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The Collaborative Economy

Beyond new business functions, a new consumption model is rising and will impact core business models. Have a look into some indicators.

collaborative-consumption

By Adriana Rocha

Mobile and social technologies have changed communications, marketing, and customer care. There are many evidences that such technologies will disrupt market research as well, despite the resistance of a “more conservative” side of this industry. In a recent article, I mentioned that we are entering “The Golden Age of Market Research Technologies”, since I believe we are just beginning to learn and effectively applying the usage of social and mobile technologies to innovate and create new opportunities for market research. But if you believe that such technologies will not cause more disruptions, keep an eye open on the next big trend: with the same technologies, consumers are now sharing products and services with each other, bypassing existing companies and institutions.

Beyond new business functions, a new consumption model is rising (also called “collaborative consumption” or “collaborative economy”) and will impact core business models. In this new economic model, the crowd becomes a company! Scary?  Have a look into some indicators:

  • Hundreds of start-ups like Airbnb, Yerdle and Lyft have emerged to let people share goods and services
  • Venture Capital funding is accelerating this trend: more than 2 billion dollars has been invested thus far by VCs in collaborative economy startups, with $28mi average funding (Lift raised US$60mi in funding in May 2013)
  • WikiSpeed ( a business that crowdsourced designs, production and development ) has created a SAE-registered, road-legal-approved car, the Wikispeed Car, now on sale in limited quantities
  • Start-ups such as HandShake  provide platforms for consumers to control and sell their own personal data

With this new trend, companies risk becoming disintermediated by customers who connect with each other. Let’s analyze, for example, the possible impact for the automotive industry: every car-sharing vehicle reduces car ownership by 9-13 vehicles; a revenue loss of at least $270,000 to an average auto manufacturer. The cascading impact to the ecosystem has far reaching impacts to auto loans, car insurance, fuel, environmental impacts, auto parts, and other services. For consumer goods companies, the direct impact is that consumers can now purchase one product, and share it among many others, reducing revenue in traditional business.

My recommendation: instead of fighting against the new, embrace it, rethink your business model.  The forward-thinking companies will probably motivate a marketplace, provide a platform, adopt a company-as-a-service model, or maybe the three of them. Thoughts?

References:

The Collaborative Economy by Altimeter

http://www.web-strategist.com/blog/2013/09/10/meet-the-empowered-people/

WikiSpeed

Techcrunch: http://techcrunch.com/2013/09/02/handshake/

HUffPost: http://www.huffingtonpost.com/jeremiah-owyang/in-the-collaborative-econ_b_3574118.html

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12 Responses to “The Collaborative Economy”

  1. @correlationist says:

    September 15th, 2013 at 12:14 pm

    Great thoughts, Adriana. I am in vehement agreement with you. :)

    I call this the boiling frog syndrome – read my 2009 blog post on this : http://ow.ly/oSOKA

  2. joe underwood says:

    September 15th, 2013 at 4:00 pm

    Adriana, your thread contained “…….customers who connect with each other.” When Manufacturers/Distributors/Suppliers adopt a partnering marketing platform that understands that consumers always start with 911 or 411 they will share in the ROI of such action! Adriana, your last paragraph comes close as too a forula to the path of LOCAL marketing success. It is C2B and B2C that gives B2B validity.

    joe underwood
    Area Code Shopper
    Titan Fence, Inc.
    Woof Woof Roofs

  3. Adriana Rocha says:

    September 16th, 2013 at 12:14 am

    @correlationist thanks for your comments! I loved your “Boiling Frog syndrome” article. :) Regarding your question “Which companies do you think are adapting to the new reality better?”, maybe the ones who better embrace randomness, as Andrew Smart exposes in his article “Why Organizations Should Embrace Randomness Like Ant Colonies” http://blogs.hbr.org/2013/09/why-organizations-should-embra/ Thougths?

  4. Adriana Rocha says:

    September 16th, 2013 at 1:23 am

    @joe, agree that could be a formula to the future LOCAL marketing success. BTW, there are big players, such as BMW, already embracing the collaborative comsuption. During a recent Stanford Collaborative Consumption Event (http://www.shareable.net/blog/stanford-collaborative-consumption-event-big-business-and-the-little-guy-in-the-same-room) , Peter Dempster from BMW’s future lab ( http://money.cnn.com/gallery/technology/innovation/2013/04/03/bmw-future-electric-car.fortune/2.html ) suggested that if BMW didn’t adapt to the new generation’s attitudes towards car use, ownership, and mobility, they would be out of business by 2050. LOL

  5. Ayesha says:

    September 16th, 2013 at 1:51 am

    I have started to question, how collaborative economy will effect marketing research and strategic planning. Incase anyone has any ideas then please share links

  6. Adriana Rocha says:

    September 16th, 2013 at 2:08 am

    @Ayesha, it can impact MR in various ways…for example desintermediating the access to consumer data since consumers (using platfoms such as HandShake (http://handshake.uk.com/hs/index.html) can sell, rent or provide their data directly to any company). Also, companies in the same industry can use collaborative platforms to share data with each other (in our company we’ve built a platform for that purpose). With consumers sharing products and services, or buying from each other, there will be opportunities for developing new research models as well.

  7. Adriana Rocha says:

    September 16th, 2013 at 2:14 am

    There is also an interesting article “The rise of the sharing economy” posted by The Economist available here http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy

  8. @correlationist says:

    September 16th, 2013 at 12:09 pm

    Thanks Adriana. There is another interesting use case of the potential disintermediation you talk about at http://www.myprivacy.info

  9. Adriana Rocha says:

    September 16th, 2013 at 8:38 pm

    @correlationist Thanks! Cool example!

  10. Kate says:

    September 17th, 2013 at 11:47 am

    @Adriana, you are making a great point. Collaborative economy has already had its effect on market research and honestly, it is only natural that it did. With digitization, being a major trend of the century it just makes sense for online platforms to arise and form a Marketplace. Sellers & buyers collaborate and share market research products directly, which makes it faster and cheaper. Clearly, these are client’s benefits. The question is, will conservative market research companies harvest the benefits of “sharing economy“?

  11. Adriana Rocha says:

    September 17th, 2013 at 3:38 pm

    @Kate, nice points. Regarding your question, I think the MR industry or any player can benefit, once they can see the new opportunities in a collaborative model. See BMW, for example: “BMW says this model allows them to sell one car nine times (to sharers) “ (Peter Dempster, BMW Technology Office)

  12. Collaborative Research – Join the Movement! | GreenBook says:

    June 8th, 2014 at 3:18 pm

    […] September 2013, I posted on this blog the article “The Collaborative Economy” highlighting that a new consumption model was on the rise and that could impact core business […]

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