Many are excited about the new collaborative economy, where people use common technologies to get what they need from each other. This has created disruptions for some industries, but overall, holds much business opportunity for progressive companies.
Progressive companies can glean greater loyalty through crowdfunding, turn to the crowd for new co-innovation and launch their own sharing programmes to expand how they serve their customers new desires. Companies who ignore this trend are likely to suffer from disruption, but those that lean in can benefit from using the crowd to their advantage.
In the next section, I’ll share examples of what the crowd is doing, and how large companies are responding to integrate the crowd into their strategy.
Crowdfunding is at an all-time high, there’s been $16 Billion of investments made by the crowd, reports The Economist. Despite the growth, there’s been concerns that in the case of the crowdfunded Occulus Rift being acquired by Facebook, that the investors are making donations for perks, and not actually gaining equity.
To solve some of these woes, large companies are applying crowdfunding into their strategy, DIY brand U-Haul has launched a crowdfunding platform called U-Haul Investors Club, enabling the crowd to fund new trucks, and in return these investors would receive dividends from the performance of the specific vehicle.
The crowd is creating their own goods in the maker movement, which appears to be a disruption for large companies who create physical goods. However, savvy companies like Hasbro are enabling makers who use 3D printing services to alter and 3D print Hasbro approved toys, fostering deeper engagement, and even generating new revenues as each 3D Print of a toy provides Hasbro with new revenues, see the Hasbro and Shapeways partnership called SuperFanArt.
Ride sharing and rides as a service continue to dominate the media landscape as Uber, Lyft, Sidecar, and BlaBlaCar continue to grow in adoption, funding, and market attention. Executives at some of these start-ups are aiming to reach a point where car ownership ceases to exist. Innovation groups at BMW have launched a new program called BMW Drive Now, which offers a membership programme for customers to borrow Electric 1-Series vehicles at lots in Urban cities. This innovative program enables BMW to offer a single car to more customers, increasing utilization, reducing inefficiency and generating recurring revenues.
In each of the above examples, the crowd shows growth, and large companies are tapping this trend to harness this strategy for their own benefit. What can we learn from U-Haul, Hasbro and BMW? They enabled the crowd to help them with funding, which in turn increased loyalty, let the crowd co-create products like Hasbro, and let customers rent your products instead of own them, like BMW. In each of these cases, companies are altering their business model, to tap the crowd movement.
This post was originally posted on the Virgin blog, read it here.
Photo :”Conversation” by Steve Bridger, used with Creative Commons license.
Buzzwords, buzzwords, buzzwords! Nothing is more fun than using buzzwords – except one thing: Reading all the buzzwords on a single page. Impress your colleagues at the co-working spot, your tatted Lyft drivers, and your hot Tinder dates with your immense knowledge on the latest hipster technology terms.
New terms and phrases emerge as new movements are born. The purpose of this post is to help clarify, from one single location, some of the jargon you may hear out in the industry. I plan to update it, along with your help, with submissions in the comments, to serve as a reference for our collective work.
At the bottom of this post, you can access links to existing glossaries that cover more well-known terms like Collaborative Economy, Sharing Economy, Maker Movement, crypto-currencies, P2P Lending, crowdfunding and more. The purpose of this post is to focus on emerging terms that are not so commonly known.
A Glossary of Emerging Terms of the Collaborative Economy:
- Access over Ownership: A transaction style where individuals have access to goods, products and services via on-demand models instead of ownership. Common business models include rental, delivery, subscription, membership and others. I first learned of this from Lisa Gansky, author of the Mesh.
- Air Squatters: A situation where Airbnb renters legally rent a location for over 30 days and are deemed official tenants –the host is unable to remove the “guests.” From multiple news sources, including NBC.
- Charity Jacking: A copycat campaign where non-profits slightly alter a popular cause and make it their own in order to generate awareness and donations. Example: The Livestrong bracelets resulted in thousands of permutations for other similar non-profits. Causes are hijacking campaigns made popular by other causes. Watch as the ALS Ice Bucket Challenge morphs into a Jell-O Bucket or Mud Bucket challenge for some other worthy cause. Charity Jacking coined by Beth Kanter.
- Fab Lab / Hacker Spaces / Maker Spaces: Physical locations where Makers design, create, prototype and develop new products and technologies in a collaborative setting. Notable examples include Noisebridge, NYC Resistor, A2 Mech Shop, Pumping Station: One, Artisan’s Asylum, and TechShop. Read more on Wikipedia.
- Internet of Things / Internet of Everything / Mesh: Refers to the interconnection of uniquely identifiable, embedded, computing-like devices within the existing Internet infrastructure. Mining this results in individuals being able to use technology to find idle resources (cars, homes, services) in local areas and quickly accessing, on-demand. Source: Wikipedia. Also see Mesh, by Lisa Gansky.
