By Jeremiah Owyang, with co-contributor Ryan Brinks
Corporations are approaching innovation processes and methods in different manners, we’ve seen catalogs of over 70 examples. Here’s a sample of the most common methods that we’ve commonly heard in our interviews from our recent report on the Corporate Innovation Imperative (download). Feel free to leave comments below with a design process or method that you feel if valuable, and explain why.
In summary, here’s the most commonly discussed and adopted versions, both in a high-level table below, then summaries below with a diagram
Guide to Innovation and Design Methods
||1956 by Herbert D. Benington
||Teams work independently on each stage
||2008 by Eric Ries
||Low investment to test the market
||1969 by Herbert Simon
||Creative, unconventional solutions
||Forces exploration of ideas beyond the familiar
||2001 by the writers of the Agile Manifesto
||Can quickly and easily adapt to project changes
||2010 by Jake Knapp
||Produces a tested prototype in just one week
||1981 by Hideo Kodama
||Direct digital-design-to-prototype approach
Known for a traditional method, it’s best suited to products for which the customer’s needs and expectations are well defined, the waterfall design methodology flows sequentially through six stages of development, completing one milestone before reaching the next. Waterfall design begins by understanding the context surrounding the problem to be solved and forming boundaries within which the solution must exist. Next comes the theoretical design of the product itself, followed by prototyping and testing. The fifth stage is packaging and delivery, and the final consideration is ongoing maintenance and customer service. “Even though there are newer and sexier development processes available, most projects are still probably using some version of this approach to deliver their projects,” TechRepublic stated.
Example: Acme project leaders sit down to interview a corporate client and agree on requirements for the project. They then instruct the design team to produce plans, which are prototyped and tested. From there, designs are tweaked, the prototype refined, and more testing conducted until the product is launched. Post-deployment, customer service keeps tabs on issues and ongoing maintenance.
Rather than presume to know what customers need and want, the lean startup design methodology helps innovators focus on a disciplined management process that transforms an idea into a product by circling around and around three core principles: build, measure, and learn. This process begins by solving the problem with a basic, unrefined minimum viable product (MVP). The development team can then test the MVP internally and externally with a focused group of target customers. The feedback and learning then feed back into a new round of refinements, tests, and feedback. Soon the product is spiraling along an ever-rising and broadening helix that exposes it to better technology and more customers. “By the time that product is ready to be distributed widely, it will already have established customers,” TheLeanStartup.com states. “It will have solved real problems and offer detailed specifications for what needs to be built.”
Example: As soon as a product idea is formulated, Acme’s build team puts together a rough working MVP and passes it along for testing and exposure to a focus group of customers. Based on tests and feedback about the potential for the MVP, the build team reworks or refines the MVP and presents it for another round of testing and customer feedback. Eventually, early versions of the product gain momentum with beta testers, and their feedback defines the direction of future enhancements.
The design thinking methodology encourages exploration of unconventional solutions by forcing innovators to go beyond their instincts and experience. Design thinking starts with the challenge of defining not just any problem but the right problem, and that requires developers to leave the comfort of stereotypes and theories to confront the realities of their customers’ situations and habits. It also involves intense questioning of every perspective. To then solve the right problem, a diverse team must be disciplined enough to push past the solutions that come easily and propose many other, often more creative, possibilities. From there, the team experiments freely with the most promising ideas until a winner emerges that can ultimately be prototyped and tested. “Design thinking,” according to Fast Company, “describes a repeatable process employing unique and creative techniques which yield guaranteed results — usually results that exceed initial expectations. Extraordinary results that leapfrog the expected.”
Though more ambiguous than other methodologies, Agile represents any methodology that’s focused on creating products in a way that quickly adapts to ever-changing needs, demands, ideas, and technologies. At the core of Agile is a set of four guiding values and 12 principles. Being Agile means prioritizing individuals and interactions over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation, and responding to change over following a plan. This is typically accomplished by breaking projects into small pieces and conducting short-term iterations that move products along one goal at a time. Between iterations, teams have the opportunity to act on feedback, re-prioritize goals, etc.
