{"id":31119,"date":"2018-11-13T15:51:54","date_gmt":"2018-11-13T20:51:54","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/from-housing-marketplace-to-lifestyle-platform-how-airbnbs-democratized-innovation-system-and-external-communities-influence-its-pr"},"modified":"2018-11-13T15:51:54","modified_gmt":"2018-11-13T20:51:54","slug":"from-housing-marketplace-to-lifestyle-platform-how-airbnbs-democratized-innovation-system-influences-its-product-strategy","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/from-housing-marketplace-to-lifestyle-platform-how-airbnbs-democratized-innovation-system-influences-its-product-strategy\/","title":{"rendered":"From Housing Marketplace To Lifestyle Platform. How Airbnb\u2019s Democratized Innovation System Influences Its Product Strategy"},"content":{"rendered":"

Cash flow positive and valued between $31-38B, in just 10 short years, Airbnb\u2019s business model to \u201ccreate a world where people can belong through healthy travel\u201d strategically shifted under the guidance of its co-founders [1] [2]. Such evolution has been powered by Airbnb\u2019s strong community of hosts and guests who tap its global people-to-people platform across 191 countries and 81K cities [1]. As Airbnb charters its growth strategy and anticipates new scrutiny as it goes public in 2019 [3], what role would these stakeholders play in its future? Would open innovation continue to be a key lever transforming Airbnb from a disparate group of travel-related products to a powerful lifestyle platform?<\/p>\n

Open systems of innovation translate into better product experiences and should be core to Airbnb\u2019s product strategy. Leading corporations are incorporating open innovation into their businesses, and are recognizing that collaboration\u2019s value exceeds the threats of sharing information, birthing a culture of \u201cco-innovation, open ideation, and sharing of technologies and information externally\u201d [4]. The efficiency of a system in which innovations are developed by individual users is increased if users carefully diffuse what they have developed to others [6]. Google leads by example with \u201cGoogle I\/O\u201d that brings developers together to explore the next generation of tech [5]. Similarly, Airbnb\u2019s communities surface innovative knowledge through \u201cAirbnb Open in LA\u201d which the company describes as a \u201ccommunity-powered festival of travel and hospitality that celebrates a city and its neighborhoods\u201d [2]. To be successful, proper channels must be available that structure these interactions appropriately [6]. Skeptics argue that financial incentive is paramount for this behavior to surface, but this is not truly the case as end users benefit from better products\/features. At Airbnb, signs of distributed innovation also exist through the company\u2019s intentional outreach to external networks for feedback collected on its website and open forums. This contributed to the development of Airbnb\u2019s \u201cTrips\u201d and \u201cPlus\u201d products in 2016 shifting focus to \u201cmaking the entire trip easy and magical\u201d and \u201copens up the concept of hosting, empowering people to share their interests, hobbies and passions\u201d [8]. Airbnb\u2019s future sustainability depends on its ability to not simply build new features to its strong structure, but to build entirely new communities in a thriving neighborhood – represented by a well-integrated platform.<\/p>\n

A technology platform provides several benefits for the sustainability of Airbnb\u2019s business model and involvement from external parties will be critical in its continued growth. User-centered innovation focuses on exactly what is needed or requested by the consumer and increases overall social welfare [6]. We have seen several best-in-class companies pushed by customers\u2019 actions to make such a pivot at different stages in their growth: Amazon from retailer to marketplace or Apple from iPhone to App store. Successful platforms start with great products that already built a critical mass of frequent customers and provides enough defensible value from competitors [9]. For Airbnb, this manifested itself in the release of the \u201cExperiences\u201d product – a direct response to guest feedback on desired product features. The firm has built two active communities that have no hesitation in providing suggestions that will improve their traveling experiences. The best approach to consistently delight the consumer is to understand her pain points and solve it with an intuitive solution, and this is exactly what Airbnb thrives to accomplish. Companies can accelerate conversion to the new platform by carefully adding new products that are consistent with their brands, and the best ideas are derived from those communities that engage with their product most [9].<\/p>\n

