‘X’ is NOT a Sharing Economy.
We see this with AI all the time. It is the “theater of innovation.” People just want to frame themselves as new and hip when they are actually, as Will Smith put it “old and busted.” They have done the same sort of stretching with the term sharing economies. Look out for an article called Innovation Theater [Rant] in the future.
In this article, I give a definition, point out factors of sustainability related to sharing economies, then go on to explain what is not a sharing economy, as well a couple of pitfalls and silver linings, before closing with a few persistent questions.
Definition
Sharing economies are multi-sided platforms that connect resources of distributed ownership to a seeker for a limited amount of time before access is returned to the original owner.
5 Sustainability Factors ensure a lasting sharing economy.
- Trust facilitation is achieved through mutual respect and transparent communication between stakeholders. In order to assure that, the sharing economy platform must
- Kick bad owners off
- Kick bad seekers off
- Keep expectations communicated
- Encourage authenticity
2. Networked ownership.
3. Pay for temporary access
4. Not restricted by behavior in category. Some things have behavioral constraints tied to them, societal norms, or frequency of use factors that present hurdles too high to make sharing make sense. Like an umbrella, when you think you need it, everyone else also needs it. There is no off-peak frequency.
5. Is resilient to amortization. There is a Quality Cost threshold for shareable items where upkeep will not surpass what is earned on the shared thing. The shared thing needs to withstand the wear and depreciation with multiple uses over time enough to make participation worth it.
Sharing Economies are NOT
Scope creeps.
Benefits or products developed on economies of scope are not sharing economies. Co-working spaces are often woven into the same media cycles and conversation loops as sharing economies, so there is natural association, but they are different things. WeWork, or any office, or co-working space, is ‘bundled overhead’ sold as a subscription, like a gym.
Rentals of Traditionally Personal Items.
Rentable product offerings and subscriptions to access a ‘thing’ owned by a single company are not sharing economies. Rent the Runway is kind of weird because it is like your sharing clothes, but the company owns all it’s merchandize. The ownership is not distributed.
Buying on consignment or donation platforms.
Sharing economies are not good will or crowdsourced funding platforms that promise delivery later, like Kickstarter or GoFundMe. Alternatively, if the shared item is money, loans, as with Lending club, where payment for taking out a loan is measured in interest before the whole asset is returned, that is a sharing economy. Of course Lending Club added a loan sale business model atop their sharing economy as the business grew, so it is not a pure sharing economy.
Upload and forget.
Sharing Economies are not free-as-a-business-model business models, like MOOCs, where content is acquired and kept public for general use by whoever. Kodi stretches this boundary a bit. Kodi users own access to music and movies and make them available for access by other platform users on a temporary basis for free, but owners maintain when their assets are offered and when they are not.
Contractor Platforms.
Asking someone to make you something then paying them for that thing, as with Fivr and Upwork, is a gig economy, not a sharing economy.
The Stretch
Hadoop is a open source data processing and storage solution, by Apache, that connects unused processing power and storage to others needing additional juice. Because the shared resource is behind a UI wall, and may be a compilation of various individuals computational resources, this model, to me, is the stretchiest border of the definition of sharing economy.
Pitfalls
A. Delusions of Trust. Entraining trust via sharing economies may be unsustainable, especially for geo-specific things that involved shared space. Eroding risk averse cultures may dilute ones perception of what is safe, putting users at great risk.
B. Interests not made transparent. Owners may not understand the trade-off and maintenance expectations involved in platform participation. This could be just another way for businesses to shift burdens and take less responsibility themselves.
Silver Linings
Businesses selling new items may lose customers who are willing to share something, like a lawn mower, but benefit from sharing economy multipliers related to increased touch points and word-of-mouth. Such a benefit might encourage companies to prepare products for sharing by making them more resilient to amortization, or more easily repaired.
Sharing economies have the capacity to facilitate trust and communication around last years thing, which may yield more accurate understandings of brand than what is gathered about today’s new thing.
Persistent Questions
Will the general economy handle the reduction in spending if sharing economies really take off?
Does more utilization of thing mean more consumption, or does it mean those things will go to bed sooner, to be replaced with updated more sustainable things?
Can we think of sharing economies as “commons” with a communication regulatory body?
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A special thank you to Aastha Singh and Yijia Sun who, with me, explored the sustainability of the sharing economy. And, a big thank you to MDES — Business Plan: Sustainability instructor, Brian Mullen, Innovation Strategy Manager of the Brigham Innovation Hub at Brigham and Women’s Hospital, for his directives and persistent will to challenge.
