The sharing economy may offer a gentle smile. But it harbours razor sharp teeth, for those who ignore it. Because it is not (just) about people helping each other through tough times. Far from it. It is about how “people helping each other, through smart platforms, all over the world” completely overthrows the balance of power. About how it results in them buying less … from you. And about how your competition is no longer a company just like you, worrying about margins and investments, but a young guy wearing a hoodie that is just looking for a way to offer a cheap and fast service.
The concepts of owning and sharing underwent a significant shift these last few years. Consumers are less and less interested in possession. It is not about assets. It is about access. It is not about “having”. It is about “experiencing”. People no longer want the DVD (or the Blu-Ray, for that matter). They just need the movie. And only for as long as it lasts. And why should we pay an absurdly large amount of cash for a motorized vehicle that is just pretty much unused for 90% of the time? It’s absurd when you think about it, right?
And so we entered the Era of the New Sharing. Where we offer and trade cleaning, wood chopping or calculating skills on TaskRabbit. Where we exchange “a place to stay” on AirBnB with those in dire need of a holiday. Where we sublet our vehicle via FlightCar, instead of having it waiting for us at over expensive airport garages. Where we rent our idle driveway through ParkatmyHouse. Where we leave our dogs in the trusted hands of likeminded – and thus obviously trustworthy - pet lovers on DogVacay. Where we hire costly power drills via SnapGoods (which is currently re-launching into version 3.0). I love how almost every article uses the power drill as an example when writing about sharing tools. People seem to be really frustrated about how they need to spend so much money on something they will only use for like 1 hour during its entire life time. I almost feel pity for power drill vendors.
Sharing becomes multiplying
This new kind of sharing has very little to do with what “A Streetcar Named Desire’s” Blanche DuBois so dramatically called “depending on the kindness of strangers”. We used to end up with less when we shared. So only really nice people – and hippies – did that. No more. When you share the ‘Silicon Valley’ series with others, you will never have less of it yourself. When you share your house, your car, or even your driveway, you get paid some money. When you share an idea, it gets enriched by others. When you share useful information a lot, your Klout Score might just go through the roof. Sharing has become multiplying. Like Jesus feeding 4000 people with seven loaves of bread and a few small fish. But more digital. And minus Jesus, the bread and the fish.
It had to be around the fifties that the focus on consuming and owning started to become really important. Success was measured in goods. Its metrics were objects, preferably expensive ones: that precious colour TV that everyone in your street coveted or that sand coloured Pontiac in the driveway. This “I own, therefore I am” ideal lasted for a very long time. It drove – and still does prompt – the business models of most big brand companies. It is where perceived obsolescence is rooted. It is partly why a lot of brands solely focused on sustainable innovation: making their products, better, smarter and faster so you would buy the next version before the old version was run down. If it ain’t broken, … just buy a new one pretty please. Nobel Laureate economist Milton Friedman called this kind of hyper-consumption economy a ponzi scheme, one that was just waiting to collapse. Be that as it may, this era is coming to a close. And a lot of organisations are still failing to adapt to what’s coming.
I have to say I do not fully agree with those who write that were are “going back to yore” when they talk about collaborative consumption. Those that compare it to way back when we used to share our hammer with our friendly neighbours, but merely on a larger scale. Some even go as far as to say that it is just our oldest instincts as humans resurfacing after the stifled era of self-sufficiency. “Thank God we have been freed of the shackles of individualism” and what not. However, in the New Sharing, the real driver is not looking out for each other. Not really. It’s more about convenience and necessity.
When scarcity meets digital
So what happened, then? Well, first of all, digital did. Dematerialisation and digitalisation of a lot of products - like films and music – made it a lot easier to share them online whenever and wherever we wanted. The advent of the social internet pretty much did the rest. Enter Napster, Youtube, Twitter,… And let’s certainly not forget what the sharing of product design will signify when 3D printers will become affordable. Then the credit crunch came knocking on our doors in 2008, of course. We had less money to buy things and less storage space anyway to put them, seeing that we had to live in smaller houses, with much smaller cupboards. And of course there was the rude wakeup call of the environment: that of dwindling energy resources and global warming. But scarcity feeds creativity. And all of this combined was the ideal hotbed for the sharing economy.
But it is not just goods and services that we are swapping. It goes beyond that. We are sharing knowledge, information, insights and – yes, this one often has those coming before generation Y breaking into a mild sweat – commercial ideas too. More and faster than ever before. It is “real” people sharing and voting concepts and inventions on the Quirky innovation platform. It is strangers exchanging comments and answers on all kinds of questions on Quora. It is governments sharing their information in a transparent and analysable format on Open Data platforms. It is people co-creating on eYeka. It is everywhere, and a force to be reckoned with.
