We live in the age of disruptors. We have one in the White House, and we have multiple examples throughout the business world.
Illustrations of the latter were scrawled on a whiteboard a while back by Alberto Brea, chief growth strategist at a New York marketing firm.
Here’s what Brea wrote—
- Amazon did not kill the retail industry. They did it to themselves with bad customer service.
- Netflix did not kill Blockbuster. They did it to themselves with ridiculous late fees.
- Uber did not kill the taxi business. They did it to themselves by limiting the number of taxis and fare control.
- Apple did not kill the music industry. They did it to themselves by forcing people to buy full-length albums.
- Airbnb did not kill the hotel industry. They did it to themselves with limited availability and pricing options.
- Technology by itself is not the real disruptor. Being non-customer centric is the biggest threat to any business.
Those six bullet points provide lessons for anyone who’s planning—or already running—most any kind of enterprise. Including yours.
Focus on the customer is not a new concept. Yet it somehow escapes a lot of people.
But not the people at Airbnb.
Customer experience consultant Joseph Michelli explores Airbnb’s journey from startup to juggernaut in The Airbnb Way: 5 Leadership Lessons for Igniting Growth Through Loyalty, Community, and Belonging.
How can Airbnb’s experience apply to your business?
Rodger Dean Duncan: Philosopher Paul Tillich once said, “The first duty of love is to listen.” How does Airbnb incorporate that into its leadership and business practices?
Joseph Michelli: Airbnb founders (Brian Chesky, Joe Gebbia, and Nathan Blecharczyk) all have strong backgrounds as experience designers. Brian and Joe graduated from the Rhode Island School of Design, and Nathan graduated with a computer science degree from Harvard. Given their educational experiences, all three founders are grounded in design principles that focus on listening to the stated and unstated needs of the customers or web users they serve. Based on their penchant for listening, leaders throughout Airbnb challenge themselves and team members to think about possible solutions that might address customer/user needs. They then test those solutions by listening for feedback from customers. Subsequently, Airbnb team members then deploy the best solutions across their platform.
Duncan: Give us an example.
Michelli: Airbnb serves two types of customers on its platform—hosts and guests. Since hosts report that they don’t know which elements of an accommodation to detail in their listings and since guests often aren’t aware of their own subtle preferences, Airbnb has explored and deployed artificial intelligence (AI) and machine learning to enhance the experience of both stakeholder groups. Specifically, picture recognition technology uses machine learning to scan, tag, categorize, and filter images on the Airbnb site.
To understand the benefits of this technology, assume an image of a listing has a picture of a bunk bed, but the bunk bed information failed to be included in the text description of the property. Also, assume that you have a history of choosing homes with bunk beds. Picture recognition technology could select that specific property as an option for your consideration because of the context of your past behavior on the platform. Leaders at Airbnb remind us that sustained business success involves understanding customer needs through listening and observation and then testing solutions to address those needs.
Duncan: Airbnb leaders say they are not only in the people business, they’re also in the “belonging” business. What does that mean in their context, and what can it mean for other kinds of businesses?
Michelli: Let’s assume I am a member of the LBGTQ community wanting to stay in a rural conservative town. When I make my booking on Airbnb, I want to know that I will be respected and treated like a welcomed guest. Similarly, assume I am traveling to a remote part of the world where I can’t speak the language. I would want to know that my Airbnb booking will do more than provide a place to sleep. I would want a host who will care for me and about me during my stay.
Airbnb leaders seek to communicate the importance of assuring this type of psychological well-being to everyone who engages on the platform. As such, Airbnb’s founders have embraced hierarchy models of needs like those proposed by Abraham Maslow. As you’ll recall, Maslow suggested humans have basic needs for safety, food, and shelter as well as higher-level needs for love, belonging, community, and personal fulfillment.
Duncan: How do you see that model’s application at Airbnb?
Michelli: In the broad context of business, each of us should consider how we can help customers achieve not only their basic needs but also facilitate fulfillment of their higher-level needs. Airbnb has formalized the importance of helping guests experience belonging into their formal mission statement – “to create a world where anyone can belong anywhere.” The shortened version of that mission simply reads “belong anywhere.” Additionally, Airbnb leaders continually communicate (formally and through social channels) with hosts about the importance of creating belonging.
Duncan: There’s no doubt that trust is the “operating system” of every good relationship—professional as well as personal. What can entrepreneurs and other businesspeople learn from the way Airbnb approaches trust issues?
Michelli: Few human interactions require more trust than opening up a room in your home to a stranger or conversely staying in a stranger’s home. Early on, in fact, Airbnb struggled to secure funding from investors who resoundingly said, “A business requiring this much trust between strangers will never work.” Eleven years into Airbnb’s juggernaut (and an estimate $38 billion valuation) while going into a public offering, Airbnb continues to challenge conventional wisdom.
