Balanced Scorecard: Uber Case Study

Summary

This video explores Uber’s financial struggles, including its significant losses in 2019, while highlighting why investors remain optimistic. Despite financial setbacks, Uber's focus on customer experience, innovation, and long-term goals through the Balanced Scorecard (BSC) method has positioned it as a valuable investment in the eyes of many. The company’s commitment to diversifying its services, improving internal processes, and enhancing employee satisfaction further supports its future potential. The video compares Uber’s growth and challenges to traditional businesses, concluding that financial KPIs alone are not enough to evaluate modern, innovative companies like Uber.

Takeaways

• 😀 Uber faced significant financial losses in 2019, with a $5 billion loss in Q2 and record-low revenue growth.
• 😀 Despite these losses, Uber's stock value rose as investors are looking toward the company's future potential rather than just short-term financial outcomes.
• 😀 Investors are more focused on long-term growth and strategic vision, as seen with Uber's expansion into new industries and services.
• 😀 Traditional valuation methods, such as analyzing profit and ROI, may not apply to companies like Uber in the digital world, where risk-taking and innovation are key.
• 😀 The Balanced Scorecard (BSC) framework provides a comprehensive approach to managing both financial and non-financial business aspects.
• 😀 BSC includes four perspectives: Customer, Internal Processes, Growth and Learning, and Financial outcomes.
• 😀 The customer perspective in BSC focuses on measuring satisfaction and competitive efforts through customer feedback and service availability.
• 😀 Internal process analysis through BSC aims to improve operational efficiency, addressing delays, waste, and gaps in processes.
• 😀 The growth and learning perspective focuses on employee skills, training, and future opportunities to sustain long-term growth.
• 😀 Uber's business strategy aligns its performance measures with its long-term vision, including customer satisfaction, driver excellence, and technological innovation.
• 😀 Despite controversies such as legal issues and workplace culture challenges, Uber continues to lead the ride-sharing and food delivery markets with strong user bases and market share.

Q & A

What financial challenges did Uber face in 2019?

Uber faced significant financial losses in 2019, with a reported $1 billion net loss in the third quarter, and a $5 billion loss in the second quarter. Despite this, the company's stock value began to rise after an initial decline.

Why do investors still consider Uber a good investment despite its financial losses?

Investors are focusing on Uber's long-term growth potential rather than short-term financial losses. Uber's future goals and market positioning, especially in new industries and its focus on customer experience, attract bullish sentiment.

What is the Balanced Scorecard (BSC) framework, and how does it help companies like Uber?

The Balanced Scorecard (BSC) is a management framework that balances financial and non-financial measures to evaluate a company’s performance. It includes four perspectives: customer, internal processes, growth and learning, and financial performance. Uber uses this framework to align its short-term actions with long-term strategic goals.

What are the four key perspectives of the Balanced Scorecard?

The four key perspectives of the Balanced Scorecard are: customer perspective (customer satisfaction and loyalty), internal processes perspective (business efficiency), growth and learning perspective (employee skills and opportunities), and financial perspective (profitability and financial health).

How does Uber implement the customer perspective in its BSC?

Uber focuses on customer satisfaction through measures such as client feedback, cancellation rates, and fare reviews per trip. The company tailors its offerings by customer segment, like UberX or UberPool, to meet specific needs and enhance user experience.

How does Uber handle internal processes to improve business efficiency?

Uber addresses internal processes by focusing on innovation and diversification, such as expanding into food delivery and exploring self-driving cars. The company continuously looks for opportunities to optimize its operations and remove bottlenecks.

What does Uber’s growth and learning perspective involve?

Uber's growth and learning perspective includes tracking and developing the skills of its employees, particularly drivers. The company uses performance metrics and incentives to encourage excellence, such as maintaining high ratings to avoid deactivation.

What strategic objectives guide Uber’s use of the Balanced Scorecard?

Uber's strategic objectives focus on becoming the leader in transportation, providing fast, reliable, and affordable services. The company aims for long-term growth, ensuring that all employees align with these objectives through shared vision and values.

What controversies has Uber faced, and how does it impact its business?

Uber has faced controversies, including sexual harassment within its corporate culture, poor working conditions for drivers, and violations of local regulations. These issues have led to legal challenges and bans in some cities, impacting its reputation and operations.

How does Uber’s performance compare to traditional companies like Walmart?

Unlike traditional companies like Walmart, Uber is a high-risk, high-reward company, focusing on long-term growth rather than short-term profits. While Walmart may offer more stability and consistent financial returns, Uber’s focus on innovation and market expansion appeals to risk-seeking investors.