Design sprints are five-day shortcuts to solving big problems or tapping new markets through high-level idea prototyping. Developed by the minds behind Google Ventures, “the sprint gives you a superpower: You can fast-forward into the future to see your finished product and customer reactions before making any expensive commitments.” Google Ventures outlines the design sprint process by day: “On Monday, you’ll map out the problem and pick an important place to focus. On Tuesday, you’ll sketch competing solutions on paper. On Wednesday, you’ll make difficult decisions and turn your ideas into a testable hypothesis. On Thursday, you’ll hammer out a high-fidelity prototype. And on Friday, you’ll test it with real live humans.”
With the rise of 3D printing has come the emergence of rapid prototyping, which transforms digital CAD designs directly into functional prototypes or concept models. The rapid prototyping process accelerates testing, cuts out wasted time and resources, and leads to earlier detection of important product flaws or issues. It can also allow for wider experimentation of different manufacturing materials, including photopolymers, thermoplastics, metals and composites. Rapid prototyping can even engineer the tooling or molds needed for large-scale production.
Summary: Choose a design method that suits your need.
What’s most interesting is that very advanced companies like WL Gore train and educate all their employees on a common innovation framework (in this case, Lean Startup method) and encourage all teams to approach, measure, and even report up on this method. I personally care less about which method you choose, as long as it’s the right one for the business and encourages a culture of innovation beyond just pockets of labs. Lastly, we found that many agencies, consulting firms and innovation boutique companies have their own permutations of the following methods, which they rebrand and package up for their clients. Here’s a sample of a few processes that we’ve observed, feel free to leave a comment with additional versions, below.
Photo credit: pexels
The Collaborative Economy is a complex ecosystem composed of many unique players.
These many players are jostling about, partnering, competing, and disrupting each other. It’s key to understand the many players in this movement before blindly stumbling into this market. This post took weeks to prepare, and it’s my attempt to catalogue a very complex market that has broad, global economic impacts being felt by many people. By no means is this market breakdown complete, so I seek your feedback in the comments.
This space is diverse.
There’s a wide range of political groups: from grandstanding politicians, to left-wing sharing communal hippies, to conservative incumbents resisting the movement, to libertarians seeking as little government regulation as possible as possible. There’s a wide range of social ideologies: There are environmentalists, to people’s rights activists, to technologists fascinated by the latest trends, to local neighborhood leaders, to federal regulators and government leaders. There’s also a wide range of economic classes: from billionaire investors, to bootstrapped entrepreneurs in their 20s, to the working class, to retirees forced to host strangers at their home to avoid foreclosure.
It looks complex to the outsider.
It’s impossible to analyze this market and expect to put each person into one single box. Life is complex, and nearly every person can fit into multiple categories. The sections below are categorized into four major groups: 1) The People, 2) The Technologists, 3) The Established and 4) The Influencers. Each specific group contains a breakdown of its constituents. Thanks to Robin Chase, who provided additional insight into the nonprofits in the space.
This guide will help distill a complex movement.
Ecosystem Guide: The 12 Players of the Collaborative Economy
||What they want
||What no one tells you
||Makers, Airbnb hosts, Uber drivers, Lyft friends, TaskRabbits and others who provide services, space or resources to others. Get more detail on Providers, Platforms, and Partakers.
||They seek to make a living, to have a lifestyle where they control their own destiny and have the rights and benefits that should accompany doing so.
||They’re potentially at risk of not being insured, protected or providing benefits similar jobs have. Expect them to move closer to organizations, like the Freelancers Union, which offer health and wellness services, retirement options and other resources.
||People who buy Etsy goods, Airbnb guests, Uber riders, Lyft passengers and others who purchase the services from Providers.
||Our research found that these folks seek ease of use and pricing above all, followed by unique experiences and achieving altruism by helping others or participating in a more sustainable lifestyle.
||Our research found that the rate of adoption will double this year alone, with more folks using these services sooner than previously thought.
||Taxi drivers, hotel workers, traditional manufacturers, and others who are losing their jobs as providers assume their positions.
