The New Economy Called Sharing Economy
Exclusivity is out. Collaboration is in. Working together is the new way of doing business which brings us to the concept of sharing economy. What does sharing economy mean? As kids, we were taught early on that sharing is an essential part of being. The definition of sharing that we knew back when we were starting to learn about numbers and ABCs is no different to the idea of sharing when referring to the sharing economy.
Uber, Airbnb, Grab, ebay, Fon, HomeAway, and Elance – do any of these companies ring a bell? These are just some of the growing number of sharing-focused businesses that are shaping today’s industries and economies. Companies built on collaborative ecosystem and sharing management culture are transforming businesses and the way people deal with daily life and work situations.
The rise of social media
Admit it or not, social media has become a part of the daily lives of most people. Unlike traditional communication tools, social media offers a two-way communication stream that allows people to be proactively engaged in discussions and the decision-making process. Social media is a tool aimed at collaboration and sharing. Imagine how easy it is to order food, look for a job, shop, book trips and appointments, join organizations, and even set-up a date right at your fingertips. Years ago, we were stuck with lengthy paper processes, charged with exorbitant fees, and even traveled miles away just to do such things. And today, social media has become a fundamental element of the sharing economy as witnessed in the companies mentioned earlier. The advent of social media has changed people’s perception and attitude towards others. Since then, people have become more willing to open up about their lives to strangers as seen on a lot of vlogs and social media posts. People are more engaged and unafraid to share their opinions and recommendations. Subconsciously, these are behaviors that can very well be attributed to the idea of sharing. What started out as a simple idea of sharing information turned into something even bigger – the sharing of resources.
If you don’t evolve, you dissolve
Why do we need to understand the sharing economy? Why does it matter to us? If we are just mere consumers and not into the business and technical side of the sharing economy, then why should it matter to us? The answer is simple. Life is chemistry. Everything around us affects us. And if we don’t evolve and adapt to changes, we will get left behind and stop growing. We need to understand the basic principles of sharing economy because we are a part of it. Our contributions, no matter how small, make all the difference collectively. A deep understanding of this emerging economy can lead us to better opportunities, allow us to reach new horizons, and provide us foresights that will allow us to make strategic decisions. We can’t just always be on the receiving end all of the time. It would be an irony to benefit from an industry that capitalizes on sharing but could not receive its fair share of time, resources, and efforts from the people it caters to.
So, you want to be a part of the sharing economy?
What does it take to be a part of this emerging economy? Just like in any other business or venture, we set values and traits that help us succeed in our undertaking. The values and attributes required in a typical business are no different with the values and traits one needs in the sharing industry. Sharing-focused businesses operate on trust, transparency, accountability, cooperation, open-mindedness, and the willingness to adapt to changes, innovate, and constantly feed your mind with knowledge. Apart from these values, it’s also necessary to come up with a strategic plan for your planned shift to a sharing-centric economy. How will a sharing economy affect your existing business model? Are you well-prepared for disruptions and the transition? Have you thought about the mindset of your market? You need to consider these questions on your planned economic shift. And you need to integrate all the values mentioned earlier in answering and creating solutions for such questions.
Entrepreneurship that creates opportunities for all
The sharing economy is empowering entrepreneurs and reshaping how they do business. Entrepreneurship is evolving because of peer-to-peer marketplaces. Pooling together, sharing resources, and reducing overconsumption or unnecessary purchase of things are redefining the concept of community-building in the perspective of a sharing economy. What sets the sharing economy apart from the traditional economy is its ability to provide business opportunities for all. In a traditional set-up, only those who have enough capital to build or buy apartments or condo units can actually sell or rent out these places. Imagine having an unused room in your apartment that’s just building up dusts and cobwebs. Thanks to the sharing economy, you can now have your room easily rented.
Is it sustainable or not?
This leads us to the question on whether this kind of economy is sustainable or not. Yes and no. Like all things, the sharing economy has its own pros and cons. When it comes to sustainability, it will depend on how we treat and view it today and in the future. It could be sustainable because it creates jobs for people and reduce the unemployment rate but it’s not sustainable for governments because of loss of tax revenues. Will sharing-centered enterprises last long if the number of similar businesses rises? Will it still be sustainable socially and environmentally speaking? The answer will depend on how a business sees the opportunities in challenges. Again, it all boils down to the values mentioned earlier, especially one’s open-mindedness, and willingness to adapt to changes, innovate, and constantly feed their mind with knowledge. These are what will make the sharing economy successful and sustainable.
Companies and organizations need to give back more than what they take from the environment and the society. For a company to be net positive, it needs to outweigh all the negative impacts on society and the environment with positive impacts. Net positive is a way of transforming businesses by having them innovate their products and services in a way that helps consumers have more sustainable lifestyles and restores the environment.
Why the Need to be Net Positive?
Nothing in this world is permanent. We live in a time of profound disruptions, rapid changes and unprecedented social, economic, and environmental challenges. These factors have made significant impacts on our lifestyle and the way we view our environment. When a business or an organization fails to positively respond to these changes, adapt and adopt appropriate measures, it usually leads to failure and eventually, closure of business. This is why becoming net positive is important. Net positive aims to encourage organizations and businesses to leave a positive impact to the environment – you put more resources into the environment than you get. Is it achievable? Yes, it is.
