on managing innovation in the sharing economy · hausemer et al. (2017), p. 76 – gfk consumer...
TRANSCRIPT
On Managing Innovation in the Sharing Economy
Franz Huber
Joint work with Vadim Grinevich
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9,892 platforms in 132 countries http://meshing.it
€572 bn –total value of resource underutilisation in EU (Goudin, 2016)
The sharing economy potential
Disruptive innovation?
• What is the sharing economy and what is new?• Upscaling challenges
Structure of the presentation
Reflections on projects:
Upscaling in the Sharing Economy (2014-2015) (Southampton Strategic Research Fund) with Vadim Grinevich
Consumer issues in the Sharing Economy (2016-2017)(European Commission research) with VVA Consulting
• No shared definition or terminology– Crowdsourced (peer) economy (Sundararajan,
2013)– Access economy (Rifkin, 2000)– Collaborative economy (Botsman and Rogers,
2010)– Mesh economy (Gansky, 2010)– Gig economy– On-demand economy
What is the sharing economy?
• The way to engage households, individuals, businesses, government, non-government organisations, and their idle resources in collaborative– production – distribution– consumption
• via digital platforms
Still very broad !?
What is the sharing economy?
The Sharing Economy Landscape
“Pure” sharing economy
Temporary P2Paccess to
underutilised physical assets
On- demand economy
P2P access to intangible resources
Second- hand economy
P2P transfer of ownership
Product service economy
B2C shared access
B2B sharing
Adapted from Frenken et al, 2015
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P2P platforms as two-sided markets
Hausemer et al. (2017), p. 19
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What is new? Disruptive innovation?
• New value proposition: a cost-effective and convenient access to underutilised or redundant resources.
• Appeal to a different group of customers: those willing to use/reuse someone else’s (strangers’) assets on a regular basis.
• Novel supply chain and operations model: outsourcing of conventional business functions to peer providers/consumers.
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Upscaling/geographical expansion
• Upscaling/geographical expansion critical for success of platforms because of network effects.
• Generic digital platform technology could be applied anywhere.
• But unclear which kind of activities/resources are requiredfor geographical expansion.
https://media.licdn.com/mpr/mpr/p/5/005/084/0ed/08b1d9c.jpg
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Company type
• 3 types of companies
o foreign sharing economy platforms which successfully expanded their operations in the UK
o foreign sharing economy platforms which attempted to expand in the UK but later withdrew
o UK home grown sharing platforms expanding regionally, nationally or internationally
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Sectors
30 companies interviewed
• 3 sectors
• Web-interfaces of 75 sharing economy platforms analysed
Three perspectives
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Born global vs. rest
Geography of value proposition: global from the start
Consequences:
• Peer providers/consumers in new locations ‘popping up’
• Customer support: centralised call centre
• Global branding effective
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One-sided vs. two-sided platforms
Type of platform: one-sided (product-service economy)
Consequences:
• Substantive upfront investment in fixed assets required for new locations
• Coordination with local authorities or infrastructure providers required
• No need for tools to generate trust among individual strangers
vs.
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Standardised vs. co-createdbespoke services
A significant amount of complex social coordinationrequired to co-create a service experience.
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Standardised vs. co-createdbespoke services
A significant amount of complex social coordinationrequired to co-create a service experience.
https://www.borrowmydoggy.com/safety
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Standardised vs. co-createdbespoke services
A significant amount of complex social coordinationrequired to co-create a service experience.
Consequences:
• High quality communication requirements between the platform, service providers and service recipients (f2f and telephone…).
• Substantial investment in identifying and selecting service providers (qualitative interviews etc.)
• Challenging experimentation with standardisation and customization.
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Type 1“born global”
Type 2“local value potentially
global”
Type 3“local infrastructure as product service”
Type 4“co-created services”
Pure sharing economy -accommodation;
On-demand economy -professional services
Pure sharing economy -transportation, &
personal/professional services
On-demand economy -transportation
Second-hand economy-Personal services
Business sharing-professional services
Product service economy -
transportation
On-demand economy -personal/professional
services
Business sharing -professional services
Little sharing among sharing economy platforms…
Untapped potential for collaboration and open innovation.
Idea types
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Challenge: Regulation• Increasingly important and complex:
– Understanding and finding ways of dealing with regulatory changes– Coordination/lobbying with policy makers/regulators
http://assets.nydailynews.com/polopoly_fs/1.2978679.1487716735!/img/httpImage/image.jpg_gen/derivatives/landscape_1200/airbnb22n-1-web.jpg
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Challenge: trust among strangers
Hausemer et al. (2017), p. 76 – GfK consumer panels in 10 EU co ntries
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Challenge: trust among strangers
• Effective tools to generate trust among strangers
– Reputation and review systems– Identity verification– Insurance– Local offline support processes– ‘Reputation dashboards’ across platforms (similar to
credit score) could help
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Challenge: trust among strangers
Hausemer et al. (2017), p. 89
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Challenge: trust among strangers
Hausemer et al. (2017), p. 92
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Other challenges…
• Strategic positioning (rivals with massive venture capital make huge financial losses for attracting platform users).