- On-Demand Economy: Championed by leading VC firm Sherpa Ventures, the On-Demand Economy (ODE) includes many business models that use technology to deliver goods, services, food, transportation and more to individuals, using mobile-based apps and the Internet of Things. Read the full investment thesis by Sherpa.
- Scampaign: A scenario in which a crowd-sourced campaign results in the project founders taking the money, but never delivering the product or perks. A recent scampaign involved a founder spotted driving a Ferrari, after raising $1.5 million and walking away from the project. Alternatively defined as “A concerted effort to achieve a goal which relies upon deceit to be successful.”
- Slogging / Share-Jacking: A scenario where sales teams from ride-sharing companies legally take paid rides from drivers – then proselytizes the drivers to join the other ride sharing company. Recently, an Uber playbook was published by The Verge, outlining the controversial and questionably ethical plans.
- Share Washing: A campaign led by either a large organization or startup that claims to be sharing, but is not living according to the values expected by the movement. Critics cite that commonly used monikers of “Sharing is the renting” and “working without benefits” are examples of large companies hoisting the sharing banner while taking advantage of smaller players. Read: Share washing is the new Green washing.
- Two-Sided Marketplace: A business model often powered by technology that enables providers and partakers to find goods, services and resources from each other. Early examples included Craigslist and eBay, but now these models have extended to Airbnb for home sharing, Lending Club for money sharing, and Sidecar for ride sharing.
- Leave a comment! Can you suggest a new term? Do you want me to amend an existing term? I’m open to respectful feedback. Leave a comment. I’ll review, edit, add and credit you.
This post is not intended to debate the X economy vs. Y economy lexicon as, in the end, I believe it will just be called The Economy. See similar efforts: GitHub and CoinDesk have a Bitcoin glossary, a glossary of Maker Movement terms. Denise Cheng from MIT has also created a “related-to-sharing” glossary, and Rachel Botsman clarifies the many terms in this broader movement.
Update: The good folks at Listly have added these terms to their site.
Crowd-based business models and marketing are no stranger to the Web Strategy blog –and now we’re seeing the same effect impact non profits, including the much discussed (and debated) ALS Ice Bucket Challenge. I was curious on the actual impacts of this controversial crowd challenge, and decided to tally up some of the numbers. In this above embedded slideshare, you’ll see facts on buzz, assumptions on water usage, influencer impact, money raised, and bottom line of total donated dollars.
Also, in case you’re wondering, I was challenged by Scott Monty, I accepted the ice shower (over my garden –in a nod to our drought) and also donated to ALS —you can enjoy my washed up video, here. Lastly, top non profit thought leader Beth Kanter has questioned if this effort can be replicated, and even found other non-profits are emulating or “charity jacking”.
Cruise through the embedded slides above –to see some of the stats of this crowd based effort.
Update: Over the last few days, I’ve started to think about the causes of this blue moon event. I put together this handy guide, so if your boss, client, or charity wants to create their own, they have a simple ten step guide.
Harvest a thousand ideas. Above photo from popular photographer, and my friend, Thomas Hawk.
Crowdfunding is the highest form of loyalty, but only a few big companies have deployed this crowd strategy.
Big companies can learn from Indiegogo, and Kickstarter.
You’ve heard of Indiegogo, Kickstarter, and other crowdfunding platforms for the tech savvy, but what does it mean to corporate product development and marketing strategy? Today’s crowdfunding projects include a panoply of products that never make it to the shelves. I jokingly refer to this as “this decade’s home shopping network,” due to the proliferation of oddball products you didn’t realize you needed. These “long tail” products, are examples of grassroots market innovation offering an opportunity for entrepreneurs to get pre-orders, pre-funding, and free marketing to support future business.
U-Haul Investors Club spurs crowdfunding strategy.
For years, marketers have told themselves that repeat sales are the highest form of loyalty, but I’d like propose that we’re now seeing a greater form of loyalty in crowdfunding. Yet, it remains largely an untapped opportunity for large companies to recognize and develop. Take U-Haul Investors Club for example, where the crowd can finance and own parts of the loading equipment, often at better rates than traditional banks. In return, they receive periodic revenue from the performance of these vehicles. It’s safe to assume, that when it’s time for folks to move, U-Haul Investors will use U-Haul’s services, as well as advocate U-Haul to their friends.
GE taps crowd innovation from Quirky.
With that said, this is just the first phase of the crowdfunding movement. Expect more refined versions to appear, akin to GE’s Quirky program, where the crowd submits ideas, a smaller team selects the best, then GE’s massive production and supply chain creates and distribute at scale. The inventors who submit ideas benefit from their name being on the box, shared revenues, and a chance to see their brainchild on store shelves – without even going to a fabrication plant.
What are the benefits of Corporate Crowdfunding?