||Want their jobs, rights, and lives back. In some cases they’ve taken to protests, violence or joining unions.
||Many taxi drivers have become Uber or Lyft drivers because of the opportunity to achieve a more flexible schedule, although their rights, wages and benefits are still up for discussion.
|Non Profits, NGOs
||The Freelancers Union, Shareable, Sustainable Economies Law Center, OuiShare, People who Share, and Peers.
||Focused on the empowerment of people or advancing sustainability, these offer education, resources, and more to this growing market.
||These groups are pro-movement, but many are partnered with the startups (Platforms) and large corporations to yield benefits, as well as work closely with regulators to drive action and change.
||What they want
||What no one tells you
||The startups. Airbnb, Lyft, Etsy, TaskRabbit, oDesk, Uber, Lending Club and more. There are over 9000 startups, many regionalized in specific countries or cities.
||They want to provide a scalable, two-sided marketplace of buyers and sellers offering value added services. They must protect their interests, those of the partakers and providers. Many are heavily VC funded and have goals for adoption and valuation.
||These startups are less altruistic than one may think. Advocates have criticized them for becoming the new lords of feudalism. There are over 9,000 startups, as indexed by the Mesh Directory, hosted by industry leader, Lisa Gansky.
||Angels who’re getting the platform going, traditional VCs, often from Sand Hill, and Corporate Venturing, like Google Ventures, who’s invested in Uber. In the last 8 months alone, there’s been over $2.5b of funding, with over $2B the years before.
||Maximum return on their investments. VCs are known to often want to achieve 5-10X return after 5-10 years of investment.
||The requirement for return on equity puts pressure on Platforms to monetize the marketplaces they manage, which, critics suggest, will minimize the abilities of both providers and partakers.
||Sharing advocates include both lobbyists hired by the Platforms and non-profits like Peers.
||To achieve market acceptance of the benefits of the maker movement, sharing and the impact it has on society, people and the global economy. They seek to educate, foster grassroots and lobbying support, and achieve change from the established.
||There’s been scrutiny about where funding actually comes from in this category. It’s quite clear that Uber has hired traditional DC lobbyists to advocate for their issues to regulators at the federal level.
||What they want
||What no one tells you
||Taxis, hotels, banks, retail, consumer goods and more.
||To protect and advance their business models.
||There have been over 90 instances of traditional corporations who’ve deployed in the collaborative economy (see timeline graphic). At the same time, a lobbying group for hoteliers has formed to battle Airbnb specifically.
||Hoteliers and taxi commissions have formed associations or hired lobbyists.
||To protect the interests and rights of the industries, owners or workers they represent and to ensure a level playing field so that startups do not gain an unfair advantage by avoiding regulations and taxes paid by incumbents.
||Multiple journalists have told me that advocates and lobbyists against the movement provide them with stories, data, and research, both for and against this movement.
||Municipal, state and federal governments and departments, like the California Public Utilities Commission or the European Union.
||To find the balance between supporting innovation and new business models, while, at the same time, protecting the vested interests of industries, current systems, safety and security and to yield taxable monies.
||Governments are not all reacting the alike. Some cities adopt quickly. To wit, Airbnb now pays 14% hotel tax to the city of SF. Some cities ban it all together, as Vegas has banned all ride sharing. Feds are also looking at the issues of crowd-based funding and of crowd-created currencies like Bitcoin.
||What they want
||What no one tells you
|Press and Media
||The New York Times, the Wall Street Journal, Fast Company, Salon, TechCrunch, INC, Wired and SFGate, have deployed journalists and columns dedicated to this topic.
||To be the leading coverage of this new market as it breaks, providing insight to the impacts and outcomes.
||This industry recognizes and distinguishes disruption from collaboration. It was disrupted from peer-to-peer social media over the past 15 years. Now it reports by having adapted to P2P.
||Lisa Gansky, Neal Gorenflo, Mark Hatch, Rachel Botsman, Chris Anderson, Dale Dougherty, Robin Chase, Arun Sundararajan, Jeremy Rifkin, and many, many others.
||To lead the discussion in the market about the benefits and risks of these global and economic changes. Their business models tend to inform and influence by means of writing, speaking, consulting, forming associations, and advancing their investment portfolios.
||This is just the start. Expect a wave of thousands of Collaborative experts to emerge, just as we saw the rise of ninjas, gurus, and samurai in the social media space.
