World Economic Forum Young Global Leaders Sharing Economy Position Paper June 2013

23,410 views

Published on

This paper seeks to place the sharing economy on the global agenda for companies, governments, communities and entrepreneurs alike. It is presented by the WEF YGL Sharing Economy Working Group which is part of the Circular Economy Innovation and New Business Models Initiative.

The goal of this paper is to explain what the sharing economy is and why it holds potential, focusing on key principles, drivers, trends and models. It maps out critical factors and conditions required for access-based business models to scale up, and identifies both opportunities and possible challenges to their success. It also embeds the sharing economy within a larger context and movement focused on resource efficiency, sustainability, changing demographics and user behaviors.

The sharing economy represents one of several substantive investigations by the WEF community into new disruptive business models that are impacting industries, value chains and systems around the world. It is intended to serve as an input to future WEF summits, sessions and engagements focused on the future of business, cities, technology, demographic shifts and a variety of sector-specific verticals.

World Economic Forum Young Global Leaders Sharing Economy Position Paper June 2013

  1. 1. An Initiative ofWorld Economic ForumYoung Global Leaders TaskforceCircular Economy Innovation & New Business Models InitiativeYoung Global Leaders Sharing Economy Working GroupPosition paper2013
  2. 2. 2ContextThis paper seeks to place the sharing economy on the global agenda for companies,governments, communities and entrepreneurs alike. It is presented by the WEF YGL SharingEconomy Working Group which is part of the Circular Economy Innovation and NewBusiness Models Initiative.The goal of this paper is to explain what the sharing economy is and why it holds potential,focusing on key principles, drivers, trends and models. It maps out critical factors andconditions required for access-based business models to scale up, and identifies bothopportunities and possible challenges to their success. It also embeds the sharing economywithin a larger context and movement focused on resource efficiency, sustainability,changing demographics and user behaviors.The sharing economy represents one of several substantive investigations by the WEFcommunity into new disruptive business models that are impacting industries, valuechains and systems around the world. It is intended to serve as an input to future WEFsummits, sessions and engagements focused on the future of business, cities, technology,demographic shifts and a variety of sector-specific verticals.
  3. 3. 31 Mary Meeker 2012 Internet Trends report update: http://www.kpcb.com/insights/2012-internet-trends-update2 http://www.forbes.com/sites/tomiogeron/2013/01/23/airbnb-and-the-unstoppable-rise-of-the-share-economy/How Did We Get Here,and Why Now?The world is at an inflection point.Globally, economies are strained ascompanies and governments alike seekto “do more with less.” Many naturalresources are no longer plentiful,and some are at risk of exhaustion.Population and urbanization continueto rise, more people are ageing whileyounger cohorts are also booming,and few cities are equipped to dealwith what such changes will bringabout in terms of public services andcommunity-building.Meanwhile, digital technologies areenabling people to connect directly withone another in all kinds of meaningfulways and with fewer intermediaries.We’re also discovering a large number ofidle resources and underutilized assetswhich could be put to better use. TheMillennial generation is making it clearthat they do not wish to inhabit a worldwhich is depleted of value – and that,by and large, they want to own less, bemore connected with others and part ofsomething bigger than their individualselves. We are moving from an asset-heavy generation to an “asset light”lifestyle.1 These trends are spurringmassive innovation, creating newmarketplaces and redefining the natureof business.This inflection point is unique. The worldis faced with a confluence of needs– frugal economics, environmentalsustainability and loss of community– with a variety of enablers includingtechnology, social networks, andshifting cultural factors. Thanks toadvances in technology, this confluenceis taking shape on a scale that’sunprecedented in history.Against this backdrop, the sharingeconomy (also called collaborativeconsumption and the collaborativeeconomy) is gaining momentum in waysthat potentially hold the keys for thefuture. At a basic level, sharing is one ofthe oldest behaviors known to humans.It is natural and intuitive; humanityhas been doing it throughout historythanks to a variety of motivations.When combined with the power ofnew technologies, particularly mobileplatforms in today’s global village,collaborative models of