • The Role of the Board. Where was the leadership accountability of Uber’s board in all of this? They also bear responsibility for the company’s problems. How much did they know about the cultural issues at the company? Did they turn a blind eye to the bad behavior of Kalanick and the top leaders, or did they not bother to look too closely? When they saw their CEO struggle, did they support him? Did they spend time thinking about the reputational risk to the company? Did they consider the risks to Uber’s investors and customers? Boards today are facing more intense scrutiny for the leadership of a company. We already see increased vigilance and action on the part of boards when CEOs or other executives misbehave. Directors will need to understand how they need to step up and be accountable as leaders and work with the CEO to set the right tone for the rest of the organization.
  • The Role of the Executive Team. Let’s now shift our focus to Uber’s executive team. They must surely have seen a lot of the inappropriate behavior happening in the organization. They most likely engaged in it or condoned it. How did they support their CEO through the challenges the company was facing? If they saw all these issues play out in the months or even years leading up to 2017, where were they? Did they step up, or keep quiet and go along for the ride? The executive team needed to be accountable, and it wasn’t. Did they think about the broader leadership culture of the organization? Were they supporting leaders at all levels through their development? Were they glorifying the brilliant jerks? Did they turn a blind eye to complaints about harassment and inappropriate behavior on the part of many managers? Again, it’s easy to put all of this on the CEO, but the executive team also needed to bear responsibility.
  • The Role of Managers. Let’s also look at the role of managers and supervisors deeper in the organization. Many leaders don’t appreciate that they also set the tone for employees. Their behaviors shape the culture every day. In Uber’s case, did managers engage in bad behavior because it’s what everyone else did? Did any of them stand up to say, “This is wrong and unacceptable”? Alternatively, did they say, “We’re following orders”? Did many see what was happening and choose to keep quiet?
  • The Role of Human Resources. Uber’s HR function also bore responsibility for the situation the company found itself in during 2017. In fact, in the summer of 2018, the head of HR left the company after she dismissed claims of racial discrimination from employees. Companies need to look to their HR function to set the tone for the rest of the organization. HR needs to be the conscience of the organization and challenge leaders at all levels when their behavior is causing problems. In my experience, companies often underestimate the price they pay when the HR function is weak and not doing its job. It seems this was the case at Uber.

Final Thoughts

Leadership accountability has become a critical business issue. In many ways, it is the primary leadership challenge facing organizations today. To effectively address this issue, it is crucial to think about it in a systemic manner. Many factors contribute to an organization’s degree of leadership accountability. As we saw with the Uber story, when it is weak, disaster can ensue in an instant.

Gut Check for Leaders: How to Think About Leadership Accountability

As you think about the ideas in this chapter, reflect on your answers to the following Gut Check for Leaders questions:

  1. What insights did you gain about the role of a CEO in driving strong leadership accountability?
  2. What do you believe should be the role of the board in helping set the tone and drive strong leadership accountability?
  3. How should senior executives and managers demonstrate strong leadership accountability in their roles?
  4. In what ways should the HR function play a role in supporting an organization to drive strong leadership accountability?

