4 Ways to Maximize Disruption in the Gig Economy
The gig economy is opening up new opportunities to build out service-based marketplaces that are industry specific.
PHOTO CREDIT: Getty Images
When planning and strategizing about the future of any industry, the topic of disruption is one of the first ones that comes up. Will your company disrupt, or be disrupted?
In today's fast-changing business environment, entrepreneurs cannot expect their ecosystems to remain static. Any competitive advantage in technology, value proposition, talent acquisition, distribution channels, offering quality, or speed of delivery will soon be copied and surpassed by others. This has been the trend from the beginning of commerce, and the rate of acceleration has increased exponentially in recent years. This challenge is not going away.
Disruption via Creating a Marketplace
In order to be the disruptor of your industry, how will you go about taking the lead? One answer that has proven itself to stand the test of time is to create a viable marketplace.
In a TechCrunch article by Tom Goodwin, The Battle Is For The Customer Interface, the case for the marketplace solution is summed up this way:
"Uber, the world's largest taxi company, owns no vehicles. Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider, owns no real estate. Something interesting is happening."
Goodwin's article was written in March of 2015, and the marketplace phenomenon continues to be a top growth and disruption strategy. It's easy to be intimidated by the size and notoriety of Uber, Facebook, Alibaba and Airbnb. You might even question the viability of creating a marketplace with less capital and perhaps a smaller target market than these behemoths. Still, controlling the customer interface by giving straighter-line access to providers (i.e., a marketplace) is a worthy goal for companies wishing to not only avoid disruption, but to produce it.
Factoring In The Gig Economy's Impact
Industry disruption continues to be fueled by the gig economy. As businesses look for freelance solutions to avoid adding staff, the number of gigs has increased substantially. What started out as low-skilled jobs posted on sites like TaskRabbit, continues to evolve into much more demanding work from an increasingly skilled labor force.
Malik Zakaria is the CEO and founder of FieldEngineer. After providing services in the telecom engineering space for 15 years, he realized that he could serve a much larger number of clients--and provide more work for more engineers--if he created a marketplace platform. FieldEngineer now operates in 142 Countries, has over 15,000 engineers and 5,000 work orders to date. Revenues are expected to be $5 million by the end of this year.
The 4 Factors to Maximize Disruption in the Gig Economy
Having successfully launched a new gig-based marketplace for the telecom industry, Zakaria has identified the four factors that has helped FieldEngineer grow.
1. The Platform Must be Easy to Use
For fast growth, start by identifying and removing friction. Friction is why buyers and sellers opt for marketplaces rather than legacy business models. The number of clicks necessary to purchase, the amount of information one must enter, the methods of transferring money, and many other touch points must all be significantly simplified. "Our first pass at designing the FieldEngineer platform was far too complicated," Zakaria recalls. "It wasn't until we had reached our third and fourth iterations that we knew we had something worth taking to our customers. Then, their feedback took us the rest of the way."
2. Industry Knowledge is Critical
According to Zakaria, "If we hadn't already been in this industry, we could never have understood the pain points that would push buyers and providers into our marketplace platform." It turns out that for the telecom industry, a major pain point is the high cost of overhead associated with full-time technicians and engineers; a cost that can be reduced with the on-demand variable expense of FieldEngineer. Also, Zakaria identified a subtle disconnect between the time a telecom company delivers services and the time they can recognize revenues after the work is completed. This can end up taking months, and has created a constraint that FieldEngineer has been able to resolve.
What are the pain points in your industry that could be relieved through a marketplace solution? The better you understand the pain your customers already have, the more powerful a solution you will be able to bring to market.
3. The Platform Must Balance the Needs of Suppliers and Buyers Equally
Your marketplace must serve buyers and sellers evenly, with no perceived disproportionate advantage (or disadvantage) on either side. The best marketplaces are impartial and independent in the minds of the people who use it. "The question we kept asking ourselves was, 'which comes first--suppliers or buyers?' Then, we realized that it's both," says Zakaria.
There is an informative HBR article, written about research by Harvard Business School Associate Professor Thales Teixeira, on this chicken-and-egg question, entitled How Uber, Airbnb, and Etsy Attracted Their First 1,000 Customers. By understanding the needs of everyone who will use your platform, you can ensure you attract the right balance of suppliers and customers.
4. Go for Minimum Viable and Iterate
The desire to create the 'Uber of you industry,' can lead you to want to build every possible feature prior to launch. It's great to want to set the standard for your industry, but don't get lost in the architecture before you have the chance at testing your implementation.
You are unlikely to have the capital to build all of the functionality up front, but you can use it as a pattern and choose the most crucial features to build your minimum viable product. "We, like others, had to start with some initial functionality and build on that. Through customer feedback we're getting better all the time. We're not done yet," states Zakaria.
The gig economy is opening up new opportunities to build out service-based marketplaces that are industry specific. If a marketplace doesn't already exist for your industry, consider what it would take to build one in order to maximize the disruption that's already taking place. For more on the topic of disruption, here's another Wildly Successful Formula for Disruption You Can Implement Today.