consumption,production and marketplace creation– such as Airbnb, Etsy, TaskRabbit,RelayRides and many others – stand toreinvent and redefine these timelessbehaviors on a scale and in ways neverpossible before.The sharing economy is complementaryto the circular economy. The circulareconomy refers to an industrialeconomy that is, by design or intention,restorative and which focuses oncradle-to-cradle principles and materialssustainability. Resources are used toenable high-quality design withoutcontaminating the biosphere.Both the sharing economy and thecircular economy focus on efficient andsustainable resource use by individuals,companies, and governments. This paperfocuses specifically on the sharingeconomy, while containing insights thatare relevant for the circular economyand ecosystem as well.What Is The SharingEconomy?A Brief HistoryThe sharing economy representsone node of a much broader seriesof shifts underway dating back tothe Industrial Revolution and, muchlater, to the invention of the Internet.Just over 15 years ago, collaborativeconsumption pioneers such as eBayand Craigslist launched, capitalizingon our newly found ability to use theInternet to match millions of haveswith millions of wants, instantly andefficiently. People of all ages becameempowered not just to be buyers,but also sellers of things throughthe explosion of peer-to-peer (P2P)commerce. In so doing, they were ableto unlock the idling capacity – theuntapped social, economic andenvironmental value of underutilizedassets – that can now be redistributedthrough technology platforms.Moreover, as well as being able totrade and exchange with othersonline, people started to experiencea different relationship to theirmaterial possessions, especially: thingsthat were more affordable to access(rather than own outright); things thatwere expensive to maintain; things theydidn’t really want; or things that wereused infrequently. This has resultedin a broader shift away from massconsumption and an individual one-person, one-unit, one-purchase, must-own mentality.About a decade ago, companies suchas Zipcar started to capitalize onthe idling capacity of cars, which sitidle on average 23 hours per day, bydeveloping new mobility platformsthat charge for usage. Today there areliterally hundreds of ways one can sharedifferent kinds of assets: space, skills,stuff and time. Companies now caterto everything from accommodation onAirbnb to office space on LiquidSpace,from cars on RelayRides and Getaroundto pets on DogVacay, and from skillson SkillShare to travel experienceson Vayable. These companies aregrowing quickly: it is estimated thatin 2013, more than $350 billion inrevenues will be generated fromtransactions in the sharing economy.2In addition to these relatively newcompanies, there are several oldertypes of companies and organizations– such as libraries, cooperatives andneighborhood clubs – that have aheritage of facilitate collaborativeconsumption and production. Many ofthese organizations are experiencingincreased membership and growth, andsome of them are among the largestemployers worldwide. Collaborativemodels of consumption, production, andmarketplace creation exist across thevalue spectrum.
  4. 4. 4Trust and reputation in the sharingeconomyTrust and reputation are essential for the sharing economy.Trust is the social glue that enables collaborative consumptionmarketplaces and the sharing economy to function withoutfriction. Reputation comes from the trust of people anddevelops over time as people interact in a repeated andconsistent manner with one another.People develop a feeling of trust based on their personalassessments of many factors. Trust operates on manylevels: inner-personal, relational, organizational, market,and societal.4Reputation derives from observations and experiences overtime. We can work to manage reputation, but in the end ourreputation comes from the judgments that other people makeabout us. Various web-reputation systems have been built andanalyzed,5 although there remain significant opportunitiesfor such platforms and networks to evolve within and for thesharing economy specifically.3 Rachel Botsman and Roo Rogers, What’s Mine Is Yours: The Rise of Collaborative Consumption HarperCollins (2010) as featured in Forbes Magazine, 2013.4 Kaliya Hamlin, The Trouble with Trust and the Case for Accountability Frameworks: http://www.identitywoman.net/the-trouble-with-trust-the-case-for-accountability-frameworks5 Christopher Allen, Life with Alacrity Collective Choice Rating System: http://www.lifewithalacrity.com/2005/12/collective_choi.html and Randy Farmer,Building Web Reputation Systems: http://shop.oreilly.com/product/9780596159801.doEnablers and ParametersRachel Botsman, co-author ofWhat’s Mine Is Yours: The Rise ofCollaborative Consumption and oneof the principal thought leadersof collaborative consumption,outlines the sharing economy asdriven by three primary benefits:• Economics: more efficient andresilient