Year: 2016

Four steps to benefit from the ‘sharing economy’

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Already rented out your flat when you left on a vacation or stayed in someone else’s? Took a ride in stranger’s car or worked in a co-working place? If so, you were likely taking part in the sharing economy.

This new way to think the market place is there to stay for at least a little longer, so any traditional company should prepare to operate this altered framework. There are few things to keep in mind.

 

What is sharing economy and why does it matter?

A phenomenon that goes under names of access economy, peer-to-peer networks or the collaborative consumption represents an important shift in the way consumers are meeting their needs and the way companies are defining their value added.

We used to share trade and swap since the early days of the humanity. And now the sharing is back as a fast growing economic phenomenon. But the key difference that allows all this interaction is the digital interface. The consumer interacts directly with other private parties turned suppliers through an online platform.   This ‘platform capitalism’, facilitating the online economic meeting place between willing sellers and buyers, is resulting in some of the most staggering market capitalizations we have seen so far.

Beyond the names such as Uber or Airbnb that first come to mind, there are giants such as Etsy (crafts and vintage market), WeWork (shared workspaces),  Kickstarter (crowdfunding) or   Bla Bla Car (car sharing service).  And thousands of other app-driven market places for everything from jobs, knowledge, excess capacity or mobility and vacation, catering to consumers and businesses alike.

The growth of the sharing economy is set to quadruple in the next three years and reach EUR 100 billion as per the recent Deloitte report. So how will your company benefit from this massive trend? Or, indeed, prepare to compete in changing economic circumstances?

 

#1 Select the operating model that fits your business

 Understand what works and what not in the sector or the industry you operate.  If you are a retail business, you are probably present online for years now and digital is a part of your operating model.  Investing into one of the related peer-to-peer platforms or buying the one that is of particular interest may be the next logical step. The recent purchase of HomeAway by Expedia or Avis buying Zipcar are falling in that category.

If you are in machine building, the choices may seem different at first. But the questions remain:  How can you improve your customers’ experience? How are you designing, manufacturing or delivering the product to them? Is your existing business model still the only way to keep your customers happy?  Opening up the design process to the crowd like P&G’s Connect+Develop program or leasing the construction tools to the customer instead of selling them as Hilti does, can be an alternative. Caterpillar chose to partner with Yard Club, a platform that allows the heavy equipment peer-to-peer rental.

Embracing change before it leaves you behind remains the choice of the frontrunners.

 #2 Review your own resource usage

Company’s own resources tie up a lot of capital.  Many assets that companies own, from the office and the storage space, to manufacturing and transport equipment, remain underutilized. With security issues properly addressed, those assets should start generate revenue when opened for use to new partners. Be it a conference room or a spare desk rented through a platform such as ShareDesk, or a truck excess capacity shared through Cargomatic, the underused assets will be made to work.

#3 Select the competences that fit the need of the moment

40% of the workforce will be freelancing by 2020, according to recent predictions.   Economic downturn may have explained the starting point but now we see an increasing number of highly skilled contractors choosing to stay independent.  So when next looking for a specific expertise why not select it through a platform for highly skilled workforce such as Expert360.  Whether you are filling a part time, a full time or ad interim opening, the business preserves the flexibility of matching the evolving needs with the wide variety of competencies available at the freelancing marketplace.

#4 Take part in agenda setting for regulating the sharing industry

Staying in the game for the long term will mean to secure a predictable operating environment and the regulation in particular. In any industry that is being disrupted the regulator is the latecomer. But when the new rules arrive, things change for both the disruptor and the incumbent.

Those companies that are successful in sharing their vision on how that new space should be regulated will retain the first mover’s advantage. And the others will have to adapt.

 

 

How to keep “license to operate”

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Complex regulations will remain a fact of life for most industries. How to cope?

By IMD Professor Carlos A. Primo Braga, with Sanja Fabrio

A new era of government activism poses serious challenges to leaders in the corporate world and may lead to unintended consequences in terms of global economic activity. Regulations are on the rise as a consequence of the global financial crisis, increasingly negative public opinion towards large corporations, and scandals involving household brand names.

In the aftermath of the financial crisis (2007-08), there was a rush towards retooling the regulatory environment for the financial sector. Efforts both at national and global levels proliferated with a view to tighten financial regulation and supervision. For example, the Basel Accord of 1988 (Basel I) – the first international prudential regulatory agreement for the financial sector – was only 30 pages long. Basel II (2004) encompassed 347 pages. Basel III (2010), in turn, is 616 pages long. It is not only a question of quantity, but also of increasing complexity as illustrated by the exponential increase in the related calculations required to estimate risk weights for internationally-active banks.

On a parallel track, as many countries entered into recessions and unemployment increased, there was also an increase in governmental interventions, including many beggar-thy-neighbour measures (such as subsidies, localization requirements, and state-aid) that discriminate against foreign companies. These interventions have not only increased complexity, cost and regulatory burdens, but also have often delayed needed structural adjustment.

If one adds to this mix the increasingly negative public perception of large enterprises based sometimes on facts and sometimes on misunderstandings of how markets operate, one can speculate that public opinion will continue to broadly support more regulation. In such an environment, to the extent that the “license to operate” needs to be continuously earned and that it doesn’t take much to tarnish a corporate reputation, attention to proper regulatory engagement strategies is a must.

How is business responding to these regulatory challenges and what can one learn from different approaches to regulatory engagement? These questions were asked to corporate public affairs officers, regulators, and academics at the IMD’s “Regulation and License to Operate” conference on October 22nd in Lausanne, Switzerland. Here are some of the highlights:

On engagement

A regulatory strategy is an important component of a comprehensive business strategy just as regulatory risk is one of the key considerations in mapping corporate risks. When properly developed, a regulatory strategy should be able to address most of the WHATs, WHYs, WHOs, WHEREs and HOWs of relevance to a company in terms of the regulatory environment. The design starts with a comprehensive stakeholder mapping, appropriate message development, execution planning, and – last but not least – adequate funding for regulatory engagement.

Engagement with the regulator, just as with any other stakeholder, is only effective when based on trust and a professional relationship. That allows adding value through collaboration and providing insights that help regulators understand the ways business operates and the constraints faced by companies in implementing regulations. Staying on message, being consistent over time, and choosing one’s battles improves the likelihood of being taken seriously.  continue reading