Is your business ready for the collaborative economy?
Business conditions are changing at a rapid pace and one of the biggest trends in the last few years has been the emergence of the collaborative economy.
Over the last decade, organisations like Uber, Air BnB, eBay and GoGet have become household names for the shared services they are able to coordinate. This new model of operating is poised to make big waves in the Australian economy over the coming years, presenting a challenge for even the most established corporate models.
For any SME, planning ahead is going to be essential. Finding a course in this new business environment and then adjusting course as necessary is going to be a major factor in setting your business apart from the competition.
What is the collaborative economy?
The collaborative economy currently goes by a number of different names – the sharing economy, collaborative consumption or peer-to-peer sharing. The idea is that people are now using new technologies to unlock alternatives to established business models in an effort to reduce costs and increase efficiency.
The idea is also an economic one – many people have things they own but don’t use most of the time. By sharing these items, the cost of use is spread across a number of different people, while the object is also used much more efficiently as a result.
Perhaps the best example is Uber – the app which lets anyone become a taxi driver without using a traditional company. The service has become incredibly popular overseas and already seems to have broken the monopoly previously held by taxi operators.
Just a few years ago, this sort of innovation in shared services wouldn’t have been possible and the taxi industry certainly wouldn’t have been one people would associate with digital disruption.
Of course, Uber isn’t the only firm riding this new development in the collaborative consumption space. Other companies like Air BnB have had a similar effect on the hotel industry, providing an alternative for individuals to offer accommodation at a cheaper rate than established providers.
These are just some of the ideas that have already impacted the market. Companies are also innovating in new spaces that could upend more industries. One example that a number of startups are investing in is car sharing services that will allow individuals to rent a car short-term without having to go through a car rental provider.
Given that a car will spend most of it’s life unused, this sort of innovation has the potential to significantly change they way we think about buying and running a car.
Many other industries are also going to see significant growth. Research from PricewaterhouseCoopers in the UK predicted that nine key sectors – peer-to-peer (P2P) finance, online staffing, P2P accommodation, car sharing and music/video streaming will be the sectors which see the largest growth over coming years.
With these areas range from futuristic to an imminent strategic opportunity, every company now needs to be thinking carefully about how to adapt to this sort of digital disruption.
What does the collaborative economy mean for an SME?
Clearly these new models of sharing are going to change the way individuals perform. As new sectors of the economy encounter the same disruption that is affecting transport and hospitality, SME owners will need to be sure they are taking steps to prevent this same kind of disruption occurring in their business.
While there are clearly significant obstacles that the collaborative economy is putting on small businesses, it also represents an opportunity for companies to improve their operations and realise new growth.
So what are these benefits? Here are two of the advantages of a shared economy for a small business:
1) New opportunities to provide services
Every company will now need to think about how their services might be better provided over a shared service. Planning ahead for how a business’s services might be provided over a shared platform will be essential if your SME is going to make the most of the shared economy.
This was highlighted in recent research, discussed in the Harvard Business Review, which found that the main reason for individuals to engage with shared services is based on price. The research suggested that companies that want to be competitive in the shared economy will be those that can offer convenience and lower cost.
However, companies working in this space will also need to be sure they are investing in their reputation. The sharing economy requires both companies and individuals to build “reputation capital” if they want to be successful under this business model.
2) Lower operating costs
Just as the number of businesses working in the shared economy space has increased, established firms are turning to these same services as a way to cut costs in their business. This new model of managing services means that even if a firm’s own business cannot be translated to a shared platform, they can still profit from this new model of using resources.
Peer-to-peer finance is just one example of how shared services might come to benefit an organisation in the future. Instead of relying on funding sources from a bank or financial institution, SMEs might be able to attract capital from alternative funding sources. By cutting out the middleman, these services have the opportunity to lower ongoing costs for accessing essential business services.
These are just two of the ways Australian SMEs might be able to achieve a more effective operation by using the shared economy. For companies that can take the time to understand this service and adjust their corporate strategy to account for this shift, the advantages in the future are going to be considerable.