Entrepreneur

Finding success as a business in the sharing economy

Above: Zipcars are a part of the sharing economy

Image Credit: shinya/Flickr

Peter Coffee is VP and Head of Platform Research at Salesforce.com.

“I have a large seashell collection,” said comedian Steven Wright in a 1985 routine, “which I keep scattered on the beaches all over the world. Maybe you’ve seen it.” We laugh, because of course he doesn’t own them, but then again, why would he? To quote another Wright-ism, “You can’t have everything. Where would you put it?”

Increasingly, people are deciding that ownership isn’t worth its burdens. That’s not just a Millennial attitude: rather, there are fundamental structural and technological changes in progress that weaken the traditional advantages of ownership, and create new benefits to sharing. Companies that learn to pull those levers will create commanding value.

The biggest traditional incentive to own things is assurance of access on demand. In a world where most people carry mobile communication devices, and where wireless connections are common in devices as well, it’s now easy to know the nearest location where something shareable is available. We have long relied on this idea for shared capital assets, like a room for overnight stay or a rental car for a day of business meetings, but today we can apply that model cost-effectively to a few hours’ use of a conference room, a ZipCar or even a forklift. The minimum value of the asset worth sharing, and the minimum time for which it’s worth making that arrangement, are approaching the infinitesimal.

Predicting fluctuating demand and dynamically pricing time slots to level out the peaks is becoming increasingly feasible with “big data” analytics as well. By giving people better information about when a shared resource will be scarce, a normally invisible cost of utterly wasted waiting time can also be hugely reduced, further reducing the differential advantage of ownership.

On the flip side of assured access today, where owning something means you can have it whenever, is the idea that what you need might not be available in the future. But this entire category of ownership incentive is being attacked head-on by the growing capability and prevalence of 3-D printing (more formally, additive manufacturing) technologies and protocols. A warehouse of rarely-needed parts can be substantially replaced by a database of specifications, feeding a table-top machine that produces any desired part on demand. The 3-D printers themselves, of course, are eminently shareable.

We also own things so that we’ll have freedom to modify them. Today, though, many more devices are becoming customizable – in software or through other configuration mechanisms. We might be talking about the firmness controls of a Sleep Number bed, the customizable functions and controls of a high-end camera, or a metadata-based customization model that lets hundreds of thousands of cloud computing customers each enjoy access to a deeply customized application — without actually altering the shared code base.

Finally, we can combine these “soft” modifications with affordable automation, connectionless identification (such as a wireless key fob), and strong cryptographic protections. Given that mixture of capability and control, we can pick any point on a broad spectrum of trade-offs between convenience, ease of use, and certainty of exclusive or restricted (and monitored) access to any number of physical or informational assets.

In this environment, there are general strategies to increase the chances of success:

  • Build products to be highly configurable, in ways that allow several different combinations of preferences to be stored and readily re-applied for rapid hand-off from one user to another.
  • Nurture customer communities that encourage a broad range of sharing models, ranging from commercial renter to casual lender.
  • Support product registration systems that maintain service logs and product upgrades, so that shared products carry their own provenance of readiness for use.

What much of this comes down to is one simple idea: that what we used to call a product, because that’s what we designed and sold, is better visualized as a package of capability because that’s what most customers actually want to buy. Making the baggage of ownership less burdensome while turning products into services will be a path to market leadership in the new world that’s already taking shape around us.


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