The 12 Principles
Through the 12 principles of a positive net approach, organizations and businesses understand net positive better which in turn help them adopt this new approach more efficiently. Here are the 12 principles of a net positive approach:
Net Positive Leaders
A lot of companies are already geared towards a net positive plan. Companies like IKEA, Coca-Cola, Capgemini and Kingfisher are among the key organizations making a positive impact to the society and the environment. These companies go beyond doing less to zero harm to the environment. What they do is they set clear guidelines and common set of principles to increase their sustainable practices while innovation. The net positive principle is a great way to avoid companies from greenwashing since in going net positive, you don’t just simply label your products or services as eco-friendly. In net positive practice, you show proof that you are indeed returning more than what you get from the environment. Coca-Cola, for example, returns and restores the water it uses in its products. They’ve set a concrete goal with a definite timeline in replenishing all the water they use in making beverages.
This goes beyond just merely restoring the water they use. Coca-Cola incorporates social responsibility through launching community water projects all around the world. These projects range from protecting watersheds to improving access to potable water. Meanwhile, IKEA’s net positive strategy focuses on generating renewable energy. Energy-saving initiatives such as installation of wind turbines and solar panels on their stores and distribution hubs have helped IKEA reduce their energy use globally. Their strategy is also encouraging consumers to change their mindset regarding energy consumption.
Gearing towards a net positive impact will not only drive a restorative economy. More importantly, it will create societal and environmental values that drive sustainability and help build community resilience.
We hear it everywhere, we talk about it among our colleagues, family members and circle of friends in business meetings, social media, and advertising platforms. It’s a concept born out of the need to combat the exploitation of natural resources and to meet the needs of today without compromising the capabilities of future generations to meet their own needs.
How can we address the issues of energy, food, climate, chemicals, renewable resources and globalization well within ecological limits? Sustainability is a key in addressing such challenges we face in our daily lives. It’s a concept that everyone can work towards because even the smallest things we do can gravely impact our future and make a difference.
Capitalism vs. Shared value
Capitalism, being the dominant economic system, plays a crucial role in the formation of a sustainable society. However, times are changing and what used to work before might not work now. What’s more, many of today’s environmental, social and economic challenges are being blamed on corporations. So, if we want a sustainable future and society, we need economic systems that really work. And creating shared value is the way to go – it’s the way to reinvent capitalism. But just what is shared value? It’s more than just creating economic value. It’s about realigning your business to create values that address the challenges and needs of societies.
Is Fair Trade Really Fair?
What started out as a simple means of helping people in developing countries has now evolved into a multibillion-dollar trade that’s helping address poverty and empowering producers in poor countries – or not! Not that we’re being skeptical of fair trade policies but as socially conscious consumers, we can’t help but ask ourselves if fair trade is really being fair to our farmers in poor countries. Are we sure that our money is really going to good causes? How do we gauge it? Who is making sure that it is really fair and ethically acceptable? Who is ensuring that the rights of farmers are not being violated? Critics of the fair-trade movement are arguing that fair trade doesn’t help the poor rather, it’s more beneficial to traders in rich countries. They argue that joining the fair trade requires specific quality and political standards that are obviously difficult for poor farmers to comply with. Another argument is that little money reaches farmers. It’s difficult to find out if the extra money we pay for the goods is really reaching them. There’s not much evidence proving that farmers receive a good sum of the money. Our purchasing power is crucial in helping producers in developing countries but the more critical factor is our discernment of these fair trade-marked products being sold to us. It’s becoming more of an appeal to our emotions rather than helping consumers have a better grasp of the situation and become more proactive in exercising their purchasing power.
Going organic is Green Washing?
Going green is a growing trend among health-conscious and eco-conscious consumers. It’s seen as a sustainable means and ecologically responsible practice of using natural resources. However, this growing trend has recently come under fire mainly because of the integrity in labelling goods as organic. A lot of organizations spend more time and resources in claiming to be eco-friendly through marketing and advertising than they actually practice. It’s a form of deception that is making everything all the more complicated because we have consumers who really want to positively impact the environment but the more that they “go green,” the more that they unknowingly harm the environment and help these deceptive organizations profit.
The Principle of Permaculture
How then can we gauge if something is legitimately eco-friendly and not just greenwashing? Understanding how permaculture works is one way. Permaculture originated from the words permanent and agriculture. It is an ingenious agricultural design process that incorporates ethics and social design principles geared towards sustainability and self-sufficiency. As a consumer, understanding how permaculture works is one big step in being self-sufficient and avoiding greenwashing. It’s a way to avoid greenwashing and counter the linear economy perspective. In permaculture, you are guided by three interwoven ethic principles – care for the people, care for the earth and the concept of fair share. Agroforestry, rainwater harvesting, intensive rotational grazing, fruit tree management and natural building are among the common permaculture practices adopted today. Permaculture can be likened to the circular economy where wastage of resources is avoided. It’s a more viable and legitimately eco-friendly practice than simply buying green-labelled products. And what permaculture does on a larger scale is that it contributes to sustainable economic development.
Shared value, capitalism, fair trade, greenwashing, permaculture – all these things relate to sustainability in one way or another. Understanding the core principles behind these concepts and terms is important just as much as it is important to understand what sustainability really is. For without enough knowledge on these concepts, a surface-level understanding of sustainability would not suffice.
Patrick Roupin is an expert in innovation, design, strategy & entrepreneurship.
Ashrefunisa Shaik is an expert in organizational transformation & sustainability.