Upon doing the Accor case study, I was exposed to the terms intermediation and disintermediation, learned what they meant, and discovered the effect they can have on a specific business or an industry as a whole. I struggled with understanding the terms and began looking for specific examples within industries and found an article, “Disintermediation and intermediation beyond theory,” which has some interesting examples and references the Digital Disruptive Intermediaries report, published through the University of Sydney Business School (Nichol, 2016).
But I was still trying to grasp the concepts of disintermediation and intermediation, as well as why they occur within an industry or company, and why disintermediation especially has been such a topic of discussion with current and new businesses, so I looked up additional articles and one, “Disrupt, Disintermediate, De-Layer, Dynamize” published on the Huffington Post, stood out to me and helped further my understanding (Kirkpatrick, 2017). The article began by explaining the concept of a new shared value network, with multiple partners, that develops “new operational work streams that can scale fast and earn trust in the marketplace” by having each player bring “optimal capability in its domain of capability” which is essential for the sustainability of business innovation (Kirkpatrick, 2017).
It explains how this new model is necessary, due to customers having “fickle loyalties” and always being “ready to move to something new, exciting and better” (Kirkpatrick, 2017). This idea is corroborated by Accor’s CEO, Sébastien Bazin, who stated that “The digital revolution has given customer’s technologies and tools that make them more expert and better informed, and which offer them prompt access to an increasingly wide choice…” demonstrating how businesses need to constantly innovate because with the increasing use of digital platforms and online retailers, ““consumers are demanding their products reach them quicker than ever” (Avery, Dev, O’Connor, 2017) (“Amazon vs Uber,” 2018). EY also published a report titled “The digitisation of everything: How organisations must adapt to changing consumer behaviour” which explained how due to the rapid emergence of new digital platforms and devices, as well as the exponential acceleration of technology change, companies “must keep up with the pace of change or lose relevance” because consumers are now used “to immediacy and convenience” (“The Digitisation of,” n.d). Changing consumer expectations and preferences are connected to disruption within traditional business models and are major reasons of why disintermediation is occurring.
A cornerstone underlying the business disruptions in these new value networks is the “continuing disintermediation of unnecessary, non-value adding participants” and the article explains how both Uber and AirBnb have begun “cutting out unnecessary intermediaries” and have begun “connecting people up with fewer intermediaries than before” (Kirkpatrick, 2017).
The article then moves on to ask if this new model that AirBnB and Uber are following is ripe for disruption because the actual organizations themselves could be considered intermediaries and there may be opportunities in the future for more disintermediation through new business models that may take out even more players “deemed non-value added” and unnecessary (Kirkpatrick, 2017). There is speculation that direct peer-to-peer relationships with no legal entity in the middle will end up taking over and make even these new and emerging business models obsolete (Kirkpatrick, 2017). It even discusses the possibility of eliminating hierarchies within organizations and moving to a peer-to-peer partnership style, where all roles are adding value because “hierarchy is a form of intermediation that is a relic from the industrial revolution” (Kirkpatrick, 2017). It doesn’t advocate eliminating management activity, just the management positions, and instead have workers assume management functions within a full, internal peer-to-peer model (Kirkpatrick, 2017). I find this idea fascinating and I think it would speed up decision making processes because questions or pitched ideas/processes wouldn’t have to go through several levels or wait for many approvals before being implemented. Additionally, I think this internal structure would provide more value to the end user or customer because of the transparency that would increase with a flatter structure, as well as the shared focus on the organization’s goal, which would be optimizing the customer experience. Everyone would be privy to the results and everyone would see how they are contributing to the goal, which can be intrinsically motivating for employees and help to increase employee engagement, and thus improve end results and work ethic and output of the employees.
I’m curious as to my classmate’s thoughts. Do you think this is a possibility? Where current business models (new and novel now), will shift into an entirely different model, that of peer-to-peer? If so, how long do you think before that occurs? If not, why do you think it will not happen?
Additionally, do you think there will always be a necessity for some type of middlemen or management position? Do you think organizations would provide more value to the customer with a flatter structure, without the intermediation of management structures? Do you think having less intermediaries internally helps an organization stay on track, provide quicker and better service to customers, and provide a more positive experience to employees? Why or why not?
Amazon vs Uber: Two Technology Giants Disrupting Logistics – Supply Chain 24/7. (2018). Retrieved from https://www.supplychain247.com/article/amazon_vs_uber_two_giants_disrupting_logistics
Avery, J., Dev, C. S., & O’Connor, P. (2017, June 09). Accor: Strengthening the Brand with Digital Marketing. Retrieved from https://www.hbs.edu/faculty/Pages/item.aspx?num=49261
Kirkpatrick, D. (2017, December 07). Disrupt, Disintermediate, De-Layer, Dynamize. Retrieved from https://www.huffingtonpost.com/great-work-cultures/disrupt-disintermediate-d_b_10326688.html
Nichol, P. B. (2016, April 21). Disintermediation and intermediation beyond theory. Retrieved from https://www.cio.com/article/3058882/innovation/disintermediation-and-intermediation-beyond-theory.html
The digitisation of everything: How organisations must adapt to changing consumer behaviour. (n.d.). Retrieved from https://www.ey.com/Publication/vwLUAssets/The_digitisation_of_everything_-_How_organisations_must_adapt_to_changing_consumer_behaviour/$file/EY_Digitisation_of_everything.pdf