Closing Thoughts and a Request for Feedback
In the future, we should expect new players to emerge as unions form for worker rights or new co-ops that enable a new type of startup that straddles both technology and people. Use this guide to help maneuver this ecosystem, rather than blindly charging in. Conducting this market breakdown isn’t easy and the results are not necessarily perfect. I look forward to your feedback in the below comments.
Creative Commons: Image by Divya, Image by Chicago Cell, Image by LukeW, Image by Mkeefe
Edits were made 12 hours later, added People who Share and tweaked language in other sections.
Above: MakerBot 3-D printer from MakerBot Flickr account.
This blog is focused on the relationship between large companies and their communities (customers, partners, and more) as it relates to new technologies. Emerging markets generate a desire for large companies to integrate new technologies to scope out new business models, scenarios and plans. Within this context I propose four major scenarios for large companies to offer 3D printing and scanning technologies within their business ecosystem.
New business models are emerging, transforming retailers into manufacturers and service providers, offering customized products at scale, and reconfiguring supply chain and logistics into new business entities heretofore unseen and into others we’ve yet to see. As a primer, before you read on, be sure to read the impacts of 3D printing to corporations, then read the five different roles large companies can play in this market.
|4) Industrial 3D printing
||$500k industrial printers that print complex, advanced materials or multi-materials, ideal for medical and industrial use. Example: aerospace parts are being printed by GE, and BAE systems is printing fighter jet parts.
|3) 3D Printing as a Service
||In this scenario, expensive 3D printers are housed in a central location and orders are received online. The finished products are mailed to the customer, taking days or weeks. Currently, Shapeways offers this service, printing using high quality metals, plastics and other substrate materials.
|2) Retail 3D printing
||The potential exists for retail stores, big box electronics, shipping, and office supply services to offer print on demand, much like the old Photomat business model.
|1) Home 3D printing
||Cube, Type A Machines, and MakerBot, already offer consumer-grade machines that may be used to print in 3D in your own home.
3D printing requires business model change.
The big trend is that people and businesses are becoming empowered by new technologies for funding, design, modeling, manufacturing, and shipping goods on demand. While most goods are currently simple items, technology will continue to advance, demanding major shifts in today’s manufacturing ecosystem.
- The game shifts when anyone can manufacture goods. First of all, my mom isn’t ready for 3D printing. I’ve taken classes at TechShop, and I was stunned by the complexities involved. However, 3D printing as a service (like Shapeways) enables anyone to produce 3D goods without configuring printers, filaments and dealing with 3D files. Production, even on a limited scale, starts to become democratized.
- New services emerge for customized products. 3D printing isn’t just about printing goods on demand or at a local level. It also allows people to print out customized products for their own lives, bodies, and homes. Expect new design services to emerge to produce custom-fit products for bodies. In fact they already exist. A logical starting point is jewelry, then practical gadgets, mechanical devices, consumer electronics, automotive components.
- Logistics, supply chain, and shipping are impacted. With goods being produced at local levels rather than at production facilities, in country or offshore, supply chains are disrupted, as 3D Printing takes global hold. With that said, China is already investing in 3D printing, according to USAToday.
Thank you to the Ben Simon-Thomas and Scott McGregor from SoundFit, a 3D scanning provider who fleshed out this diagram with me. If you are a large company and want to discuss these topics with experts and your peers, I recently launched a company dedicated to these and similar game-changing topics. See Crowd Companies, a brand council for the Collaborative Economy.
Above: Screenshot from the story board on how corporations can fight or join the collaborative economy.
Taking a look back at last two week’s event show some interesting twists, the crowd is continuing to organize around getting what they need from each other, rather than from corporations. For the advanced corporations who’ve entered the collaborative economy, they’ve formed partnerships to strengthen their own ecosystem.
