2020 has demanded that companies pivot like no other time in recent history. Organizations with the flexibility to adapt their business models to changing customer preferences find themselves better equipped to face current challenges and to move past them in a post-Covid world. One example of a company that has encountered this year’s inflection point and adjusted successfully is Airbnb.
This month, Airbnb went public, opening at an impressive $146 per share. It has been listed among a slew of start-ups, including DoorDash and Asana, that have managed to circumvent or even benefit from the pandemic’s path of disruption. With its agile business model and focus on customer needs, Airbnb shows how you can thrive during an inflection point by overdelivering on what your customers value and underperforming strategically.
Get a clear view of what your customers need
This summer, for our annual vacation, my family and I drove to the Hamptons, New York, and stayed in a hotel. While booking our visit, I realized that my requirements had changed. I sought a room with direct access to the outside, without hallways or elevators to potentially encounter other travelers. We selected a modest hotel with plenty of outdoor spaces and didn’t mind that it lacked a common bar or restaurant.
Down the street was Gurney’s, where I stayed a few years ago with my wife for our anniversary. It has an amazing restaurant, spa, and lounge. But now, in an era of social distancing, all those pluses suddenly become minuses. The hotel we chose may not have listed as many stars or amenities, but its features had become high value to us in the midst of the pandemic. Meanwhile, the luxury hotel’s extras held little to no value for my family.
This year, Airbnb attuned itself to customers like me, who have become more concerned with safety and staying closer to home. The company shifted its focus away from attracting new clients with short stays in big cities to supporting its existing community of hosts and travelers who want to create meaningful, secure experiences.
Over-deliver on what your customers care most about
In the Live Q&A portion of our latest Insight to Impact Adventure, Rita McGrath highlights Airbnb’s ability to morph its services and reinvent itself mid-pandemic. Like the majority of the hospitality industry, Airbnb was hit badly by travel restrictions and subsequent layoffs, but unlike other hotels, the company quickly pivoted to land on its feet. Along with having a strategy that allows for reinvention, Airbnb was able to do this by listening to its customers.
As demonstrated in my own search for a Hamptons hotel, Airbnb realized that its customer needs have changed drastically. Demand has shifted from listings in densely populated urban areas to safe, rural spaces where travelers can stay for longer periods of time.
Airbnb’s website informs hosts that customers now prefer options outside of major cities that can be booked for longer stays and larger groups. Hosts are advised to offer entire homes and allow last-minute bookings.
Strategically under-deliver on what they care less about
Francis Frei taught us that “excellence is being great at the things your customers value most.”
In a world of limited energy and resources, a solid strategy is one that underperforms in areas that don’t matter to your customers. In one example, Frei explains that Walmart customers value low prices and variety across categories. They don’t care about sales support and store ambiance. By cutting back in low-value areas, Walmart frees up resources to deliver in areas that matter.
Similarly, Airbnb realized that customers no longer value popular tourist attractions, but want longer stays, last-minute booking, and local experiences. As you redesign your own strategy in a post-Covid world, consider where you might under-invest so that you can overinvest in what your customers value most.
Airbnb’s willingness to reimagine its business model is key to withstanding the tumult caused by an inflection point and preparing for a future beyond the pandemic. As Scott Galloway said on his recent Pivot podcast episode, “DoorDash is going public because of Covid. Airbnb is going public despite Covid. Which would you rather own when the vaccine comes?” Your strategy is essential to how you handle disruption and move forward.
To help your business meet the unique challenges we face today, ask yourself these three questions:
- How has the order of the attributes your customers care about changed?
- What would it look like to over-deliver on an attribute that is now a higher priority?
- What would it look like to intentionally underperform on an attribute that they now care little about?
By being agile, pivoting based on in-depth customer insights, and excelling at what your customers value, you will position yourself for success in a post-Covid world.