In the last few years, we have been experiencing new business models emanating from sharing of resources that has been made possible by the connected world phenomenon and the social media technologies facilitating engagement with the interested communities. The examples of platforms created for accessing properties created by hotels or individuals for the benefit of customers who may be in need or easy, cost effective and reliable inter city transportation service facilitated by bringing together car owners, drivers and customers who wish to commute and car pooling for facilitating small groups of individuals. These people have similar requirement of travel and have been emulated by several others who have been creating innovative methods of leveraging already available physical resources and designing business models through sharing of such resources with customers far and wide. This trend is expected to touch many other dimensions of life and bring about a sea change in the investment and buying patterns concerning ownership of assets.
While so far most of the examples experienced have been on account of new business models created by entrepreneurs on the strength of digital technologies, these experiences are now being studied with interest by corporate firms to examine how they could be adopted in the context of their respective businesses. Standalone online retailing businesses such as Amazon.com or flipkart.com got the established retailers such as Barnes and Noble or Bigbazaar to rethink their business models.
Similarly inspired by the transformation of personal life and interactions through Facebook, Twitter and mobile apps, corporates started considering these channels for building customer intimacy. Of late, we are finding many corporates adopting the cloud infrastructure moving away from the investments of their own in large datafarms and similarly adopting pay per use model for software. In the next phase, we are likely to see businesses considering options for getting more out of their investments in fixed assets by adopting the shared assets model, thus changing the investment and usage patterns.
Let us examine the opportunities for organisations to rethink about their resources which could be fully or partly converted into shared resources. Office spaces have traditionally been considered as 100% owned or rented on 24/7 basis. Most organisations do not use the space 24/7 or during weekends and such infrastructure could be available for renting out. Organisations which own their own vehicles to transport employees or material may be willing to find other users for them during the weekends.
Companies that require specialists, may not want to employ them full time on their rolls and instead would be willing to hire their services from organisations who do not have 100% utilisation. Even though companies employ large number of smart professionals, recognising that there could be smart ideas and concepts that could come from outside. This has prompted many of them to launch innovation contests inviting people to share their ideas and have adopted some of them into their business models or have converted them into apps that benefit their customers. Even companies selling premium products are rethinking their business models catering to the millennial mindset of not wanting to own high value products but use them as and when required.
PwC’s projections show that five key sharing sectors—travel, car sharing, finance, staffing, and music and video streaming—have the potential to increase global revenues from roughly $15 billion today to around $335 billion by 2025. While companies are willing to cater to their requirements through shared assets model, there are associated challenges with such models. For instance, insurance companies would have to rethink their approach to insurance as the ownership and temporary usage by several consumers would create complexity in defining the terms and premiums for insurance contracts. Instead of going through detailed background checks and verifications of previous experiences of employees before hiring them, when companies consider the option of hiring the services of staff on as and when required basis, they would have to rely upon the online reputation and the recommendations made by the peers in the community that they are part of. Recruitment managers have to build specialist skills in recruitment through such channels and knowledge of the community profiles to minimise the risks of wrong hires.
Trust is an important factor while relying on the social communities to recommend or influence in the decision making process. Hence for companies to promote shared products and services, establishing the identity of the individual would be critical. Identity verification methods are still at a nascent stage and asking customers to provide proof of their identity through document support is not easy yet. More comprehensive and reliable methods would be required as more and more companies start adopting the sharing model.
Corporates would have to deal with the high expectation of quality and reliability from the customers that they serve with the ‘shared model’ as they would want the best for a one time or limited experience of the product/service. This poses a challenge for product designers and brand managers as they need to consider the positioning of their products, rethink features and value they would build into their offerings and convince their buyers of their utility for themselves or for the stakeholders who would be a part of the sharing community.
In order to be successful in the sharing economy and execute the strategy well, ultimately seamless technical execution would be crucial for success— one that facilitates ease of transacting and the positive experience thereof which would lead to future and sustainable business.
The writer is CEO, Global Talent Track, a corporate training solutions company