At Kansas City's beautiful Union Station - a building that used to be bustling with millions of people - Crowd Companies founder Jeremiah Owyang spoke about companies moving forward before the old way of doing business dries up.
What better place to drive that point home than a train station?
In fact, Union Station has completely remodeled their business model, and as the couple hundred people sat in the big conference room for the Social:IRL-sponsored Resilient Summit, their brains were no doubt thinking about the same thing. The term that Owyang spoke about is catching on all over the world: the collaborative economy.
The collaborative economy is a new economic model where there's shared ownership and access among people, startups, corporations, and governments. One of the things Owyang's new company was formed to do is to help companies figure out what role they can play in a world where people can get what they want from each other.
Some examples of new collaborative economy companies:
- Uber and Lyft - helping passengers connect with drivers of vehicles for hire and ridesharing services
- SurfAir - shared cost of jet, shared flights
- AirBNB - enables the crowd to be a hotel
- Lending Club - enables the crowd to be a bank
- Yerdle - trading products, building up credit, everything is free
- LiquidSpace - helps you find meeting rooms, office rentals & co-working spaces booked by the hour or for the day.
This fundamental change in they way people get what they need will result in lost revenue for companies, and its happening fast. A Shareable magazine study showed that 75% of respondents predicted sharing of physical objects and spaces will increase in next 5 years. VCs have sank over $2 billion in these companies, Google is the lead investor in this market.
Why is this happening? There are a number of reasons - access to technology, cheaper resources, more online ways to trust, etc. Lisa Gansky, another thought leader in this space (she calls the collaborative economy the "mesh") says this is all about having an experience.
The Collaborative Economy Value Chain - 3 Ways to Change
1. If you sell a product, you must go through business model transformation and turn your products into services.
- Netflix - duh.
- Toyota/BMW as a service - rather than fight sharing, they rent cars. The quote from their CEO: "Instead of selling 1,000 BMWs, we want to sell one BMW 1,000 times."
- Home Depot - they've been renting tools, trucks for a long time, something new - They used Uber to deliver Christmas trees last year!
- Dollar Shave Club - razors as a service
- BeautyBox5 - samples to your home
- Marriott - turned lobbies into co-working spaces - Workspring - suites, spaces, meeting rooms as a service
- Preugeot - gives you access to bikes, cars, etc
2. If you sell services, turn them into marketplaces.
- Owyang predicts that a major hotel chain will launch an AirBNB marketplace this year. This means they would attract hosts to post on their site. Let's say this company is Marriott. Why would someone make their house available on a Marriott site? How does this benefit them? Well, Marriott has loyalty programs already, a huge base of customers, and the trust comes from a home being Marriott-certified. Of course, Marriott gets a cut.
- DesksNear.Me - Allows people to generate extra revenue by renting desk and office space that's not being used.
- Patagonia's Common Threads Partnership - allows customers to buy a used jacket on eBay. Again, why do that? Well, it instills confidence in their product, saying "our coats last," and helps increase their loyal fanbase.
- Toms launched a marketplace where people sell socially conscious goods.
3. If you have marketplace, you must make products.
With this, the crowd enables every part of the company. Owyang says just put the "co" in front of your business function.
- Co-fund - Crowd determines what gets built, like Kickstarter or the U-Haul investors club, which allows crowdfunding for their company, increases loyalty by giving people stake in the company.
- Co-design - Nike allows you to design your own shoes. Barclays offers Barclaycard Ring, where the crowd helps you design your credit card and which NGO/nonprofit the benefits that you rack up will go to.
- Co-develop or co-innovation - Quirky - The crowd designs products and they go to market together
- Co-customize - Etsy users get products distributed in Nordstroms, etc
- Co-production - with 3D printers. Nokia enabled 3D printing of phone cases by offering up their blueprints.
- Co-storage of products - Lockitron offers keyless entry for security measures, using your phone. Walgreens partnered with TaskRabbit to deliver pharmeceuticals to homes
In this economy, employees and customers start to look the same. Companies can tap the crowd to make business more efficient.
The 5 Takeaways for the Collaborative Economy:
- People are empowered to get what they need from each other
- The crowd is becoming like a company, bypassing inefficient corporations
- Corporations must use these same tools to regain relevancy
- Requires business model change: product > service > marketplace > repeat
- Crowd becomes company, making company resilient
Owyang's final statement on the subject: It may be tough, but you have to let go of your business model to gain the market.