Millennials Are Driving The Sharing Economy — And So Is Big Data
Need a ride? A room? Open an app and make it happen — in seconds.
I’m excited about the possibilities of the collaborative economy and about the role data plays in enabling this new model for doing business. Last week, at the CDO Summit In New York, Jeremiah Owyang, the Crowd Companies founder who made the summit’s closing presentation, was spot-on in his assessment that participation in the collaborative economy — which nearly doubled between 2013 and 2014 — is only going to keep growing. Societal, economic and technological forces are firmly in place to drive the collaborative economy, people are continuing to discover the benefits of peer-to-peer exchanges of goods and services, and resistance from traditional businesses is giving way to an understanding of the need to adapt and adjust to this new normal. Under these conditions, continued robust growth seems inevitable.
I’d like to take a closer look at where customer data and big data fit into the growth of the collaborative economy, as well as at how established companies are responding to it — but first let’s quickly review exactly what we’re talking about here. The collaborative economy (also known as the sharing economy, among other descriptions) is, in Owyang’s words, “an economic model where technologies enable people to get what they need from each other — rather than from centralized institutions.” Some of the more obvious examples include Uber and Airbnb.
Data makes the difference
In the collaborative economy, it’s not the idea of sharing that’s new; people have been doing that for eons. What’s different now is the introduction of technology into the concept — particularly easy-to-use digital technologies like location-based GPS that allow people to quickly make and respond to requests for goods and services.
Data is one component in the technology stack that supports the collaborative economy. Participants freely share their data to let others know what they need, and big-data algorithms are applied to make recommendations based on where there’s idle capacity available to meet needs. Data underlies the capacity calculations, social media integrations and digital technology interactions that together make on-demand access to things possible. Data is also the key to the ease with which startups can enter the economy. With data analytics to quickly analyze and anticipate needs, and cloud services to scale data and applications up or down depending on demand, the cost and time to go to market are minimal. It’s no wonder hundreds of startups are joining this space and finding funding to support their efforts.What was once a threat becomes an opportunity
Until recently, most traditional companies perceived low-asset, high-valuation, collaborative-economy startups like Uber and Airbnb as threats — perhaps not so much startups as upstarts, sweeping in and wreaking havoc on the established business-scape that took so long to build. Their first response was to fight these newcomers; taxicab companies worked to make services like Uber and Lyft illegal, and hotel operators attempted to do the same to Airbnb, to name two prominent examples.
As time goes on and it becomes increasingly clear that the collaborative economy isn’t going anywhere, traditional companies are starting to see the advantages of adapting their own operations to the collaborative model — and to realize that “sharing’s not just for start-ups,” as the Harvard Business Review put it.
Participation in the collaborative economy has taken several forms for traditional businesses. Some larger companies are acquiring startups; car-rental company Avis acquired the car-sharing service Zipcar, for example. Others are partnering with startups, as in the case of TaskRabbit working with corporations like Pepsi and Walgreens to deliver brands on demand.
One of my favorite examples of a mainstream business operating in the collaborative economy is BMW, which last year launched the DriveNow car-sharing service featuring BMW electric cars. It works much like any other service of its kind: Drivers who need a car for an hour or a day use digital technology to share data about where they are, what kind of car they want to use and where they want to go. Once they locate a nearby available vehicle that fits the bill, they pick it up and then bring it back or drop it off at another car-sharing location when they’re done.
That’s a great example of how data enables the collaborative economy. The other point it illuminates is how mainstream companies are adapting to the new reality of collaboration. What’s really revolutionary here is that car-sharing is being offered by a company in an industry — vehicle manufacturing and sales — that stands to lose business to car-sharing operations. But rather than compete or resist, BMW is embracing it as an opportunity. To paraphrase Jeremiah Owyang, instead of trying to sell a thousand BMWs, the company is trying to share one BMW a thousand times.
What’s next for this new way of doing business? It’s impossible to predict. Who would have thought ten years ago that a loose network of people with extra rooms and air mattresses would end up being a $20 billion company? But whatever the future holds for the collaborative economy, I can’t wait for it to unfold and see big data power this evolution.