You want to be a writer
But you don’t know how or when
Find a quiet place
Use a humble pen
– Hurricane Eye, Paul Simon
Are you already familiar with the sharing economy? Have you shared your house through AirBnB, tools through Peerby or booked an Uber car? Consumers increasingly realize that having access to is almost as valuable as owning something. Why would you buy something that you can just as easily borrow or rent? Ebay has made everyone a retailer, but apps like AirBnB now also make people hoteliers. The divide between private citizens doing business and companies selling to consumers is quickly disappearing. Big hotel and taxi companies view the sharing economy as a huge threat, and try to force this trend to stop. But wouldn’t it be smarter to look at the opportunities it offers? We are thinking on what the sharing economy will mean for business-to-business oriented companies. In this article we’ll share the background behind this trend, some articles to ‘read more’ and some possible consequences for the B2B market.
This article was written in Dutch for my company's website merkelijkheid.nl and translated on the fly. If you spot any major errors, please let me know in the comments.
The sharing economy is nothing new, of course. Ebay enabled people to directly sell and buy stuff years ago, but the last few years the transaction costs have dropped significantly. Geo-locating technology allows us to see what’s available right now at our location. You are, right now, able to Lyft to Paris, and book a room for the night for a total cost of perhaps 50 euro. All possible because of the technological trends that drive the sharing economy trend: lower transactional cost and technological developments. The lack of economic growth also pushes people to try new and cheaper things.
“The more this trend develops, the greater the consequences for the (traditional) economy. Demand will not disappear, but the way in which supply and demand meet changes radically.”
Changing a traditional model is always a challenge. It’s the reason both traditional taxi companies and hotels prosecute their sharing economy challengers en masse. But, as we all know, this type of trend is hard to stop, let alone slow down. In a few years, ‘sharing’ will be just as normal as putting all your old stuff on Ebay, not so long ago we used to say “I’d rather not have strangers at my door”.
We found the following articles to be interesting and they discuss the background of the trend and the consequences for consumers in more depth.
13 mei 2013 Economist – The rise of the sharing economy
16 augustus 2014 In the sharing economy workers find both freedom and uncertainty
19 augustus 2014 – How can established organisations play to win in the sharing economy
B2B sharing economy – opportunities and threats
The PWC article underlines that there are a couple of industries that didn’t see the sharing economy trend coming and suffered because of it. We all know the story of music, film and TV versus Napster and later peer-to-peer sharing. The music industry especially is still fighting to adapt to the huge changes while car companies show that there is also another way. Companies like GM, Avis, BMW or Daimler have each not waited for the challenge to come to them but each started or bought their own sharing service. What threats might develop in your B2B market, and, more importantly, what opportunities does it offer?
Unified purchasing – Various big companies have joined forces to collectively purchase law services, and it’s only a matter of time before other professional service markets follow suit. But this could just as easily happen to manufacturing companies, because collective purchases saves both time and money in this field as well. Why are you not a step ahead of this by acting as a connector and facilitator? What advantages are to be had in this?
Sharing production capacity – There’s always either a lack or too much capacity, think of your organization’s machines that either run night and day or have a down time of 12 hours. Most companies will be forced to either downsize or expand, but why wouldn’t you take a moment to reflect on the question: “Why not share it with someone? Or even a competitor?”
Office space / desks – We have more office space than we know what to do with, and with an increasingly flexible labor market this will only get worse. Why wouldn’t you rent out the facilities you already have but aren’t using?
Employees and systems – Your organisation probably developed knowledge, systems or skills to allow for a certain process or quality. By applying this to other companies you can significantly improve your return on investment.
Easier access to capital – The entry-barrier to your market used to be significant, but a much easier access to manufacturing tools like machinery and other capital through for example peer-to-peer lending initiatives it’s only getting easier to join your market and compete. The question to you is, what is your company’s actual sustainable competitive advantage and how can you leverage or improve on it?
