Corporations should embrace the sharing economy

The future of business is collaborative, communicative and interactive. It will be about empowering the entire organization to create value for one another, much like how a community helps each other through the added value provided by each member. Future business models will be less like IBM and more like Airbnb, where the organization empowers the community to generate revenue, and at the same time profits out of doing so. Hyper Island takes a look at why such business models will work in the digital age.

Through networks and digital platforms, the ways in which people buy or access goods and services today are completely different from the traditional seller-buyer model of just a few years ago. Entire communities worldwide are using networked technologies to share, rent and exchange products and resources on a scale never imagined before.

Accompanied by technological advances like mobile and GPS, the sharing economy continues to flourish by reducing costs, enabling reliable services and efficient connectivity. This network and exchange of ownership and access has become second nature, even between strangers.

As highlighted in a Fast Company article, “The sharing economy has an estimated $26 billion in terms of market value, including online platforms that make it easy to do everything from renting out spare rooms in your home (Airbnb) to car-sharing (Zipcar), clothing swaps (ThredUP), and even sharing extra portions from home-cooked meals (Shareyourmeal).”

The sharing economy: why do people participate?

What is truly intriguing about today’s collaborative economy is how community-led businesses are using the power of technology to build trust and loyalty amongst customers.

For most people, it is difficult to trust strangers, or to try out new disruptive services. However, with the power of social networks and technology, trust systems such as customer reviews and social network data allow customers to know what other services their friends or peers are using and how they have benefited. At the same time, sharing platforms such as Airbnb and Uber provide insurance policies that protect both providers and consumers as part of their services, in order to build trust.

While trust is the first factor to succeed in the sharing economy landscape, what else should businesses take note of?

It is important to remember that people also share because of social reasons such as the desire to be part of exciting and enriching experiences or to meet new people around the world, in addition to practical reasons such as saving time or promoting sustainability. Companies need to acknowledge these core motivations and make sure they offer customers a greater feeling of connection and community when using their services.

Furthermore, people who identify themselves with a certain community usually want to contribute to its common values or interests.

For example, if we look at what makes Airbnb a leader in the sharing economy space, it is the company’s ability to combine the benefits of the digital age with genuine community building. In an article on Today.com, Airbnb CEO Brian Chesky emphasized that it is important to acknowledge the fact that people no longer simply want to buy a product, but an experience and a relationship with other people.

Why should larger, more traditional corporations embrace this shift?

Jeremiah Owyang and The Altimeter Group released an analysis highlighting the need for businesses to adapt to this new consumer mindset or “companies may risk becoming dis-intermediated by customers who connect with each other.”

Communities are already acting like companies by buying and consuming goods and services amongst each other. Through social networks and online platforms, they are able to monetize their own assets and compete directly.

Furthermore, customers will seek products and services from companies that provide additional value. As pointed out in a TechCrunch article, the younger generation of consumers display a tendency towards being empowered citizens which value co-creation and sharing, rather than solely being consumers.