- A nearly limitless supply of fresh innovation and ideas. Struggling to get fresh ideas to market? Is your company mandate to foster outside-in innovation? Tap into crowdfunding sources to start your journey for crowd innovation.
- Backers pre-pledge to go on the journey with you. These backers are telling entrepreneurs, and even large corporations, that they’re committed for a long period of development in exchange for early access and other perks or financial benefits.
- They’re engaged with product development. This engaged community can be counted on for active feedback, although they may likely be representative of a passionate contingent, not necessarily a mainstream audience.
- A built-in set of early adopters. In both Kickstarter and Indiegogo, most benefits include perks, which include special services, recognition, or gifts. Some provide early access and a period of exclusivity for the product being funded. Tap these early adopters for feedback and word of mouth.
- They’ll naturally advocate the product. Being engaged means to commit fully. These crowd-based backers are invested in your future product with time, money, and even reputation. Assume they’ll advocate your products to their network and beyond.
Opportunities for corporate product strategy.
Using the same consumer-type strategies as Kickstarter and Indiegogo, allow the crowd to suggest products, then fund them for potential development, akin to GE’s successful Quirky program, which has now extended beyond consumer electronics to appliances. Allow the crowd to drive the initial discussions and ideation. Allow a system for IP protection, rights and rewards to be shared between independent inventors and your company.
Below Graphic: Crowdfunding behavior set to double
Corporate crowdfunding is newly charted territory.
Result of 90,000 respondents from my recent research with Vision Critical show that Crowdfunding will double in adoption by the U.S., UK, and Canadian general population.
What’s the one major downside of Crowdfunding programs? Many project don’t see the light of day and, if they do, they may not become a global success. Additionally, some companies are afflicted with the “if it’s not invented here” syndrome, which limits innovation to only engineers and scientists. Here’s where established brands can help make the right choices, apply the right resources and help both crowds and companies win. Corporations can adopt this new strategy to create a shared destiny with the crowd, fostering a higher form of loyalty through crowdfunding.
Crowdfunding is the highest form of loyalty: shared destiny
(Disclosure: GE is a founding member of my company, Crowd Companies, an association for business leaders at large companies.)
Above image: Intertwined strands bonded together share the
same shared fate of pulling a heavy load.
“Why Do Big Companies Crowdfund?” Suprinsingly, it’s often not about the money.
That was the very question that was asked at Crowd Conference hosted in San Francisco yesterday. I had some stage time, but also listened into the panel where my contact Syndey Armani from CrowdFundBeat was speaking.
What’s crowdfunding? Instead of turning to traditional investment institutions, you can turn to regular people from around the globe to contribute money towards a good, services, or experience.
It’s pretty easy to guess why people crowd-fund, I see at least five reasons: A sense of ownership, revenue sharing, equity growing for resell later, access to goods before others, and of course, an opportunity for a better return than placing money elsewhere.
While this makes a lot of sense for scrappy startups, indie artists, and impoverished villages, why would a wealthy big company do crowd funding?
Why Do Big Companies Crowdfund?
Certainly, big companies have plenty of money, so why would they crowdfund? here’s a few reasons why:
- Market testing: A great way to test if your future product will sell is to see if the crowd is already interested. While there are dozens of social software tools that measure organic social media sentiment and online community services that act like focus groups, these don’t ask for commitment in terms of money. Expect social analytics firms to start aggregating data from Kickstarter and Indiegogo to find out what the market wants. Also expect white label open source versions of Kickstarter to integrate with enterprise social business software platforms.
- Pre-Payment: In some crowd funding programs, it’s simply a form of pre-payment. Where the crowd funders will get access to early products as the first beta users, or receive specialized premium versions. This tactic is heavily used in the online gaming space where early registrants receive customize characters to play that others don’t get. While a startup, the Pebble watch raised funds on Kickstarter, offering early versions to investors.
- Keeping members engaged: Keeping potential customers and prospects engaged is a hallmark goal for many marketers. Now you can send your crowd investors frequent updates on project progress, early sneak peaks, and rally them to advocate for you. The great thing is, it’s opt-in for everyone. See how Dodge Dart Registry tapped the crowd to get your friends and family to pay for parts of your car, a brilliant maneuver involving a whole social group. Also see how Barclay Card tapped a community for good.
- Shared Fate: To me, this is the most important reason. Marketers have often said the highest form of engagement is word of mouth and advocacy. I believe that crowd-funding, where the crowd investors actually share an end result with the company is the highest form –they’re in it together till the end. See how U-Haul Investors Club has really lead the way by living the DIY mantra, and allowing their own customers to own trucks and equipment as crowd investors.
So there you have it, big companies may crowdfund, not just because of money, but because: 1) Market testing 2) Commitment to pay 3) Deep engagement 4) A Shared Fate.
(Creative commons image by Eryn)