The dynamics behind the sharing of information are obviously not quite the same as those described above. The enablers are the same, of course: the advent of the age of digital and social networks. But the crisis and the environment have little to do with this evolution. First of all we share information because this is quite literally the Age of Stupid. Secondly, we do it to earn our badge of honour now that titles mean less and less.
Too stupid to work on our own
Don’t worry (if you were, worrying that is). Our brains are not shrinking, nor are our cognitive abilities. We are not really more stupid than our parents. What is decreasing is our individual relative knowledge level. That is because the ‘knowable’ grows exponentially, while the ‘known’ develops merely in a linear manner. This causes a knowledge gap between the two. So, we might not be less intelligent than former generations, but we really do know less about (what is known about) the world around us. So we need to “connect” our brains and ideas with those of others if we want to come up with ground-breaking innovations. There is simply too much to know to be great on our own. So we share data and insights, so other can make it richer or your network can filter the good from the mediocre and the bad. In Seth Godin’s words: ” Ideas can’t be stolen, because ideas don’t get smaller when they’re shared, they get bigger”.
The second reason has everything to do with the dynamics of the web. Or how Gary Hamel describes it: online “contribution counts for more than credentials” and “power comes from sharing information, not hoarding it”. You earn your rights in your network based on what you do, what you provide and what you share. Sharing is not exactly caring in this case. It is about building prestige and respect.
All of the above described kinds of collaborative consumption – be it of things, deeds or brain food – are not to be taken lightly. Like I said in the beginning: a big old smile, … but sharp teeth. This new way of consuming comes with a major power shift: from large centralised corporations to forceful networks and communities of empowered individuals. We have to adapt the old individual ownership-based systems – in law, regulation, management and innovation – to this disruptive paradigm shift in society and economy. We have to learn to deal with this new bottom-up dynamic that can be as destructive as it potentially rich.
If you can’t beat’em, join’em
I have noticed over and over again that governments and regulators have no idea as to how to react to the sharing economy and how it impacts their citizens and commercial companies. Most of them seem unfortunately to opt for a protectionist approach. Like trying to forbid Uber and AirBnB. But command and control will not work in a world ruled by the network, where information flows like a river and people always seem to find another back entrance when a door is closed. Just think of how regulators were as of yet unable to find a solution for illegal torrent sites. When one is shut down, another simply resurfaces. Let’s face it: the web is simply too big and fast to control.
Commercial organisations are the ones that will be most impacted by this sharing dynamic and dramatic power shift. Those most in danger are the ones deliberately ignoring the trend, or even – hard to believe as it is – not aware of how it will completely disrupt their industries and business models. Today it is not just companies that are a competitive threat, but empowered individuals. Individuals that do not care about margins. Those that do not need any budget for expensive R & D departments. Seems not really fair, right?
But there is a solution. There always is. This dynamic of sharing can – and needs – to be integrated into organisations. They need to become networks. They have to build intelligent connections. They should start sharing talents, insights and information, by any means necessary. Whether it is through smart platforms or by having their staff work together in highly mobile and alternating “swarms”. Or whether it is by allowing their employees to be shared with other companies (because that is how the younger generations will want to work: more like board members, who advise several companies at the time). Whether it is by creating strong bonds with non-competing partners so they can find solutions together or enrich each other’s ideas. Or by integrating the consumer into the R & D department through co-creation. Because the only way that traditional – and slow – corporations will become agile enough to survive the disruption of the sharing economy is by becoming a smart network: one that makes them smarter, faster, more radically innovative and much more reactive to what’s going on outside.
I truly believe that this will necessitate some efforts from the generations that grew up believing that ownership – material or intellectual, through patents and copyrights – was equal to success and where privacy trumped transparency. As for generation Y and Z, to them it comes naturally. It is they that are at the roots of the disruptive sharing economy. They that are working in a dirty garage on a sharing platform that will completely overturn the next industry, because they offer a service that is as convenient as it is practically free.
My advice: if you can’t beat’em – which you won’t, trust me – join’em. Join the sharing economy, become a network, and integrate those young wolves that understand how it works. That is exactly why we are organising the Disruption Tour next week in Silicon Valley, San Francisco and San Diego: to share insights about what is happening with our industries, customers and business models. And to inspire with those that understood and leveraged disruption: from Google and the Khan Academy to Tesla Motors and Qualcomm or Ripple Labs. Because this is just not going to go away by itself.
Originally posted as a LinkedIn Influencer Piece. View all of Peter Hinssen's LinkedIn Influencer posts here.