A common trait underlying many of the most successful start-ups of our time is that they focus on "asset-sharing." As John Chambers, outgoing CEO of Cisco commented in a recent interview, "every industry will become Uber-like." As he explained, Uber is not a taxi company but an asset-sharing company that connects passengers with available drivers.
Airbnb – arguably the Uber equivalent in the hospitality industry – is no different; it connects empty rooms with the people who need a room. It seems a simple enough formula for success, and there are other surely endless industries the same model could be applied to.
In fact, this key feature was included as one of "Six degrees of innovation" in a recent Cambridge Judge Business School and AT&T whitepaper, where it is summed up as follows:
"Shared asset ownership and utilisation to maximise the utilisation of assets, thereby reducing overall ownership cost."
So how can big companies compete in a small company’s world? Report co-author Stelios Kavadias, Director of Research at Cambridge Judge, highlighted the example of hotel chain Hilton to explain the dilemma.
"That’s the million dollar question. The answer is that unfortunately for them, they will have to adapt to a new way of doing business, which possibly could imply that Hilton will now show up on Airbnb.
"That in itself puts a big question to Hilton, because the cost of doing business is pretty high and for the Airbnb company the prices you can see this will lower out.
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"Could they dissolve this into smaller more flexible more adaptive units? They would have to rethink their business model and potentially create a collection of smaller units that are managed as independent PNLS that can generate value through the Airbnb world, as opposed to this centralised structure that is based on scale.
"I had the opportunity to talk to several managing directors based on the results of this research.
One of the people said that what I was really saying is that scale is no longer a competitive enabler. My response was the following: it depends how you define scale. I think we have a very weird definition of scale that means lots of assets owned by us so that we can drive the usage of those assets as low as possible.
"I think what we see happening, enabled by technology, is that scale is going to be at a different level; how fast can you respond to consumers? Can you have scale there? Or it could be scale at the level of how many new ideas you can initiate and push forward in your organisation. The word is the same but it’s a different way of thinking about scale as opposed to the mass production model that we are used to."
The report highlighted other key innovation ‘degrees’, including personalisation, a circular economic model to reduce waste and usage-based pricing, as well as risk-resilient value chains and agile organisational structures.
Many of these seem better suited to smaller companies, however: how are some of the bigger, older companies doing on this indicators? Kavadias discussed one example of a ‘dinosaur’ that is managing to adapt to disruption.
"If you’re Kodak, you’re going to die, you’re going to go bankrupt. There is an example of an organisation which is a dinosaur, and we all use that dinosaur on a daily basis; it’s called Microsoft. Recently, you can start seeing under the current CEO, waves of change. It used to be that Microsoft had lost track of the big bandwagon of the Cloud.
"It is only recently with Office 365 and the big changes that Satya Nadella is pushing forward and internally with the adaptive decision-making that they are undertaking that now Microsoft is responding.
The jury is out on whether they’re going to succeed, but now I would feel more comfortable that they could be an example of a company surviving disruption by adapting their business model."
As Kavadias explains, though Microsoft is now adapting, it took a CEO with the right mindset to ensure that the transformation took place. Are the bureaucratic corporate structures a drag on innovation, and could they benefit from a dedicated innovation department?
"Definitely having a contextual definition of a place where innovation can happen is important, especially for technology purposes. But the big danger is the isolation and the siloed perspective you are creating. ‘We are the innovation guys, nobody else talks about innovations because we are the innovation guys.’
"Xerox Park in Palo Alto is the quintessential example of this. They generated industries: Apple finds its origins in Xerox Park. How much did Xerox make out of this? They lost money. I wouldn’t say this is really the answer. Somebody needs to think about innovation becoming a fundamental trait to everyone in an organisation.
"Can you get people to think about a new better way for either doing a product or bettering my work environment or enabling somebody else to do stuff? If somebody gets to that level you see lots of change happening."
As Kavadias says, it is unclear yet whether the dinosaurs can evolve.
