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Author's profile photo Former Member

Are collaborative business models driven by sharing economies the way forward?

Businesses thrive in slicing customers into various segments with an objective to maximize their share within the markets they operate and segments they choose to serve. Every business and individual plays the paradoxical roles of both buyer and seller with buying being the more frequent of the two. After all, you can sell only those you produce or excel at with buying pretty much extended to any product or service you need or aspire provided you have the resources to afford.

Essentially, to minimize spend, we all need to master this art of buying. In a conglomerate organized into multiple divisions, usually, to foster economies of scale, buying is consolidated among various functions. But, why should this be limited within an organization? For example, why can’t companies (which may even compete in the same market segment) join hands to enhance their scale economies? How about two global software makers join hands to order their office supplies, plumbing services or going a step further in collaborating to onboard an IT vendor to manage their call center operations?

There is waste in every service or product we try to own 100%.  Isn’t this shrewd waste reduction philosophy which led to the rise of sharing evangelists like Uber, Airbnb, Amazon Web Services etc. albeit in different range of sectors vital for the economy and society at large? Just like corporates become conglomerates by pursuing mergers and acquisitions with players complementing/competing, individuals too can grow in strength when they join hands as buyers in-turn ending with a bigger bargaining power with sellers who otherwise are often reluctant to even entertain negotiations with such small, fragmented parties.

It is beyond any reasonable debate to see the immense benefits of this sharing economy model to businesses, individuals and economies as whole. But, for such an ecosystem to thrive, synergy and trust among parties involved is of paramount importance. Cloud services sector had teething troubles with clients not willing to move owing to data safety concerns in their initial years. But, as industry attained maturity state with stricter regulations and stronger safety practices in place, most of the players big and small with reasonable infrastructure needs (and unpredictable up/down demand swings) are happily joining this bandwagon. In the same tone, the likes of Uber and Airbnb have made transportation and holiday rental options far cheaper through their efficient and innovative models in ride sharing and short-term lodging of private properties respectively.

Bottom line is, if all of us have to build or produce everything required for our existence, our society wouldn’t have thrived this long. Industries have mushroomed with new sectors emerging when individuals joined hands in manufacturing, services and every other human pursuit making all our lives much more efficient and easy to handle with.

By sticking to 19th century ownership models, we are putting strains on the limited global resources we have in every spectrum be it minerals, fuels, skills, land etc. The reason for god placing constraints on every aspect of his/her creation might be to witness us beating those very boundaries through our limitless approach in making the most effective and meaningful use of the same for our larger welfare. Applying a collaborative approach focusing on waste minimization is the only plausible means to achieve this. It is time to extend this sharing thinking to other aspects of our businesses and lives.

Mankind has survived over ages by adapting to emerging realities at various stages in its history. Social Living, Industrialization, Computerization etc. are some standing testimonies to this progressive metamorphosis. The next stage of evolution and our collective future lies in adeptly deploying this sharing concept to various other aspects of our lives and sectors beyond transportation, infrastructure, rentals etc. where change has already started for good.

In essence, sharing economy is here to stay with its definitive influence on multiple sectors and need for such an outlook being imperative for organizations operating in every industry.

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      Author's profile photo Jelena Perfiljeva
      Jelena Perfiljeva

      IMHO you are confusing "Circular Economy" with "Sharing Economy".

      Either way, all this has been said dozens of times in the SAP executive keynotes already. Sorry, I just didn't see any original thoughts in this "take".

      Author's profile photo Michael Appleby
      Michael Appleby

      I am not sure there is a clear statement throughout the entire blog which someone could take away as value added.

      Circular, Sharing, Collaborative are not interchangeable terms.  Blithely swapping them without worrying about their definitions is disingenuous at best and misleading in general.

      Ride sharing viaUber is not really.  It is a service in which money is exchanged for providing a means of utilizing available spare capacity available from personally owned vehicles and their owners .  Money still changes hands.

      Author's profile photo Jelena Perfiljeva
      Jelena Perfiljeva

      Yes, I opened this to learn about "Circular Economy". Had to go to Wikipedia to look it up.

      @Jagannadha - I don't mean no disrespect or to act as some kind of SCN censor but you might want to seriously consider removing this blog. I have a degree in Economics but even I don't go around posting my takes on Marxism theory on SCN and such. I'm afraid you're misinformed in this matter and it is unfair to mislead the SCN members with such posts.

      Before posting another blog, check the content already posted on SCN and try to do some more research and fact checking.

      Good luck.

      Author's profile photo Former Member
      Former Member
      Blog Post Author

      Hi Jelena/Michael,

      As I reviewed my blog, it largely covers the relevance of sharing economy. I agree that it is not synonymous with circular economy although there are multiple view points on web of what all businesses actually fall under each of these categories.

      By trying to cover both these models in one place, it is definitely adding to some confusion which is best to avoid. I have made changes in a manner not losing the key message which I wanted to convey in the first place.

      Thank you both for your constructive comments.