use of financial resources;• Environment: more efficient,sustainable and innovative use ofnatural resources; and• Community: deeper social andpersonal connections among peopleAll of which are enabled and scaledby technology platforms. Technologyprovides the efficiency to match havesand wants seamlessly and economically,and the social glue to build trustbetween strangers (in both online andoffline settings).Collaborative consumption hasbeen defined as “the reinventionof traditional market behaviors –renting, lending, swapping, bartering,gifting – through technology, takingplace in ways and on a scale neverbefore possible.”3 The parameters forits success are broad.Successful models are both monetized(such as Airbnb, which has booked morethan 10 million nights and received$112 million in venture capital fundingin 2012 on a $1.2+ billion valuation;guests pay hosts a nightly fee) andnon-monetized (such as CouchSurfing,which has 5+ million members aroundthe world and is based on a cultureof reciprocity; no money exchangeshands directly, and instead guests areexpected to host fellow guests whenpossible). Both models tap into latentsources of value, create new value, buildcommunity and spur innovation. Bothare highly scalable, even though moneydoes not flow in the same ways (if atall). Both are redefining the nature oftravel, tourism, community-building andbusiness in a new economy.Sharing EconomySystems, Models andSectorsWithin the sharing economy andcollaborative consumption, there arethree principal systems: 31. Redistribution Markets redistributethings from where they are notneeded to someone or somewherethey’re needed.• Examples include eBay (auctionsite), Craigslist (local classified ads),Swap.com and niche marketplacessuch as 99dresses (clothes), thredUP(children’s clothing), yerdle (various)2. Product Service Systems allowmembers to pay for the benefit ofusing a product without needing toown it outright.• Examples include Zipcar, Getable,Snapgoods, RelayRides, City CarShare,Velib, bicycle sharing platforms3. Collaborative Lifestyles platformsallow for the sharing and exchangeof less tangible assets such as time,skills, money, experiences or space.• Examples include Skillshare, Airbnb,TaskRabbit, Lending Club, LiquidSpace,Vayable, time banks and localexchange systems such as Sel du LacIn addition to these three systems,there are a variety of related models ofcollaborative production, transaction,investment and marketplace creation.Well-known examples include Wikipedia(crowdsourced online encyclopedia),Kiva (crowdfunding for microenterprise),TechShop (hardware hacker space) andKickstarter (crowdfunding), and lesser-known variations such as Rang De,Milaap, and LendFriend (financing forfriends and family).
  5. 5. The Sharing Economy Universe.Source: What’s Mine is Yours: The Rise of Collaborative Consumption. HarperCollins (2010)as featured in Forbes Magazine, 20135
  6. 6. 6Crowdfunding and the sharing economyAs the name implies, crowdfunding refers to a new andquickly growing form of financing in which individualscan fund projects, products and causes on a peer-to-peerbasis facilitated by digital technology. A variety of typesof crowdfunding sites are available; Kickstarter, Indiegogo,Crowdrise and RocketHub are some of the larger platforms,although new entrants are arriving in new geographiesfrequently. Each platform provides unique terms and/orfocuses on a unique target market. Pending the JOBS Actimplementation (see below), equity crowdfunding – for afinancial return – will also be feasible.Use of crowdfunding as a financing mechanism is growingdramatically. In 2011, a total of $1.1 million was raised on ahandful of crowdfunding sites. By the end of 2012 this numberhad risen to $2.7 billion across nearly 600 platforms and morethan a million campaigns across the globe. In 2013 the rate ofincrease is expected to be even higher.In the United States, the Jumpstart Our Business Startups(JOBS) Act was passed by President Obama on 5 April2012. It provides limited exemptions from securitieslaws which permit a small business to raise up to $1million per year via crowdfunding. The JOBS Act has beenheralded as a step in the right direction to new formsof P2P and democratized fundraising structures, thoughthe Securities and Exchange Commission (SEC) has yetto pass the necessary rules for its implementation.6 http://www.slideshare.net/NESTA_UK/rachel-botsman-purpose-with-profits7 Bendell, J. and T. Greco (2013) Currencies of Transition, in McIntosh ed. (2013) The Necessary Transition, Greenleaf Publishing. http://www.greenleaf-publishing.com/content/pdfs/TNT_bendell.pdfDepending on a company’s goals,they may wish to monetize theirbusiness model in a variety of waysincluding service fees, membershipand/or subscription fees, and flator tiered usage fees. Crowdfundingsites may provide a financial return,social return, or a product or servicein exchange for investment.6With or Without Money?It is