• Choice of online/offline marketing instruments in new locations.
• Dealing with responsibility and liability issues for P2P transactions.
• Creating value with data vs. data protection issues.
…
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Concluding remarks
• Sharing economy is transforming/disrupting many sectors.Challenges and opportunities for innovators, entrepreneurs, policy makers and academic researchers.
• Alignment of technology with non-technological factors critical.
• Geographical embeddedness of generic digital platforms.
• Creativity required for a wide range of challenges (value propositions, cooperation and open innovation, generating trust among strangers, dealing with regulation etc.).
Grinevich, V., Huber, F., Karatas-Ozkan, M. and C. Yavuz (forthcoming). Green entrepreneurship in the sharing economy: utilising multiplicity of institutional logics. SSmall Business Economics.
Grinevich, V. and F. Huber (2016). Organizing upscaling in the sharing economy: a typology of socio-technical enablers and constraints. 32nd EGOS Colloqium, Naples.
Hausemer P. et al. (2017). Exploratory study of consumer issues in online peer-to-peer platform markets. European Commission.
Thank you!
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Approached Interviewed
a) Sector Accommodation 32 7
Transportation 20 10
Personal/professional services
23 13
b) Sharing economy type
Pure sharing 43 13
On-demand 15 7
Product service 8 4
Second-hand 4 3
Business sharing 5 3
Sector and sharing activity
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Age and popularity
Target sample Interviewed
Year founded less than 2,000 monthly visits
8,800 monthly visits and above
less than 2,000 monthly visits
8,800 monthly visits and above
before 2000 8 3 1 3
2000-05 8 10 1 4
2006-10 9 14 4 6
2011-15 12 11 5 6
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Social and racial discrimination•Consumers of lower socio-economic status may find it difficult to take full advantage of sharing economy services (Thebault-Spieker et al., 2015).
•Black service providers (in the case of Airbnb) may be discriminated against by consumers (Edelman and Luca, 2014).
– !? sharing platforms may be best positioned to detect and eradicate discriminatory practices by applying digital algorithms (Cohen and Sundararajan, 2015) .
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Geographical availability•Mainly urban agglomerations due to business model rationale (assuming there are no issues with internet and infrastructure connectivity
• Disadvantaged high risk areas may not be covered by insurance products and face higher prices
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Social protection/exclusion• Risk of downward pay spiral for certain type of tasks – market
efficiency driven • Especially relevant for those who make the sharing economy main
job– Male, young, single, between 18-34 (The 2015 1099
economy report) • Health/safety in workplace, social security (illness, overtime,
pensions, unemployment/income reductions)
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Regulatory issues
Business side
• has an incentive
– to engage with regulators (important for upscaling)
– to clarify legal status (to ensure level playing field)
• willing to self-regulate (and even facilitate tax collection) but not regulated
• P2P to B2C trend
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Regulatory issuesPolicy side
• Should go beyond responding -to be more proactive to jointly develop regulatory set-up with sharing platforms (Airbnb shared city programme)
• Balance between unleashing the potential of the sharing economy and maintaining standards (health, safety, social exclusion)
• Perhaps, even help establish sharing platforms by public sector organisations
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Regulatory issues
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Type 1 - Born GlobalValue proposition is from the start designed for multiple countries
Demand and supply side of the market shaping up automatically
Strengths:
– low start up costs;
– highly centralised, automated and standardised interactions between the platform and the customers;
– no need to be physically present in multiple international locations;
– focussed on matching demand and supply via promotions and marketing campaigns.
Challenges:
– data analytics capabilities;
– ongoing investment in technology development and public relations;
– interaction with policy regulators is increasingly important.
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Type 2 - Local value potentially global
• Value proposition can at first be sustainable on a regional and local level
• may be viable internationally, but cannot be enabled automatically; require more local knowledge, local coordination and local testing in order to structure and grow a marketplace in a new location; may require regional offices
Strengths:
– low start up costs;
Challenges:
– Ongoing investment in technology development, public relations, identifying local representatives, local partners /selecting service providers;
– integrating national legal frameworks (labour laws; taxation);
– unstructured data analytics.
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Regional/local geography of value proposition but unable to start operations without significant upfront capital expenditure and prior, often formal, agreement with local authorities and other infrastructure regulators.
Strengths:
– highly centralised, automated and standardised interactions with customers;
– one-sided platform, i.e. no need to orchestrate both supply and demand, and therefore, less demanding in terms of technology development and organisational capabilities.
Challenges:
– Upfront fixed capital expenditure;
– formal coordination with local authorities, transport infrastructure providers;
– ongoing public relations expenditure; working closely with local and national legal frameworks.
Type 3 - Local infrastructure as product services
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Type 4 – co-created services
• Regional/local value proposition with a significant amount of complex social (human-to-human) coordination required on the part of the platform to engage with different types of platform users to co-create a service experience.
Strengths:
– Initial start up costs are relatively low
Challenges:
– platform design; standardisation v customisation;
– integrating online and offline channels of communication;
– high quality of traditional forms of communication required;
– unstructured data analytics.