Collaborative Economy: What It Means for Brands
Posted by KatieSoo
A fellow social colleague said it best:
“The next phase of Social Business is the Collaborative Economy; Brands will enable customers to share, trade, lend, gift products and goods using social technologies – Jeremiah Owyang“
Although this isn’t a new idea, many of us working at disruptive companies seldom take step back to evaluate the impact this shift has made in social and brands.
Historically: Startups vs. The Brand
Having been on both sides of Enterprise and startup, I can (without a doubt) say the moving landscape of social media has forced these two groups to acknowledge the threat they pose towards each other. In the past, if a company was overpriced or too high-brow for an average consumer… it spawned an opportunity to create a new company that provided a lower cost alternative for the same services, and pairing it with strong social loyalty programs to create deeper consumer connections, e.g. AirBnb vs. Hotels, Rent the Runway vs. High End Fashion Brands, Kickstarter vs. World, and more.
Today: The Brand vs. Startups
Startups have disrupted the ecosystem of traditional business models, empowering consumers to rent, swap, borrow and share. Brands affected by these emerging businesses are forced to acknowledge that ‘something’ is in fact missing their business model, resulting in one of four reactions: acquire the competing startup that ‘fills in’ the gap of what’s missing, adopt the same formula/trend in-house, take out the budding competition, or do nothing.
Take AirBnb, for example.
The company, valued at $2.5 billion, reinvented the definition of BnBs by offering an alternative to booking overpriced hotels. Customers were no longer bent over and taking it up the ____ by hotels, they now had an option to rent a home or flat through a collaborative social platform. The mere existence of this choice impacted the revenue streams of hotels.
So, they fought back.
This CNET article released on Monday made it official: AirBnB rentals are now illegal in NYC.
Wait, whaa…..?! The word ‘illegal’ pretty much drops the guillotine on many NYC renters, but luckily, this doesn’t mean a hard core purge of Airbnb members. It simply sets a precedent that this regulation will be enforced when a complaint is filed.
Though no one seems to know why NYC made this AirBnb case the primary target — it does bring up a bigger topic at hand: Are brands feeling the pinch and fighting back? And if so, will they adopt by gleaning best practices from one of 200+ startups empowering the consumer, or squash their competitors and force consumers to take a back seat?
I’m not going to sit here and tell you I have all the answers, but I will tell you this: New business models are rapidly emerging and excelling in acquiring new or existing customers from name brands. It’s not why, but how brands should be adopting to these changes. Consider my two cents on this: B.A.C.K. (Yes, I used an acronym – shit happens)
- Build your brand on innovation and change.
- Accept the social playground has shifted to a Collaborative Economy.
- Continue to innovate by listening to your customers and team
- Keep moving forward
After all…. we all remember what happened to the Kodak moment.
P.S. Photo of Sir Richard Branson (possibly my favorite person/innovator/thought leader/entrepreneur alive) is courtesy of the photographer.