WeWork

From Unicorn to Fiasco

Analyzing the WeWork Catastrophe
Group No 05 Members Roll No.

ANKIT KUMAR EPGP-15A-005

DILIP KUMAR DURGA EPGP-15A-019

MAYUR SHAH EPGP-15A-035

PRASHANT KUMAR EPGP-15A-052

SATISH IYER EPGP-15A-069

SEENA ANN SABU EPGP-15A-071

SRINIVASAN S. EPGP-15A-084

VIKIN JAIN EPGP-15A-100

Agenda

1. Major Events during the Evolution of WeWork

2. Nature of the Problem & Causes
3. How OB Concept Can Resolve This Situation
4. Specific Steps
5. Potential Roadblocks with these Implementations
6. Risks & Consequences of the Recommendations
7. How to Communicate the Findings and Overcome the Resistance
Major Events during the Evolution of WeWork
WeWork, a real estate Acquisitions, fundraising, rapid
company, founded by Adam expansion and new launches Rebranding, IPO, Realization
Merger with Box X, Relaunch
Neumann and Miguel of loss in 2018, CEO step
IPO
McKelvey in New York City down & Layoffs
2010 2016-17 2019 2021..

2018 2020
2015
Softbank control, COVID
Raised several funds from Global Expansion with 100+ Pandemic, Decline in
2010-15 and valuation become cities - Most valued company in revenue/valuation & another
10B $ the world with 47B $ layoff

Failed IPO Layoffs & SoftBank bailout

company postponed its initial public offering Announced 20% layoff & WeWork accepted a
(IPO) after concerns arose about its business bailout offer from SoftBank
model and the company's valuation

Sept 2019 2019 2020 and now

Leadership & Corporate Sept 2019 Oct 2019

governance issues Financial struggles
COVID-19 pandemic & multiple lawsuits

co-founder and CEO, Adam Neumann, stepped
down from his position following a series of
controversies; criticized for lack of transparency
and family business model
negative cash flow and struggled to turn a
profit significant impact on WeWork's business
revenue; and faced several lawsuits
Nature of the Problems

Highly Inflated Company

Valuation - Failed IPO

Unproven Multiple
Business Lawsuits
Model

Aggressive High Burn Rate &

Expansion Strategy Frequent Layoffs

Other causes
Highly Centralized and Highly dependent on Raising
Power and Politics
Cult-like Corporate Culture BANI Funds
Onion Organizational Environment (internal (Leadership,
relationship amongst employees, task (Industries,
Customers, human resources and general (economics,
Legalities)
Financial Mismanagement

Over
Causes of the Problems

- Over Optimistic Vision

- Lack of Strategic Focus
- Poor Management
- Lack of Clear Responsibilities
- Misalignment of Core Values and
Objectives Dependence on
- Unprepared for Contingencies - External Funding
of BANI - Real Estate Markets

Design Structural RDT Leadership

Other causes
- Vague and Complex Structure - Poor Leadership
- Centralized Power & Family - Excessive use of
Business
Machiavellian Principles
How OB Concept can Resolve this Situation

Change in Organisational Design Inter Organisational Relationships

Divisional Design Resource Dependence

Diversifying revenue
Improved focus streams

Better
Investing in
Communication Innovation
Streamlined
decision-making Improve supply
Chain management
Increased
accountability

Diversify services

Cross Selling

Partnering with other Economies of

business Scope

Power of scale to
Agility and Employee Embrace
negotiate
adaptability well being ambiguity
Specific Steps

Transformational Leadership ❖ Company's culture, Vision and Goals

01 Approach ❖ Fosters open communication, transparency, and collaboration

❖ Ensure greater transparency, accountability, and oversight

02 Strengthen Corporate Governance
❖ Adopting best practices from agency theory

❖ Conduct thorough market analyses, including SWOT analysis

Apply Strategic Management
03 Principles
❖ Develop a clear and sustainable growth strategy based on market
demand, profitability

Communicate Effectively and ❖ Clear and Transparent communication channels with stakeholders
04 Manage Stakeholders ❖ Understand and meet the expectations of different stakeholder groups

Enhance Customer Focus and ❖ Conduct in-depth customer research to find the evolving needs
05 Value Proposition ❖ Tailor products, services, and amenities to provide unique value

Foster Organizational Resilience ❖ Effectively respond to external disruptions and market changes
06 and Change Management ❖ Implement robust risk management practices and contingency plans
Potential Roadblocks with these Implementation
Resist ❖ New leadership approach. ❖ Strategic management practices.
Change ❖ Strengthen corporate governance. ❖ Old way of working and socializing.

❖ Taking accountability.
Cultural ❖ Emphasize financial discipline.
❖ Changing deeply ingrained cultural norms &
Shift ❖ Customer centric approach.
values.

