An Airbnb mindset: Insight from a master of disruptive innovation

Across all industries, digital start-ups are intimidating and inspiring businesses in equal measures. I-CIO asked James McClure, Airbnb’s general manager for the UK and Ireland, to offer guidance to IT leaders keen to think — and act — like digital disruptors.

From cars and accommodation to venture funding and petcare, the sharing economy is changing the way people source and offer goods and services, in the process challenging many established business models.

But for James McClure, Airbnb’s general manager for the UK and Ireland, the development is more to do with the traits that companies demonstrate rather the characteristics of any specific  industry. The essence, he says, is to use the internet and collaboration applications to connect the two sides of a marketplace — someone looking for a product or service and someone who has access to it.

It’s that way of working that has allowed Airbnb to become the world’s largest provider of accommodation — despite owning no property — and the world’s third most valuable start-up, valued at $25.5 billion in 2015 with revenues of around $900 million.
1. Embrace the disruptor mindset

McClure maintains those companies who have a well-established history and various legacy systems in place don’t have to view digital disruptors like Airbnb with fear. He insists it’s not a ‘do or die’ situation. He advises CIOs and business executives alike to think hard about what potential disruptors might do and how they could provide an equally radical offering.

Reminding readers that Airbnb came into existence after its founders realized they weren’t making the best use of the spare space in their apartment, he suggests that retail companies, for example, should be thinking about what they could do with their premises that sit idle for almost half of every day. Many museums, he observes, have started to challenge theatres and restaurants by becoming broader evening entertainment centers, opening up for events and dining.

“Successful businesses should take lessons from brands like Airbnb but apply those for what makes sense for their industry. Basically, make what you have work harder for you and give the customer a better experience.”
2. Knowing the customer

McClure’s focus on the customer borders on the obsessional. Technology has enabled greater insight into what customers need and want, he says, so technologists should be intrinsically connected to their organization’s customers. But,  he observes, that is not always the reality.

For companies wanting to break into the sharing economy, McClure advises a deep dive into their customer’s thinking. “Focus on why your customers come to you and what their experience is like. Really put that at the heart of your strategy, rather than thinking that adding a couple of features to your existing legacy system might make things better.”

McClure insists that the IT department must match the kind of customer-centricity found in marketing departments: “For the people on the tech side of the business, having a real feel for how their products, tools or services are being used in real life is definitely their responsibility.

James McClure, GM for UK & Ireland, Airbnb

Get along to product focus groups, he advises. That is what Airbnb’s CTO and co-founder Nathan Blecharczyk does when the company hosts sessions for select groups of its accommodation providers.

That can be highly instructive, McClure says. In a recent breakfast meeting in London, “the group gave Nathan a pretty hard time over certain features they would like to have in the product. It was an opportunity for him to see how customers use the app on a daily basis.”

“It’s about being able to get that direct feel, rather than it being filtered. You have to understand the challenges different customers face and how you can overcome those.”
3. Develop valuable data insights

A deep understanding of customers also comes from exploiting big data. McClure outlines how analyzing the data it holds on both sets of customers (hosts and guests) is what the company’s IT team is currently wrestling with. “When you have a marketplace of two sides, the most important activity is matching — putting guests and hosts together faster and in a more useful way.”

“It’s about using their profile information, detailing their interests and their past behavior from bookings histories, to be able to quickly match guests to the kind of space they’re after, so both sides have the best experience possible.” 

Being able to interpret data efficiently and act on insights effectively is a characteristic of digital disruptors that should be well within the reach of all businesses, he says. “I don’t think every company will participate in a sharing economy but I think every company can look at the underpinning principles of a sharing economy company and see how to make them work in their own business.”