[Business models and tempers change as the crowd gets what they need from each other –rather than corporations]
It’s important to state that this is a continuation of social business. The next phase of social business isn’t just sharing ideas, but the sharing of goods and services. People can share goods and services with each other (like Lyft, Airbnb, Yerdle and more)–without having to purchase from corporations. Notice the trend? Social media dis-intermediated corporate communications –and now the same trend is happening to goods and services.
One of my desires is to look for patterns, and I’m seeing these tension points arise as power shifts hands, here’s four distinct events in the last two weeks that highlight the energy in this growing space:
- Taxi drivers unify and protest against peer-to-peer ride services. SF taxi drivers who’re losing money from ride and car sharing services revolt, they picket and protest at SF City hall. I’ve met Lyft drivers (regular citizens who will drive you around like a friend, for a tip) who have been yelled at, spat on, and called “Scab” by angry taxi drivers. It’s impossible to stop this trend, as newly arrived UberX cars are driven by regular people, and have no distinguishing marks. Read the analysis on brand sentiment comparing Uber vs Taxis –the crowd sentiment favors peer ride services over Taxis.
- Yet California Public Utilities Commission proposes legal approval. California lawmakers are discussing legalizing peer based car rides, even as SF Mayor engages with a sharing program around emergencies. This movement seeks to legitimize peer to peer car rides, by applying some standards, and I’ll assert this is a direct way to obtain additional tax revenues. Once this landmark battle is addressed, it will set precedent for home sharing, money sharing, good sharing, food sharing, and beyond.
- Established Regis and Zipcar (by Avis) form a partnership. Massive praise to innovative Zipcar (owned by Avis) and Regus (we’re a client) who’ve partnered up to allow customers of on-demand car sharing to now receive discounts at on-demand office spaces. This bodes well, and I could expect to see other forms of on-demand food, workers, and hotels on demand emerge to suit this same vein. This is a smart move for corporations to align with each other, offering additional value peer to peer sharing can’t.
- Sharing startups form alliance, with big implications, called Peers.org. Watch this group, Peers.org, closely. I was able to talk to founder Natalie Foster, who was a former digital strategist on the Obama campaign (famed for grassroots online democracy), who shared with me the mission of this advocacy group, containing 22 collaborative economy startups like Airbnb, Lyft, TaskRabbit, Shareable, and more (Businessweek has more). This group will enable people to post their causes online, and then generate global advocacy for the sharing revolution. They also can help the startups themselves built a massive network that could content with corporations.
Breakdown: Crowd and Corporate Alliances in the Collaborative Economy
||The sharing startups: Like Uber, Lyft, Airbnb, NextDoor, Lendingclub, Liquidspace
||Fortune 1000 corporations like BMW, Marriott, Regus, Avis, Enterprise Holdings, WellsFargo, and beyond
||Peers.org enables the sharing startups to work together forming a powerful collective of shared voice, and potentially market strategy.
||Corporate alliances like Zipcar and Regus are the first phases, expect other lobbyist to provide power and corporations to get involved.
||Fast and flexible, crowd-powered, VC-backed. Break the rules, barter for forgiveness later. A people’s movement ties in with democracy, empowered individuals, and Occupy movement themes.
||Trusted and established brand. Large set of loyal customers. Massive distribution and resources. Working capital.
||Fragmented set of companies, some directly competitive. Lack a trusted long term ‘brand’ like established corporations, lack an established customer base, lack systemized infrastructure, lack standardized experiences.
||Slow moving companies, with first instict is to fight a disruption, rather than adopt. Saddleded with regulations, they lack flexibility, and innovation. Some standard services may not appeal to those seeking local and personal experiences. Often more expensive than crowd-based services.
||Standardize reputation and ecommerce systems for fluid transactions for people to use all services seamlessly. Tap into the infrastructure, distribution, and supply chain of large corporations.
||Tap into the crowd for innovation and reduce costs by leveraging the crowd by collaborating. Reduce costs of goods by providing new business models such as on-demand services, a marketplace to yield new transactions and sell new value added services.
