The operating system for the services industry

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freshome.com

Recently I have been googling for many different service oriented businesses. This experience got me thinking about some of the hottest themes right now:

  • one demand economy
  • marketplaces and platforms
  • bookings / scheduling
  • automation and shifts in the labour market

Companies like Uber and AirBnB are reshaping big parts of the global economy. They are changing the spectrum of work and services on both ends: the consmer and the service provider. In local trasnportation it used to be a taxi company — now it is everyone with a car and and phone.

Depending where you are in the value chain, these changes might be viewd as good or bad. Taxi companies are probably not happy about Uber. On the other end of the spectrum — consumers have a new choice, and by looking at Ubers growth numbers, people like the new service. This is only the tip of the iceberg. With smartphone and the Internet accessible anywhere, many more service oriented industries will be affected.

To any service provider, the Internet is like the direct line to the perfect customer. Through platforms, marketplaces and apps a handyman can easilly fill his calendar with booking. Same goes for hairdressers, plumbers, electricians and so forth. Any type of service you can think of can leverage the Internet in pretty much the same way.

In the service industry everyone is competing on the same rules. Not like in retail where small offline shops struggle to compete againts large online retailers. Products are easilly comparible on price and it doesn’t really matter where you buy them. In services it is much different. It is hard to compare the service of two hairdressers, or at least it is not so straight forward as with products. In services, the human element plays a very important role. As does location, customer support, quality of service.

We have seen huge improvements in ecommerce with tools and products serving retailers. In the service industry we are definitely lagging behind. I would argue that in 2015 most service businesses are still not aware of how they could use web and mobile tools to boost sales and customer support. Think about the millions of handyman and cleaners who are still not used to using smartphones and apps. The fact that we are so far behing makes me very bullish on this category. Uber and AirBnB were just the beginning. What will come next will probably transform every service we were used to using.

I came up with a concept of: the operating system for the services industry which helps me to structure my thinking around this topic. In my opinion there are multiple components that need to be developed for this operating system to work:

  • search and discovery — how to find a good handyman?
  • identity layer — can I trust this person/company?
  • data structure — what is the price, what is the location and other attributes.
  • interconnectivity — smart POS, apps, “inlocation” experience, notifications.
  • transactional interface — seamless payments, subscription, receipts.

Each of the components is a broad spectrum of smaller improvements to the over all service/process. In order to reach scale, all will have to be simple and easy to use by the average consumer or service provider. Most of the components are already inplace today but their user experience is still at a minimal level.

How will the world look and feel once every consumer and service provider will be using this imaginary operating system? This is something we will have to find out, but my gut feeling is that it will be a seamless transition.

From signposts, to YellowPages, to the clunky Internet, to app enabled on demand economy to the operating system.

Written by

I’m a Partner at Innovation Nest, a seed VC fund focused on B2B Software. Helping SaaS founders with growth strategies and tactics.

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