Mobile Apps, Code Halos, The Sharing Economy And Trustonomics
I love receiving gifts in the form of new insights! It doesn't matter if others received the same gift years ago and I am just getting it now. If it is new to me, I get excited. It is like waking up in the morning and discovering a new room in your house. I read an article by Thomas Friedman in the New York Times this weekend titled, "And Now for a Bit of Good News." The subject of the article was the new "sharing economy," think Uber, Lyft, Airbnb, etc. In the article, Friedman calls Airbnb a "Trust Platform." To me, this weekend, this term was a gift. He is so right.
I have used Airbnb many times when traveling with my family, and to date have been very pleased with our experiences. Often the transactions are sizeable as I am reserving a home in a desirable location for a week. I am engaging in a transaction of some size with a person I don't know, in a home I have never visited, most often in a foreign country using different currency, involving different laws and customs. Why did I risk it? I trusted the platform.
The travel and hospitality industry is experiencing an incredible amount of digital transformation already. Hotels are competing for best mobile app experience, fastest broadband Internet connections, Apple device support in the rooms, and increasingly they are digitizing and mobilizing the check-in and check-out experiences to improve the user's overall experience and convenience.
Competition amongst business class hotels like Marriott, Hilton, Starwood etc., was traditionally focused around a certain quality of environment, convenience and a standardized experience for the business traveler. Business travelers trusted the brands to provide them with their expected experience. In business and in travel there is enough inherent chaos. The business traveler does not want additional chaos from their hotels. They want a trusted experience. I am speaking from personal experience.
Business class hotels have built their brands on trust. They have invested heavily for decades in their "trust" level. This "trustonomics" or the economic value of trust was substantial and represented a barrier to entry for start-ups. I can imagine incumbents felt pretty secure in their position of trust and the trustonomics it represented. Today, however, competing digital "trust" platforms are emerging. The reputations that took incumbents decades and hundreds of millions to establish can be challenged by digital "trust" platforms seemingly overnight.
The trustonomics model in the travel and hospitality industry is changing all around us. It will be interesting to watch how the incumbents respond. Will they get defensive and attempt to minimize up-and-coming digital "trust platforms," or attempt to delay them through political lobbying and legal restrictions, or choose to respond with their own digital "trust platforms."
I wonder how much economic value "trust" really represents? Although Airbnb is not targeting the hardcore business traveler today, the sharing economy and emerging digital "trust" platforms represents a major shift in the economic value of "trust" in this industry. As both companies and consumers more effectively use data or "Code Halos" to build trust in each other, even more digital transformations will be expected.
Are there other industries where start-up "trust platforms" and effective "Code Halos" strategies will digitally transform the market and introduce a different trustonomics model?