Undercover boss: what CEOs can learn from going incognito

The CEOs of Uber and Starbucks recently worked incognito as part of an exercise in organisational introspection. Should more executives be willing to engage in subterfuge to see what it’s really like on the front line?
Undercover boss handing out coffee

If you hailed an Uber in San Francisco in September last year, there was an – admittedly tiny – chance that the person who picked you up was Dara Khosrowshahi, the CEO of the company.

Khosrowshahi – who drove under the alias Dave K – spent the month ferrying customers in his Tesla across the San Francisco Bay Area in an effort to find out the common pain points for drivers and determine why the business has struggled to attract workers back onto its app.

He is not the only high-profile CEO to step down from his ivory tower recently. Laxman Narasimhan, who recently took over from Howard Schultz as CEO of Starbucks, has pledged to spend half a day a month behind the counter serving customers.

The former PepsiCo executive claims that the exercise will help him to “keep us close to the culture and our customers, as well as to our challenges and opportunities”.

But is that really true? Is there something to be learnt from these two CEOs’ stints at the coalface or is it a further sign of how out of touch many modern business leaders are?

What CEOs can gain from going undercover

In 2016, Build-A-Bear Workshop president and CEO Sharon Price John donned a disguise and spent time working in the retail outlets and warehouses of her company while on the TV show Undercover Boss.

At the time the business was undergoing a strategic business transformation to return the company to profitability, which involved redesigning the look of its stores and modifying its service model. “I wanted a first-hand view beyond Build-A-Bear’s headquarters as to the progress of the transformation, as well as a better understanding of how the changes were being understood, accepted and executed,” Price John says.

If the mindset is one of openness and a genuine willingness to learn, it can be very beneficial

She claims that the experience taught her a lot about both the business operations and her own management style. Price John adds: “Given I was a relatively new CEO at the time, the process reinforced the importance of staying grounded and connected to the broader organisation.”

It also revealed that many of the changes being introduced from management would be “more readily embraced” if the messaging around the underlying reasons were clearer.

In her experience, and that of Khosrowshahi and Narasimhan, going undercover allowed these CEOs to see for themselves some of the issues faced by staff, which led to new insights and ideas.

In an interview with The Wall Street Journal, Khosrowshahi described his brief time as a gig worker as a wake-up call. After encountering rude passengers, difficulty navigating a clunky app and tip-baiting – where customers offer a high tip upfront, only for it to be reduced after the service has been provided – he came to the realisation that Uber “had to fundamentally change how we built our product”.

A sign that CEOs are getting more detached?

But Margaret Heffernan, professor of practice at the University of Bath and former CEO, is more sceptical of the benefits of going undercover. “The problem with stunts like this is that it’s a one-time affair, which is often carefully stage-managed,” she says. “If you really want to fix the problem you need to do something that’s more sustainable and meaningful.” 

For Heffernan, this trend of bosses going undercover speaks to how detached many within the managerial class at large organisations now are. She contrasts her own experience of having to work her way up the career ladder with that of the career paths of CEOs such as Khosrowshahi, who was plucked from an investment banking role by Barry Diller, chairman of holding company IAC, and parachuted in as CEO of travel company Expedia after its acquisition. Similarly, Narasimhan followed the well-trodden route of consultant to corporate executive when he moved from McKinsey to Pepsico.

People used to call it management but all it really amounts to is the ability to talk to people without scaring the living daylights out of them

“This can be the problem with these sorts of fast-tracked career paths, where people spend years in formal education but don’t have the real work experience,” Heffernan says. “CEOs can also inhabit a very separate, well-paid executive life. The fact that they feel that they have to resort to subterfuge to understand their business suggests that they know how detached they are.”

She believes that these CEOs would be better off learning to talk to people in a way that encourages them to tell them the truth and creating a company culture that encourages openness. “The onus is on the CEO to be able to speak with their workforce in a way that makes them comfortable. Being able to communicate well with all your employees is a key skill; going undercover is a confession that they can’t do that part of their job,” Heffernan adds. “People used to call it management but all it really amounts to is the ability to talk to people without scaring the living daylights out of them.”

In the case of Starbucks and Uber, both companies have strained relationships with their workforces. In recent years 6,500 Starbucks employees have voted to unionise in a bid to improve staffing and training levels, as well as pay. Meanwhile, Uber and other gig economy platforms lobbied for Proposition 22 in California, a state law which nullified attempts to classify Uber drivers as employees, rather than contractors. 

In this context, Khosrowshahi and Narasimhan’s time spent alongside subordinates handing out coffees and chauffeuring passengers can be viewed as a bid to repair employer/employee relations – or, by the more cynical, as a cheap PR stunt.

Price John, however, believes there is definite value to be gained from going undercover as a chief executive. “I believe it depends on the situation and the mindset of the CEO going into the process,” she says. “If the mindset is one of openness and a genuine willingness to learn, listen and look at themselves through a different lens, in addition to looking at the company through a different lens, it can be very beneficial.”