Essec Business School

If everything we hear about Travis Kalanick's personality and behavior is true, his issues would be likely be better addressed by a psychologist than a management researcher. Yet the global publicity frenzy surrounding his recent departure from Uber reminds us that this is, alas, a particular case of a common phenomenon in entrepreneurship.

We’re reminded that Steve Jobs was forced to leave Apple under similar circumstances to those surrounding the departure of Travis Kalanick. Here in France, in 1996, the co-founders of the Accor group had to abandon an empire they’d taken decades to build. The same year Guy Dejouany was forced to leave Compagnie Générale des Eaux, an organization he had not founded but had played a nonetheless important role.

Besides their strong personalities and U-turn circumstances, one might wonder what else these prominent personalities have in common. The answer is that they all express, in different ways, a particular version of what Canadian management researcher Dany Miller called the Icarus paradox^[1] in his 1991 book The Icarus Paradox: How Exceptional Companies Bring About Their Own Downfall.

To sum it up in broad terms, the Icarus paradox is the process by which the factors of success for a given subject create the conditions for its failure. Like Icarus, his powerful wax wings helped him reach the sun… and the heat of this success melted the wings and caused him to fall from so high.

Dany Miller applied the myth of Icarus to the analysis of very large companies, such as IBM or Polaroid, whose strengths have become obstacles to their adaptation.

The adventures and eventual fall of Travis Kalanick offer just one example of how the Icarus paradox applies to entrepreneurship. Even when we leave aside extreme cases like his, we find a great number of situations where the entrepreneur becomes an obstacle to the growth - and sometimes even the very survival - of the business he or she created.

The ways through which entrepreneurs can burden the growth of their businesses are numerous. Many entrepreneurs have a very strong need to control everything related to their business and prevent growth in this way. Others have an emotional attachment to a product, a client or a modus operandi and ignore other strategic options. Some leaders seek growth at any price, including through costly acquisitions, to build an empire to match their thirst for power. Business ownership transfer experts are also familiar with many situations founding managers unwittingly prefer to “go down with the ship” rather than selling it to a third party who could give it a new life.

These kinds of situations, where entrepreneurs become detriments to their company  are fairly common. But is this kind of self-destruction natural to the point where, if it’s going to happen, there’s no way to prevent it?

This is a crucial and complex question for management specialists. How can we prevent an entrepreneur from becoming an obstacle to the development of his business and how can we stop the damage when prevention has not worked?

Let's go back to Travis Kalanick. Everyone recognizes that his aggressiveness and impertinence have been decisive in conquering a field dominated by deep-rooted interests. This same rebel attitude has set up an abrasive, toxic culture in the company and crushed several groups of stakeholders including the employees and drivers affiliated with the platform.

In the case of Kalanick, prevention clearly did not work and Uber’s dirty laundry was aired in the public sphere. Under public pressure, the board of directors and investors were forced to take a curative approach to fix the situation… or be at risk of prosecution. Let’s remember that investors injected nearly $ 9 billion into Uber after losses totally $ 3 billion in 2016. They absolutely needed the company to realize its exponential growth expectations in hopes of a return on investment.

In many situations where the entrepreneur becomes a problem for his or her business, it’s too difficult to change the course of events. So what advice can we give entrepreneurs to avoid becoming a burden on their business?

Before offering advice, we must first stress that when a founder has strong personal ethics, he or she is far less likely to lose the plot or be tempted by tyranny.  However, the growth and development of a company shouldn’t have to depend entirely on a single individual’s personality. However, an entrepreneur can be protected from him or herself, so to speak, by taking a wide range of concrete measures:

• Sharing management responsibility with an alter ego;
• Setting up processes through which they must listen to fellow employees and encouraging those with differing opinions to speak-up;
• Finding a mentor capable of giving honest feedback on behavior and pointing out problems.

Indeed, if the proverbial solitude of the entrepreneur is real, it is not a fatality. Entrepreneurs who are aware that they can become a problem for his business can protect themselves. This awareness can even encourage some entrepreneurs to give up their own crown in the best interests of their business. 

Here, as on other subjects, the word of the ancients is of great relevance. The Socratic dream of 'wise, economical, virtuous and law-abiding citizens, especially prudent and fair' provides a realistic ideal for entrepreneurs even in the 21st century. Still, it’s important to recognize the Silicon Valley and a few spectacular successes seem to promote a value system that goes against this ideal.