What this means to corporations:
The crowd isn’t going to wait for a corporation to get their social media center of excellence in place to get what they need, these disruptions are happening at the pace of the crowd’s desires. Corporations must quickly realize the following three insights:
- Energy is shifting from institutions to the crowd. Angry taxi drivers, hotel lobbyists fighting Airbnb, and aggressive marketing highlight the friction as power, and money shifts from established groups to the crowd-based groups. One reason I’m so focused on this movement is when I see customers move away from corporations, I run (not walk) to this disruption to uncover what’s happening, in hopes to help corporations catch up.
- A battle is being fought at individual city, state, and other levels. The natural reaction of institutions, businesses is to fight it. The pattern of attacks are illegal activity, unsafe, poor quality and unreliable. As a result, the sharing revolution starts to self-organize their own advocacy (and potentially crowd based lobbying group) through Peers.org to self-organize.
- Innovative corporations who seek to thrive will collaborate. Companies don’t need to fight this unstoppable internet movement, but instead can collaborate with this movement and make their products available on demand, motivate a marketplace around them, or provide a platform for customers to build on top of them.
The future could mean a connected collaborative economy ecosystem –disruptive to corporations. Do watch Peers.org, who could align the collaborative economy ecosystem into a single force. With the 22 (and more coming) startups that are part of the collaborative economy, they could standardize currency, profiles, reputations, and enable people to get homes, rooms for rents, office space, jobs, goods, food, and more from each other –rather than buying from traditional corporations. If you want to learn how your corporation can be involved, read the full report on the Collaborative Economy, read a curation of stats, a list of startups, and a list of corporations who’ve moved in.
Above Image: Screenshot taken from keynote presentation on the Collaborative Economy.I’m about to tell you that in the most advanced form of the Collaborative Economy, the crowd becomes the company.
To set the context, this post is the most advanced form of the Collaborative Economy, and is only part of my ongoing coverage of this next phase of social business. Read the definitive research report or peruse all the posts on the Collaborative Economy topic. Let me restate the definition of this movement:
[The Collaborative Economy is an economic model where ownership and access are shared between people, startups, and corporations.]
Disruption: The Crowd Is Already Replicating Company Functions
The Collaborative Economy is where people get what they want from each other, bypassing corporations. They fund, ideate, design, develop, produce, distribute, market, sell and support products on their own. As proof points, here’s a list of over 200 startups across various sectors, industries, and geographies.
Corporations Have Two Options: Fight or Adapt Movement
As with social media, disrupted companies have realized they must use the same technologies to regain power. Similarly, corporations have one of two options: 1) Fight this revolution by trying to ignore it or by trying to introduce or influence regulation. 2) Collaborate with this new economy, invite the crowd in and unlock new business value for all.
For the corporations that want to explore the second option, read on.
Adapt: Advanced Collaborative Economy – The Company Provides a Platform
In our research on the Collaborative Economy, the most advanced use case is when corporations allow their customers to participate in core business functions. We call this Provide a Platform (software, services, solutions), whereby companies make available a dedicated area for customers to join in.
The Rollout: How Corporations will Deploy This Concept
In my analysis of this industry, I am seeing business functions from every sector being taken on by the crowd. They will do one of two things: 1) Partner with the startups that offering this, or, 2) Host the available enterprise software on their website.
The below breakdown shows how it’s already emerging
Collaborating with the Crowd in Many Business Functions
Element of a company that can collaborate with crowd
Disruptors and potential partners to corporations
SW providers that enable corporations to self-host the experience
Who’s doing it now
||oDesk, Taskrabbit for business, Crowdflower
||Manpower, Kelly Services, Robert Half
||Many companies are already tapping into on-demand work
|Co-Ideation and Co-Design
||Uservoice, Spigit, Crowdtap, BrightIdeaNn the design side, CrowdSpring and 99 Designs; potentially Adobe Creative Cloud
||Starbucks Ideas, NikeID product designer
||SelfStarter by Lockitron, Ignition Deck (Tx Tanya)
||Dodge Dart Registry
|Co-Development and Production
||Etsy, 3D Printers Industry
||Google Shopping Express
||Wa-Mart considered crowd delivery, but no movement sensed.
