Last week, after an investigation by former Attorney General Eric Holder found rampant problems with sexual harassment and discrimination at Uber's San Francisco headquarters, CEO Travis Kalanick had two choices. He could remain as Uber's CEO and pursue reforms designed to deal with this and other problems plaguing the company. Or he could step down to make room for a new CEO whose promises to change Uber might have more credibility.
Instead, Kalanick chose a third option that's worse for everyone but Kalanick: He announced an indefinite leave of absence and left the company to be run by a 14-member committee of senior executives. That means Uber won't get the fresh start that a new CEO could have offered.
Instead, Kalanick's departure will leave Uber in a broken state. The company desperately needs to rebuild its leadership team after a string of high-profile departures, but highly qualified candidates aren't going to join a company with a leadership vacuum. Changing Uber's culture is going to require clear messaging and consistent leadership from the top — something a 14-person committee can't offer. And a committee structure will leave Uber crippled if it needs to make major strategic decisions.
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"He said, 'I won't be around but I'm going to be available for the most strategic decisions,'" says Adam Lashinsky, a Fortune reporter who wrote a new book on Uber. "To me, that was code for, 'I'm not going anywhere.' It wasn't even code. It was pretty clear."