The sharing economy is on the rise as more and more consumers conduct business transactions through platforms like Airbnb to find lodging and Uber for transportation services. These companies have experienced explosive growth in the last couple of years and their financial value is skyrocketing among the investor community. Indeed, Airbnb’s valuation is at $25.5Billion in their attempt raise an additional $1.5 Billion in funding and Uber’s valuation of $50B is higher than 80% of the S & P 500 companies.
A sharing economy platform is one that leverages information to empower individuals and organizations with information that enables distribution, sharing and reuse of excess capacity in goods and services.
Sharing economy platforms take many different forms, including:
- Product-service systems – privately owned goods that are shared or rented out via peer to peer market places.
- Redistribution markets – pre-owned good are passed on from someone who does not want them to someone who does.
- Collaborative lifestyles – people with similar needs and interests banding together to share and exchange less-tangible assets such as time, space, skills, and money.
I also think of a sharing economy platform as having a number of basic elements. First, it uses technology to create a peer to peer marketplace. Second, they are “open” meaning anyone can exchange goods and services with anyone else. Third, goods and services are available on demand. Fourth, payment in full is often made only after the service is delivered in many sharing economy platforms. Fifth, fixed costs are converted into variable expense through the sharing of resources.
The success of Airbnb and Uber has not only led to the emergence of competitors in the lodging and transportation market but also the creation of sharing economy platforms in other industries. “Uberized” has become a commonly used buzz word in the business world by industry analysts and thought leaders. This word is often juxtaposed within the question… Is our industry the next to be Uberized?
To a large extent, High Tech Service & Support is far along the path to becoming Uberized. For example, product – service systems like Rolls Royce’s “power by the hour” form that basis of the “Servitization” trend which is gaining appeal in the High Tech Industry. In addition, redistribution markets have existed for decades within our industry; just think about all the businesses in the IT, Telecom, and Medical Electronics industries that trade used and refurbished equipment. Collaborative lifestyle solutions are provided through companies like Field Nation, Work Market, and PC-SOS that enable individual field service engineers and small businesses to become a contingent workforce for larger companies.
However, in many ways the High-Tech Service & Support Industry is not truly “Uberized”. For example, the platforms/solutions I’ve identified above are not truly peer to peer. They typically involve an intermediary or aggregator that manages the redistribution of products and services. Equipment owners (i.e., end-users) are not leasing or renting unused capacity to other users. Second, some of these models are not truly open. There is often a thorough vetting process involved in becoming a member or user of these platforms and solutions. On the other hand, the on-demand, pay for performance, and conversion of fixed cost to variable expense elements of the sharing economy do exist today within the High-Tech Service & Support Industry
Regardless of where you think our industry is on the sharing economy spectrum there is certainly room for new innovation. Now it is your turn. I’d love to get you answer to this question…. Is our industry (i.e., field service, reverse logistics) the next to be Uberized? Please cite examples and share your thoughts on why or why not the sharing economy can work in our industry. You can also feel free to schedule a strategy session if you have a great idea you’d like to vet or discuss with me in more depth.