Culture, values and accountability: Are network aggregators like Airbnb and Uber really just a middle-man?

The media is ablaze with analysis with what sites like Airbnb, Uber and others mean for the future of work, our economies and local government mandates over regulated services like hotels and taxis[1. Good recent  posts on this include those by Tim O’ReillyLauren Smiley, Matt Buchanan.].

Lots of businesses are now being pitched as the ‘Uber for x’ or ‘Airbnb for y’. The sort of network aggregation model they offer is becoming a dominant mental model for many discussions on digital transformation at the moment. So I think it’s worth some further consideration because I don’t think this model in practice is quite as clear-cut as some suggest, though it certainly is disruptive.

In essence the thinking goes that network aggregators are simply making the market more efficient. They connect customers with providers more efficiently than ever before. They lower barriers to entry so that underused resources (homes, cars, drivers etc) can access the market to generate revenue whilst meeting consumer demand. Quite simply the thinking I’m seeing expressed is that they (network aggregators) are like the travel agent matching a holiday package with the customer’s budget and desires with underused airplanes and hotels lowering their prices to attract more demand – but now individuals are the providers using their own cars, homes and time.

Airbnb and Uber often say that they just are making connections between buyers and sellers. They argue that the quality of the service, the accuracy of the service listing, the liability etc all lie with the providers who are categorically not employees of the network aggregator. Yet it’s not quite that simple.

First we have the reviews and verifications these aggregators offer their ‘community’ to assure quality. These can go as far as checking the passports and other identity documents of providers. Then we have the controls on pricing they offer plus the overarching branding they lay on top of the providers similar to a hotel chain or limousine firm. We also have the customer service they end up providing. They try to nudge you into resolving problems directly with the providers but if you can’t then they regularly step in to intervene, to offer refunds and smooth things over, desperate to avoid negative stories sticking to their surging brands[2. I have personal experience of network aggregators forking out hundreds of dollars to leave everyone feeling happy with their brand after things have gone wrong].

So network aggregators aren’t merely aggregating supply and demand, they are building brands and owning customer relationships so much so that they will even extend refunds and credits when the provider won’t. Yet because of their very nature and their legally-driven insistence that they don’t employ the providers they have few ways in which to encourage genuinely better behaviour. We see Uber and Airbnb offering programmes trying to encourage and celebrate their best providers but to me they read like weak cultural change programmes with no oomph.

Because ultimately this comes down to culture, values and accountability. (Well what doesn’t?!) Tom Peters rightly said that culture eats strategy for breakfast. Successful hotel chains like Accor know this – their brand is a promise that wherever in the world you are you will get a good night’s sleep, a comfortable bed, a certain kind of breakfast and service etc. If anything goes wrong they train and incentivise their staff in ways to not just make it right but to leave the customer feeling better about the brand than before. Good taxi and limo firms keep their drivers trained up on serving customers with disabilities, on major works happening in their patch, they trial new vehicles and tools for improved efficiency, safety and access. They get to know particular clients with certain preferences and needs.

Now any individual provider to a network aggregator can and does do those things, I’m sure. Most likely they will even get good reviews. But how does this scale? What kind of experience can Airbnb and Uber promise me? Nothing really. Offering a special badge or annual $100 voucher to their best providers is light years away from the organisational leadership, accountability and values a good firm in any sector can provide.

So where does this take us? Network aggregators almost certainly open up the opportunities for micro businesses to reach more customers than ever before. And for now the big ‘unicorn’ aggregators are willing to spend time and money to retain customers even after bad experiences. They are even financing some of their providers, as Uber do with car loans. But that won’t be able to continue indefinitely, at some point either after launching onto the stockmarket or with a private owner, profits will need to be made. The result will have to be far greater control over providers and/or retreat from the level of support offered to customers.

Are there lesson we can take from the network aggregators? Most certainly but we must do so with caution – recognising that they are not proven, sustainable businesses yet and that they aren’t quite the light-touch networks they like us to think they are.

If one applies this to public services then I believe ultimate accountability will continue to lie with public bodies, even as delivery becomes ever more distributed, digital and networked. Agile and networked we should be, but the need for accountability, culture and values can’t be magicked away in a puff of network aggregation.

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