Leadership ❖ Identifying and recruiting leaders. ❖ Identifying right individuals, to align with
Transition ❖ Identifying necessary skills & experience. organisation's vision and values.

Resource ❖ Finance to implement the change. ❖ Limitation of finance and right skilled
Constraints ❖ Time and effort required. people.

External ❖ Economic conditions ❖ Shift in customer preference

Factors ❖ Changes in regulations. ❖ Uncertainties and competitive market.

Rebuilding ❖ Trust and Credibility.

❖ Previous failures and controversies. ➢ Investors
Trust & ❖ Transparency in actions. ➢ Employees
Reputation ➢ Customers
Risks & Consequences of the Recommendations
Transformational Leadership ❖ Resistance to change from employees and other stakeholders
01 Approach ❖ Loss of talent as leadership style may not be universal

Strengthen Corporate ❖ Too much disclosure of information

02 Governance ❖ Increase cost of compliances

Apply Strategic Management ❖ May lead to analysis paralysis

03 Principles ❖ Implementation risk and increased collaboration may lead to delays

Communicate Effectively & ❖ Increased PR costs

04 Manage Stakeholders ❖ Information overload may hamper key issues to be identified

❖ Customer needs evolve rapidly; no one size fit all strategy

Enhance Customer Focus &
05 Value Proposition
❖ Competitor response may erode value proposition with too much
disclosure

Foster Organizational Resilience ❖ Immediate response may be myopic; will affect vision
06 & Change Management ❖ Additional resources may have to be pooled in to create buffers
How to Communicate the Findings and Overcome the Resistance

Comm. 360 o Stakeholder

Target Messaging Data Analysis
Channels Feedback Management

❖ Customized ❖ Incentives ❖ Build Robust ❖ Develop Strong ❖ Use of

Message to All Referencing 360o Feedback Investor empirical data
Stakeholders ❖ Social Media Mechanism Relationship Teams to garner
❖ Financial Reports Buzz ❖ Building Trust ❖ Encourage insights.
and Variance to be ❖ Publishing and Stakeholder Learning and Build
reported to Investors Online Reports Engagement a Team to have
❖ Increased of Budgets ❖ Regular Strict Quality
Networking and Feedback Processes
ecosystem
development
❖ Deals with
landlords need to be
restructured
References

https://www.vox.com/recode/2019/9/23/20879656/wework-mess-explained-ipo-softbank

https://www.linkedin.com/pulse/wework-10-fundamental-questions-kourosh-maheri/

https://latana.com/post/wework-deep-dive/

https://startuptalky.com/wework-case-study/

https://www.forbesindia.com/article/darden-school-of-business/why-wework-didnt-work-as-planned-four-
lessons-on-corpo-rate-governance/75693/1

https://www.theguardian.com/business/2019/dec/20/why-wework-went-wrong

https://www.coworkingresources.org/blog/the-wework-business-model

https://hbr.org/2019/08/no-wework-isnt-a-tech-company-heres-why-that-matters
APPENDIX
Executive Summary

WeWork, a real estate company was founded in 2010 that provides flexible office spaces for freelancers, startups, and established businesses. The
company grew rapidly, attracting billions of dollars in investments and achieving a valuation of $47 billion at its peak. However, in 2019, the company's
IPO was cancelled, and its valuation plummeted, leading to a crisis in its leadership and operations. The organisational issue that led to the failure of
WeWork may include a complex corporate structure, with Adam Neumann serving as CEO, giving significant control over the company and its
decisions, which could have led to conflicts of interest and a lack of transparency. Further, it may include Adam Neumann’s leadership issues who was
seen as a charismatic but erratic leader who may have made questionable decisions, such as trademarking the word "we" and investing in companies
that had no clear connection to WeWork's core business. Other issues like a lack of strategic focus as WeWork expanded rapidly into new markets
and business lines without a clear strategic focus led to a lack of coherence in the company's operations and made it difficult to scale the business
sustainably. WeWork’s culture of excess as it was known for its lavish spending on office spaces, perks, and events. This led to a culture of excess
that may have contributed to the company's financial difficulties and raised questions about its long-term viability. WeWork's organisational culture was
characterised by a cult of personality, a lack of accountability, a high-pressure environment, a culture of excess, and a lack of diversity and inclusion.
These cultural issues contributed to the company's financial difficulties and made it difficult for WeWork to build a sustainable business model.

Therefore, we want to analyse how the combination of factors, including poor corporate governance, financial mismanagement, a lack of strategic
focus, a culture of excess spending, poor culture, & leadership issues, and in view of resource dependence theory, its high dependence on external
funding, real estate markets, and reputation led to a loss of investor confidence and a decline in the company's valuation.
Org Structure

Before After