important to keep in mind thatnot all organizations that enablesharing may ask for participantsto transact using money. In a non-monetized setting, value is oftentracked and exchanged usingsystems of points or credits instead.Systems such as time banks or localexchange trading systems use such anapproach. They may generate incomethrough fees, advertising, or evenbrokering exchanges, but many relyon voluntary contributions of timeand funds from those that supportthe practice of “moneyless” sharing.Key to their growth is the availabilityof free open source software so thatthe cost of establishing and runningsuch systems is low. The potentialof such systems is that participants’ability to share is not restricted byhow much money they have.7All of these systems – both monetizableand non-monetized – are enabled inturn by four key principles that enabletheir existence and growth:• Trust between strangers;• Belief in the commons, and effectivemanagement of common resources;• Idling capacity; and• Critical mass of users, customers,consumers, producers and/or membersOver time, there has been an evolutionin the variety of sharing economybusiness models. There are two mainmodels: business-to-consumer (B2C)and peer-to-peer (P2P). Zipcar isan example of a B2C company; thecompany owns the inventory andcoordinates access to it throughtechnology. RelayRides and Etsyare examples of P2P companies;the company never produces, ownsor maintains the inventory that’sshared. They simply facilitate thetransaction, which takes placedirectly between individuals.With P2P sharing platforms, people whohave an asset (car, home, skill, etc.) canput it into shared use and offer it topeople who are looking for that asset.Exchanges increase the use of the asset,offset the cost of owning it, and do sowhile consuming fewer resources andpromoting local entrepreneurship.Although still fewer in number,business-to-business (B2B) modelsof collaborative consumption alsooffer growth opportunities. In a B2Bsetting, a company provides a serviceto another company (usually online) toenable them to share their inventory,are increasing. Companies like Getableand LiquidSpace provide examplesof how businesses may rethink theirapproach to B2B transactions.The sharing economy can be manifestin almost every sector of society andcorner of the globe. Sectors which haveexperienced robust traction and interestinclude accommodation, transportation,tourism, office space, financial servicesand retail products. Areas wheresignificant growth is expected includeP2P car sharing, ridesharing, errandmarketplaces, P2P and social lending,and product rental.
  7. 7. The Complete Picture.Source: What’s Mine is Yours: The Rise of Collaborative Consumption. HarperCollins (2010)7
  8. 8. 8Generally speaking, collaborativeconsumption businesses work best whenthey meet certain criteria:• It is important for the asset tobecome “liquid,” i.e. easy to share and/or distribute; this is typically the casefor spaces and skills.• It is also particularly good when theasset has high idling capacity, i.e. lowfrequency of use, such as cars or sparespaces (commercial and residential).• Assets that are correlated with a highpercentage of income outlay or areexpensive to own outright, such assolar panels and luxury goods, due topotential cost savings and/or incomelimitations.• Assets that quickly become obsolete,such as baby goods and maternity-related clothing and products.• Assets that have no demand or supplylimitations, or whose value increasesbecause of the fact it is shared (suchas travel experiences), are otherhallmarks of this space.Longevity and GrowthPotential: Is theSharing Economy HereTo Stay?The sharing economy continues togrow at almost breakneck speed,though its course is still early. Totalventure investments in collaborativeconsumption startups topped $431million in 2012, continuing an upwardtrend dating back to 2007.Over ten million nights have beenbooked on Airbnb. The P2P financiallending market is estimated to reach$5 billion by the end of 2013,8and car sharing revenues in NorthAmerica alone will hit $3.3 billion by2016.9 The global P2P rental marketis valued at $85 billion, the vacationrental market is valued at $85billion, and the ride sharing industryis valued at $117 billion. From aneconomic perspective, collaborativeconsumption looks promising.In addition, big brands and establishedcompanies are beginning to understandthe drivers and demographic shiftsunderway and entering the sharingeconomy. They are doing this in avariety of ways. In January 2013, Zipcarwas acquired by Avis for $500 million.General Motors Ventures has investedin RelayRides. BMW has DriveNow andDaimler launched Car2Go; both arecarsharing services facilitated throughmobile technology (and in some casesfocused on electronic vehicles). Amazonoffers textbook rental services. Walmartrecently announced its own white-labelP2P delivery service. Large companiesare looking at crowdfunding as