||RelayRide partnered with OnStar for instant inventory
||Customers organically share in social channels
||Extole, BuddyMedia by Salesforce, Wildfire
||Social marketing examples exist in great supply
||In a limited way: LivingSocial, Groupon
||Reseller programs with verified partners already exist
||Customers do this informally now, often in social networks.
||Get Satisfaction has been active on this topic; Lithium, Jive
||Social support examples exist in great supply
||Ebay, Craigslist, and many vertical specific, like Gazelle (electronics)
||While unproven, the following have potential: Oracle CX, Salesforce, IBM Social Business, Adobe Experience and social commerce platform, Bazaarvoice
||Patagonia partnered with eBay on Common Threads; Scottevest points to eBay market
|Co-Facilities and Office Space
||Companies can rent office space to each other: Liquidspace, Sharedesk, Pivotdesk
||While many examples are startups, these platforms are open to enterprise corporations too.
||Some corporations offer innovation labs, opening their doors to the market.
||Customers do this informally now, often in social networks
||Get Satisfaction has been active on this topic; Lithium, Jive
||Social support examples exist in great supply
|The process repeats
Note: There are other business functions, such as sharing revenue and IP that could also be extended to the crowd; this is only a small sample of what’s possible.
Challenges Await for all Parties
Rife with opposition, the road ahead will require a business transformation and, with it, a series of more challenges await. Challenges over liability, IP ownership, revenue sharing, information security, and concerns over quality lay ahead. Don’t assume that all startups will want to work with corporations. I interviewed Airbnb for this research, and asked them point blank if they would partner with hotels. They made it clear that’s not a part of their current roadmap.
Expect New Enterprise Software to Emerge
Expect that many social business suite players will get wind of this space and seek to build or acquire players in this space to assemble a suite. I’ve briefed a number of the small and large software companies associated with this booming movement and informed them of the opportunities at hand. Expect for now that point players will continue to emerge and, eventually, provide an opportunity for acquisition cycle. But for now, we’re just at market identification stage.
Conclusion: Soon Customers and Employees Will be the Same
Corporations that adopt these methods and invite the crowd to be part of the company will benefit from a more efficient workforce, reduced costs, and tapping into loyal customers from product ideation to delivery. In this new model, it will be difficult to tell the difference between customers and employees, as the ownership of core business functions are shared with customers.
In the very near future, the crowd will become the company.
Above Image: An advanced view of the Collaborative Economy Value Chain in an ‘exploded’ view. This exclusive image, which was not included in the seminal report on the Collaborative Economy, shows a potential new business model that taps into new transactions beyond traditional selling. In the final phase of “Provide a Platform,” the crowd is building new products.
[The Collaborative Economy is an economic model where ownership and access are shared between corporations, startups, and people]
First, it’s key to read the full report and watch the 18 minute video of the highlights of the research report, the Collaborative Economy. The report defines the movement, gives quantified examples of disruption, indicates the three market forces that are driving this trend, and offers solutions for corporations who must adopt the value chain. Once you’ve done this, we can explore the advanced model (above), which proposes a hypothetical model that we created in the market where new forms of transaction emerge and the end state is where the crowd starts to design and build the company’s products.
[For corporations that adopt the Collaborative Economy Value Chain, this results in market efficiencies that bear new products, services, and business growth]
Exploring the Above Graphic: The Collaborative Economy Value Chain (Exploded View).
Starting at the top at the products and moving clockwise, let’s explore the three major use cases of the Collaborative Economy for corporations. In each phase, a shift is required as products become services, services become marketplaces, and marketplaces build products. I have named each of these phases, and then I have given real world examples of these phases already happening. In the table below, I give further definition to the transaction types at each phase.
