Uber Drives Restructuring for Success

I’ve heard several wonder aloud words to the effect,

What in the world is happening to Uber; first two C-level departures, then several Board departures, and most recently 1/3rd of the marketing force has been let go, with talk of hiring freezes in marketing and technology development… really?”

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To some it appears Uber is in some serious trouble, or at the very worst, they’ve lost their sense of the importance of the customer.  I disagree with both, and in fact, this work force reduction move on the 29th is not surprising, but foreseeable if not completely sensible.  Why?

A Predictable Meteoric Rise

Let’s start by taking a quick look at the past 118 months of Uber’s unchecked marketing growth history to understand how in less than a decade, they could have accumulated well over one thousand headcount in marketing across the globe. Consider this time line of selected events:

  • March 2009: Uber was founded and the first passenger took an Uber in July of 2010.  Marketing peeps were needed to drive awareness, generate buzz, and acquire social influencers for the brand.

  • December 2011: Uber launches in Paris.  Uber’s first international marketing team was mostly likely created with the need to hire content, social, brand, events, analytics, and other marketing roles.  

  • April 2014: Uber has expanded to 100 US cities.  More marketing positions likely created in the regions and cities to address localized brand and product awareness, knowledge, consideration, and to earn selection.  Makes sense; Uber is known for focusing on local marketing efforts and events. 

  • May 2014: Uber Eats launches in Chicago, Los Angeles and New York City.  Again, Marketing Managers, mar-com specialists, copywriters, and more are likely added to specifically focus on the “Eats” business.

  • December 2016: Uber ride business is expanding in 500 cities.  This catalyzes continued regional and local marketing staff growth to support 400 new cities added in less than 2 years.

  • May of 2017: Uber Freight launched and the rides business was in 24 countries.  More business specific marketing roles were most likely brought on board to support Freight and the rides business possibly had marketing teams in most of the 24 countries to support the rides business.

  • March 2018: Uber Health launches.  More marketers are likely added to focus on the Healthcare shuttling business. 

  • April 2018: Uber acquires Jump Bikes, rebranding and launching Uber Bikes. Again, a new platform precipitating needs for marketing professionals.

  • June 2018: Uber is now operating rides business across 5 continents; no small feat for any company, let alone a company that is just 9 years young.

  • September 2018: Uber’s “We ignite opportunity by setting the world in motion” campaign launches with a focus on the customer and a new global identity.

  • November 2018: Uber launches rider loyalty program in select cities, which assuredly created additional marketing positions to work on the loyalty programs acknowledged to be very important to the Uber brand.

  • February 2019: Uber expands Canadian operations, launching in Saskatoon.

  • May 2019: With $8.1B hauled in from its IPO and a corresponding valuation estimated at $82.4B, there were in excess of 150 marketing positions open on the Uber Careers web pages.

In just nine years since Uber’s launch, the company is supporting five different business lines across the globe.  During these formative years the company has been in a race to the top for their ride and food delivery businesses against competitors in every country where they did business.  

In short, pre-IPO this was a race to get as big as possible, as fast as possible.

Bracing for Impact

It’s evident that the competitive pressures on Uber fueled the company’s need to add more and more regional and local talent to fight for market share.  Candidly, I’m surprised there weren’t more than 1,200 people in the Uber marketing organization around the globe. 

With all that capitalization, all that growth, and at times, breathless media coverage, the expectations were sky-high going into their IPO, and rocketed the pressure into orbit following a lackluster pop.  From there it was up to their CEO to make “market approving” decisions.

So, sure enough, Wall Street’s reaction to Uber’s first earning call resulted in a shake-up in executive management resulting in the departure of both the COO and CMO.  So, to some that might be “wow” enough alone, given the stated reasons and approach to the resulting reorganization.

But then came Monday, July 29th when Uber cut 400 individuals from their global marketing team.  Add to that in recent months Uber has lost three members from its now nine-member board of directors.

The knee-jerker social media commentators all made their predictable responses. I am on the opposite side of their predilections for demise.  Sure, the brand name is aggressive; they’ve set a high-bar for the reinvention of transportation… of everything.

From my perspective with plenty of years experience in consumer marketing in the digital age, these events, and in particular, this round of layoffs is a clear sign that Uber is working to now organize for operational performance. Bear in mind too, the company employs 22,000 worldwide, making this marketing workforce reduction 1.8% of their global headcount and about 33% of their total global marketing organization. 

If I were in Jill Hazelbaker’s (SVP Marketing & Public Affairs) position, I too would be looking to quickly reorganize the marketing force to structure it as a high performance, operationally efficient organization to best deliver on the Brand promise and build and sustain the customer relationship.   

Restructuring for Centers of Excellence and Operational Efficiency

The company is maturing from a “start-up” to a fast-growing “adolescent” and into corporate adulthood at break-neck speed.  The time is right to consolidate infrastructure and other core marketing related activities into Centers of Excellence that provide tools and service to the various geographies and business lines.  I expected this from the market open of their IPO.

And to be sure, despite the meme of “Can Uber ever be profitable” I believe the management team is ready; the board is being fortified, domain and subject matter experts will be available when they are ready.  Let’s remember its fair to assume, as CEO Dara Khosrowshahi has suggested, the company is “at the very early point of an incredible journey.”

Clearly, the stock is essentially flat since its May offering; despite a brief spike last week prior to their earnings report. And sure a $3.9B charge for post-IPO stock compensation is a little jolting. However, given Lyft’s price increases across several markets with some natural deceleration built into consensus forecasts, all of these events still have some analysts rating Uber a buy at a $76 price target. 

First, it makes more sense for marketing-technology, CRM, performance marketing, data, analytics, and overall brand strategy related activities to be provided by centralized organizations.  Today’s marketing technology and personalization platforms make it easy for centralized teams to deliver the capabilities, assets, business rules, etc. to support geographically different requirements.  This type of centralization affords the geographies the freedom to do what they do best – deliver revenue generating, personalized messages and relevant events to local customers. 

Having run Global CRM for Nike and co-led or participated in global digital transformation efforts with several other global brands in recent years, I know first-hand that it takes substantial effort to shift the mindset of the geographies to let go of the need to do it all when it comes to marketing.

That’s not to say the geographies cannot or should not have a vital stakeholder role in what services they require, when and how for localized application. They do, and the global marketing organization needs to recognize that while it may be the Brand’s Sherpa in the market, it is also tasked with being a world-class service organization to the Brand across all lines of business and all geographies.  That requires significant regional input, but does not call for regional redundancies in people, processes, or platforms.

When the transition is complete and the geographies are focused on leveraging centrally managed infrastructure and global brand assets it will be far easier for the geographies to deliver exceptional results that truly delight customers, drive loyalty, and have a higher likelihood of naturally promoting customer advocacy.