a sourceof innovation capital, and some insurersare developing new forms of insuranceto cover sharing-based transactions.What is at play in the sharing economy,however, goes beyond basic economics.Aside from these benefits, the sharingeconomy is also part of a larger processaround value creation in the neweconomy: value that is environmentallysustainable and connected to localeconomies. The sharing economyenables local entrepreneurship andlocal economic investment, becausetransactions accrue value at the point ofuse. As a result, sharing-based businessmodels hold huge potential for publicand private sectors alike.Public Innovation and“Shareable Cities”The sharing economy provides myriadavenues for public innovation andbenefits for the public sector as a whole.Examples include Landshare, GoodGym, Southwark Circle, city-sponsoredbike sharing programs and a varietyof open government data initiatives.Cities are arguably the largestsingle beneficiary, as collaborativeconsumption and technologycan help redefine public services,infrastructure and civic engagement.Imagine a “shareable city.” It couldbe a city in which car sharing werethe norm, thereby reducing trafficand pollution while freeing up spaceand disposable income for everymember of the community. Or a cityin which office spaces were morewidely accessible, matching mobileworkers with appropriate space andenabling people with space to boosttheir revenues simply by sharing thisunderutilized asset. Or a city in whichresidents can teach each other valuableskills, help with projects or even runerrands – saving money, using resourcesresponsibly and connecting with oneanother in the process. Cities that cantake advantage of platforms availablefor collaborative consumption will tapinto vast new opportunities to createjobs, attract talent, promote localinvestment and community-building,and offer a healthier place to live.Local and national governments haveunique roles to play to understand theopportunities available and promotemodels that use resources moreefficiently. Many governments todayare not even aware that the sharingeconomy exists, and even when theydo, they are uncertain about how tonavigate it best. It is critical to getpublic sector engagement to ensure anappropriate “enabling environment” fornew businesses to thrive.In addition to start-up companiesin the sharing economy, establishedcompanies can be key promoters ofbusiness innovation. Although sometraditional and large businesses mayfeel threatened by collaborativeconsumption drivers – includingcompanies built on an “ownershipeconomy” and those that depend onfrequent, disposable purchases – theyare nonetheless looking at a future ofchanging demographics and consumerpreferences. For example, GeneralMotors partnered with P2P car sharingservice RelayRides and GM’s OnStardivision to enable car renters to unlockGM cars (rented on RelayRides) withtheir mobile phones.8 Gartner Group Banking and Investment Services Press Release http://www.gartner.com/newsroom/id/1272313 (Jan. 5, 2010).9 Frost & Sullivan industry report, Carsharing: A Sustainable and Innovative Personal Transport Solution with Great Potential and Huge Opportunities (2010).
  9. 9. Source: Collaborative Lab.Profit$8,931 USD per yearAverage amount made byRelayride’s frequent renters$200 USD per monthRentoid renting out videogaming systems$21,000 USD per yearAverage amount that a New Yorkermakes renting their space on Airbnb$15,000 USD per yearAverage amount that a Taskrabbiterrand “runner” makes in a yearCollaborative consumptionmarketplace• Murfie.com• Swap.com• Airbnb.com• Crashpadder.com• Skillshare.com• Taskrabbit.com• Relayrides.com• Parkatmyhouse.comParking & transport Skills & chores A spare bed DVD’s, books & gamesThe Collaborative Home9No amount of marketing will force acustomer to buy something that canbe shared. Rather, smart companies– and progressive governments – willembrace the sharing economy andintegrate it into their business lines andcommitment to local citizens.In addition, companies andorganizations in the sharing economyare experimenting with new metricsfor enabling trust and exchange. Theseinnovations raise new possibilitiesfor how low income individuals orbusinesses with cash flow difficultiesmay find new means by which toexchange goods and services –effectively trading without money.Therefore the sharing economy providesnew opportunities for enabling localeconomic development and evenpoverty reduction, underscoring itsrelevance and potential for communitiesand business in myriad markets aroundthe world.Collaborative homeTake a look around you. Do you havea spare room that sits empty formost of the year? Perhaps you arelike the average car owner whosevehicle sits idle for 22 hours a day.We are surrounded by spaces, skills,time, gardens, and stuff that all have“idling capacity.” With more and morecollaborative consumption marketplaceslaunching, we can now swap, barter,rent or share these assets.
