Today, the largest car rental and hospitality companies are Uber and Airbnb, respectively. What do they have in common? Let’s see— neither of them own physical possessions associated with their service and both have turned a non-performing asset into an incredible revenue source. Don’t be surprised because this is the new model for doing business. People want to rent instead of own and at the same time, they want to monetize whatever they have in excess. This is the core of the sharing economy. The concept of earning money by sharing may have existed before, but not at such a large scale. From renting rooms to rides to clothes to parking spaces to just about anything else you can imagine, the sharing economy is rethinking how businesses are growing.
What’s Driving a Collaborative Economy?
The sharing economy or the collaborative economy, as it’s also called, is “an economic model where technologies enable people to get what they need from each other—rather than from centralized institutions” explains Jeremiah Owyang, business analyst and founder of Crowd Companies, a collaborative economy platform. This means you could rent someone’s living room for a day or two, ride someone else’s bike for a couple of hours or even take someone’s pet out for a walk—all for a rental fee.
Even a few years ago, this sort of a thing was unthinkable. When Airbnb launched in 2008, many people were skeptical, as the whole idea not only seemed irrational, but totally stupid. I mean why would anyone want to stay the night in a stranger’s room and sleep on air beds, right? Well, turns out many people did! Airbnb moved from spare rooms to luxury condos, villas, and even castles and private islands in more than 30,000 cities across 190 countries, the rentals reached a staggering 15 million plus last year.
What is driving this trend? Millennials definitely play a role here. Their love for everything on-demand, plus their frugal mindset makes them ideal for the sharing economy. But the sharing economy is attractive to consumers across a wide demographic, as it only makes sense.
How Collaborative Economy is Reshaping the Future of Businesses
Until recently, collaborative-economy startups like Uber and Airbnb were looked upon as threats. Disuptors to any marketplace are usually threatening, so this isn’ tsurprising. Established businesses who were accustomed to the way things had always been did (and still do) rail against companies like Uber or AirBnB, yet consumers seem to love them. And that’s what matters. Uber faced many harsh criticisms yet it continues to provide more than a million rides a month.
We are living in an era of consumer-driven enterprise where consumers are at the helm. Perhaps this is the biggest reason why the collaborative economy is here to stay. No matter what industry, companies are trying to bring customers to the fore. A collaborative business model allows customers to call the shots. A great example is the cloud, which relies on resource sharing and allows users to scale up or down according to their needs.
Today, traditional businesses are participating in a collaborative economy in different ways. Some are acquiring startups. General Motors, for example, invested $3 million to acquire RelayRides, a peer-to-peer car sharing service. Others are entering into partnerships like Marriott, which partnered with LiquidSpace, an online platform to book flexible workspaces. Not just these, many brands like GE, BMW, Walgreens, and Pepsi are putting their foot in the collaborative-economy space and holding the hands of startups, instead of competing with them.
Changes in the Workplace
Remote work and telecommuting has taken off. Companies are already getting used to the idea of people working outside their offices and cloud technology is enabling that. Now, let’s look at the scenario from the lens of the sharing economy. With companies looking to find temporary resources that can meet the fast changing demands of the business, freelancers could replace a large chunk of full-time professionals in future. Why? Because at the heart of this disruptive practice, lies the concept of sharing human resources.
As companies set out to temporarily use the services of people to meet short and medium-term goals, it’s going to completely change the way we build companies. Besides, as we have seen through the growth of companies like Airbnb and Uber, it’s going to change the deliverables that companies provide. With demand changing so fast and technology proliferating at breakneck speed, not only is it important that businesses start to see and adopt this change, but it’s also imperative because companies that overcommit to any one thing will find themselves obsolete.
When it comes to workplaces, there’s so much happening that it’s impossible to predict where things are really headed. But one thing is for sure, the collaborative economy is not going anywhere as long as our priorities are built around the terms like better, faster, efficient, and cost-effective.
This article was originally seen on Ricoh Blog.