Industries that center around platform products increase in value when there are more users in the system [10]. Naturally, the question of Airbnb\u2019s sustainability arises: can the disruptor potentially be disrupted? To thrive, Airbnb must view itself as part of a business ecosystem defined by cooperatively and competitively supporting new products, satisfying customer needs, and incorporating subsequent rounds of innovations [11]. Firm-hosted communities are an important source to generate external ideas into an organization. Airbnb needs to build a social identity that makes community members feel like they are part of the firm\u2019s success. It has slowly pushed in this direction through the \u201cSuper Host\u201d designation and \u201cOpen\u201d forums for the sharing of ideas [12]. Despite its multi-billion-dollar valuation, doubters cite \u201cdivergence cost\u201d – when a system is opened to outsiders, choices that could have been made by the original designer are now undertaken by independent parties that pursue their own interests – as a concern [13]. As the intermediary, Airbnb has the fortune of sourcing its innovation pipeline and sharing practices and ideas by allowing its external communities to be viewed as partners, arguably reducing divergence cost levels. The sharing economy for the broader hospitality industry is exiting its infancy, and while Airbnb is a clear leader today, it needs to build strong competitive defenses and cement itself deeper into the minds of its base if it wishes to survive another 10 years.<\/p>\n

(801 words)<\/p>\n

[1] Trefis Team, \u201cAs a rare profitable unicorn, Airbnb appears to be worth at least $38 billion.\u201d Forbes, May 2018, \u201c<\/span>https:\/\/www.forbes.com\/sites\/greatspeculations\/2018\/05\/11\/as-a-rare-profitable-unicorn-airbnb-appears-to-be-worth-at-least-38-billion<\/span><\/a>\u201d, accessed November 2018<\/span><\/p>\n

[2]\u00a0AirBnB, \u201cAbout Us,\u201d https:\/\/press.airbnb.com\/about-us\/<\/a>, accessed November 2018<\/p>\n

[3] Ingrid Lunden and Romain Dillet, \u201cAirbnb aims to be \u2018ready\u2019 to go public from June 30, 2019, creates cash bonus program for staff,\u201d TechCrunch, June 2018, <\/span>https:\/\/techcrunch.com\/2018\/06\/29\/airbnb-ipo\/<\/span><\/a>, accessed November 2018<\/span><\/p>\n

[4] Jitendra Kavathekar, \u201cMaking Open Innovation a Success,\u201d Techworld from IDG, May 2015, \u201c<\/span>https:\/\/www.techworld.com\/apps-wearables\/making-open-innovation-success-3613290\/<\/span><\/a>,\u201d accessed November 2018<\/span><\/p>\n

[5] Google, \u201cEvents,\u201d<\/span>https:\/\/events.google.com\/io\/<\/span><\/a>,\u201d accessed November 2018<\/span><\/p>\n

[6] von Hippel, E. 2005. Democratizing Innovation. Cambridge, Mass.: MIT Press.<\/span><\/p>\n

[7] Langner, B. & Seidel, V. P. 2015. Sustaining the flow of external ideas: The role of dual social identity across communities and organizations. Journal of Product Innovation Management, 32(4): 522-538.<\/span><\/p>\n

[8]\u00a0\u201cAirbnb expands beyond the home with the launch of trips,\u201d press release, November 2016, on Airbnb website, https:\/\/press.airbnb.com\/airbnb-expands-beyond-the-home-with-the-launch-of-trips\/<\/a>, accessed November 2018.<\/p>\n

[9] Zhu, F. & Furr, N. 2016. Products to platforms: Making the leap, 性视界 Business Review, Vol. 94: 73-78. Boston: 性视界 Business Review.<\/span><\/p>\n

[10] Gawer, A. & Cusumano, M. A. 2002. Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation. Boston: 性视界 Business School Press.<\/span><\/p>\n

[11] Moore, J. F. 1993. Predators and prey: A new ecology of competition. 性视界 Business Review, 71(3): 75-86.<\/span><\/p>\n

[12] Langner, B. & Seidel, V. P. 2015. Sustaining the flow of external ideas: The role of dual social identity across communities and organizations. Journal of Product Innovation Management, 32(4): 522-538.<\/span><\/p>\n

[13] Antorini, Y. M., Mu\u00f1iz, J., Albert M., & Askildsen, T. 2012. Collaborating with customer communities: lessons from the lego group. MIT Sloan Management Review, 53(3): 73-79.<\/p>\n","protected":false},"excerpt":{"rendered":"

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