  10. 10. 10Seoul, South Korea: The self-proclaimed“sharing city”The Seoul Metropolitan Government has declared the SharingCity as a new city paradigm. On 20 September 2012, thegovernment disclosed its plan for promoting the “SharingCity Seoul” project, which includes 20 sharing programs andpolicies for generating or diffusing infrastructure to promoteand enable sharing-based platforms.The government believes that focusing on models topromote sharing provides a new alternative for reform thatcan “resolve many economic, social, and environmentalissues of the city simultaneously by creating new businessopportunities, recovering trust-based relationships, andminimizing wastage of resources.”The government has identified several roles itwill play in the development of infrastructure forsharing companies, supporting companies and non-profit organizations, spreading participation bycitizens, and prioritizing certain programs focused ontransportation, welfare, culture and the environment.Following through on its declarations, the Seoul MetropolitanGovernment passed Act No. 5396 (Act for Promoting Sharing)on 31 December 2012.Implications,Challenges andRecommendations:The Path ForwardThe sharing economy holds greatpromise. This implies a more sustainablefuture, efficient asset utilization,stronger social and community ties,new marketplace creation for productsand services that never had a marketbefore, and an expanded definitionof work and entrepreneurship.However, alongside these potentialadvantages come challenges, potentialpitfalls, and calls to action. The sharingeconomy could unravel for a variety ofreasons, all of which are surmountable.The key areas that impact sharingeconomy prospects, and thereforewhere thoughtful and concerted actionis most important, are:• Marketplace creation and criticalmass: for sharing economy companiesto succeed, it is essential that theyhave enough people to participateand enough supply and demand toprovide convenience and choice.This is typically easier to overcomein large cities, which have higherpopulation densities and more assetsto share. However, for collaborativeconsumption to go mainstream,platforms should be available insmaller cities as well.• Legal, regulatory and policy issues:Many existing public policies andlaws can help or hinder the sharingeconomy. Equally important, manypolicies drafted in the ownership eraare silent about sharing – creatinga “gray area” in which activitiesare neither legal nor illegal. Todaythe most contentious issues focuson taxation, insurance, zoning andlicensing, and consumer protection(including personal data) issues. Inorder to realize the full potentialof these new business models, it isrecommended to develop a paralleland complementary set of rules foraffected companies. In addition,many cities have implemented or areconsidering implementing SharingEconomy Working Groups to navigatethis new territory. Enlightened cityleaders can champion this charge.• Designing for sharing: This hasmultiple implications for companiesincluding product developmentand servicing, branding, marketing,customer loyalty, innovation strategyand technology investment. It alsorequires enabling inter-operabilityof platforms and portability of data,including relationships. One caneasily imagine a car or appliance thathas been specifically designed to beshared rather than owned outright;it does not require developing anentirely new product, but it doesrequire thoughtful modifications anda focus on durability, sharing logistics,and Cradle-to-Cradle principles. Forexample, one could imagine a “digitalbirth certificate” for products inshared use.
  11. 11. 11
  12. 12. 12• Personal data and identity:Companies must also addresspersonal data identity concerns andacknowledge that, in many cases, it isno longer about selling the products(or “stuff”) and shift their focus toproviding ecosystem services tosupport the sharing, maintenance andfunctionality of these items.• Cultural barriers: Sharing economymodels will thrive where there isan attitude that deems sharing andcollaboration to be acceptable – andeven preferable to – ownership oroutright competition. This requiresa mindset that’s aware and open tothis kind of innovation, prioritizesresource efficiency, and understandsthe limitations that the world facestoday. There are potential culturalbarriers, for example, in developingcountries with a rising middle classwhose goal is to own (a car, home,motorbike, etc.) outright. Particularlyin megacities in the developing world,these aspirations must be balancedagainst the environmental and socialpressures that stand to limit the well-being of the same communities.