Sharing economy

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Does your business share its physical, human and intellectual resources?

Question collaborators: The People Who Share, Share The World's Resources


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GOOD Answers

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The ‘sharing economy’ is a relatively new and amorphous term which refers to an economic system built around the sharing of human and physical resources and the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations. Sharing has developed from lending and borrowing between friends and family to new means and models of business enabling millions of transactions each day.

Enabled by the internet and powered by the appetites of millions of micro-entrepreneurs, it is now possible to find people who are willing to rent you a room in their house, lifts in their car, unused power tools or unloved children’s toys, and more, in countries all over the world. Sharing is about finding new utility for underused resources and assets and includes people’s time, ideas and skills. It includes hiring people to come round to assemble your furniture, bring you food or queue up for tickets for the latest West End show. Sometimes for a price, sometimes in exchange for something less tangible. For example, deprived dog-lovers can now easily make themselves available to busy dog owners for walking duty or dog sitting, in exchange for the simple pleasure of having some canine companionship. For many, sharing is also about a culture and value shift towards a more connected, collaborative, community-oriented sustainable society.

Sharing puts excess capacity - The People Who Share estimate that there are over £3.5 trillion worth of idle assets globally - to use. Since 2009, there has been a significant growth in specifically designed peer-to-peer networks where collective resources can cheaply and easily meet collective needs, and where the desire for access trumps the desire for ownership. People and businesses are now able to trade and share their idle resources and human skills and knowledge with other people and other businesses.

Sharing has grown rapidly as commerce has moved onto the internet and smartphones in particular. Many sharing economy businesses have started up to link those people who want to be on either side of a deal together. In the UK transactions reached £7.4bn in 2015 up from £3.9bn in 2014. PwC believes that globally the value of the sharing economy could top an astonishing £335bn by 2025.

Sharing, borrowing and lending have always existed within societies. However, it is the confluence of contemporary megatrends such as the digital revolution, urbanisation and resource scarcity which have heralded their transformation. Its benefits are varied. With linear models of production and distribution seemingly incompatible with the planet’s finite resources, releasing surplus capacity (idle assets) into the economy is compelling from an environmental perspective. Economists would also assert the benefits of increased efficiency as a result and, although evidence is thus far inconclusive, downward pressure on prices.

Benefits of sharing can be categorised in three broad ways:

  • On a financial level, underused resources can generate supplementary income for their owners. Once there is a market for it, ‘waste’ can be viewed as a resource in the wrong place, generating revenue for the vendor as opposed to waste disposal costs. Where goods and services cost nothing (or much less) as they are already produced/available, they can be sold cheaper and save purchasers money, whether they are businesses or individuals
  • On an environmental level, trading idle resources and promoting access over ownership means that less raw materials needed to be extracted, processed and transported, less manufacturing occurs, less waste is generated and less greenhouse gases are emitted. Waste is diverted from landfill to those who can put the previously wasted resources to good use
  • On a social level, sharing also creates new networks and relationships between people and can foster greater trust within societies. Furthermore, by having a more collaborative culture within organisations, efficiencies are greater and staff enjoy increased well being. The correlation between increased sharing and well being leads to healthier, more connected and sustainable communities, according to Cooperatives UK 2011 study: The Great Sharing Economy.

For businesses, the growth of the sharing economy has enormous implications. Now people can trade directly with other people (peer-to-peer), they are less reliant on traditional businesses for their goods and services. This has led many traditional companies to re-imagine their business models and identify new opportunities, and for entirely new business organisations to emerge.

Further, evidence suggests businesses which have a more collaborative culture are more profitable: they enjoy roughly 10% increases in revenue (according to a 2013 report from The Economist), increases which are expected to rise significantly further in the coming years. A 2014 study by Deloitte on collaboration within business highlights the strategic importance of sharing, finding companies that prioritise collaboration to be twice as likely to be profitable and outgrow competitors, and five times more likely to attract employment. Embracing sharing can increase workforce productivity, corporate acceptance, and customer authenticity, while ignoring it may eventually turn those very same customers into competitors.

Notwithstanding, the emergence of the sharing economy has also caused disruption and controversy. Two of the most remarkable new players are US based sharing platforms, firms which have attracted hundreds of millions in venture capital funding and multi-billion dollar valuations. Uber enables people to hail taxis using their smartphones and turns car owners into taxi drivers. Airbnb is the world’s leading hub for renting spare rooms.

