Sustainability through Collaboration:

New Consumption Models in the Collaborative Economy

Presented by :

Alix Omori
Leadership in
Sustainability Management
Capstone Project

Objectives

Sustainability through Collaboration:

New Consumption Models in the Collaborative Economy

To align on a standardized definition of the

collaborative economy and differentiate it
from related models
To identify successful value propositions
and review key business models in the
collaborative economy

To envision how the collaborative

economy can advance more sustainable
consumption
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Agenda
Sustainability through Collaboration: New Consumption Models in the Collaborative Economy

Introduction
Define the collaborative economy and understand its significance in todays
society

History & Background

Examine existing thought leadership and historical context of the collaborative
economy

Terminology & Taxonomy

Differentiate the collaborative economy from related concepts and review key
business models

Challenges & Critiques

Confront the legality of sharing and negotiate its place in a traditional capitalist
society

Next Steps
Identify how the collaborative economy can cultivate sustainable consumption
habits

INTRODUCTION

What is the collaborative economy?

An economy built on distributed networks of

connected individuals and communities, as opposed
to centralized institutions, transforming how we can
produce, consume, finance, and learn.

The projected worth of the collaborative economy is

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$26.2B in 2014
Sources:
1 Rachel Botsman, The Sharing Economy Lacks a Shared Definition: Giving Meaning to the Terms, Collaborative Labs, 2013.
2 Rachel Botsman and Roo Rogers, Whats Mine Is Yours: The Rise of Collaborative Consumption. New York: HarperCollins, 2010.

Why does the collaborative economy matter?

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Video: http://youtu.be/0qWdmZnXpN0

Source: The Power of Collaboration, Visual.ly, December 2013.

HISTORY &
BACKGROUND

The collaborative economy is a cross-disciplinary

movement rooted in socioeconomics
Smiths
invisible hand

2008
1776

Veblens
conspicuous consumption

1867

Marxs
commodity fetishism

1899

McDonough & Braungarts

Cradle to Cradle framework

1968

Hardins
tragedy of the commons

2002

2011

Collaborative consumption in
TIMEs 10 ideas that will
change the world

Sources:
1 Andrew Smith and Ruth Potts, The New Materialism. London: Bread, Print, and Roses, 2012.
2 Towards the Circular Economy: Volume 1: Economic and Business Rationale for an Accelerated Transition, Ellen MacArthur
Foundation, 2013.

Converging social, economic, and technological

trends have accelerated this new economy

Increased urbanization
& population density

Monetize excess or
idle goods

Social networks &

constant connection

Voluntary simplicity
& sustainability

Increase financial
stability

Mobile devices &

platforms

Desire for community

Access over ownership

New payment systems

Generational altruism

Influx of VC funding
($2B to date)

Source: Jeremiah Owyang, The Collaborative Economy, Altimeter Group, 2013.

There are 3 main systems for consumption within

the collaborative economy

All of these systems require an element of trust

in order to facilitate successful transactions
Source: Rachel Botsman, The Case for Collaborative Consumption. Presentation at TEDxSydney, Sydney, Australia, May 2010.

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These systems empower customers by allowing

them to transact directly with one another
Market relationships have shifted due to new channels and technologies:

Companies speak at
consumers via online
corporate presence

Consumers share
content & opinions,
requiring brands to listen
and speak with
consumers

Source: Jeremiah Owyang, The Collaborative Economy, Altimeter Group, 2013.

Consumers empowered
to share goods &
services;
power shifts to the
consumer
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This consumer-centric economy threatens to

make traditional market players obsolete
Traditional Capitalist Economy

New Collaborative Economy

Manufacturer as Producer

Consumer as Producer

Bank as Lender

Consumer as Lender

Retailer as Seller & Distributor

Consumer as Seller & Distributor

Retailer as Service Provider

Consumer as Service Provider

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TERMINOLOGY
& TAXONOMY

It is important to differentiate the collaborative

economy from several related concepts

Source: Rachel Botsman, The Sharing Economy Lacks a Shared Definition: Giving Meaning to the Terms, Collaborative Labs, 2013.

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For example, peer-to-peer sharing is one type of

collaborative consumption within this economy
These concepts share
common values & drivers,
including:
Distributed power:

Power shifts from centralized

institutions to networks of
consumers

Optimal asset utilization:

Social & mobile technologies

allow consumers to unlock idle
resources

Efficient supply & demand:

System built on peer trust
matches haves & wants

Source: Rachel Botsman, The Sharing Economy Lacks a Shared Definition: Giving Meaning to the Terms, Collaborative Labs, 2013.

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Others argue this movement must be segregated

into different types of collaborative economies

Source: The Sharing Economy: Where We Go from Here, Leo Burnett Company, Inc., 2014.

n = 4,404

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Collaborative businesses can be categorized

based on their products and value proposition
< Maker movement >

Types of collaborative
business models:
Service fee
Freemium
Tiered subscription plans
On-sale
White label
Flat membership
Membership plus usage

Sources: Jeremiah Owyang, Collaborative Economy Honeycomb, Version 1.0, Crowd Companies, 2014.
Rachel Botsman, Purpose with Profits: Collaborative Consumption Business Models, Nesta, 2012.

