The ripple effects of the sharing economy
The sharing economy is a disaster! Or so says Business Insider which takes the opposite view to what Forum and the rest of the sustainability world sees as a good thing – the sharing economy – and warns of the ‘catastrophic ripple effects’ on the economy while wondering ‘what’s to blame?’.
The tweet that drew my attention to this from Cameron Tomkinwise says it all really: “spectacular example of right research, wrong ideology-based conclusions”. But it’s worth asking why sustainability experts such as David, and a business magazine like this, have such contradictory views.
First of all the article, and the underlying research, is not entirely wrong. The implication of the sharing economy is indeed that: “Adjusting to a consumer who does not necessarily buy, but rather rents, would necessitate a shift in production, sales, and even employment structures. Everything interesting in economics happens at the margin, so if the nth consumer chooses to rent an apartment instead of buying a house or making do with a car-share program instead of purchasing a new vehicle, then demand for new houses and cars drops”.
This is why the sustainability world loves renting and sharing. Fewer assets bought and sold means that there is more value taken from the same environmental resources. Not everyone in my building needs their own washing machine, so sharing one between us all makes sense and means less energy and materials were needed to produce the assets that will generate the same volume of clean clothes.
It’s true that if you’re a washing machine manufacturer that’s not necessarily good news. But overall we know that our current economic paradigm is not sustainable. That’s why at Forum we talk about creating #theBIGshift – a change to a new paradigm. This means finding ways for the washing machine manufacturer to find a sustainable business model (leasing the machines and being the recipient of my quarters, for example) rather than panic and send out the salesmen.
We desperately need the paradigm shift that the sharing economy entails if we’re to co-exist comfortably on this planet much beyond the middle of the century. That’s why at Forum we work with companies to look at their long-term business model and ask them questions such as “what are the products and services that are fit for a resource constrained future?”.
Text books tell us that capitalism thrives on creative destruction. So there will be companies for whom this does indeed prove catastrophic and whose unemployed ex-executives can look back and say they were right. But we also know that there’s money in them hills. There will be successful businesses in 2030. And they will be the ones that started asking themselves those questions right now, and start adapting and seizing the opportunities that the sharing economy provides them. Businesses can help create #theBIGshift, not see themselves as victims of a catastrophe.
- Read David Bent’s blog about The sharing economy: how it might develop, and what it means to big business
- Find out more about #theBIGshift here
- Follow @hl_clarkson on Twitter
- Download our report: Creating #theBIGshift System - Innovation for sustainability
- Want to seize the opportunity? Why not join our network?