How social media disrupts business?
The collaborative economy is ready to disrupt businesses wedded to the old manufacturing paradigm. Jeremiah Owyang introduced the new paradigm of the collaborative economy in his keynote during Vocus Demand Success Conference on Friday.
So, what is the collaborative economy? It’s an economy based on sharing resources
Keynote: The Collaborative Economy with Jeremiah Owyang from Jeremiah Owyang
rather than owning resources. And, it’s an old idea that’s really gaining traction not only among millenials, but older folks and some very enlightened businesses determined not to be left behind.
Jeremiah calls this the sharing economy, where consumers buy once, then share — which means fewer people need to buy. The collaborative economy reflects a more sustainable economy where the needs of the population quickly outstrip the ability of the planet to create products.
Of course, social media disrupts business in lots of ways. For instance, read how social media disrupts traditional media — requiring different tools and tactics. In essence, social media disrupts business by putting consumers at the helm rather than businesses. The collaborative economy is simply another tool supported by social media that disrupts the traditional way of doing business.
Social media disrupts business through sharing
Zipcar is a rather old example of consumers sharing rather than buying. If you live in a city with adequate public transportation, you likely leave your car parked much of the time. For some, car ownership isn’t even necessary. They simply borrow a car when needed. Enter Zipcar, a company who charges membership alleviating all the boring paperwork necessary when renting a car. Plus, the park their cars in convenient locations, such as near metro stops, so there’s always a car nearby. Zipcar’s business model is so compelling, Avis recently bought them to increase car utilization on weekends. Social media sharing and their internet business model won large numbers of members.
Bag Borrow or Steal rents designer handbags for increasingly fashion conscious and resource poor consumers.
AirBnB coordinates sharing rooms in owner’s homes. A recent interview on CBS Sunday Morning showed an elderly woman who rented even her couch to travelers and saved her home from foreclosure in the process. A man rents his treehouse overlooking San Fransisco and makes money from his whimsical hideaway.
ODesk let’s you hire contract labor and new firms appear all the time to allow businesses to borrow a workspace at the drop of a hat.
Even SAAS services, such as Adobe’s Creative Cloud, rent software rather than forcing consumers to buy it.
How does disruption affect YOU?
If you’re a consumer or small business, the collaborative economy reflects great opportunity. You can adopt this business model to create an income stream. You can use the collaborative economy as part of your lean start-up process. You can find great talent without the high cost, risk, and paperwork of full-time hires.
If you’re a large business, the collaborative economy also reflects great opportunity — if you avoid marketing myopia trying to retain your existing business model by ignoring or trying to squash the sharing economy. Here are some options:
Leverage your brand to compete
Every car rented through the collaborative economy represents $270,000 in lost income to auto dealers (according the Mr Owyang). They can bury their heads in the sand or join the collaborative economy. For instance, Toyota offers short-term rentals from their dealerships. While offering a good selection of cars at easy rental terms, they lack the convenience of Zipcar. To adequately compete in the collaborative economy, they should consider relocating cars to convenient locations.
Hotel chains might represent individuals renting their homes by creating a network and using their vast marketing ability to rent these spaces while retaining a fee from the homeowner.
Companies might create a market for used electronics or fashion since these items are frequently cast off by owners before they’re trash. By creating an electronic swap meet, a business would retain 20% for every item sold.
Membership rather than ownership
Like Salesforce.com and Adobe Creative Cloud, firms might lease their assets rather than sell them. The income is greater and consumers get state-of-the-art products for a low monthly fee. We see more companies adopting this model for software. But, membership in the collaborative economy goes beyond simple SAAS.
If you remember the old milk model where a driver delivered fresh milk on a regular schedule, you get the idea. For instance, Dollar Shave Club sends members new blades on a regular schedule.
Need help harnessing the collaborative economy? Grab our newsletter or request a proposal to see how Hausman & Associates can help.