Both firms stand accused of riding roughshod over the rules and regulations which incumbent businesses must adhere to. In some countries, existing taxi drivers and minicab firms have protested that Uber drivers are unskilled, unqualified and inexperienced. In others, criticisms have ranged from the loss of drivers' autonomy, fare erosion and lack of transparency on tips. Incumbents from the hotel industry and those offering traditional bed and breakfast accuse those renting on Airbnb of avoiding health and safety regulations (e.g. providing fire escapes), breaking sub-letting agreements and preventing the collection of tourist taxes.

As firms such as these grow bigger, some observers question whether they have distorted the true meaning of sharing, arguing that they turn everyone into micro-capitalists, generate enormous returns for their shareholders and end up behaving much like most other large, profit-driven corporations. As a result, it is increasingly likely that actors within the sharing economy will be expected to explain if and how they are motivated by any social, environmental or ethical considerations or beliefs.

Sharing economy

The 'sharing economy' (sometimes also referred to as the peer-to-peer economy, mesh, collaborative economy, collaborative consumption) is a socio-economic system built around the sharing of human and physical resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations. These systems take a variety of forms, often leveraging information technology to empower individuals, corporations, non-profits and government with information that enables distribution, sharing and reuse of excess capacity in goods and services. A common premise is that when information about goods is shared, the value of those goods may increase, for the business, for individuals, and for the community.

Answering YES

All Businesses MUST

Explain any values or philosophy that supports their practices or policies in regards to sharing

Explain their policies to promote sharing of resources, skills or intellectual property

All Businesses MAY

Describe how they support or participate in the sharing economy, providing examples

Explain if and how they carry out audits of their idle resources

Explain if and how they facilitate the trading of idle resources to match surplus with demand

Describe how they foster a more sharing culture within their organisation

Describe any collaborations they enter into with other businesses to trade idle resources

Describe how they foster business innovations around the sharing of resources

Answering NO

All Businesses MUST

Explain why they do not or cannot answer YES to this question, listing the business reasons, any mitigating circumstances or other reasons that apply

All Businesses MAY

Assess whether this issue is likely to affect them more or less in the future

Mention any future intentions regarding this issue

DON'T KNOW is not a permissible answer to this question

NOT APPLICABLE is not a permissible answer to this question

Version 1

To receive a score of 'Excellent'

Engagement in and promotion of the sharing economy as a means of creating better businesses for a better world is of strategic importance

Examples of policy and practice which may support the EXCELLENT statement:

  1. Promoting, enabling and incentivising sharing - and a culture of sharing - inside and outside the organisation
  2. Owned assets kept to an absolute minimum
  3. Innovation and intellectual property lent and borrowed as much as possible
  4. Sharing is core to business: incorporated in the core business model
  5. Idle resources shared as widely as possible
  6. Collaborations across supply chains and with other businesses
  7. Full, defined, thorough audit of utilised and under-utilised assets conducted
To receive a score of 'Good'

The business is engaged in and/or promoting the sharing economy whilst balancing the pursuit of profit and market growth with the ambition of helping to build and part of a new business system which impacts positively on people and planet

Examples of policy and practice which may support the GOOD statement:

  1. A sharing culture is clearly demonstrated across the organisation
  2. Innovation and intellectual property lent and borrowed occasionally
  3. Makes a clear effort to reduce ownership of assets
  4. Regularly holds some kind of audit of its idle resources
  5. Shares expertise with non-profit organisations
  6. Redundant resources are donated to local causes / communities
To receive a score of 'Okay'

The business is engaged in and/or promoting the sharing economy on an ad hoc basis OR the sharing economy is of no relevance to the business

Examples of policy and practice which may support the OKAY statement:

  1. Evidence of ad-hoc sharing activities
  2. Sharing opportunities restricted (due to rules/regulations, open-sourcing IP would lead to bankruptcy, data privacy issues, etc.)
To receive a score of 'Poor'

The business demonstrates no interest in or knowledge of issues relating to the sharing economy

Examples of policy and practice which may support the POOR statement:

  1. No attempt to assess opportunities / which resources may be under-utilised
  2. Recourse to idle assets but no attempt to put them to good use