If you think that high tech company Uber is unique due to the recent scandals, you may be surprised to learn that this is all too common in high tech start-ups.
Ride sharing pioneer Uber is facing serious issues:
- Colorado is suing them for $8.9 million for allowing employees with serious criminal or motor vehicle offenses to drive,
- A security breach, paying ransom to hackers to destroy the evidence and a long term cover up of 57 million riders’ and drivers’ information, as well as
- Sexual harassment allegations from former employee Susan Fowler.
These problems are not unique to Uber; it has just been caught more than others. In our 27 years consulting with companies, one thing has become crystal clear. Serious and recurring problems don’t happen for no reason, especially in high tech companies. We believe that these high tech company problems are the result of the upper management’s hyper-vigilante focus, the ensuing culture, and resulting tactics. In essence, management becomes blinded by their day-to-day evolving vision, tech skills, and success, which results in tunnel vision. This tunnel vision results in gaps in critical areas.
It is not unusual for high tech start-up companies to become hyper-focused on the technology, delivery, and the external customer experience to neglect important corporate infrastructure such as how to treat staff, how staff treat each other, as well as compliance with federal state and local regulations.
Senior management in these companies can become blinded with their own tech skills and think of themselves as the smartest people in the room who don’t have to concern themselves with mundane things such as HR issues, compliance with regulations, and security concerns. The resulting company culture may not understand or pay attention to issues until there is a million dollar issue. Even then, these companies may choose to downplay the significance or hide the problem until a scandal breaks and they are forced to fire senior management.
Some will argue that it is the responsibility of the board of directors to help monitor strategy and tactics for the stockholders or stakeholders (everyone who can be effected by the corporation). All too often however, the board is filled with cronies and/or ceremonial figureheads who simply go along with the CEO.
That does not mean that these issues are inevitable; in fact, most of these problems can have be avoided with minimal oversight and annual independent audits as well as a relatively small investment to overcome the uncovered issues. Our recommendation is to hold both senior management and the board accountable and mandate the high tech start-ups to undergo independent audits!