Dark horse CEO candidate could be a good thing for Uber

When Uber decided to name Expedia’s Dara Khosrowshahi as the new leader of the troubled ride-hailing firm, one phrase was used repeatedly to describe him: a “dark horse.”

On Sunday, following the unusually public and acrimonious search to find a replacement for Uber cofounder Travis Kalanick with big shareholders suing the former CEO and tweets from sitting CEOs withdrawing from consideration - the company picked Khosrowshahi for the job. (He was not officially named until Tuesday.) After the consideration of high-wattage names like General Electric chairman Jeff Immelt and Hewlett Packard Enterprise chief executive Meg Whitman - who were seen as either a frontrunner or backed by segments of the board - the naming of Khosrowshahi to the job was called “surprising,” “unexpected” - even “shocking.”

But as horse races go, being the unforeseen winner - and a lower-profile one at that - has its advantages. Leadership experts say Khosrowshahi’s lesser-known status means he’ll be given more slack from the media and investors, be seen as more accessible to employees, and have the ability to make the kind of radical changes that may be needed to manage the much-needed transformation of the fast-growing startup’s troubled culture.

There has not been much research on how “surprise” candidates for CEO jobs tend to perform over more wellknown or expected choices, says Jason Schloetzer, a professor at Georgetown University’s McDonough School of Business who studies CEO succession. The boardroom mentality of seeking out a superstar CEO - described well in the 2004 book “Searching for a Corporate Savior” -has given way to more focus on internal succession planning and less credibility to the idea that executive experience running one big company necessarily translates well across firms.

“There does appear to be a shift between the value of a generalist CEO to a specialist CEO,” Schloetzer said. “This appointment would be consistent with that trend.”

And while Immelt or Whitman may have brought big operational chops to the job, they also would have carried even more scrutiny to a job where the media tracks every move.

“With Dara coming in, people don’t have those expectations,” said Jeff Sonnenfeld, senior associate dean of the Yale School of Management. “He can operate in a continuing stealth mode.”

Khosrowshahi will have the chance to create more of his own narrative and likely, get more space to get started in the job, said Charley Polachi, managing partner of an eponymously named executive search firm.

“Let’s face it, if it had been Jeff or Meg, it would have been a media circus,” he said. “This guy is going to get some more leeway, and get more time to put together a plan. It’s not like there’s a large dossier of him. He’s going to get a chance to create a public persona.”

One of the dangers of bringing in a well-known outside leader to a company is he may think he has all the answers, and try to imprint what worked at another company into a very different turnaround. Justin Wasserman, a managing director at the consulting firm Kotter International, points to Ron Johnson, the Apple retail executive who tried to rehabilitate JC Penney by cutting sales programs and radically overhauling the discount retailer’s stores.

“He literally just followed the Apple playbook, and he could not have been more wrong,” Wasserman said, noting he was struck by a comment Khosrowshahi made about how culture change doesn’t come from the top, but is “written bottoms up,” hinting at an important level of modesty.

CEOs with a rock-star status or accustomed to running massive companies also risk being seen as unapproachable to employees, an issue that’s particularly important for the cultural change Uber needs. “There’s this big aura around them,” Sonnenfeld said of CEOs with bold-face names. “That seems harder to penetrate. They seem less accessible.”

Perhaps most encouraging, said leadership experts, given the dysfunctional nature of Uber’s search process, is that Khosrowshahi’s selection suggests the board’s process may have been less haphazard than it looked from the outside.

“I wouldn’t use the term dark horse or savior, but when so many people were focused on this search and nobody came up with this outcome,” Schloetzer said, “it suggests to me they were very careful in the process.”