• Incumbent backlash: Givencollaborative consumption’s potentialto disrupt existing industriesand ways of doing business, it isimportant for established companiesto understand what their optionsare and how best to react. Thereare two typical reactions.In the first case, companies see thedisruption and, rather than ignoringit or trying to shut it down, theyembrace the potential for innovationand begin to engage: in other words,they show some willingness to disruptthemselves. A good example of this isthe automotive industry. Traditional carmanufacturers have partnered with carsharing companies (GM and RelayRides)and developed their own car sharinginitiatives (BMW, Daimler), while ridesharing services can work with taxi cabcompanies to maximize utilization ofunused cabs (Uber). They have begunto look at a future in which customersare more interested in having access to“mobility services” than owning a car,and developing offerings accordingly.In the other case, established companieshave been using collective efforts tooutlaw sharing economy-focused andP2P models. The hotel industry fallsinto this category. They often focus onissues such as taxation of residents orinstituting minimum stay requirementsfor people using P2P accommodationplatforms (which would not apply in ahotel setting). These efforts tend to behighly reactive and focused on short-term unknowns, rather than lookingat long-term cues and drivers of whypeople opt into P2P platforms such asproximity, accessibility, affordability,and uniqueness of the asset.How to accelerate the sharingeconomy: open standards for personaldata and opportunities to acceleratethe sharing economyThe computers in our pockets and data in the cloud are enablingthe growth of the sharing economy. “Personal clouds” areemerging for people to store their personal data. This personaldata has been identified by WEF as a new asset class.10This asset – including social graphs the history of sharingtransactions, and the data about what individuals have thatthey can share (e.g. things, time, skills) – is a key component ofa new economy that harnesses new sources of value.In this context, services which use open standards to accesspersonal data clouds will have an advantage over services basedon proprietary standards and “walled gardens.” Adopting openstandards supports people to provide information in a commonformat. Practically speaking this is what SMTP does for e-mailand HTML does for web pages.With open standards in the sharing economy, people canconnect with multiple sharing networks without having tore-enter all of their data. This makes it easier to build onlinereputation and credibility, which helps to build and scale userbases, and it enhancing user choices rather than creatingchoice barriers.10 World Economic Forum Rethinking Personal Data Project http://www.weforum.org/issues/rethinking-personal-data)
  13. 13. 13
  14. 14. 14Looking to theFuture: EvolutionaryBusiness Models andthe CollaborativeRevolutionThe sharing economy seeks to tapinto and unlock idle assets in order tocreate new wealth and use resourcesmore sustainably. It is part of a broaderseries of trends related to collaborativeconsumption, production, supply chainmanagement and more that standto evolve and revolutionize the waybusiness is conducted around the world.The adoption of sharing economyprinciples, systems and drivers has thepotential to reshape business modelsand create valuable opportunities forcompanies – large and small, start-upand established – who can understandand harness the advantages available.Moreover, they are better for anindividual’s pocketbook, better forthe environment, and better for localcommunities. Companies who do notrecognize the magnitude and potentialof these opportunities stand to missone of the greatest inflection points ofour time. Public and city leaders havea key role to play in the full realizationof what the sharing economy couldbecome for sustainable and “shareablecities” everywhere.Recommendations forBusiness Leaders andPolicy-MakersThere are many ways that businessleaders and policy-makers can learnabout and get meaningfully involved inthe sharing economy. The first step isunderstanding the drivers and principlesthat enable new business models andways to create value to evolve.The recommendations below areintended to serve as guidelines for morerobust discussions within both publicand private sectors. The YGL SharingEconomy Working Group welcomesfurther input and seeks to identifyopportunities for collaboration withinthe WEF community.Recommendations for Businessand Private Sector Leaders• Better understand the potentialeffects of collaborative consumptionmodels on our core sector/vertical andbusiness line(s)- How could access-based businessmodels either threaten or enhanceour core business?- How could sharing better engageemployees, clients, and otherpartners in the communities andmarkets we serve?- Is it possible to use sharing businessmodels to stimulate and shape newopportunities and demand for newservices?- What are the opportunities for P2P,B2C and B2B?• Understand lessons and insights thatincumbents have already learned,such as focusing on underlyingdrivers affecting why people opt forcollaborative consumption models:- Access (ease and facility)- Greater choice and flexibility(uniqueness of assets)- Affordability- Opportunities for human interactionand relationship building- Sustainability (environmentalbenefit)• Better understand the attractiveness,rationale and diversity of collaborativeconsumption funding options forinvestors and entrepreneurs- Venture capital and private equity- Crowdfunding and other P2Pfinancing platforms- Economic development agencies- Potential new opportunities forfinancial institutions• Seek partnerships and joint venturesthat enable leveraging of assets,inventory and expertise in ways thatpromote additional innovation• Investigate non-monetary valuecreation, resilience strategy, andnon-monetary and other qualitativeperformance metricsRecommendations for Policy-Makers and Public Sector Leaders• Identify opportunities to create andpromote a “Shareable City”- Commission a study of idle assetswithin your city- Launch a sharing economy workinggroup to Identify opportunitiesfor collaborative consumptionmodels to redefine public services,innovation and civic engagement- Look at new ways to utilizegovernment assets (e.g. space, land)for shared use- Establish shareable infrastructure- Promote mechanisms to bringmembers of the sharing economytogether (residents, neighborhoods,company and community leaders,etc.)