Beyond Sharing – the Collaborative Economy

By Gloria Lombardi

“The Collaborative Economy is an economic model where commonly available technologies enable people to get what they need from each other.”

Jeremiah Owyang (pictured right) is the founder of Crowd Companies, an Innovation Council based in San Francisco that helps large companies to embrace the Collaborative Economy. “We are talking about the enablement of the peer-to-peer movement, where individuals get the things that they need from each other – from food, to physical space, money, transportation and healthcare services.”

Technology is often the prerequisite for this to happen at scale. “Having mobile devices and smartphones is really key.”

While the movement is creating disruptions for some industries, it also holds much opportunity. “Progressive companies can glean greater loyalty through crowdfunding, turn to the crowd for new co-innovation and launch their own sharing programmes to expand how they serve their customers’ new desires.”

The Collaborative Economy is pervasive, impacting every industry and vertical. “I cannot think of any sector that has not been disrupted.” While Uber and Airbnb may be the first names to come to mind, the movement is much bigger. Owyang talks about over 9,000 start-ups already being involved!

In fact, Owyang believes that large businesses have not choice but to embrace this trend: “Companies who ignore it are likely to suffer, but those that lean in can benefit from using the crowd to their advantage.”

Collaborative Economy and Sharing Economy

It’s not so rare to hear talking about the Sharing Economy and the Collaborative Economy in equal terms. But, Owyang makes a clear distinction between the two.

“The Sharing Economy is a subset – sharing is just one part of the whole movement.” The word ‘sharing’ itself is not very appropriate since “in most cases people are not sharing.”

Another observation that Owyang likes to make is that the Collaborative Economy could have not existed without the social media space emerging. Yet, it goes far beyond it: “it was in the early stage when people shared media; now we talk about sharing tangible things. The movement involves the physical world.”

Hence, for Owyang, the Collaborative Economy is much broader and more complex: it includes peer-to-peer landing, where people borrow money from each other such as through LendingClub, Greenote and Upstart; it incorporates crowdfunding, where the crowd funds a product or service (e.g. Kikstarter, Indiegogo, Crowdfounder); and it empowers the makers movement, where people build their own products.

New business models

To adapt and innovate, large companies have started integrating those trends into their business strategy. A good example within the maker movement comes from the toy company Hasbro. “Hasbro have partnered with Shapeways to enable customers to 3D print their own Hasbro approved toys, fostering deeper engagement and generating new revenues.”

Another good example comes from BMW with their on-demand services. They have launched a program called BMW DriveNow, which lets customers borrow, rather than buy, Electric 1-Series vehicles. “The program enables BMW to offer a single car to more customers, increasing utilization, and reducing inefficiencies.”

Ford is doing the same with its Ford GoDrive, which enables Ford car owners to share their vehicles with peers and generate revenues. “Rather than own a car in a dense city, now you can rent one from the BMW or Ford lots.”

Additionally, Owyang speaks about the ‘platform model’, where companies create their own marketplace – essentially, the products and services that people make are offered alongside those of big brands. For example, Swisscom has created Swisscom Friends, an online platform to find neighbours who can help you with installations, repairs and questions about technical issues – from computers to mobile devices and the Internet.

What can other organisations learn from companies like Hasbro, BMW, Ford and Swisscom? “They enable the crowd to co-create products, or let customers rent their products instead of owning them. In each case, companies are altering their business model to tap the crowd movement and innovate their business.”

So, corporations become more resilient while the crowd becomes part of the company.

The entrepreneurial mind-set

Silicon Valley, where Crowd Companies is based, is very popular for its breakthrough ideas and technological developments. Owyang himself doesn’t deny the benefits that his company gains from being placed at the centre of innovation.

In particular, there are a few ways of operating that set the Bay area’s founders apart. “Firstly, they are willing to connect to the ecosystem and to work with the outside market. Secondly, they don’t feel they need to own assets. For example, Airbnb is the largest hospitality brand but they don’t own any home.” For sure, that is quite a remarkable change in doing business.

Owyang also cites an open mind toward new ideas. “Companies can try to build anything. If you want to create drones that deliver burritos, people are OK with that!”

There are also big universities such as Stanford and Berkley, which are “tech-focused, very liberal and produce plenty of talent.” And, the area is home of many investors who oftentimes they have been themselves successful entrepreneurs, and now want to give back to the ecosystem by mentoring and investing in other start-ups.

Last but not least, “in Silicon Valley, it is OK to fail. We embrace failure. In fact, if you fail, it is a good thing; it means that you can try again.”

But, there are many other locations in the world where The Collaborative Economy is spreading and where that type of mind-set can be adopted. “Innovation should not be limited to one geographical area. It does not have to be just Silicon Valley. It would be a danger.”

For example, he sees great potential from places such as Singapore, Dubai and Europe. “Think of start-ups like BlaBlaCar in France.”

Collaborative services for work

Within his on-going research, Owyang has been exploring the collaborative services that target the business world of work. “These services help professionals outsource tasks in their work life so they can focus on their core responsibilities and competencies.”

The category appears to be in good health: Zirtual is the virtual executive assistant service that matches busy people with dedicated personal assistants; Sprig delivers inexpensive and hand-crafted meals on demand to employees; PeerSpace provides teams with a creative workspace by bringing together those who need workspace with those who have unused space. And, CloudPeeps provides companies with on-demand community managers.

“There’s even an app for all of that.”

The changing face of employment

Indeed, an area that has been hugely impacted by the Collaborative Economy is the labour market. In some measures the whole definition of work has been re-defining. The easiest example is given by the debate around Uber’s drivers’ status: should they be considered and treated as employees or as contractors? “This is a hard topic with significant economic and political ramifications across the globe. And, there is not a clear-cut answer to which way to go.”

To make the point, Owyang comes up with a nice analogy: “In 2008, it was all about ‘Joe the Plumber.’ In 2016, it will likely be ‘Carl the Uber driver.”

Who’s Carl?

“A persona that I created, but an important metaphor for an iconic freelance worker in the Collaborative Economy. One side will argue this individual is becoming empowered, smashing unwanted regulation. The other side will argue that Carl is being used by “Big Tech” for raw profits.”

Perhaps, the discussion about full time employees versus independent contractors is too stark a division. “There’s a new class of workers that are freelancers, an in-between role that some are dubbing a “Dependent Contractor.”

Some start-ups seem to have figured out a solution. An example is Zirtual. “Unlike other marketplaces of workers that use 1099 contractors, Zirtuals are full time employees that have regular office hours, tools and benefits.”

Benefits and challenges to this employee model

On the one hand, the Collaborative Economy is encouraging flexibility in staffing, giving companies the opportunity to have more workers during high-demand times, and vice versa during low demand.

Additionally, “many workers enjoy this new economy as they have the flexibility to work when they want, rather than being tied to a 9 to 5 career job.”

On the other hand, the on-demand economy challenges businesses to re-think entirely their training programs, resources, benefits and reward structures.

Will Uber and other start-ups change their employment relationship with partners/workers? The answer(s), which is yet to be found, is likely to impact international labour for years to come.