{"id":29866,"date":"2018-11-12T22:39:14","date_gmt":"2018-11-13T03:39:14","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/taskrabbit-is-using-open-innovation-to-tap-an-unrealized-labor-market-but-can-it-sustain-its-growth\/"},"modified":"2018-11-12T22:39:14","modified_gmt":"2018-11-13T03:39:14","slug":"taskrabbit-is-using-open-innovation-to-tap-an-unrealized-labor-market-but-can-it-sustain-its-growth","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/taskrabbit-is-using-open-innovation-to-tap-an-unrealized-labor-market-but-can-it-sustain-its-growth\/","title":{"rendered":"TaskRabbit is using open innovation to tap an unrealized labor market, but can it sustain its growth?"},"content":{"rendered":"
\"\"<\/a>
Source: http:\/\/www.kalw.org\/post\/taskrabbit-takes-hold-bay-area-divided-income-gap#stream\/0<\/a><\/figcaption><\/figure>\n

Overview<\/strong><\/p>\n

TaskRabbit is your new handyman, mover, grocery shopper, and more.\u00a0 Using open innovation, or \u201ccrowdsourcing,\u201d TaskRabbit connects demand for and supply of contractual labor.\u00a0 TaskRabbit was founded in 2008 and in its 10 years in operation, the company has raised $37.68 million in funding.{8}\u00a0 In late 2017, the company was bought by IKEA Group for an undisclosed amount.{2} Their open innovation model offers a unique opportunity to enter a highly capital-intensive business (labor supply) with very little capital itself – TaskRabbit only employed 68 people in 2017.{8} \u00a0However, open innovation, in particular, the two-sided platform model that TaskRabbit employs, comes with inherent risks due to relationship between the company, external innovators (\u201cTaskers\u201d) and customers.{3} This essay unpacks TaskRabbit\u2019s two-sided platform business model and presents the opportunities and challenges facing the company as it looks to sustain its growth.<\/p>\n

The Model<\/strong><\/p>\n

The TaskRabbit value proposition is an online labor marketplace that offers competitive, transparent pricing, and a truly unlimited variety of services by leveraging a network of innovators, the \u201cTaskers,\u201d and allowing them to decide what work they are willing to get paid to do.\u00a0 Open innovation allows TaskRabbit to differentiate itself in two ways: first, by improving customer experience within an existing market (handyman services), and second, building an all-new market for low-skill labor.\u00a0 This new market is undefined, ranging from furniture building to grocery shopping, driven by customer demand.\u00a0 A customer starts by entering their required task details, and subsequently, sees a complete list of available Taskers with their profiles, hourly rates, and reviews.{11} \u00a0From there, the customer picks a Tasker and communicates with them through the TaskRabbit application to finalize logistics.\u00a0 Upon completion of the task, customers will pay Taskers directly through either Braintree or Stripe (depending on country).{9} To ease customers\u2019 fears about allowing a stranger into their home, TaskRabbit requires background checks on all Taskers and offers a $1 million happiness pledge to cover any damages.{10}<\/p>\n

\"\"<\/a>
Source: https:\/\/blog.taskrabbit.com\/2014\/06\/17\/unveiling-the-new-taskrabbit\/<\/a><\/figcaption><\/figure>\n

Challenges<\/strong><\/p>\n

Despite the benefits, there are also risks associated with using an open innovation model.\u00a0 Competitive side-by-side pricing provides a great consumer experience, but less-so for Taskers who are pressured to offer lower service rates.{4}\u00a0 In 2014, TaskRabbit tried to address this concern by transitioning from a bid auction system to the current matching system, which uses an algorithm that only shows certain Taskers – with their hourly rates – to customers.{6} Despite good intentions, the change was disliked by many Taskers who felt that the matching system limited their revenue potential.{6} \u00a0Unfortunately, there will always be an inherent challenge in finding an ideal solution because incentives between the two parties do not always converge: TaskRabbit optimizes for customer experience, its own Net Promoter Score, and low costs, whereas Taskers want to optimize personal revenue with visibility and higher rates.{6}\u00a0 The erosion of the standard company-employee relationship also presents a challenge, restricting TaskRabbit\u2019s ability to control its own customers\u2019 experiences.\u00a0 Taskers are independent contractors without employee benefits or protections, yet a customer\u2019s impression of the TaskRabbit brand is directly tied to their experience with Taskers.\u00a0 Good online user experience and insurance offerings aside, TaskRabbit has limited control of this critical component in their value proposition.{3}<\/p>\n

What comes next?<\/strong><\/p>\n

As the open innovation model grows in global adoption, regulators may be looking closer at its impact on wage and labor standards for companies like TaskRabbit.\u00a0 \u00a0Many critics of the model\u2019s use here question whether Taskers are being exploited for minimum wage labor, with no benefits, and little-to-no job protection.{1} Uber, which follows a similar business model, has already faced this pressure in European markets and in May 2017, extended their benefit coverage for European drivers.{7} \u00a0Does TaskRabbit have a vested interest in getting ahead of this risk by offering their Taskers employee benefits as well?<\/em><\/p>\n

