Travis Kalanick. Picture: REUTERS
Travis Kalanick. Picture: REUTERS

The founder and CEO of global ride-sharing business Uber, Travis Kalanick, resigned this week. He made the move after years of controversial claims against him and his business, including the use of software to bypass regulators, numerous allegations of discrimination and sexual harassment, and a recently released report by the former US attorney-general on Uber's toxic company culture.

It took the shareholders leading a revolt against him for him to quit. This followed months of resignations by senior executives.

It is puzzling that Kalanick remained in the role for as long as he did, a sure sign of how difficult it is for organisations to separate themselves from the leaders who created them, blindly ignoring their unethical leadership ways.

A leader's DNA becomes infused in the DNA of the organisation, making it impossible to believe that such practices will stop merely through their removal.

It can be too easy for people to ignore the fact that their leadership teams are not operating in the most ethical way.

It becomes even easier when the business is growing and thriving despite these unethical practices. Today, almost everyone knows what Uber is - the start-up that changed the transportation industry and became the world's biggest privately held technology start-up, valued at $70-billion (about R915-billion). It is celebrated alongside Airbnb, which disrupted the accommodation industry, and Facebook, which disrupted the advertising market.

We celebrate these kinds of companies for the very fact that their success relied on a chain of young entrepreneurs who used fresh thinking to challenge long-standing norms on how business should be done in these industries. They have been able to create work environments that make millennials happy, something that old-school businesses still struggle with.

I am a big proponent of finding new ways to lead that are more consistent with the modern world. This is how we will ensure that today's businesses are being geared for success in the future. But there are certain tenets of the traditional leadership models that we cannot ignore. Ethical leadership is one of them.

It relies on upholding a moral set of principles and values, even when doing so is unpopular, inconvenient and even unprofitable.

Ethical leadership is not something a business leader can afford to ignore. This is the reason there are so many controls, checks and balances, to ensure that unethical behaviour is eradicated early on. They are typically lacking in the start-ups led by a new, younger wave of leaders who thrive on breaking the norms. But ethical leadership is not a norm that is logical to break. This is the big mistake young leaders make. Today, we are still seeing the high cost of ignoring ethical business practices. This has crippled some of the world's biggest businesses.

You would think we would have learnt from the Enron and Arthur Andersen scandal in 2001, after Enron went from a $64-billion valuation to bankruptcy in 24 days.

The BP oil spill in the Gulf of Mexico in 2010 is still fresh in our memories, alongside the 2015 manipulation of carbon emission testing by Volkswagen.

All these are examples of large organisations that suffered severely after they ignored business ethics through gross negligence and by falsifying information.

By the time their unethical practices were discovered, it was too late - their unethical manner of being had already permeated the wider business.

It is hard to imagine how Uber expects to transform itself as an organisation after this. It requires more than just the removal of the CEO and revising a few HR policies.

It might be too late for it, and, very soon, the ethical mishaps it let slide in the past will be the very reason that it fails to sustain itself. For those of us building businesses today, let us not be fooled by the short-term benefits that come from ethical lapses - the long-term consequences can be catastrophic.

• Sikhakhane is a global speaker and business strategist on leadership, entrepreneurship and doing business in Africa, with an MBA from Stanford University. E-mail her at zipho@ziphosikhakhane.com

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