7521QCA Design Thinking - AirBnB Case Study

Answer:

Part 1

Introduction

According to Tim Brown the CEO and David Kelly of IFEO which is rated as the topmost design corporation, they refer design thinking (DT) as a procedure that is employed by an organisation to help solve a problem. The theorist states design thinking process makes use of a designers ‘toolkit components such as experimentation and empathy to drive at innovative solutions (Ikem, Aponte, and Muffatto, 2015, p.832). Accordingly, design thinking helps an individual to be in the position of utilising their decisions on the grounds of what their upcoming clients are in need unlike depending solely upon past data. Furthermore, Brown notes that “design thinking is a human-driven technique that comes the designer’s original toolkit whereby they integrate customers’ needs and wants using the possible available technology and existing requirements to realize business success.” Indeed, thinking like a designer plays a significant role towards the manner in which a corporation fashion its products, services strategy as well as processes. In the case of this paper, Airbnb is a good example of an organization that has put design thinking in use, and it is currently enjoying the innovation as the fruits of design thinking (Michlewski, 2016). As a result of the emergence of DT as a business strategy framework has revolutionized how business practices are done in the 21^st-century era (Patrício, Gustafsson, and Fisk, 2018). For example, the fast progress experienced on the internet, as well as the use of integrated platforms, helps Airbnb to transform from a loss-making venture to making billions.

The most important aspect to note in this cases is that design thinking thrives on the following principles dynamism, end-user need, action-oriented, change-culture and enterprise creativity. Dynamism is when the organisation becomes pro-active as well as reactive to the market modifications. End-user need means that the business is supposed to address the needs of its target consumers. Change –culture is where the business can bring change regarding culture and culture of the consumer. Lastly but not least, enterprise creativity is core to the constant innovativeness in the development of the business, therefore for a business to triumph in this age of design thinking it must abide by these elements. In light of this statement, this paper looks at how design thinking helps to turn things around at Airbnb from zero to its present successful path.

Background of Airbnb Company

Airbnb started in 2007 when its designers Brian Chesky and Joe Gebbia decides that they could rent their apartment in San Fransico to achieve their daily chores. As a result, in order to make ends meet these designers decide to turn their roof space into a lodging space since there was a design conference that was coming to San Francisco and the hotel space could not accommodate all the visitors. Therefore, they come up with a simple website comprising of pictures of their loft-turned-lodging space (Wheeler, 2017). The website consisted of three air mattresses placed on the flow and an additional service of home-cooked breakfast in the morning. At first, the site wins them three renters with each paying $80 after the first week, then afterward they began receiving emails from individuals around the globe seeking if they could get accommodation at their site for destinations such as Japan, London, and Buenos Air to mention a few. Accordingly, clients were suggesting what they needed. Thus, Gebbia and Chesky set off to design the offer made by their clients. Accordingly, as these designers were striving to solve their problem of how to make ends meet, they were also aiding other people in solving their problem too. Indeed, Airbnb story is background information is similar to that of IKEA which are perfect examples of Design Thinking in action.

Airbnb Tuff Moments and how it Manoeuvre

However, some few years later Airbnb was almost collapsing due to running short of resources to run the business. Similar to other start-ups companies that always struggle to survive in the new market, Airbnb finds itself on the verge of bankruptcy. Airbnb Company income could barely reach 200 dollars in one week, thus due to the high loses the business was crippling the efforts of its founders. As a result of the constant loses experience by the business, both the founders in collaboration with the creator of the business incubator Y Combinator Paul Grham, the launched a scrutiny process in determination to the causative agent of the consistent losses that was being recorded on weakly basis. After carrying out research, it is found that Airbnb advertisements it was found that there as something in the pattern at which their ads were published, and the similarity was in the pictures. Consequently, these pictures were not having a good look since it was not fascinating to customers.