Another final question moving forward is how TaskRabbit\u2019s identity will be impacted through its acquisition by IKEA Group.\u00a0 In a Forbes article, Blake Morgan argues that the purchase was a perfect fit for IKEA Group, providing the Swedish brand greater access to its customers, but is this the right fit for TaskRabbit?{5} \u00a0TaskRabbit built demand for a limitless market of freelance labor, yet by connecting itself to IKEA, risks constricting itself into hardware services.\u00a0 The TaskRabbit platform even has a distinct page for \u201cIKEA Services\u201d instructing IKEA customers on how to get a TaskRabbit to come build recently purchased IKEA furniture. Considering all the above, was the IKEA acquisition an inhibitor or prohibitor to TaskRabbit\u2019s growth potential?<\/em><\/p>\n

Only time will tell.<\/p>\n

 <\/p>\n

\"\"<\/a>
Source:\u00a0https:\/\/www.taskrabbit.com\/ikea<\/a><\/figcaption><\/figure>\n

(Word Count: 746)<\/em><\/p>\n

Citations<\/strong><\/p>\n

{1} Collinson, Paul and Lunn, Emma. \u201cBoring chore? Airtasker or TaskRabbit could help \u2013 at a price.\u201d The Guardian, March 10, 2018. [https:\/\/www.theguardian.com\/money\/2018\/mar\/10\/boring-chore-airtasker-or-taskrabbit-could-help-at-a-price].<\/p>\n

{2} IKEA Group (Ingka Holding B.V. and its controlled entities). \u201cIKEA Group signs agreement to acquire TaskRabbit.\u201d press release, September 25, 2017. IKEA website, [https:\/\/www.ikea.com\/us\/en\/about_ikea\/newsitem\/092817-IKEA-Group-signs-to-acquire-TaskRabbit#], accessed November 2018.<\/p>\n

{3} K. Boudreau and K. Lakhani. How to manage outside innovation. MIT Sloan Management Review 50, no. 4 (Summer 2009): 68\u201376.<\/p>\n

{4} Kessler, Sarah. \u201cThe Gig Economy Won\u2019t Last Because It\u2019s Being Sued To Death.\u201d The Fast Company, February 17, 2015. [https:\/\/www.fastcompany.com\/3042248\/the-gig-economy-wont-last-because-its-being-sued-to-death].<\/p>\n

{5} Morgan, Blake. \u201c3 Lessons Learned From Ikea’s Acquisition Of Gig Economy Startup TaskRabbit.\u201d Forbes, September 30, 2017. [https:\/\/www.forbes.com\/sites\/blakemorgan\/2017\/09\/30\/3-lessons-learned-from-ikeas-acquisition-of-gig-economy-start-up-taskrabbit\/#35e3085837a8].<\/p>\n

{6} Said, Caroline. \u201cTaskRabbit makes some workers hopping mad.\u201d SF Gate, Updated July 18, 2014. [https:\/\/www.sfgate.com\/technology\/article\/TaskRabbit-makes-some-workers-hopping-mad-5629239.php].<\/p>\n

{7} Schechner, Sam. \u201cUber Bows to Pressure, Offers Some Health Benefits to European Drivers.\u201d The Wall Street Journal, Updated May 23, 2018. [https:\/\/www.wsj.com\/articles\/uber-to-offer-limited-health-insurance-to-european-drivers-1527082557].<\/p>\n

{8} Source: [TaskRabbit Company Profile], Capital IQ, Inc., a division of Standard & Poor\u2019s.<\/p>\n

{9} TaskRabbit. \u201cHow do I pay My Tasker.\u201d https:\/\/support.taskrabbit.com\/hc\/en-us\/articles\/204411560-How-Do-I-Pay-My-Tasker-, accessed November 2018.<\/p>\n

{10} TaskRabbit. \u201cHow it works.\u201d https:\/\/www.taskrabbit.com\/how-it-works, accessed November 2018<\/p>\n

{11} TaskRabbit. \u201cHow to Hire a Tasker.\u201d https:\/\/support.taskrabbit.com\/hc\/en-us\/articles\/210861763-How-to-Hire-a-Tasker, accessed November 2018.<\/p>\n

{12} TaskRabbit. \u201cIKEA Services.\u201d https:\/\/www.taskrabbit.com\/ikea, accessed November 2018.<\/p>\n

{13} TaskRabbit. \u201cTaskRabbit Support.\u201d https:\/\/support.taskrabbit.com\/hc\/en-us\/articles\/204411090-Is-TaskRabbit-in-my-city-, accessed November 2018.<\/p>\n","protected":false},"excerpt":{"rendered":"

TaskRabbit is your new handyman, mover, grocery shopper, and more.\u00a0 Using open innovation, or \u201ccrowdsourcing,\u201d TaskRabbit connects demand for and supply of contractual labor.\u00a0 <\/p>\n","protected":false},"author":11888,"featured_media":30233,"comment_status":"open","ping_status":"closed","template":"","categories":[1195,4304,4489,4239],"class_list":["post-29866","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-crowdsourcing","category-gig-economy","category-handyman","category-open-innovation","hck-taxonomy-organization-taskrabbit","hck-taxonomy-industry-service","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"\nTaskRabbit is using open innovation to tap an unrealized labor market, but can it sustain its growth? - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/taskrabbit-is-using-open-innovation-to-tap-an-unrealized-labor-market-but-can-it-sustain-its-growth\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"TaskRabbit is using open innovation to tap an unrealized labor market, but can it sustain its growth? 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