• Work with policy-makers andmunicipal agencies to develop andimplement appropriate legal andregulatory mechanisms for access-based and collaborative forms ofbusiness, consumption, productionand exchange- Ownership-based rules are oftenoutdated and/or awkward foraccess-based transactions- Focus on developing a robust“enabling environment” for thesharing economy to grow• Collect data on consumption andwaste patterns within the city orregion, which gives a foundation forcompanies to build business modelsand attract funding
  15. 15. 15• What impacts might the adoption of sharing economyprinciples, systems and models have on my business andindustry? What about on the place (neighborhood, city,country) where I live?• How might insights and trends from the sharing economybe incorporated into my organization? What capabilitiesdo we need to better understand the opportunities (andpotential challenges) we face?• How could our business, or our local government:- Fold sharing-based business models into what we do?- Communicate this impact to key stakeholders, investors,and communities where we work?- Engage employees, clients, and other partners into thesharing economy?- Stimulate and shape new opportunities and demand fornew services?- Shape or respond to a regulatory environment conduciveto the sharing economy and collaborative consumption/production business models?• What could I do to become involved in the World EconomicForum and YGL Sharing Economy Working Group in apractical way?- We would greatly appreciate any feedback, commentsand contributions to this paper, as well as expressionsof interest from those keen to play an active role in thedevelopment of a broader sharing economy agenda.Key Questions for WEF Membersand YGL Participants
  16. 16. 13-1512Author & SharingEconomy WorkingGroup LeadApril RinneChief Strategy Officer | Collaborative LabSupporting AuthorsYGL Sharing Economy Working Group incollaboration with Collaborative Lab.April would like to particularly thankthe following for their contributionsand insights.Lauren AndersonJem BendellRachel BotsmanPrivahini BradooDavid ChiuRossanna FigueraKaliya HamlinKate HamptonPooja JainJerry MichalskiJames MoodyKohei NishiyamaJulia Novy-HildesleyKristin D. RechbergerLucas SimonsAdam WerbachPeter WürtenbergerSharing EconomyWorking GroupThe Sharing Economy Working Group wasfounded in 2012 by YGLs who see it asan important example of business andbehaviour that promotes sustainabilityat scale, innovation and resilience acrosssectors and geographies. It is closelyintegrated with the Circular EconomyInnovation and New Business ModelsTaskforce, and it is expected to lead toadditional workflows and synergies overtime. The leaders of these initiativesare committed to collaboration andprogressive thinking together.In addition, the Sharing Economy WorkingGroup has partnered with CollaborativeLab to source the information and dataprovided in this paper. CollaborativeLab is a strategic advisory firm thatworks with companies, governments andentrepreneurs interested in understandingand harnessing the potential of thesharing economy.As the Sharing Economy Working Groupcontinues to team with the CircularEconomy Task Force and CollaborativeLab to build on the work of the last year,we would greatly appreciate feedback,comments and contributions to thispaper, as well as expressions of interestfrom those keen to play an active rolein the development of a broader sharingeconomy agenda within the WorldEconomic Forum.Circular EconomyInnovation and NewBusiness ModelsInitiativeThe vision of this YGL taskforce is to createa socially and environmentally prosperousworld where profitable businesses providesmart goods and services within theresource limits of the planet.Our mission is to inspire leaders toembrace the “Circular Economy” businessphilosophy for their organizations andprovide tangible examples of successfulbusiness models and means ofimplementation.By advancing this mission the taskforcehelps create universal awareness amongstbusiness leaders and other stakeholdersof the inherent problem of unsustainable– linear – production methods; the casefor and possibility of change; the businessopportunities; and means of transitioningto a sustainable global economy.Taskforce Co-ChairsPeter LacyManaging Director | Strategy &Sustainability APAC, AccentureDavid RosenbergCo-Founder and Chief Executive Officer |AeroFarmsTaskforce Managers& Key ContactsQuentin DrewellManager | Strategy & Sustainability,Accenturequentin.drewell@accenture.comJakob RutqvistManager | Strategy & Sustainability,Accenturejakob.rutqvist@accenture.comWe would also like to give special thanksto Eric Roland for his unfailing supportand work in the background in helpingmake the Taskforce a powerful agentfor change.

×