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CHAPTER IV - Toward a Collaborative Economy

Are and Google outliers in the current economy or are they bellwethers of a fundamental shift? Jeremiah Owyang, an Industry Analyst and Partner with the Altimeter Group, believes that we are moving toward a “collaborative economy” that will require companies to move toward either becoming a platform provider or participating in platforms provided by other companies.

According to Owyang, we are now entering the third phase in the role of media in business. In the first phase, the “brand experience era,” corporations used media to deliver messages about their brands to consumers, a largely one-way process that was intended to shape purchasing behavior (the classic function of advertising). In the more recent “customer experience era,” social media emerges to give consumers more power by enabling them to share experiences and opinions about brands. And now we are entering the “collaborative economy era” in which individuals are able to exchange goods and services directly. This sort of sharing has been appearing first in areas where high cost products are often idle: even at the peak of rush hour, some 90 percent of all cars are parked; most second homes are used rarely by their owners, while many first homes have unused space. The peer-to-peer connections made possible by social networking along with the emergence of online payment and e-commerce systems have simplified the process of monetizing these resources through ride sharing services such as Lyft and RelayRide and home sharing services like VRBO and Airbnb. The impact of this evolution is likely to be significant on companies that cling to more traditional models of production and distribution. Owyang cites a study that found that each car that is used for ride sharing has the potential to replace 9-12 private vehicles. Companies that do not want to suffer from disintermediation need to join the trend and devise ways to support collaboration with and among their customers and partners.

These ventures may be just the first step in a broader movement that will lead to many different kinds of network-enabled collaborations. In the near future, according to Owyang, we will see platforms that allow people to co-ideate, co-fund, co-build, co-distribute, co-market, co-sell and co-revenue share all sorts of goods and services. The collaborative economy will even impact the way companies are organized and operate: the relationship between employers and employees will be redefined as the definition of a workforce becomes more “porous”; the location of the workplace will become less fixed as offices become available on-demand; and the distinction between employees and customers will blur as companies tap into user communities to define and even fund and develop new products through crowdfunding and crowdsourcing mechanisms. Owyang concludes that companies that try to hold on to traditional models are likely to suffer from disintermediation, while those that are willing to “let go” of established ways of operating and embrace new models of collaboration are likely to thrive.

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