on managing innovation in the sharing economy · hausemer et al. (2017), p. 76 – gfk consumer...

On Managing Innovation in the Sharing Economy

Franz Huber

Joint work with Vadim Grinevich

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9,892 platforms in 132 countries http://meshing.it

€572 bn –total value of resource underutilisation in EU (Goudin, 2016)

The sharing economy potential

Disruptive innovation?

• What is the sharing economy and what is new?• Upscaling challenges

Structure of the presentation

Reflections on projects:

Upscaling in the Sharing Economy (2014-2015) (Southampton Strategic Research Fund) with Vadim Grinevich

Consumer issues in the Sharing Economy (2016-2017)(European Commission research) with VVA Consulting

• No shared definition or terminology– Crowdsourced (peer) economy (Sundararajan,

2013)– Access economy (Rifkin, 2000)– Collaborative economy (Botsman and Rogers,

2010)– Mesh economy (Gansky, 2010)– Gig economy– On-demand economy

What is the sharing economy?

• The way to engage households, individuals, businesses, government, non-government organisations, and their idle resources in collaborative– production – distribution– consumption

• via digital platforms

Still very broad !?

What is the sharing economy?

The Sharing Economy Landscape

“Pure” sharing economy

Temporary P2Paccess to

underutilised physical assets

On- demand economy

P2P access to intangible resources

Second- hand economy

P2P transfer of ownership

Product service economy

B2C shared access

B2B sharing

Adapted from Frenken et al, 2015

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P2P platforms as two-sided markets

Hausemer et al. (2017), p. 19

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What is new? Disruptive innovation?

• New value proposition: a cost-effective and convenient access to underutilised or redundant resources.

• Appeal to a different group of customers: those willing to use/reuse someone else’s (strangers’) assets on a regular basis.

• Novel supply chain and operations model: outsourcing of conventional business functions to peer providers/consumers.

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Upscaling/geographical expansion

• Upscaling/geographical expansion critical for success of platforms because of network effects.

• Generic digital platform technology could be applied anywhere.

• But unclear which kind of activities/resources are requiredfor geographical expansion.

https://media.licdn.com/mpr/mpr/p/5/005/084/0ed/08b1d9c.jpg

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Company type

• 3 types of companies

o foreign sharing economy platforms which successfully expanded their operations in the UK

o foreign sharing economy platforms which attempted to expand in the UK but later withdrew

o UK home grown sharing platforms expanding regionally, nationally or internationally

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Sectors

30 companies interviewed

• 3 sectors

• Web-interfaces of 75 sharing economy platforms analysed

Three perspectives

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Born global vs. rest

Geography of value proposition: global from the start

Consequences:

• Peer providers/consumers in new locations ‘popping up’

• Customer support: centralised call centre

• Global branding effective

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One-sided vs. two-sided platforms

Type of platform: one-sided (product-service economy)

Consequences:

• Substantive upfront investment in fixed assets required for new locations

• Coordination with local authorities or infrastructure providers required

• No need for tools to generate trust among individual strangers

vs.

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Standardised vs. co-createdbespoke services

A significant amount of complex social coordinationrequired to co-create a service experience.

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https://www.borrowmydoggy.com/safety

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Consequences:

• High quality communication requirements between the platform, service providers and service recipients (f2f and telephone…).

• Substantial investment in identifying and selecting service providers (qualitative interviews etc.)

• Challenging experimentation with standardisation and customization.

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Type 1“born global”

Type 2“local value potentially

global”

Type 3“local infrastructure as product service”

Type 4“co-created services”

Pure sharing economy -accommodation;

On-demand economy -professional services

Pure sharing economy -transportation, &

personal/professional services

On-demand economy -transportation

Second-hand economy-Personal services

Business sharing-professional services

Product service economy -

transportation

On-demand economy -personal/professional

services

Business sharing -professional services

Little sharing among sharing economy platforms…

Untapped potential for collaboration and open innovation.

Idea types

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Challenge: Regulation• Increasingly important and complex:

– Understanding and finding ways of dealing with regulatory changes– Coordination/lobbying with policy makers/regulators

http://assets.nydailynews.com/polopoly_fs/1.2978679.1487716735!/img/httpImage/image.jpg_gen/derivatives/landscape_1200/airbnb22n-1-web.jpg

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Challenge: trust among strangers

Hausemer et al. (2017), p. 76 – GfK consumer panels in 10 EU co ntries

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• Effective tools to generate trust among strangers

– Reputation and review systems– Identity verification– Insurance– Local offline support processes– ‘Reputation dashboards’ across platforms (similar to

credit score) could help

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Other challenges…

• Strategic positioning (rivals with massive venture capital make huge financial losses for attracting platform users).

• Choice of online/offline marketing instruments in new locations.

• Dealing with responsibility and liability issues for P2P transactions.

• Creating value with data vs. data protection issues.

