The sharing economy is a multibillion-dollar industry that's making big brands feel uneasy. Also known as the collaborative economy, borrowing, lending, reusing, and reselling is moving full speed ahead, and in 2014, large companies and organizations will struggle if they don’t do a few key things to adapt.
Sharing as a business model is on the rise, with more than 200 companies already part of the movement. Look no further than million dollar businesses such as Airbnb, Lyft or LendingClub as examples. The numbers tells us that people want to rent out their apartment when they’re out of town, share a ride, and loan money to people in need.
To be part of this generational shift and not be left behind, big brands should consider the following.
1: Play Devil's Advocate
It’s often the really surprising questions that lead to some of the strangest, yet most useful opportunities. A decade ago when the first-generation iPod and Motorola flip phone were hugely popular, few assumed that one day the phone and MP3 player would merge into one device. That same device is now also a photo and video camera, book, newspaper, e-mail platform, wireless hot spot and much more — all because Apple and others challenged what a phone should be able to do. More recently, some of the quirkiest startups have found success in questioning traditional business models.
From renting out workers with TaskRabbit, to offering parking spaces with Parkatmyhouse and borrowing clothing with Rent the Runway, companies are pushing the limits of what’s comfortable across industries and working with consumers that are used to handymen, parking garages and shopping malls. In a world where gadgets are everywhere, the companies that will make it will push the envelope, and risk cannibalizing themselves in order to make improvements and look for the long-term benefits, not immediate successes.
Apple could have had numerous product lines — phones, MP3 players, cameras, camcorders, etc. Instead, it saw a much bigger and better win in creating one product with all of the right bells and whistles. Don’t agree? More iPhones are sold around the world than babies born every day.
2: Compete or Create
I recently heard Magnus Lindkvist, a futurologist, author and TED speaker, present at a conference. He made a comment that hit me hard and it should do the same for you: Businesses have only two options today — they can either compete with others or they can create with them. The two options have never been more true as the sharing economy tests the value that big brands bring to consumers. With that in mind, big brands can either go head-to-head with companies that are of the sharing economy, or they can work together with the audience that matters most to them by looping the customer voice into the decision-making process.
While I’m an advocate of creating with consumers and businesses alike, the collaboration process needs improvement, too, which we’ll see happen in 2014. Regardless, whether a brand chooses to compete or create, it’s important to remember, as Magnus put it in his presentation, the most important thing is to make enemies. If everyone likes your idea, it has probably already been done.
3: Act Like a Therapist
Let customers know their voice is being heard by sitting back and listening to what they have to say. Engage only to find out more and stay relevant to their needs. And, most importantly, resist the temptation to bombard customers with offers, deals or ads. Then, deliver to the market what they asked for and continuously point out that they, the customers, were part of the decision-making process. This way, they’re reminded that they provided meaningful value to the brand and themselves. The trick is to make sure to involve the customer while the brand is on the rise or at its peak.
Bringing the customer into the innovation process can’t wait until it’s too late, like JC Penney did earlier this year. After a series of terrible quarters, mishaps and letdowns, the retailer now says it’s finally listening to its customers, which is where it went wrong in the first place.
In order to better deliver products and services that its customers want, our client, SingTel, recently launched three customer communities with more than 10,000 select customers. These communities are being used to listen to the voice of the customer and connect with community members on an ongoing basis in order to improve products and services. More and more brands are adopting this approach to making customer-centric ideas. Companies such as Banana Republic, NASCAR, Molson Coors and Yahoo! are all turning to their customers to co-create and come up with great ideas together.
Whether you’ve been to a therapist or not, we all know the general idea: You talk and the doctor listens as you figure out what matters most to you, helping you live a better life. Perhaps brands should apply a similar approach in dealing with consumers. It may take some time, but the self-discovery will always be worth it.
This post first appeard on Fast CoExist on January 21, 2014.