Jeremiah Owyang is the Chief Catalyst at Crowd Companies, a brand council that aims to help big companies navigate the collaborative economy. Amy Cortese talked with him about the Collaborative Economy and how large companies are responding.
Amy Cortese: Describe the Collaborative Economy and what’s driving it.
Jeremiah Owyang: The Collaborative Economy is an economic movement that empowers people to get what they want in the physical world from each other. They can crowdfund new products, create them in the maker movement, and share what they already have in the sharing economy. Essentially, the crowd has enabled peer-to-peer commerce, allowing people to bypass inefficient corporations. This is both a disruption and an opportunity. The opportunity is that large corporations can use these same strategies, adjust their business models and benefit from this global change.
This movement is being driven by three major factors: societal shifts, like urban density and a focus on sustainability; economic drivers, such as economic disparities and an influx of venture capital funding; and technology enablers, such as social, mobile and payment technologies.
In particular, the Internet of Everything has been a major driver, as it enables people to find idle resources to activate in their local areas.
AC: How big is this? Compare the collaborative economy with other major economic and social shifts...
JO: This is bigger than social media. Social media was the first phase, where people could create media and then share it. This next phase, the Collaborative Economy, impacts the physical world. It’s organized into six discrete families of goods, services, space, food, transportation and There are over 9,000 companies doing some form of sharing.
So this is a long term movement, not a passing fad.
AC: This collaborative movement is, by nature, about empowering individuals. Your work explores an interesting question: what role do companies play when people can get what they need from each other? What’s your initial answer to that question?
JO: Companies must adapt their business models. Now that people want access to goods rather than owning them, companies must provide products for rent. For example, BMW's Drive Now program enables members to have access to new 1-series electric cars, rather than having to own them.
Secondly, it means companies must host their own marketplaces of used goods. Patagonia, for example, hosts its own Common Threads marketplace for used Patagonia gear.
Lastly, it means companies must work with the Maker Movement to co-create their own products. For example, GE collaborates on crowd-based product innovation with Quirky, a site that shares ideas, co-marketing, and even rewards with the makers who submitted ideas.
AC: Can you give us some examples of how companies are adapting to the new collaborative world?
JO: Many innovative brands have already joined in the movement. In addition to those mentioned above, companies like West Elm, Nordstrom and GE are allowing the crowd to design their products alongside them. Ford is partnering with Uber to give drivers discounts on cars. And Walgreens tapped TaskRabbit to deliver goods to homes, extending the brand promise.
AC: How does that change the nature of the relationship between company and customer – or what we used to call ‘consumer’?
JO: The term "consumer" is antiquated for this market. These "empowered people" are crowdfunding, making their own products, and sharing their homes and cars. They're more like micro-entrepreneurs than passive consumers. As such, companies should think of them as partners.
AC: This is one of those rare win-win situations that can benefit the planet as well as companies’ bottom lines. Explain.
JO: The Collaborative Economy ultimately results in the empowerment of people that are generating their own wealth and resources—freeing them from traditional 9-5 jobs. It also means more efficient use of the world's resources, as we use and re-use the same resources many times via this new sharing market.
There were 4 billion people on the planet when I was born. Today there are 7 billion. That’s expected to grow to 9 billion by 2050, and more people will be living in megacities. We don’t have a choice.
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