Duncan: So how is trust baked into the Airbnb model?
Michelli: No business (online/offline, sharing economy/traditional enterprise) can guarantee the safety and trust of those they serve, given that there are occasional bad actors. That said, business leaders can learn many lessons from Airbnb on how to design for trust, including the importance of developing a reciprocal reputation system. In the case of Airbnb, guests and hosts rate one another and the results of those ratings on dimensions like cleanliness, communication, etc. are simultaneously published on the site. These ratings not only drive accountability and positive behavior from the hosts and guests involved, but they also influence the decisions of prospective guests. Moreover, these ratings are factored heavily into search algorithms, such that poor host ratings make it difficult for those hosts to have their listings appear when a prospective guest searches for a property like theirs.
Another quick trust factor to mention is host and guest guarantees. Airbnb provides up to one million dollars in insurance protections to hosts against damage to their properties caused by guests. Similarly, Airbnb continues to enhance guest guarantees to include support booking a property of equal or greater value in the event a listing is not as promised. In these instances, guests should incur no cost for their stay.
Duncan: How can hospitality (some call it “service with heart”) be practiced by a business that never actually interacts in person with its customers or clients?
Michelli: We are all hosting. In the digital world, many brands only host customers on their website or app, but it is still hosting and requires an understanding of the deliverable customers expect from basic and (as I like to call it) “enlightened” service. Hospitality is Airbnb’s take on enlightened service and it means that you care for internal and external stakeholders with an emphasis on the following basics—
- Responsiveness – Helping customers with prompt service
- Reliability – Efficiently delivering on promises
- Tangibles –Appearance of virtual and physical property, equipment, people, products, and communication
It also means developing skills to offer service with heart, by delivering:
- Assurance – Courtesy, knowledge, thoughtfulness, and anticipation of emotional needs
- Empathy – Personalized care
Duncan: “Empowerment” is a popular word with multiple shades of meaning in the world of commerce. What does it mean at Airbnb, and what can other businesses learn from Airbnb’s example?
Michelli: Airbnb leaders approach empowerment in keeping with a definition provided by experts Nanette Paige and Cheryl Czuba, who note “it is a process that fosters power … in people, for use in their own lives, their communities, and in their society, by acting on issues that they define as important.”
Airbnb leaders have crafted a formal economic empowerment agenda, which includes aggressive goals to help predominantly minority communities leverage homes to generate income. That agenda also makes strong commitments to living wages for not only Airbnb team members but vendors as well. Moreover, that economic empowerment agenda encourages hosts in the Airbnb community to pay a living wage to those that support their respective businesses (e.g., cleaners or other hosts who cover for them when they’re on vacation).
Airbnb also encourages and supports hosts to engage with local officials in order to protect their right to responsibly share their homes. Many of these individuals report that they have saved their homes from foreclosure by home-sharing. Similarly, many seniors (the fastest-growing host group) told me home-sharing has protected them from housing insecurity. For broader application, Airbnb teaches us how to take an “ecosystem” approach to business. When we help others succeed (economically and personally), those individuals have more power to help us sustain our business success.
Duncan: What role can (or should) the notion of “community” play in a company’s efforts to establish an organizational culture?
Michelli: Linking back to the notion that humans have a higher-order need to belong (in the context of community) companies can help their team members, business partners, and customers connect with one another. For example, Airbnb team members routinely participate in volunteer activities with Airbnb hosts. By activating employees and business partners to do good, Airbnb builds bonds between Airbnb team members, hosts, and in the communities in which Airbnb does business. By supporting online and offline host groups, Airbnb also becomes a valued partner for individuals seeking to make a living from home-sharing.
I was recently in Portland, Oregon, where a home-sharing group named Host2Host put on an Airbnb sponsored event called HostFest. The community event raised funds for a non-profit organization in Portland, which helps people experiencing homelessness.
In my humble opinion, we should be in business to serve others. It’s through that service that our businesses thrive. Service requires us to build communities within our organization where our team members are treated well and where they also engage customers and other stakeholders in broader community building.
Duncan: What’s next for Airbnb and home-sharing?
Michelli: I think many people are wondering what’s next for Airbnb and home-sharing. I expect Airbnb will continue to expand offerings beyond accommodations. For example, they have a robust division call Airbnb Experiences. That group supports hosts who list experiences like cooking classes or city tours. I look for Airbnb to continue to develop adjacent product lines seeking to deliver what Airbnb CEO Brian Chesky describes as “magical end-to-end travel.” This might take the form of an Airbnb airline, for example.
As for home-sharing, the genie is out of the bottle. People have been sharing homes for time immemorial, but the mobile marketplace designed by Airbnb has made it an extremely easy and attractive option worldwide. Increasingly you are seeing traditional hotel brands extend their offerings into this marketplace.
This column was first published by Forbes, where Dr. Duncan is a regular contributor.