We’ve provided you with an introduction to the sharing economy, but also asked some questions that should give you some professional insight in the effects this trend can have on your market. We hope to have inspired you to think about your market and the opportunities it holds. If you already formulated a view on this subject or the opportunities it offers in your market, I’d love to hear from you! Please leave your remarks in the comments.
It is not too late to change. The damage isn’t irreparable but it will take time and it will be hard. We have grown used to constant interruption and wonder why we cannot focus any more. Stop fooling yourself into thinking that it is the new way of the world and realize creativity or leadership will never come from shallow thoughts or effort.
When was the last time you solved a problem and not Google? What was your last truly inspired idea?
You probably are not consciously dividing your attention and crippled by an information overload. I know what it feels like. This not only prevents you from being your professional best, but also from being simply happier. You should take charge.
Recently, I completed the Annual Report project for dutch collective management organization Buma/Stemra. The resulting report looks amazing and makes me very proud. I wrote an more extensive blog on it over on De Merkelijkheid website, including some images.
Stunning article by Unilever’s CEO Paul Polman in McKinsey Quarterly detailing his vision of the future for both Unilever and businesses/capitalism. The article didn’t trigger me from the start, but as soon as he connects his analysis to Unilever’s behaviour I was hooked. The following sentence was responsible:
We actually had a ten-year period of no growth, and that forces you to make your numbers or you’re under pressure from your shareholders.
He then continues to connect shareholder pressure to short term thinking and the negative influence this has / had on a [his] company’s capital base. Their decision to change connected his views of the future to him leading the company, because by redefining themselves he was able to embed both sustainable and economic targets in Unilever’s core. He took an 8 percent hit in share price, but is now convinced that he successfully ‘removed enormous shackles from our organization’.
Very ambitious words and an article well-worth reading yourself. So GO!
Variety and The Wall Street Journal both report on Google/YouTube’s supposed acquisition of game streaming service Twitch. While Variety tells us the deal is done for $1 billion, The Wall Street Journal just reports Google’s intentions. Twitch would extend on YouTube’s large game audience, while Google’s ad sales will probably be more able to capitalize on the value of Twitch’s hardcore viewers. Before we start talking about the insanity of paying $1 billion, please consider that Twitch represented 1,35% of all downstream bandwidth in the US and according to Qwilt, Twitch has a 43,6% market share in streaming video. And it’s growing quickly.
Fun fact: Google’s share price increased by 1,6% when I write this, representing $5,6 billion of added value for its shareholders. Seems a positive response to me?
What makes this rumoured deal interesting to me is the apparent value of a smaller but hardcore gaming audience. For someone who has no experience or affinity with competitive or multi player gaming, it seems astounding that people spend 15 hours a week watching someone else play a video game. But for two generations of gamers, this is the most natural thing in the world. It just took technology a while to catch up with demand. And its not limited to South-Korea, Japan and China any more. Gamers from all continents travel to watch major tournaments and games. And in numbers that are far bigger than all but the most popular sports. Twitch facilitates this trend, but combines it with something that everyone is familiar with, being a fan.
To most people, it is obvious that people are fans of big musicians or movie stars. But when you favourite pastime is not music but games, doesn’t it make sense that the best or coolest gamers become your idols? Twitch allows people to actually join their idols while they practice, play matches or just hang out, and the get to interact! By combining the demand for watching major games and tournaments with people following or being fans of their idols, Twitch has stumbled (the original company was different) on what seemed a niche, but now turns out to be a major popular movement. Google has recognized this demand before, by acquiring stakes in major YouTube gaming channels for example.
It remains to be seen if the rumours are true, but I’m convinced that Twitch is a great opportunity to get in on something that others still call a niche.
Personally, I think that one of the main benefits of hiring outside advisers or consultants to help solve a problem is the fact that they will dedicate time to think about a solution. While they are not limited by your understanding of the market. Your experience, or mine for that matter, makes us rejects certain ideas or insights out of hand, while they might eventually lead to the actual solution! And this all works swimmingly up until the point where they have to sell you their solution.
I have to keep this in mind whenever we talk to clients and it is essential when presenting my thinking.