Notes

  1. 1Greg Bensinger, “Uber Technologies CEO Travis Kalanick Leaves President’s Business Council,” The Wall Street Journal, February 2, 2017, https://www.wsj.com/articles/uber-technologies-ceo-travis -kalanick-leaves-presidents-business-council-1486073997.
  2. 2Susan Fowler, “Reflecting on One Very, Very Strange Year at Uber.” Susan Fowler Blog, February 19, 2017, https://www .susanjfowler.com/blog/2017/2/19/reflecting-on-one-very -strange-year-at-uber.
  3. 3Greg Bensinger, “Uber Fires Executive Who Shared Rape Victim’s Medical Records,” The Wall Street Journal, June 7, 2017, https://www.wsj.com/articles/uber-fires-executive-who-shared-rape -victims-medical-records-1496891613.
  4. 4Greg Bensinger, “Uber CEO Says He Needs ‘Leadership Help’ After Video Shows Him Berating Driver,” The Wall Street Journal, March 1, 2017, https://www.wsj.com/articles/uber-ceo-says-he -needs-leadership-help-after-video-shows-him-slamming-driver -1488347091.
  5. 5Greg Bensinger, “Uber to Let California Self-Driving-Car Permit Lapse,” The Wall Street Journal, March 27, 2018, https://www .wsj.com/articles/uber-to-let-california-self-driving-car-permit -lapse-1522186240.
  6. 6Tim Higgins and Jack Nicas, “Alphabet’s Waymo Sues Uber Over Self-Driving Car Secrets,” The Wall Street Journal, February 23, 2017, https://www.wsj.com/articles/alphabets-waymo-sues-uber -over-self-driving-car-secrets-1487894378.
  7. 7Greg Bensinger, “Uber Posts $708 Million Loss as Finance Head Leaves,” The Wall Street Journal, June 1, 2017, https://www.wsj .com/articles/uber-posts-708-million-loss-as-finance-head -leaves-1496272500.
  8. 8Greg Bensinger, “Uber CEO Travis Kalanick Quits as Investors Revolt,” The Wall Street Journal, June 21, 2017, https://www.wsj .com/articles/uber-ceo-travis-kalanick-resigns-1498023559.
  9. 9Greg Bensinger and Kelsey Gee, “Leaderless Uber Scrambles to Prevent Employee Exodus,” The Wall Street Journal, June 23, 2017, https://www.wsj.com/articles/uber-makes-quick-workplace -reforms-to-calm-strained-nerves-1498237561.
  10. 10Greg Bensinger, “Uber Board to Discuss CEO Travis Kalanick’s Possible Leave of Absence,” The Wall Street Journal, June 11, 2017, https://www.wsj.com/articles/uber-board-to-discuss-ceo-travis -kalanicks-possible-leave-of-absence-1497172226.
  11. 11Greg Bensinger and Kelsey Gee, “Uber: 14 Bosses, One Corporate ‘Game of Thrones’?” The Wall Street Journal, June 14, 2017, https://www.wsj.com/articles/uber-14-bosses-one-corporate -game-of-thrones-1497468304.
  12. 12Greg Bensinger, “Uber’s President of Ride-Sharing Jeff Jones Resigns,” The Wall Street Journal, March 20, 2017, https://www .wsj.com/articles/uber-president-of-ride-sharing-jeff-jones-resigns -1489961810.
  13. 13Greg Bensinger, “Uber Chairman Says Travis Kalanick Won’t Return as CEO,” The Wall Street Journal, August 7, 2017, https://www.wsj.com/articles/uber-chairman-says-travis-kalanick-wont -return-as-ceo-1502141814.
  14. 14Amanda Holpunch, “ ‘No More Brilliant Jerks’—Arianna Huffington Ushers in the New Uber,” The Guardian, July 30, 2017, https://www.theguardian.com/technology/2017/jul/30/uber -ariana-huffington-travis-kalanick-ceo.
  15. 15Greg Bensinger, “Uber Selects Expedia CEO Dara Khosrowshahi to Lead Company,” The Wall Street Journal, August 28, 2017, https://www.wsj.com/articles/uber-selects-expedia-ceo-dara -khosrowshahi-to-lead-company-1503881482.
  16. 16Mike Isaac, Super-Pumped: The Battle for Uber (W.W. Norton and Company, 2019).
  17. 17Brian Feldman, “ ‘I’ve Never Seen a Cast of Characters That Willing to Kill Each Other’: Mike Isaac on Chaos at Uber,” New York Magazine Intelligencer, September 3, 2019, http://nymag .com/intelligencer/2019/09/super-pumped-author-mike-isaac-on -ubers-toxic-culture.html.
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