This year, the term “sharing economy” entered the Oxford English Dictionary, an idea that’s been inspiring — and challenging — companies and brands since its predecessor, “collaborative consumption,” entered the lexicon. The term, coined by Rachel Botsman, identified and explored the cultural shift towards “sharing, bartering, lending, trading, renting, gifting, and swapping,” as Botsman explained in her 2010 book, What’s Mine is Yours: The Rise of Collaborative Consumption.
Widely in demand as a speaker and consultant, including an influential TED talk in 2012 (“The Currency of the New Economy is Trust”), she’s become a global thought leader who runs The Collaborative Lab and still has plenty to share on the topic. Her recent Fast Company article, Defining The Sharing Economy: What Is Collaborative Consumption—And What Isn’t, examines how far the concept has come in five years, and attempts to clear up some of the confusion as brands look to disrupt industries, following on the example of Uber, Etsy, Kickstarter, Lyft, Airbnb and other collaborative consumption companies.
— rachel botsman (@rachelbotsman) July 5, 2015
We caught up with the London-born, Sydney-based Botsman to find out how brands can successfully participate.
brandchannel: Rachel, with the spread of new models comes new vernacular, and there’s even now a Global Sharing Week. How has the sharing economy evolved since you identified the movement?
Rachel Botsman: Well, for one thing it is called many different things and applied to a whole range of ideas! It is tricky to answer this question because it has evolved on so many different fronts: regulatory, venture capital, user behaviors, etc. The most significant evolution is that attitudes towards “sharing” and “collaboration” are rapidly evolving in different areas of our lives. Ideas that seemed strange, unsafe or were regarded as just for “early adopters” are becoming mainstream.
I remember talking about the French ride-sharing service BlaBlacar in 2009 and the common response was “Isn’t that just digital hitchhiking?” Last year it received over US$100 million in venture capital and is regarded as potential threat to long distance Eurorail. Similarly, it is now not unusual for people to talk about the Airbnb place they stayed in or the driver that gave them a ride on Lyft. In short, ideas in the sharing economy, and in some instances the term, have entered the common vernacular.
bc: Has the ubiquity of mobile and app-enabled sharing been a significant factor?
RB: Mobile has played a massive role in the increased adoption by making it easy for users from product or service selection to booking to payment. But I think at a deeper level, since 2008 we have seen a massive evolution in trust. The idea of trusting “peers” over a traditional corporation is becoming increasingly normal. And so rather than people just using car-sharing or using a peer-to-peer lending platform, we are starting to traverse across examples without even thinking whether they are part of the sharing economy or not. They are not an alternative way but a better way.
In the early days, I spent a lot of time convincing a range of people, from policymakers to traditional business leaders and yes, even venture capitalists, that this was not a niche trend or reaction to the recession. It is telling that the questions these days have dramatically shifted from “So when will these thrifty behaviours reverse” to “So what sector will next get disrupted by the principles?”
bc: You’re teaching the first-ever M.B.A. course at Oxford’s Said business school on the collaborative economy. What takeaways do you hope to imbue in your students as they venture out into the world?
RB: Most importantly, I want them to take away that the collaborative economy is a transformative lens, not a start-up trend. Throughout the course they will see how across sectors it is a different way of thinking about how to utilise assets and trust people.
For those thinking of launching ventures in the space, I want them to realize that the best entrepreneurs typically solve a problem they are close to and deeply care about. They typically don’t do market analysis, identify a white space and then launch something. It comes from a deep understanding and drive to solve a problem or improve people’s lives.
bc: What responsibility do brands have to engage in the sharing economy so it’s a proverbial win/win for all?
RB: In order to belong to the sharing economy a company must meet five criteria:
1. The core business idea involves unlocking the value of unused or underutilized assets (“idling capacity”) whether it’s for monetary or non-monetary benefits.
2. The company should have a clear values-driven mission and be built on meaningful principles including transparency, humanness, and authenticity that inform short and long-term strategic decisions.
3. The providers on the supply-side should be valued, respected, and empowered and the companies committed to making the lives of these providers economically and socially better.
4. The customers on the demand side of the platforms should benefit from the ability to get goods and services in more efficient ways that mean they pay for access instead of ownership.
5. The business should be built on distributed marketplaces or decentralized networks that create a sense of belonging, collective accountability and mutual benefit through the community they build.
bc: We were intrigued to see there’s a new trade body governing the sharing economy in the UK and the move towards an industry-wide “kite mark” and standards for consumers to identify and trust participants in the sharing economy. Is a similar idea afoot elsewhere?
RB: There is a difference in industry-wide standards to help categorise what companies are in and out of the sharing economy. I think it is important to agree on these criteria and a definition, but I actually do not think they are what is important to users of these platforms. The type of certification that is needed is an independent evaluation of whether both providers and customers can trust platforms/marketplaces on different dimensions.