Certainly, to counter the problem of poor pictures, Chesky and Gebbia the designers goes out to New York City to for benchmark to learn from the successful hosts. After the New York City visit, Airbnb is able to revamp its website in accordance to the experience gained from the host in New York whereby highly crafted pictures are included on the website like TripAdvisor and HomeAway (Cetindamar, Phaal, and Probert, 2016, p. 7). This is the time when the company was able to change its name from Airbedand breakfast to Airbnb in 2010 (Bocken, Rana, and Short, 2015, p. 68). Accordingly, through Airbnb attempt to move to New York to benchmark from the thriving hosts reveals that as an entrepreneur no one can survive in isolation just like the class lecture three advocates the use observation of other peoples (Zervas, Proserpio, and Byers, 2017, p. 689). Some of the great business ideas do not necessarily come from structured ideas, but it can also come out of observation of what the competitor is doing by refining it in the most creative way possible (Prudhomme van Reine, 2017, p. 56). For instance Airbnb after going through the benchmark process it marks the turning point regarding its way of customer service delivery and satisfaction. Airbnb improves its service chain delivery by extending its services into a range of rental services such as castles, treehouses, private rooms, homes and apartments, igloos, islands, manors, and boats. Accordingly, Airbnb starts to experience gradual changes regarding services delivery as well as revenues, for instance in 2011 the company was able to raise over $7 million and at the same time the company was able to win some of its rivals. Moreover, Airbnb acquires travel guides Localmind and NabeWise, which helps it to begin offering localised information regarding local destinations. Subsequently, over a short time, Airbnb was known all over the globe for its rental services and by 2014 it had opened a number of offices in different part of the world such as in Copenhagen, Singapore, Tokyo, Berlin, Milan, London, Dublin, Beijing, Hamburg, Sydney and many others cities across the world.

Airbnb Business Operations Mode

Airbnb does not possess any of the listed properties. Nonetheless, it only charges the guests and hosts for making use of its website. The website has made it easier for travellers to make direct bookings as well as inquiries with the owner of the property. In this business, the core driving force here is built on trust. Airbnb designers had identified the trust aspect initially during the San Fransico design conference. As a result, they come up with several steps to advance trust among consumer in the Airbnb (Demil, Lecocq, Ricart, and Zott, 2015, p. 4). The most significant milestone that has been able to keep Airbnb at the top of market share is its capacity to use high-quality pictures on its website. On the same note, Airbnb success is out of its close concentration to the needs as well as experiences of all its hosts as a struggle to enhance its service delivery. For instance, Chesky stays in Airbnb shortlisted properties as a strategy of collecting insights of the real Airbnb experience.

Accordingly, Airbnb website is structured based o functions, but it is fashioned in accordance with consumer experience which is tailored based on the needs of guest and hosts. Therefore, hosts are inspired to make their contributions by offering more information on the profile of Airbnb in an attempt to better their credibility. Also, Airbnb uses reviews to improve hosts reputation about the service delivery (Sniukas, Lee, and Morasky, 2016). As such, these factors have and continue to build the trusted platform that enables clients to feel safe when making their transactions.

Airbnb acts as a cyber-agent which has facilitated it to link up like-minded sellers and buyers, and through this connection, it can collect a nominal agency charge in case of a successful transaction between a guest and the host (Steinke, Al-Deen, and LaBrie, 2017, p. 55). Consequently, the process has resulted in a community of people (travellers) with similar ideas for instance hosts who need to create their travelling experiences with other travellers. In doing so, Airbnb demands that its clients mainly travellers to developing their profiles on its website before they can make any reservations (Fleischmann, Daniel, and Welters, 2017, p. 119). By allowing customers to create their profiles makes their profile to be accessible by their chosen host at the time they are able to make any form of reservations (Garrett, Straker, and Wrigley, 2015). Then on the time of receiving the reservation request, the host will be in a position to cross-check the traveller’s profile. Thus this plays a part in influencing them on whether to accept or decline the traveller as a guest. On acceptance, the traveller is supposed to pay 12% of guest service on top of the reservation cost, which is payable using a range of methods like PayPal, credit cards and Google Wallet. At the same time, Airbnb deducts 3% as service charge from the host for every successful reservation as well as offer a Host Protection Insurance Programme (Hamari, Sjöklint, and Ukkonen, 2016, p. 2049). Because of these economic value, this strategy has made Airbnb win more and more popularity world over. Furthermore, Airbnb is more attractive because it has created a social platform that allows host and guest to actively interact physically, thus it offers them the chance to share as well as be in a position to exchange their travelling experiences.

