The Next Disruption for Platform Capitalism: Part 2
The Next Disruption for Platform Capitalism: Part 2
Recap of part one
In part one I reviewed Alvin Roth’s three market design principles and proposed that there is an opportunity for platform models to enter the world of ‘trusted’ services, such as social care. In order to do this platforms will need to solve the market design principle of safety; it must be as safe or safer to transact on the platform than alternatives in in the physical world and users of the platform find that playing by the rules is better than breaking them.
One type of platform that has emerged is the crowd sourced model, like TripAdvisor. But would you trust the crowd with your life? That was the question levelled at me when I floated the platform model concept at a government policy discussion on adult social care.
Developing trust is hard, especially when vulnerable people are involved. There are plenty of people with bad intentions who can ‘game the system’ and cause harm. Taking adult social care as a use case, the statistics are troubling: in the US there are two million incidences of elderly abuse every year in nursing homes, with 10% of people experiencing abuse in their elderly years. Any potential disrupter would need to be better than the incumbent model, as Uber is with taxis.
However, building safety requires more than just amassing well natured people. What is even harder is screening out the well intentioned, and seemingly qualified service providers who are not up for the job.
Recently, I learned of an experience the manager of a rape victim support service had in the 1980’s. She and some friends rented a house with some spare rooms to support members of their community who were victims of domestic abuse to allow them a faster passage to safety. Unfortunately, this didn’t lead to good outcomes. The problem was twofold:
> firstly, there was no provision for the women’s emotional and physical needs which meant that they were unable to recover properly
> secondly, there were no security measures to prevent abusive partners learning where the safe house was, and breaking in
Despite good intentions, her on-demand style refuge did not pass the market design principle of safety. If this service was offered on a digital ‘safe-house’ platform (à la Airbnb), then users would be better off using the physical-world alternatives, even if they are slower.
Satisfying the safety principle for trusted services will require serious rigour. As a starting point let me offer a list of six actions platform models should consider to make their offer safer than the physical-world alternatives and build the sense of trust required to be successful.
Building a safe platform in the first instance:
1. Verify users – check users are who they say they are and services providers are what they claim to be. It’s important to be thorough; Uber send their drivers to driving school and require a licence, Alibaba offer a factory inspection service. For social care, there are safeguarding checks, qualifications and inspection reports.
2. Have insurance – insurance is a hygiene factor. BorrowMyDoggy.com protect against dogs damaging the borrower’s property. The platform owner holding the risk is a smart idea as it does not create a barrier for users.
3. Prepare for an emergency – BorrowMyDoggy.com have a 24/7 vet line, my instinct is this is an over engineered, seldom used feature but it is powerful. The sentiment is to make the platform feel safer than the alternative; an embellishment to the service.
4. Facilitate rapport – users should connect, the ambition is to recreate the rapport from a face to face meeting. Communication must be omni-channel as is the case with viewing houses.
Maintaining the safety:
5. Make reputation important – peer to peer reviews and two-way reputation scores work wonders. Not only do they incentivise service providers to perform, but they also, encourage users to be good customers. Airbnb is a nice example of this.
6. Monitor – it is likely that the end user of the service will not be the person burdened with worry; Grandma has a great time whilst her children fret. Therefore, assuring that what is supposed to be happening, whilst it is happening will be compelling to the worry bearers and ensure service givers play by the rules. Uber’s Trip Tracker feature allows family members to track each other’s journeys for peace of mind.
I believe that the next disruption for the platform economy will be ‘trusted’ services. This could include adult social care but also other areas such as child care, foster care, refugees. The one barrier to this happening now is safety. Transacting for these services on a platform must be safer than the off-platform alternatives and users must play by the rules. This can be achieved through rigorous verification, insurance, preparing for an emergency, facilitating rapport between users, reputation incentives and monitoring. All of which is possible today. In fact there are some interesting start-ups already leading the way to disrupt the market for trusted services, my instinct is soon their model will be the norm not the precursor.
By Patrick Harding