Tuesday, November 4, 2014

The sharing economy will change everything. Get on board, or get run over.

By Mark Helfen

The sharing economy, the collaboration economy, the peer-to-peer economy. Under any name there will be big changes in successful business models. The changes in customer power will be even greater than the effects of rapid social media adoption. Companies of all sizes will either need to get on board, or get run over.

So says Jeremiah Owyang, speaker at the Monday, November 10 SVForum Marketing and Social Media SIG meeting. He is Associate Director and Founder of Crowd Companies. With both Brand Council and Innovation Network, the business helps large and small business navigate the new collaboration economy. Owyang works as a connector or catalyst, helping both large businesses and start-ups take advantage of the sharing economy.

The meeting will start at 6:30, and be held at our regular location, Detati Communications, located here. Owyang’s talk is titled How to Apply Uber and Airbnb Strategies for Your Business.

The wide adoption of new technologies, including social media, smart phones, and an always connected network has changed the company-to-customer dynamics. Customers can buy and sell to each other, not just from traditional businesses. As with social media, businesses have lost even more control of the flow of information, products, and now even money.

Some of the examples are well known – Uber and Lyft for transportation. Airbnb replaces hotel rentals. Kickstarter serves as a replacement for venture funding, at least at the small scale. The New York Times has a recent article about Uber changing, at least somewhat, nightlife in auto addicted Los Angeles.

But some of the examples he discussed were new, at least to me.

Shapeways is a service that produces objects that use advanced 3D printers. When Hasbro, the toy manufacturer noted that people were using the service to make copies of their licensed toys, they could have attempted to use copyright and trademark law to shut them down. Instead, the supplied design files to Shapeways, allowed customer to make whatever they wanted, and took a percentage of what Shapeways charges their customers.

Another example is children’s toys. Instead of buying Legos for his young daughter, Owyang rented them from a company called Just Play.

Whole Foods saw that Instacart was going through their stores to fulfill orders for same day grocery delivery. Instead of stopping and trying to run a competitive service on their own, Whole Foods cooperated and gave the delivery service access to the store’s inventory database.

Owyang has a large chart titled Framework: Collaborative Economy Honeycomb visible here. It shows an impressive number of businesses already sharing.

This is an irreversible movement, not a trend according to Owyang. The business model and supporting technology started in 2008, at the trough of the recent recession. As the broader economy has taken off, he sees the collaborative economy rapidly growing. Supporting this are behavioral changes: the value of access over ownership, the activation of idle resources, and crowd sourcing that requires the adoption of open standards.

From the point of larger companies, the collaboration economy shifts markets to be more local, disrupting global business models. It also empowers freelancers, who will be a larger fraction of all workers. The “crowd” can be a business of its own, bypassing inefficient industries – with Uber and the taxi business as an example. Companies either need to become part of the new model, or get run over.

Owyang says there are over 9000 startups in this space, with a more than $6 billion of venture funding. One example is Google Ventures, which put $258 million into Uber. This is a strategic move for Google, which is competing with Amazon, among others for delivery to customer’s homes. Google has used Uber cars and drivers allow same day delivery of shopping orders to customers. Compare that with Amazon using FedEx, or owning their own delivery network, or maybe using drones. In the end, efficiency will win out.

So come by Monday, and see if your business can be at either end of the new peer-to-peer economy.

Sign up at Meetup.



Mark Helfen is a freelance writer, journalist, and marketing consultant.

He can be reached at: mhelfen@wordpixel.com
Linkedin: linkedin.com/in/markhelfen
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