Airbnb Key Business Factors

The success of Airbnb is as a result of a chain of aspect such as it links travellers famously known as “guests” who have accepted the perspective of alternate accommodation together with natives called “hosts”. Later on, these travellers get fascinated by the business services, and therefore they move in to occupy the unused space for a short durations.

Part 2

How Airbnb Operates

Travellers can search for accommodation over the company’s website

The host has been mandated to list their rooms by creating free profiles and accounts

Guest are allowed to make requests to hosts who are then expected to respond these request within 24 hours

The identity of guests and host is verified using their government-issued identification cards, personal conduct information and social media accounts (Samdanis, and Lee, 2017, p. 73)

The form offers a 24-hour customer service hotline and a maximum of $1 million insurance protection insurance programme

The company has employed a range of payment approaches making it flexible for all its user

However, the explosion of social network sites has stimulated the surrounding where individuals have become much comfortable with search as well as sharing pictures, information as well as opinion over the internet. Supported by some cycles of financial and economic turmoil, the concept of reduced price accommodation might be pleasant, nonetheless, could any person decide to live with a stranger for some days could the company increase the price? These are some of the challenges that Airbnb is likely to face or maybe facing already. Therefore, Airbnb was forced to develop an advanced website that displays respectability, credibility and fun. The use of best quality and digital pictures are used to capture the style and at the same time offer prospect guest a peek into lodging (Munigala, Oinonen, and Ekman, 2018, p.1). Also, Airbnb should make possible for its hosts make requests for professional pictures at the cost of the company to take photographs of their premises by only clicking on the “Apply” button. 

Bibliography

Ikem, C., Aponte, A.S. and Muffatto, M., 2015, September. Design and Innovation as Drivers of Modern Entrepreneurship. In European Conference on Innovation and Entrepreneurship (p. 832). Academic Conferences International Limited.

Bocken, N.M.P., Rana, P. and Short, S.W., 2015. Value mapping for sustainable business thinking. Journal of Industrial and Production Engineering, 32(1), pp.67-81.

Patrício, L., Gustafsson, A. and Fisk, R., 2018. Upframing Service Design and Innovation for Research Impact.

Zervas, G., Proserpio, D. and Byers, J.W., 2017. The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), pp.687-705.

Demil, B., Lecocq, X., Ricart, J.E. and Zott, C., 2015. Introduction to the SEJ special issue on business models: business models within the domain of strategic entrepreneurship. Strategic Entrepreneurship Journal, 9(1), pp.1-11.

Sniukas, M., Lee, P. and Morasky, M., 2016. The Art of Opportunity: How to Build Growth and Ventures Through Strategic Innovation and Visual Thinking. John Wiley & Sons.

Steinke, G.H., Al-Deen, M.S. and LaBrie, R.C., 2017. Innovating Information System Development Methodologies with Design Thinking. In Proceedings of the 5th International Conference on Applied Innovations in IT (pp. 51-55).

Garrett, A., Straker, K. and Wrigley, C., 2015. Design intersection: The growth of community-led technology-enabled companies.

Hamari, J., Sjöklint, M. and Ukkonen, A., 2016. The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67(9), pp.2047-2059.

Munigala, V., Oinonen, P. and Ekman, K., 2018. Envisioning future innovative experimental ecosystems through the foresight approach. Case: Design Factory. European Journal of Futures Research, 6(1), p.1.

Samdanis, M. and Lee, S.H., 2017. White space and digital remediation of design practice in architecture: A case study of Frank O. Gehry. Information and Organization, 27(2), pp.73-86.

Fleischmann, K., Daniel, R. and Welters, R., 2017. Developing a regional economy through creative industries: innovation capacity in a regional Australian city. Creative Industries Journal, 10(2), pp.119-138.

Michlewski, K., 2016. Design attitude. Routledge.

Cetindamar, D., Phaal, R. and Probert, D.R., 2016. Technology management as a profession and the challenges ahead. Journal of Engineering and Technology Management, 41, pp.1-13.

Prud'homme van Reine, P., 2017. The culture of design thinking for innovation. Journal of Innovation Management, 5(2), p.56.

Wheeler, A., 2017. Designing brand identity: An essential guide for the whole branding team. John Wiley & Sons.