Sharing Economy: Think impact, build a legacy

The new millennial generation will drive the reality, but it may be my older generation that can create the dreams. These will be based as much on the bitter experience on what has gone wrong as well as on the hopes of what could go right. 

It is not just individuals that should be dreaming of a better world. Companies in the midst of COVID-19 may see it as a luxury to ponder their legacy. Indeed, dealing only with the short term may have had evolutionary advantages in helping remote ancestors to escape danger. But as Lene Nielsen and Adrian Caddy, founders of branding agency Greenspace argue, climate change, sub-prime mortgages, public underinvestment, COVID-19 itself are all the consequences of short-term thinking on a grand scale. 

As companies adjust to what may be a radically new environment, Nielsen argues that at the heart of an organisation is an enduring idea – that of creating a legacy. An idea sparked by an observation about a way in which the world could be better. It is this that drives a brand’s purpose, continued relevance and success. At no time is this more important than in the crisis faced today. Many companies may need to reinvent their complete approach to doing business while others will not survive. 

Greenspace itself, says Nielsen, finds that brands with a drive to create a positive, lasting change to the environment, people or society tend to have the legs to carry them through the differentiation trap that many brands face. Consequently, they tend to stick around long enough to have an impact on the world – which is what it takes to leave behind a legacy.

Perhaps the most significant changes we are going to see in the new normal of perhaps endemic but controllable pandemics (plural because there will be more), will be in the urban environments where most of the global population will be living – 70% by 2050, according to UN projections.  As Steven Skinner, UK chief executive at HB Reavis, a property developer, points out, the lockdown has highlighted that most office-based roles can be performed remotely, facilitated by the adoption of technology. “Overnight, it has become acceptable – almost assumed – that an individual will be able to have control over their own working patterns, and it will no longer be an exception or perk to be able to work from home.” 

Nielsen argues that to transform this into an opportunity to create a positive legacy, how about we try to balance the interests of efficiency with those of well-being? “One would hope that our embrace of technology to drive ever-greater efficiencies in the places where we live and interact can be challenged by an equal concern with promoting health and happiness.”

At the extreme end of transformational change lies the smart cities movement where the use of IT and artificial intelligence create tools to allow us to live safely and sustainably together. Two notable examples are Masdar City in Abu Dhabi and Songdo in South Korea. These both have impressive environmental credentials and technical efficiencies. But, says Nielsen, they have been criticised for being characterless, with Masdar City struggling to attract residents. 

Unsurprisingly, Toyota in Japan is building the ‘Woven City’, a fully connected ecosystem powered by hydrogen fuel cells at the base of Mount Fuji. “This ‘living laboratory’ will include full-time residents and researchers who will test and develop technologies such as autonomy, robotics, personal mobility and smart homes, in a real-world environment.” The ideas that are developed here may be just dreams for my generation – but they may become reality for millennials. 

Some ideas that may be a feature of a smart city are already becoming popular. One such idea, says Caddy, is that of transforming customers into subscribers. “Subscribers represent the sharing economy and – far more than customers – they can help businesses to guarantee their longevity.” Companies should recognise that, as Caddy argues, the legacy potential of the sharing economy is far-reaching. Moreover, it can contribute towards creating a more sustainable world with environmental, social and economic benefits. These can be achieved through reducing the amount of goods manufactured and democratising access to previously exclusive products and services.

“Playfulness, creativity, joy, compassion and even democracy itself can seem messy and inefficient, but all are crucial to our quality of life”

Lene Nielsen

Luxury equipment manufacturers are launching subscription services for items ranging from high-end headphones to designer clothes. Economically, a consumer may find it makes little sense for items that are used continuously such as headphones. But for city dwellers, paying for vehicles only when needed can make economic sense as well as benefitting the environment. 

Traditional car manufacturers including BMW, Hyundai and Volvo are seeing which way the future is going and launching subscription services. The next revolution may come with autonomous driving vehicles which could then be available on demand. These could cut out huge spaces devoted to cars sitting stationary in car parks. 

The move towards a subscriber model will cause a whole series of  knock-on changes. The status symbol of ownership declines if anyone can be seen riding a Porsche, if only for a few hours. Almost inherently, says Caddy, the sharing economy transforms the relationship between brand and consumer. “The ownership model is a one-off, more-or-less anonymous exchange, but the subscriber model creates a long-term – possibly ven a lifetime – commitment.” That creates an opportunity for businesses to naturally incorporate feedback from subscribers into new products, in turn inspiring greater trust and loyalty.

The new normal could and should be a more sustainable and equitable world. Yet on the journey there lie obstacles and dangers to be overcome. Nielsen, for example, warns that while the smart cities movement is a lucrative one, there is a glaring need for democratic processes and grassroots involvement, primarily to safeguard human rights and freedoms and, most of all, to prioritise well-being – defined as the state of feeling healthy and happy. 

Companies and investors with a commitment to sustainability, could and should influence the future cities movement. As Nielsen says: “Playfulness, creativity, joy, compassion and even democracy itself can seem messy and inefficient, but all are crucial to our quality of life.” Companies that wish to create a legacy should bear that in mind. 

Joseph Mariathasan is a contributing editor to IPE and a director of GIST Advisory