Smart Enterprise Magazine

Volume 8, Number 1, 2014

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Michelsen adds, "Enterprises ever ywhere suddenly find themselves operating in markets where people would prefer to share what businesses have traditionally produced. This requires a radical shift in thinking by all executives—especially for CIOs." New Dynamics Drive New Business Thinking As with many of the challenges facing CIOs today, the issues are not a technical pure-play, nor do they involve dealing with one set of issues in isolation. Rather, it's about understanding and exploiting a set of linked dynamics that include customer behavior, economics and technology adoption. The first dynamic involves shifts in societal thinking and consumption behavior. A younger generation faced with esca- lating debt and the global financial crisis hangover realizes that sharing products and services can be just as attractive as owning them outright. "Unlike the older school of thought, based on 'beat your neighbors' and pride of ownership, younger consumers now recognize that it can be just as beneficial to share with them," says Michelsen. "For example, why not share a car if you can never afford to buy one outright yourself? Furthermore, it can be financially beneficial, too—if you have a spare room, why not rent it out or even get paid for cooking a gastronomical delight in your community?" Second, basic economic principles dictate a preference for sharing. According to the United Nations' predictions, the world's population could grow to 10.9 billion by 2050, yet natural resources are finite, and future demand will outstrip supply. Furthermore, the emerging middle class in new economic powerhouses across Asia will inevitably increase demand, resulting in more shortages and higher prices. Finally, new technologies are helping people share more easily. Trends like social computing and mobility enable people to share ideas, opinions and thoughts, and even market their own goods and services. "On an individual level, people now have the power in their pocket, meaning they can instantly engage with like-minded people to access and share goods anywhere, anytime," Michelsen says. The Power of Disruptive Business Models These forces have combined to drive the creation of highly disruptive business models, where new startups are using the Internet, social media and mobility to facilitate peer-to-peer marketplaces—enabling people to connect and share what they have with people who need it. For example, Zipcar, one of the early pioneers (founded in 2000), built a whole new business based on the willingness of people to share cars. People can use the company's mobile phone app and location-based services to find a suitable vehicle (hybrid or electric), use and insure it for as long they need it. Zipcar can even unlock the car's doors and start the engine. It's simple, quick and convenient, eliminat- ing visits to the car rental lot. Or consider San Francisco-based Airbnb and its community marketplace that connects people who have a room to share with people who need somewhere to stay. Founded in 2008, Airbnb has more than 500,000 properties listed worldwide, and more than 8 million people have chosen to stay in them. The beauty of this model is that it works in many different markets. As another example, take Lyft, a San Francisco-based company that's built a business based around people's desire to share transportation and cost. People who need a ride request one from drivers who are offering them. Similarly, Feastly, founded in 2011, is an online marketplace connecting passionate home cooks with hungry eaters to offer home- made meals prepared and served in the cook's home. Why risk 8 SMARTENTERPRISEMAG.COM

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