Sharing Economy - A Rant

Thunderstorm; Photo by Marc Wieland on Unsplash

In the past weeks I have been to some events. Their main topic has been ‘digital transformation’, which is a term that currently gets used all over the place. The good news is that people mostly seem to have understood that digital transformation most of all is a business transformation, with IT being an enabler, not a driver.

However, and that’s the bad news, one term popped up everywhere like a bad charm.

Sharing Economy

And the usual suspect companies are cited as the trailblazers of this sharing economy:

·    Airbnb is apparently the biggest hotel chain. But it does now own a single hotel, rather than a bed

·    Uber, the biggest taxi corporation. It does not own a single taxi

I even heard Amazon and Alibaba being mentioned in this context.

And then there are plenty more companies that one could mention, like TaskRabbit, Lyft, Zaarly, you name them.

There are few terms that make me flinch like this one, maybe ‘democratization of <take your pick of technology>.

Why?

Because the term does not describe the concept behind the model. Instead it creates a cozy feeling of perhaps doing something good by sharing one’s possessions with someone else.

 The Oxford Dictionary defines the verb share as ‘have a portion of (something) with another or others’.

Sharing in its original context is about jointly using or enjoying something, in a wider sense it is about giving someone else access to something. In any case it has some altruistic touch to it.

What the above mentioned companies are about is, positively speaking, helping me to give access to something that I have, be it a room somewhere else or a cab ride, or my skills. They are platforms, or market places; and the economy that they are defining is a platform economy.

And mostly, they are not doing it from an outside-in view but from an inside-out view. Uber does not care whether the drivers that offer their services via the Uber platform are well off or not. Uber certainly does not want the drivers as employees, but looks at them as independent contractors.

Airbnb has long ago ceased to be a place where people gave access to their place, just because they do not need it for some time. Instead, it is a place where renters seek to generate revenues, often as a business model. I did it, too. For the record: I also paid taxes on the revenues.

Admittedly, using these companies customers can often get what they need cheaper, and regularly with a better customer experience than traditional service providers offer.

However, apart from curiosity, the main driver for their adoption stays the price on the demand side, and the promise of (easy) revenue on the supply side.

How do they achieve this? By outsourcing cost of providing the actual service while charging for providing access to it.

Which again shows that these companies are not about sharing but about being the man in the middle.

They are offering a platform.

And platforms are about controlling products and services that get commoditized – or about commoditizing them. This commoditization may be of business applications, of taxi rides, overnight stays, of a carpenter’s services.

Platforms are about dominance, dominance in the own eco system as well as across them.

Don’t get me wrong. Platforms and platform businesses are not vile per se.

Good platforms are mandatory for businesses to be able to provide customer- and employee engagements that are geared towards delivering great experiences.

But a platform business is about the platform and is not equal to sharing economy. And the business that those trailblazers are involved in is about the platform, and nothing else.

We all should keep this in mind.