Sharing Economy Why Now
Call it what you want it’s here and changing the way we exist.
The sharing economy according to wikipiedia is a
a trending business concept that highlights the ability (and perhaps the preference) for individuals to rent or borrow goods rather than buy and own them
Why is it a trend and how do we as companies leading the way forward for the sharing economy create an inclusive environment in our next stage of evolution? This is what companies in the sharing economy space came together to discuss at a BSR focus day on building the next phase — the Inclusive Sharing Economy. Here are my takeaways.
Why is the Sharing Economy Happening?
Millenials’ perceptions changing to favor rental over ownership
Millennials having gone through a financial crisis, 8% unemployment rates, and staggering student loan debt are choosing rental vs. buying. However, financial reasons are not the primary motivations. Flexibility, amenities and convenience are climbing up the ladder of needs.
the true homeownership rate for 18–34 year olds has fallen to a new low: 13.2% Forbes
Technology as the enabler
The innovation of smart phones and the internet provide a platform for asset sharing. Payment, on-the-go transactions, navigation become accessible. Information sharing, access and communication platforms from Google to Slack make distributed work possible. Employees are choosing technology and flexible work over amenities confined to a physical location. This will change the way companies think about locations and the way they recruit.
Access to state-of-the-art technology (81 percent) ranks higher than access to food and beverages (72 percent), a beautiful office design (61 percent) and on-site amenities (56 percent). Is tech the new perk? — Adobe
Freelancing becoming a growing choice for people
There are several socioeconomic reasons for the growth in the number of freelance jobs. One negative one is the lack of other alternatives. People are falling out of the pool of those searching, and thus no longer getting counted in the published statistics. The positive is that it is now possible and often the preferred way of working. Checkout Getting Started as a Freelancer
“53 million Americans are doing freelance work…34 percent of the entire workforce.” Freelancers
The 9–5 at a physical office stops becoming the only option. New work-styles, distributed teams, freelance work and geographically distributed company presence becomes an option. Office sharing platforms like LiquidSpace enable people to find office space that works they way they do. “People are much more heterogeneous than we think and any benefit companies employing freelance workers provide will, potentially, take money out of their pocket.” The opportunity and challenge to companies in the sharing economy and the government becomes understanding this new segment of worker and catching up from a governance and education perspective to provide benefits that match the needs of this class of worker.
Small businesses are a part of economic growth
Small businesses make up almost half of job growth and creation. These companies have shallow pockets and can not afford big and long term capital expenditures. Their growth is reliant on outsourcing work to freelancers, sharing assets and services products that are pay per use rather than ownership. The ubiquity of sharing economy companies decreases the barriers for starting and running small businesses.
Growing the Market
Companies in the sharing economy are growing the market by providing a product solution beyond what previously existed. Uber is valued at more than the entire Taxi industry and yet there is room for both Uber and Lyft to operate in San Francisco and beyond. There are new customer segments unlocked that would previously not take either Taxis or public transportation. The lesson for sharing economy companies is to partner on large issues such as legislature, common cause issues to expand the market.
Partnership
There are different ways to partner but the most successful partnerships rely on mutual benefits for companies and preferably an alignment on the mission. A successful example is of Lyft partnering with Starbucks Coffee to provide benefits to Starbucks employees on rides to and from work. For Starbucks the benefit was employe’s increased willingness to pickup previously undesirable shifts, and Lyft getting more rides. The next step will be to figure out a business model that benefits both companies in sharing the costs of this program.
Another partnership dynamic for sharing economy companies is to think about identifying stakeholders that may have an incentive to block them in the future and finding mutually beneficial ways to work with those stakeholders.
The Government is a Board Member
I heard this statement from someone, and it is a powerful one. Many startup mantras are “move fast and break things” this helps facilitate innovation. The role of the government is to think about people, champion their interests and focus on services that companies inherently do not have the resources to focus on. Just like any other board member think of the government as a stakeholder in your company. Your business needs to be put in words, numbers and examples that make sense to regulators and the interests they are entrusted with. The government is a partner.
The evolution to an inclusive economy
The sharing economy is in it’s nascent stages and there is significant room to grow in moving this sector to an inclusive sharing economy. There is also a need in education and defining terms in ways that people understand.
The inclusive economy according to wikipiedia is a
“Inclusive growth is a concept that advances equitable opportunities for economic participants during economic growth with benefits incurred by every section of society. The definition of inclusive growth implies direct links between the macroeconomic and microeconomic determinants of the economy and economicgrowth.”
Unconscious Biases
The sharing economy is also tearing down walls that existed and uncovering uncomfortable truths about how people make decisions. Most apps have an approval step on the buyer and or the seller side. They also have pictures of people. Sometimes a transaction gets canceled. Sometimes it is canceled because of prejudices — fears of race, religion, age, sex... Previously, if I needed to go from New York to Brooklyn, the only way was to hop into a cab, close the door and only then tell the driver that I am going to Brooklyn. He could not kick me out once I was in the cab. He could, however, yell at me and did. Often. The driver would make a decision to pick me up based on how I looked with my thumb up on the street. Jon Westenberg had the same negative experience. If I told the cabby I was going to Brooklyn before hoping in, there was a screech of tires and I alone on the sidewalk, sad :-(. The cabby’s decision was not recorded. Today, decisions are recorded and bias patterns are emerging. Take a look Rohan Gilkes story.
The sharing economy is producing companies with phenomenal growth realities. It is also tearing down walls to reveal truths about the volatility in our economy and a need for gig work to smooth the ups and downs and as an option for a different way of working. Platforms enable our hidden biases to select service providers, something that simply was not possible previously. As companies, people, academic institutions and the government fumble through this still nascent paradigm it is important for all of us to come together in order to pave the way for an inclusive sharing economy where collaboration and empathy for people is at the core of the decision.
