Strategy Conception to Implementation - Airbnb

The readings for this week got me thinking about how companies go about implementing their strategies. The readings address how translating an organization’s strategy from conception to reality is really an art as much as it is a science.

In this blog, we will explore AirBnB’s growth strategy. Airbnb is an example of a company that has successfully

implemented its strategy to see tremendous success. Started in 2008, AirBnB is now has a valuation of $31 billion. This can be attributed to the successful execution of their strategy. Drawing from “Good Strategy Execution Requires Balancing 4 Tensions” we see that Airbnb did balance the 4 tensions. They started by renting out 3 air mattresses in their San Francisco apartment. This concept was successful. The idea then evolved into a website where others could do the same, and travelers could get a cheaper option than a hotel. Based on the success of the small business plan, they decided to shift their strategy towards renting out homes. That would be the inspiring end state. The challenging states would be when the founders had to get hosts to list their properties on the website. A major challenge would be to spread the word about the new platform. We also notice the founders balancing another tension “Capability development versus pressure for results “. The founders leveraged their capabilities and created a script that would automatically detect new Craigslist postings and email the person to also post on Airbnb. The host would then be incentivized to promote the new platform. Additionally, drawing from “Can you say what your strategy is” we see that this concept was the sweet spot union of customer needs and company capabilities.

Reading about the history of Airbnb I could relate their strategy to certain aspects we discussed in class this week. The concept was a Blue Ocean strategy since there weren’t similar offerings on the market. Drawing from the article “Have you tested your strategy lately” we see that the Airbnb strategy does check several boxes when analyzing their strategy

  ü  Will your strategy beat the market?

           Yes – they had unbeatable price points

  ü  Does your strategy tap a true source of advantage?

           Yes – Expensive real estate makes finding accommodation harder. This is a cheap solution to people on a budget and an easy way to make extra money for the hosts who list their property

  ü  Is your strategy granular about where to compete?

             Yes – Short term rental only

  ü  Does your strategy put you ahead of trends?

             Yes – At the time, Airbnb did not have any major competitors offering similar services

  ü  Does your strategy rest on privileged insights?

            Yes – Success of the mattress renting business plan gave the founders insight into the renting market

Airbnb continues to innovate in order to cater to changing customer needs. Their ability to predict customer trends and the capability to implement their strategy has resulted in the company’s meteoric rise and continuous growth.