(This article originally appeared in Ambition, the thought leadership publication by the Association of MBAs (AMBA) – in print and online – and has been republished on this website with the permission of AMBA.)
The sharing economy is causing the biggest societal shift since the industrial revolution. And it is the biggest business trend of all time. There is no sector or category of business that will not at some point be affected by the sharing economy.
What many people don’t know about the sharing economy is that, ultimately, the sharing economy is very broad. It’s an umbrella term meaning a socio-economic system that is built around the sharing of human and physical resources. This has an impact on every aspect of our lives.
Subsets of the sharing economy include crowdfunding, the gig economy, the circular economy, collective purchasing and collaboration. Within this, there are specific business aspects and ways that businesses are being impacted and disrupted.
However, the sharing economy isn’t only about business. One of the things that makes the sharing economy unique and why people take such an interest in it is because it not only creates economic and commercial value, but it also creates social and environmental value. The value that the sharing economy creates in different areas is one of the things that make it distinct.
When people engage and participate in the sharing economy, their initial motivation is financial. They either want to make money or save money. The reason people return, reuse and connect in some way to the sharing economy is because of the experience that the sharing economy gives.
In terms of the social value, people can make friends and can become part of the community. The environmental value of the sharing economy means that what you do has a benefit to the planet. For example, if you are car-sharing, not only do you have the opportunity to connect and meet other people, but you are also lowering carbon and pollution and making a positive contribution to the planet. Also, the experience itself is something that rises above the commercial experience.
The growth of the sharing economy
In many ways, the ideas behind the sharing economy have always existed – to share is to be human and there have always been forms of sharing.
However, innovations in technology have been fundamental to the growth of the sharing economy. Technology has given the sharing economy the ability to grow as well as a method to connect and share with strangers on a scale never previously imagined – across geographical boundaries with people whom we wouldn’t ordinarily have reason to come into contact.
Technology has also enabled the identification of surplus and idle assets and has created a means to connect these assets to those who need these resources the most. Without technology, this simply could not happen.
The sharing economy is evolving and changing all the time. Through these changes, we will see the impact of disruptive ideas.
People are figuring out how they can participate in the sharing economy, what it means to their lives, and how it can be applied in different contexts such as to communities and business.
I think some of the changes that we are likely to see in the future are ways in which the sharing economy is being adapted to benefit people and planet. We have seen the rise, for example, of platform cooperatives such as Airbnb and now we are seeing the rise of new platform cooperatives that are creating value for its members and those who are delivering the platform cooperative’s services themselves.
And though these new platform cooperatives provide an anecdote in terms of what we have seen in the bigger brands in the sharing economy, their value is still retained within a small group of investors and shareholders. This approach means that power, resources and value are shared with those who create it. What this ends up doing is creating a bigger network effect and these kinds of businesses will be able to grow even faster and more sustainably, look and feel very different, and the user experience will be better because the users will share in the value creation.
In general, businesses in the sharing economy are moving towards social impact and social value creation. This means businesses will become purpose-driven in the sharing economy. Until now, these businesses have been relatively small. That does not mean that some of the bigger brands do not create social value, but these will be the businesses that put the social purpose into the front seat.
Impact on employment
The sharing economy has already disrupted the labour market. For example, it has derived the gig economy and a new type of flexible working.
What people do not understand is that the people who are working in the sharing economy could have been disenfranchised, previously, and unable to enter the jobs market; for example, due to discrimination. This kind of work can offer an opportunity for some.
However, it is not the right form of work for everybody as it is highly entrepreneurial. To thrive, you need an entrepreneurial mindset and should be able to adapt to self-employment. This is a new way of working and it does not tick traditional boxes.
There is also a debate around the exploitation of workers in the sharing economy and I believe that this can be solved through platform cooperatives, whereby those delivering platform cooperatives’ services benefit through being shareholders and co-owners of these businesses.
Despite this, working in the sharing economy isn’t for everybody, but one thing we can do is to provide a lot more education and support around it. We are seeing a number of different businesses supporting workers in the sharing economy.
A bigger picture of value
GDP is how we put value on the global economy. However, GDP does not consider all the other value creation that exists such as social value creation or environmental value creation.
In the sharing economy, economic, social and environmental values are all accounted for. The sharing economy gives a bigger picture of value and is transparent.
It also has the potential to solve some of society’s problems such as poverty, but at the same time, it’s very much about an understanding of what the sharing economy means and how it can be positively applied. For example, issues such as food poverty could potentially be eradicated given an understanding that we have a huge amount of surplus food that is going into landfill. This food could instead be distributed to the people who need food. The sharing economy has the potential to solve some of the biggest challenges of our time.
The negatives
The negative aspects of the sharing economy come down to whether or not its constituent companies have a social purpose. If they do not, the sharing economy only serves to fail.
Criticism has been directed at bigger brands in the sharing economy that operate in the same way as multi-lateral corporations that are only interested in shareholders. This is a dangerous proposition because if you look at companies in the sharing economy that have grown considerably in a short amount of time, and compare them to traditional companies, the potential dangers are far-reaching because those businesses can create so much more profit and value for a smaller number of people in a shorter amount of time. They could do more damage than traditional organisations. The dangers of the sharing economy are therefore around miseducation, misunderstanding, misinformation and the misuse of ideas.
I believe that the future of the sharing economy is bright, however, we still have a long way to go in terms of education, what the sharing economy means and how it can be applied.
This is an adapted version of the article that was published on AMBA’s website, written by Benita Matofska; a speaker, social innovator, agent provocateur and global sharing economy expert. She is also the Founder of The People Who Share, a social enterprise that helps companies participate in and practice sharing economy approaches.