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Collaborative consumers can be segmented

based on their stage of adoption
61%

Not yet engaged in the collaborative economy;

however, many intend to try these services in the next 12 months,
making them a key target audience for collaborative businesses

16%

Buy and/or sell preowned goods online using well-established

collaborative services like eBay or Craigslist, but have not used any
emergent neo-sharing services like Etsy or Uber

23%

Already using the latest generation of collaborative services like

Airbnb, TaskRabbit, or Kickstarter

In the US, there are roughly 80MM consumers engaged in collaborative consumption

n = 90,112

Source: Sharing is The New Buying: How to Win in The Collaborative Economy, Vision Critical and Crowd Companies, 2014.

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Alternatively, consumers can be segmented

based on their reasons for collaborating

Source: The Sharing Economy: Where We Go from Here, Leo Burnett Company, Inc., 2014.

n = 4,404

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CHALLENGES
& CRITIQUES

For some consumers, barriers to collaboration

frequently outweigh the benefits of sharing
Americans primary reason to engage in collaboration is decidedly altruistic
(53% agree helping the needy is a top motive)
Other motives are collective (sustainability) or personal (convenience)
There is no consensus on barriers to collaboration, but top reasons include:
Risks of scams, privacy, and safety
Pro-consumption attitude & benefits of ownership

Source: The Sharing Economy: Where We Go from Here, Leo Burnett Company, Inc., 2014.

n = 4,404

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Critics claim sharing is just a new form of

privileged commoditization
Collaborative consumption touts access over ownership, but how is this different than
renting?
Sharing as enlightened capitalism
Sharing is not new, and has been practiced out of necessity for ages
Collaborative businesses dont create trust, they reinforce homogeneity & privilege
Participation requires access to expensive new technologies

Sources: Susie Cagle, The Case against Sharing, Medium, 2014.

Sharing is The New Buying: How to Win in The Collaborative Economy, Vision Critical and Crowd Companies, 2014.

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Some feel lack of legal protection is at odds with

for the people ethos
In the collaborative economy, individual consumers act as businesses
Currently few regulations covering issues such as:
Ownership

Liability

Consumer protection

Zoning

Taxation

Licenses & permits

Insurance

Workers rights

Lack of consumer protection as barrier to entry

Peer reviews legal protection
Contradictory to consumer-centric ideals
To be accepted as mainstream, the collaborative economy needs its own laws
Traditional laws not easily enforceable on collaborative businesses

Sources: Susie Cagle, The Case against Sharing, Medium, 2014.

Andy Kessler, Brian Chesky: The Sharing Economy and Its Enemies, The Wall Street Journal, 2014.

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Tensions also stem from differing values between

old and new powers
Old power:

limited, inaccessible, leader-driven,

transactional in nature

New power:

participatory, distributed, peer-driven,

beyond passive consumption

Source: Jeremy Heimens and Henry Timms, Understanding New Power, Harvard Business Review, December 2014.

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The intersection of new and old models and

values demonstrate opportunity for change

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Source: Jeremy Heimens and Henry Timms, Understanding New Power, Harvard Business Review, December 2014.

NEXT STEPS

Most Americans recognize the need for a major

change in consumption habits

n = 1,812
Source: Analysis Report: New American Dream Survey 2014, The Center for a New American Dream, 2014.

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and many see collaboration as a potential

solution to the environmental crisis

n = 1,812
Source: Analysis Report: New American Dream Survey 2014, The Center for a New American Dream, 2014.

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The answer is smarter consumption, not just less, to

support the economy and the planet
Americans still see consumption as necessary patriotic duty
By consuming smarter, we can replace guilt with purpose via:
Mindful purchase decisionslocal makers, products with a story
Consuming only whats neededquality over quantity
Obtaining full product valueextending product lifecycle, sharing/reusing

n = 10,574
Source: The New Consumer and The Sharing Economy, Havas Worldwide Prosumer Report, Volume 18, 2014.

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Businesses can respond to consumer needs by

solving key problems of traditional consumption

Source: Rachel Botsman, Sharings Not Just for Start-Ups, Harvard Business Review, September 2014.

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Brands must adapt to a less transactional retail

model where companies play more passive roles
Role

Action

Guarantor

Facilitate peer-to-peer transactions

Sustainability partner

Foster sustainable consumption

Proponent of reuse

Create secondary markets

Lending library

Offer access, not just ownership

Connector

Cultivate relationships

Curator

Provide thrill of the hunt experience

Employer & partner

Develop new consumer relationships

Maker champion

Act as intermediary for artisans

Brand

Source: The New Consumer and The Sharing Economy, Havas Worldwide Prosumer Report, Volume 18, 2014.

+
+
n = 10,574

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Services and less tangible assets remain prime

opportunities for market entry

Source: The New Sharing Economy, Latitude in Collaboration with Sharable Magazine, 2013.

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Economists predict the value of the collaborative

economy will jump to $110B in the next 12 months

Source: The Sharing Economy: Where We Go from Here, Leo Burnett Company, Inc., 2014.

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QUESTIONS?

APPENDIX

Convenience and price trump sustainability as

motivators for collaborative consumption
Top reasons to engage with collaborative business:

n = 90,112
Source: Sharing is The New Buying: How to Win in The Collaborative Economy, Vision Critical and Crowd Companies, 2014.

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