Uber at Crossroads Case

Uber at Crossroads Case

Uber at Crossroads case delves into the history of Uber as a company, its business model, and how it differs from the traditional taxi system and its competitor, Lyft. The case set in 2017 delves into the unusual scandals that had plagued the company by that time. Uber’s business has been largely successful but has a poor public image. The company is accused of ignoring local legislation whenever it moves to new locations. Also, the company gets criticism for tolerating a toxic and sexist corporate culture. Uber needs to review its broken culture and improve its public image to compete successfully in the future.

Analysis

Mini Environment

One of the main issues examined in the case is Uber’s tipping problem. Initially, Uber lacked a tipping function in its payment system, arguing that tipping would encourage drivers to spend more time in wealthy neighborhoods. After intense pressure from drivers and other stakeholders, a tipping system was introduced (Oei & Ring, 2017). However, the tipping culture has largely been unsuccessful. In particular, only 16% of drivers say they have been tipped frequently, while 60% of the drivers have never been tipped (Masanell & Elterman, 2010). Besides, tipping at the company is biased because young female drivers are more likely to receive a tip compared to their male counterparts, a sign of a sexist culture. Uber drivers are less motivated to perform due to the company’s failure to facilitate and encourage customer tips.

Another problem is associated with driver payment and expenses the drivers incur to operate cars. Before 2016, drivers had to wait a week to withdraw their earnings, but an instant payment system was introduced in 2016 (Masanell & Elterman, 2010). Besides, drivers have to pay for other expenses such as insurance remittances, healthcare policies, and the cost of car maintenance (Oei & Ring, 2017). Ordinarily, most companies would cater to these expenses to facilitate their workers (drivers in this case) to work effectively. Despite the high cost to drivers, the company has progressively increased the commission charged on rides. From an initial 10%, the company has since raised its commissions to 20% and 25% (Masanell & Elterman, 2010). Drivers complain that these commissions are too high as they incur further costs to maintain cars and pay for insurance policies leaving them with little to take home.

Social Analysis

Uber condones a sexist culture by ignoring instances of rape and sexual assault allegations. For instance, in 2017, an Uber engineer named Susan Fowler spoke about how the company ignored her sexual assault claims against one of the company’s managers (Masanell & Elterman, 2010). The company claimed the accused manager was a high performer; hence, the company could not afford to lose him. This is just one of many sexual assault allegations purportedly ignored by the company due to an inherent sexist culture. Furthermore, the company is associated with racial discrimination. At one point, drivers sued the company for dismissing drivers indiscriminately due to the failing facial recognition technology.

Technical Analysis

A key element in technical design is how safety is implemented at the company. First, the company has made its application so that only trusted driver contacts can access the driver’s location (Masanell & Elterman, 2010). Moreover, calls made from the application do not display either the client or driver’s contact to protect their safety. However, the company’s employees have sometimes used a feature called Gold View to access and view customer data, compromising privacy. Uber also envisions introducing self-driving cars (Masanell & Elterman, 2010). Although this is a positive, innovative action, it is likely to receive intense resistance from the traditional taxi industry since it will render some drivers jobless.

Redesign Proposal

Given the poor customer experiences and some rider complaints, Uber ought to make operational and branding redesigns. One of the main areas of concern is the commissions charged on rides. Uber has since cut the commissions to 18%, but drivers still feel such commissions are high (Masanell & Elterman, 2010). To that end, the company charges commissions based on their country of operations. In areas where fuel prices and the cost of living are high, the company should consider introducing lower commissions to encourage the uptake of their business model.

Furthermore, the company should implement stricter internal regulation measures to prevent the sexist culture from penetrating further. I would recommend the formation of internal ad hoc committees to investigate specific sexual assault allegations. After completing investigations, punitive measures, including involving law enforcers, will come in handy to prevent further cases.

One of the changes I would implement at Uber is to raise Uber rates. Given the relatively low rates Uber charges compared to traditional taxis, raising the rates from $1.75 to $2.0 per mile will ensure that both the driver and the company have enough to share. Such a move will solve concerns about commissions and poor tipping culture. Consistently, Uber should consider classifying its drivers as employees, not independent contractors, which may cost the company in the short run since it has to align with local regulations, but it will go a long way in addressing its grievances.

Milestones

The first milestone will be service redesign. Given the complaints raised by drivers, the company should redesign its billing system to ensure drivers are well taken care of. This should include further lowering of commissions to 10%. Another milestone will be the improvement of the tipping system. To that end, more than 70% of all Uber drivers should receive regular tips.

Conclusion

‘Uber at Crossroads’ case delves into the design issues facing Uber’s mini-environment, social issues, and technical designs at Uber. The company may be doing well on the business side, but its reputation is in jeopardy if the recent scandals and complaints are anything to go by. Drivers are concerned about the high commissions retained by the company and the lack of an effective tipping system. Also, there are claims that Uber has tolerated a toxic and sexist culture due to their inaction whenever sexual assault claims occur.

References

Masanell, R. C., & Elterman, K. (2010, September). Uber at a Crossroads (2017) – Case – Faculty & Research – Harvard Business School. Www.hbs.edu. https://www.hbs.edu/faculty/Pages/item.aspx?num=58609

Oei, S. Y., & Ring, D. M. (2017). The tax lives of Uber drivers: evidence from internet discussion forums. Colum. J. Tax L., 8, 56.

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Instructions
Review the Uber at a Crossroads case and the lecture notes for this week.

Review the history of Uber and its business model, including the ways it differed from that of the traditional taxi industry and from its competitor, Lyft.

Conduct mini environmental, technical, and social analyses. Identify and explain at least two elements that are significant for each analysis, and justify why they are significant.
Develop a redesign proposal based on your environmental, technical, and social analyses. What changes would you make? How would you implement them? Draft some key milestones you would present to executives.
Organize your paper into sections using the following headers:

Introduction
Analysis
Redesign
Conclusion
Each section should be written using well-developed paragraphs. Within the assignment, reference key concepts in the course, as well as course readings. Cite sources in APA style.

Formatting
Adapted APA:
Style: Your paper should be written using well-developed paragraphs.
Length: Your paper should be approximately 2-3 pages in length. Points will be deducted for papers that exceed the specified length
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