The concept of the collaborative economy, also called sharing economy, peer economy and maker movement has been around for hundreds of years.  Pre-industrial revolution, local communities used to collaborate and use each other's horses, ploughs and labour to bring in the harvest.  Roll on several hundred years to the post industrial revolution but pre-internet age, a, the collaborative economy didn’t go away, even with the event of big brands.  However, it was smaller:  the original co-operative or traditional building societies.  Now with the internet age, that collaborative economy has entered the domain of those big brands as users / participants take on multiple roles: customers, suppliers, distributors and even financiers.  Which, clearly has become a concern for big traditional brands.

I use the term ‘traditional brands’ as it would be unfair say 'big' or 'established' brands as those phrases would equally apply to  companies like AirBNB, Uber and Ebay who have revenue of $1bn, $2bn and $8bn respectively, plus employ thousands of people and thousands more as a result of their the eco-system they enable.

Examples of how consumers are shifting their buying power:

  • Rather than staying in a hotel, people rent a room from airbnb or a villa from HomeAway
  • Rather than rent an office, small business rent space by the hour from LiquidSpace or Pivotdesk
  • Rather than buy expensive equipment, builders etc. can now rent equipment from other organisations via YardClub
  • Rather than gain investment from banks or business angels, start-ups can raise investment via KickStarter r FundingCircle

And the list goes on for learning, personal loans, new bespoke goods, logistics and even health and food, as can be seen by Jeremiah Owyang's excellent Collaborative Economy Honeycomb diagram below:-

The collaborative economy market shows no sign of slowing.  Based upon a recent survey by Crowd Companies, it is estimated that in the UK, there are 23m people participating in the online collaborative economy and up to 64% of people share other non-online services such as car share. 

Recently, Ford announced at an event that they have now changed their vision to now read 'People working together as a lean, global enterprise to make people’s lives better through automotive and mobility leadership' , which includes 'mobility' for the first time.  The thinking behind this is that currently Ford have a 6% market share of the $2bn pa automotive market, but no market share of the $6bn pa mobility market, i.e. the other transportation services that are dominated by companies like Uber and Lift.

So how can 'legacy brands' compete in the collaborative economy?

Establish a parallel brand
Often consumers associate a brand with a particular product or type of service, it is extremely difficult to reposition the brand in the market and often easy to establish a new brand alongside an existing stream to brands and revenue stream.  A good example of this is BMW's and Sixt's Drive Now service that allows people to locate, drive and leave a BMW or Mini - in effect hiring a car from any location and leaving it in any location.  This is in parallel to their core business of building and selling cars

Open up their assets to be part of an existing platform
Often, companies can embrace the collaborative economy by offering its own assets via the same platform that could be seen as a competitor.  This has effectively been demonstrated by boutique hotels using Airbnb and houseswap. Another disruptive example could be Visa starting to leverage the Blockchain for some of their business activities.

Facilitate the market
This is where a company sees an opportunity within the sharing economy to associate its brand with collaboration etc.  An example of this would be a car manufacture or car rental company creating a platform that facilitates people car sharing.  There would be no revenue stream associated with selling or renting their cars, but their brand (and new revenue stream) is being associated with car sharing.

Clearly there are positives and negatives around brands repositioning themselves away from their classic business to one that relies on the collaborative economy.  It would be too big a statement to say they will ultimately fail if they don’t embrace it, but I think it’s fair to say that if they don’t already have the collaborative economy as a competitor, they soon will.

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CGI's Digital Practice

At CGI we work with clients to define the right digital transformation journey through to achieving its effective delivery. Our experience of delivering complex, mission critical systems ensures the strategy and roadmaps we develop and implement are realistic, achievable, and bring value to the organisation. ...

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