- In Company as a Service products become services. In this advanced model, companies move beyond traditional selling and transform their products to services. I call this, “Company as a Service.” To date, both BMW and Toyota are renting their cars from their dealership lots in San Francisco in order to serve the growing car-sharing trend. For those familiar with Netflix or Salesforce, this business model isn’t new, and it’s a good entry point for corporations.
- In Motivate a Marketplace services become a marketplace. Companies evolve their services to an entire marketplace, called “Motivate a Marketplace,” which taps into peer-to-peer markets that are already trading goods and services a traditional company involved. The difference here is that corporations must join this marketplace, rather than stand aside and be disrupted. One notable example today is Patagonia, which partnered with eBay to encourage customers to buy used goods, rather than buy new.
- In Provide a Platform, marketplaces build your products. The last phase, where marketplaces shift to products, means that corporations allow the crowd to collaborate on core business functions, such as design, funding, marketing, development, production, delivery, and sales. We’re already seeing examples emerge in pieces (Kickstarter for funding, Etsy for production, Quirkly for development, and Deliv for delivery). I see copious, open, market opportunities for brands to transform their businesses by being involved in the Collaborative Economy.
Transactions in the Collaborative Economy
Now that we’ve identified the phases in the Collaborative Economy Value Chain, we are free to explore the many transaction types that have already emerged in the industry. I’m thankful in particular to Neal Gorenflo, the founder of Shareable Magazine (the premiere media site in this space), who spent a few afternoons with me to map out the transaction types during my research process. The table below was featured in the appendix of the report.
||Not new — but more and more individuals are empowered to provide goods and services directly to consumers online.
||Crafters sell their wares on Etsy; virtual workers get hired on oDesk and Elance.
||Traditional selling as we know it has morphed as disintermediation has occurred.
||For payment, a seller offers used goods for purchase.
||Craigslist and eBay are household names, but Apple’s refurbished products also count.
||Most non-consumable goods
||For payment, a provider offers a product for use.
||RelayRides enables consumers to rent cars from anyone. Rent-a-Toy allows parents to rent toys for their children.
||High-cost or low-usage goods
||For a recurring payment, a provider offers repeat products or services.
||Zipcar offers a month-to-month subscription plan with tiered pricing.
||Renewable goods, goods that require seasonal storage, repeat services
||Two or more own or share a product or service together. Applies to individual and business.
||Sharing babysitting services on Sitting Around.
||High-cost or low-usage items
||Consumers become investors or banks, or invest in or lend directly to each other.
||Kickstarter enables the crowd to fund and help products to market. Lending Club, Zopa, FundingCircle, and Prosper facilitate peer-to-peer lending.
||Financing at reduced rates
||For no payment or a nominal fee, two parties trade goods or services directly.
||99dresses allows women to trade fashion. HomeExchange facilitates home swaps.
||All goods and many services fit into this category.
||For no payment or a nominal fee, a provider offers a product that will be returned.
||NeighborGoods facilitates loaning of household items, and more.
||Most non-consumable goods
||For no payment or a nominal fee, a “gifter” provides a product or service to a receiver. Reciprocation may be a requirement.
||Freecycle facilitates gifting of goods. GiftFlow’s mantra says it all: “Give what you can. Ask for what you need. Pay it forward.”
||Most non-consumable goods
Counterintuitive: Let go of your company to gain the market.
This macro view of how a corporation’s business model must change beyond the traditional selling model may be foreign to sellers of durable goods, CPG, retailers and wholesalers. When you look closely, however, large tech companies like IBM, Cisco, Microsoft, Salesforce and others are already activating many of these use cases. We expect that some companies will eventually incorporate at least one of these major use cases, but the really savvy ones will activate all use case scenarios to tap into their marketplace and glean a share of the new market transactions that are already happening without them. We looked closely and found that, on average, the sharing startups like Kickstarter or Uber are taking about a 20% transaction fee. We believe corporations can do the same. Without a doubt, the biggest challenge is the of the major paradigm shift that is necessary for corporations to let go of old methodology. The only way for business leaders to advance to this phase is to “let go” of your company to gain the market.More: Read all my posts tagged the Collaborative Economy for additional information.