…

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Concluding remarks

• Sharing economy is transforming/disrupting many sectors.Challenges and opportunities for innovators, entrepreneurs, policy makers and academic researchers.

• Alignment of technology with non-technological factors critical.

• Geographical embeddedness of generic digital platforms.

• Creativity required for a wide range of challenges (value propositions, cooperation and open innovation, generating trust among strangers, dealing with regulation etc.).

Grinevich, V., Huber, F., Karatas-Ozkan, M. and C. Yavuz (forthcoming). Green entrepreneurship in the sharing economy: utilising multiplicity of institutional logics. SSmall Business Economics.

Grinevich, V. and F. Huber (2016). Organizing upscaling in the sharing economy: a typology of socio-technical enablers and constraints. 32nd EGOS Colloqium, Naples.

Hausemer P. et al. (2017). Exploratory study of consumer issues in online peer-to-peer platform markets. European Commission.

Thank you!

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Approached Interviewed

a) Sector Accommodation 32 7

Transportation 20 10

Personal/professional services

23 13

b) Sharing economy type

Pure sharing 43 13

On-demand 15 7

Product service 8 4

Second-hand 4 3

Business sharing 5 3

Sector and sharing activity

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Age and popularity

Target sample Interviewed

Year founded less than 2,000 monthly visits

8,800 monthly visits and above

less than 2,000 monthly visits

8,800 monthly visits and above

before 2000 8 3 1 3

2000-05 8 10 1 4

2006-10 9 14 4 6

2011-15 12 11 5 6

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Social and racial discrimination•Consumers of lower socio-economic status may find it difficult to take full advantage of sharing economy services (Thebault-Spieker et al., 2015).

•Black service providers (in the case of Airbnb) may be discriminated against by consumers (Edelman and Luca, 2014).

– !? sharing platforms may be best positioned to detect and eradicate discriminatory practices by applying digital algorithms (Cohen and Sundararajan, 2015) .

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Geographical availability•Mainly urban agglomerations due to business model rationale (assuming there are no issues with internet and infrastructure connectivity

• Disadvantaged high risk areas may not be covered by insurance products and face higher prices

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Social protection/exclusion• Risk of downward pay spiral for certain type of tasks – market

efficiency driven • Especially relevant for those who make the sharing economy main

job– Male, young, single, between 18-34 (The 2015 1099

economy report) • Health/safety in workplace, social security (illness, overtime,

pensions, unemployment/income reductions)

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Regulatory issues

Business side

• has an incentive

– to engage with regulators (important for upscaling)

– to clarify legal status (to ensure level playing field)

• willing to self-regulate (and even facilitate tax collection) but not regulated

• P2P to B2C trend

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Regulatory issuesPolicy side

• Should go beyond responding -to be more proactive to jointly develop regulatory set-up with sharing platforms (Airbnb shared city programme)

• Balance between unleashing the potential of the sharing economy and maintaining standards (health, safety, social exclusion)

• Perhaps, even help establish sharing platforms by public sector organisations

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Regulatory issues

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Type 1 - Born GlobalValue proposition is from the start designed for multiple countries

Demand and supply side of the market shaping up automatically

Strengths:

– low start up costs;

– highly centralised, automated and standardised interactions between the platform and the customers;

– no need to be physically present in multiple international locations;

– focussed on matching demand and supply via promotions and marketing campaigns.

Challenges:

– data analytics capabilities;

– ongoing investment in technology development and public relations;

– interaction with policy regulators is increasingly important.

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Type 2 - Local value potentially global

• Value proposition can at first be sustainable on a regional and local level

• may be viable internationally, but cannot be enabled automatically; require more local knowledge, local coordination and local testing in order to structure and grow a marketplace in a new location; may require regional offices

Strengths:

– low start up costs;

Challenges:

– Ongoing investment in technology development, public relations, identifying local representatives, local partners /selecting service providers;

– integrating national legal frameworks (labour laws; taxation);

– unstructured data analytics.

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Regional/local geography of value proposition but unable to start operations without significant upfront capital expenditure and prior, often formal, agreement with local authorities and other infrastructure regulators.

Strengths:

– highly centralised, automated and standardised interactions with customers;

– one-sided platform, i.e. no need to orchestrate both supply and demand, and therefore, less demanding in terms of technology development and organisational capabilities.

Challenges:

– Upfront fixed capital expenditure;

– formal coordination with local authorities, transport infrastructure providers;

– ongoing public relations expenditure; working closely with local and national legal frameworks.

Type 3 - Local infrastructure as product services

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Type 4 – co-created services

• Regional/local value proposition with a significant amount of complex social (human-to-human) coordination required on the part of the platform to engage with different types of platform users to co-create a service experience.

Strengths:

– Initial start up costs are relatively low

Challenges:

– platform design; standardisation v customisation;

– integrating online and offline channels of communication;

– high quality of traditional forms of communication required;

– unstructured data analytics.

on managing innovation in the sharing economy · hausemer et al. (2017), p. 76 – gfk consumer...

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