What will it take for established companies to thrive in the collaborative economy?
That's the question Alexandra Samuel, VP of Social Media at Vision Critical, answered in her latest post for the Harvard Business Review (HBR). As we revealed in Sharing is the New Buying: How to Win in the Collaborative Economy, a report we released with Jeremiah Owyang of Crowd Companies, this nascent market is poised to disrupt many industries because it's a mainstream and growing movement. (Key highlights from our report are in the embedded presentation below.) But competing in the collaborative economy requires more than just partnering with or buying collaborative startups.
In her HBR article, Alexandra Samuel reveals the core drivers behind this new economy - drivers that big brands need to consider as they prepare for this new reality:
Less buying, more sharing. Big brands need to stop measuring success in terms of units sold, and think in terms of units used. The collaborative economy is shifting us from a consumerist economy to one in which people buy less because they're sharing more. Instead of five families buying five cars, five families can share the equivalent of one car (using a combination of loaner vehicles and transportation-on-demand), reducing the overall number of products purchased. (Not incidentally, this also reduces the environmental footprint of all that car manufacturing.)
Companies that have traditionally relied on selling goods need to think about offering those goods on an access model, too - for example, as Daimler AG has done by providing by-the-minute car sharing through Car2Go. And those that offer services need to think about further offering their customers access to products well outside their traditional spheres, as with Westin's partnership with New Balance to offer fitness gear rental for their guests.
Less consuming, more producing. The emergence of the collaborative economy is closely tied to the growth of the maker movement, in which individuals can become producers and sellers thanks to technologies that support small-scale production (like 3D printing) as well as those that facilitate peer-to-peer distribution (like online marketplaces). As we found in our survey, on some kinds of sharing sites, such as those that share professional services or pre-owned goods, more than half of participants have been sellers or providers (and not just buyers and consumers) at some point in the past year.
To succeed in the collaborative economy, companies will need to integrate crowd-produced goods into their supply chain, as West Elm has done with Etsy. In fact, our data suggests that attracting small-scale producers and sellers is one area where any player could still find a competitive edge: while 79% of buyers are "very" or "extremely" satisfied with the value they got from their latest sharing transaction, only 60% of sellers were as satisfied with their earnings.
Less working, more freelancing. As a number of observers have pointed out, one effect of the collaborative economy may be to increase self-employment in place of full-time employment. This means that companies will have new ways to source labor, but at a social cost: some argue that the ability to outsource via elance and TaskRabbit gives companies a (lower-wage) alternative to creating full-time positions. Meanwhile businesses that depend on skilled labor means that they're not only competing with other employers to hire the best workers - they're competing with the increasingly viable option of web-enabled self-employment.
Rather than engaging in a race to the bottom (on wages) or a fight to the top (competing for skilled labor), these companies would do well to focus on offering new value-added services enabled by the collaborative economy, as Home Depot did by partnering with Uber for Christmas Tree delivery.
Less regulation, more risk. One challenge that has bedeviled sharing startups is the emergence of regulatory efforts aimed at limiting sharing activity - or tapping it for tax revenue. Partly in response to pleas from established players like taxi and hotel companies, municipal governments have tried to corral the Wild West of sharing.
Read the full article on HBR.