While sitting in my opening week of orientation and classes at business school I found myself bemused by the frequency of applause being dished out. Every person who mentioned they were engaged, married, or had children enjoyed a sizable cheer from the room.
Today we live in a world where praise is bandied about frequently and generously. At school we are all winners, trying is it own reward. In Australia failing is not an option; sit in class for 12 months and congrats, pass go and collect $200. We congratulate people for reaching birthdays and completing social norms. Meanwhile standing ovations at the end of performances are almost mandatory.
On the other side of the equation we seem less impressed by society’s grand achievements. Reach in to your pocket and pull out your very own supercomputer, the one whose computing power required rooms of space only decades ago. Medical advances have all but eradicated many diseases from the Globe. Mathematicians and physicists are cracking old problems that are unlocking the secrets of the universe. When was the last time we thought about or praised these achievements.
Back in class, I started thinking.
What is the value of praise when everyone receives it regardless of achievement? By handing out praise so effortlessly, have we stolen from the excellent to share with those who are average?
Nowhere is praise inflation more heightened than in the sharing economy. For those who may not be familiar the sharing economy, or gig economy as it is derisively referred to by some, is a system in which people or products are shared to optimise their utility or cost. For services within the sharing economy people are often providing access to their underutilised assets and/or time.
- Uber - grab a lift from others driving their own cars as taxis;
- RelayRides — borrow cars from their neighbours;
- Taskrabbit — hire others to perform tasks for them. These can range from small delivery jobs to large handyman installations; and
- AirBNB — rent a room or entire home from others.
Essentially each of these services provides a marketplace that matches buyers and sellers. Sellers are generally ordinary people who are providing the use of their time (e.g., running a delivery) or product (e.g., house or car). Buyers are again generally ordinary people who want to rent that product or service for a particular period of time.
Trust is fundamental to these services. For many organisations in the traditional offline world trust has been established by carefully crafting their reputations over decades. Alternatively, current and former government entities enjoy this position through regulation and/or monopolies — think Telstra in Australia or the US postal service. Consumer facing service organisations such as taxis and hotels tend to be regulated and must follow explicit codes of conduct.
In contrast, services in the sharing economy are held together by the glue of the crowd’s trust. Here there is no individual playing God, determining if someone is trustworthy or not. By harnessing the experiences of tens, hundreds, even thousands of others we are able to culminate at a trust rating.
Now this all sounds great and egalitarian — and it is when it works. However this system relies on the assumption that the evaluators are fairly and accurately assessing the evaluated. In case you didn’t know both sides of the market are generally being judged as the NY times report in January.
Let’s take Uber as an example. Uber uses a 5 star rating system for customers and drivers to assess each other, with 5 being the best. A simple assumption for new passengers would be that 1 = terrible, 3 = average/acceptable, and 5 = excellent. This is how it would work if we were asked to provide an objective assessment.
It is how I used to rate. My criteria for a normal ride were 1) Turn up in a timely manner, 2) deliver me in a timely way, 3) have a clean car, and 4) be generally polite. All that and you get a 3. That was until I found out that Uber will deny drivers with average ratings below 4 to 4.5. My first reaction was to rebel against the fear of negative ratings as suggested by Aimee Millwood on Techcrunch. However this would punish those acceptable but not spectacular drivers by taking them off the road.
My new criteria is more like a pass/fail. 5 is a pass and I would like to use you again. 1 means I want you off the road. NOW.
Now I fully realise that my new rating system has no place to reward those excellent drivers in the system. The ones that help you with your bags, are warm and friendly, and find the quickest way to your destination. It seems that the sharing economy doesn’t really care about these people. In the quest to find excellence and remove poor performers, providers such as Uber and AirBNB have inadvertently created a pool of acceptable providers who vary widely in actual offerings.
Do you feel that we are creating incentives that improve mediocrity at the expense of excellence?
Keen to hear your thoughts.