Mastering RevOps: Simplifying Business Growth and Agility
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Jorma Manninen
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Sep 13, 2023 7:05:03 AM
Sharing Platforms Is One of The Five Business Models of Circular Economy.
The circular economy is a transformative model that promotes resource efficiency, waste reduction, and closed-loop systems. Digitalization plays a crucial role in maximizing resource utilization and optimizing supply chains. Public libraries sharing books or knowledge for free, co-working spaces renting office and meeting rooms, subscription-based streaming services renting movies and music, and community-based online platforms listing and renting local homes, cars, or other assets are good examples of Sharing Platforms. By sharing assets, we can make our assets more effective, efficient, and sustainable and reduce waste and conserve resources. The circular economy offers a holistic approach that addresses environmental challenges and promotes economic well-being.
Sharing economy platforms have revolutionized the way individuals and businesses access and utilize resources by offering a unique combination of organizational and market mechanisms. Unlike traditional marketplaces and intermediaries, sharing platforms seamlessly coordinate platform participation, ultimately creating value for all parties involved.
These platforms have disrupted the traditional asset procurement model by providing a space for individuals and businesses to share and monetize their underutilized assets.
Significant advancements in digital technology have brought about a revolution in the sharing platform model, making it more accessible than ever before. By connecting owners with those in need, sharing platforms eliminate the underutilization of resources and maximize their value.
One of the key differentiators of sharing economy platforms is their ability to foster collaboration and resourcefulness. Through these platforms, individuals and businesses can come together to share their assets and expertise, driving continuous improvement and innovation. This collaborative approach not only benefits the users but also strengthens the sense of community within the platform.
Furthermore, sharing platforms contribute to a more sustainable and environmentally friendly approach. By encouraging the sharing of resources, these platforms reduce the need for the production and consumption of new goods, leading to a decrease in waste and carbon emissions. This aligns perfectly with the growing emphasis on sustainability in today's society.
Overall, sharing economy platforms have transformed the way resources are accessed and utilized. Through their innovative combination of organizational and market mechanisms, these platforms create value for all involved parties while promoting collaboration, resourcefulness, and sustainability. In today's modern economy, sharing platforms are playing a crucial role in driving efficiency, innovation, and a more interconnected future.
Some widely known examples of sharing platform approaches include public libraries sharing knowledge for free, ridesharing or carsharing as an alternative to owning a car or relying solely on public transportation, coworking where individuals or businesses collaborate and share office expenses, "couch surfing" to make use of unused rooms or couches in houses or apartments, and peer-to-peer lending that connects those with financial resources to those who are in need.
These different types of businesses provide a platform for individuals to connect with others who require specific resources, eliminating the necessity of ownership.
Three researchers: Ioanna Constantiou, Attila Márton, and Virpi Tuunainen put their minds together and identified two key dimensions that distinguish sharing economy platforms: tight or loose control over participants, and high or low rivalry between participants.
They call the resulting four sharing economy business models as:
"Each model focuses on a different value proposition and strategic intent, but they all exploit the growing fluidity of organizational boundaries. Understanding the sharing economy in these terms enables businesses to identify, and respond to, the threats and opportunities provided by sharing economy platforms."
Constantiou, Ioanna & Márton, Attila & Tuunainen, Virpi. (2017). Four Models of Sharing Economy Platforms. MIS Quarterly Executive. 16.
Well known "Franchiser" companies are Uber, Grab, Bolt, and others, whose value proposition is based on low costs and efficiency gains.
They have identified overserved market segments, whose consumers couldn't afford to pay for the high price of high quality taxi services offered by taxi businesses, who used premium cars for delivering taxi services.
The rivalry is high due to practically unlimited supply of cars and drivers and therefore pricing scheme is based on real-time changes in supply and demand of services.
The control is tight and the platform participation is specified, standardized, and monitored by the platform owner.
In many countries like Finland cash payments made directly to the drivers are not allowed so customers must register credit cards to be able to use the services. In some other countries like Thailand cash is still king and cash payments to the drivers are still allowed; however, credit cards are accepted, too.
The Franchisers also offer different types of cars for different purposes; however, in general the service price levels are very low compared to limousine service providers, for example.
Limousine service businesses have focused on other market segments, who have been underserved and are willing to pay premium prices for premium services. Some regular taxi companies are struggling in the middle due to falling prices and reducing demand for regular taxi services.
Well known "Chaperone" companies are Airbnb, HomeAway, Rentomo, and others, whose value proposition is based on service differentiation.
The Chaperones have also identified overserved market segments, whose consumers couldn't afford to pay for the high price of high quality hotel rooms offered by global companies like Marriott, Hilton, InterContinental, and others, who've invested in four or five stars hotels and luxury resorts.
By the way, home sharing is nothing new, since many homeowners have traditionally offered Bed & Breakfast services for a long time in countries like the United Kingdom and Ireland. The Chaperone companies have just made it a bigger business utilizing homeowners' homes as operating fixed assets.
The rivalry is high due to practically unlimited supply of homes and homeowners, who want to share their homes, apartments, condos, or just rooms for travelers and therefore pricing scheme is based on real-time changes in supply and demand of services.
The control is relatively low and the platform participation is based on minimum standards or guiding principles set by the platform owner. Homeowners can set prices on their own and customers can make deals with the homeowners directly.
The Chaperones also offer different types of homes for rent including villas, apartments, and condos for long or short term. In some countries housing companies don't allow short term leasing of homes due to fear of disturbance caused by short-term tenants, but this is somewhat difficult to control.
Some "Principal" companies' like Handy's, TaskRabbit's, Zeel's, and Deliveroo's, and other companies' value proposition is based on low costs and risk mitigation.
The Principals have identified underserved market segments, whose consumers want to know what they get for the money they pay for the services delivered by the suppliers. Unlike local service businesses, who may not always state clearly what is included in their service offerings, the Principals help consumers buy services by specifying service packages clearly and controlling the service delivery and suppliers to make sure consumers get what they need and what they pay for.
The rivalry is low due to pricing schemes based on compensation of the suppliers' costs and prices are predefined, stable categories that are not dynamically adjusted based on supply and demand on the platform.
The control is tight and the platform participation is specified, standardized, and monitored by the platform owner.
Many "Gardener" companies' like Couchsurfing's, BeWelcome's, BlaBlaCar's, and Peerby's, and other companies' value proposition is based on self-organization and community building. For example, Couchsurfing was founded as a non-profit organization coordinating peer-to-peer, short-term and free-of-charge accommodation.
Gardeners have identified overserved market segments, whose consumers couldn't afford to pay even for the low price of accommodation service offered by hostels, for example. Another benefit consumers get from suppliers is life-sharing experiences and friendship type of relations where money is not exchanged.
The rivalry is low due to pricing schemes based on compensation of the suppliers' costs, which in many cases is zero or almost zero, for example, if the consumers bring and share food and drinks and clean their rooms before they leave.
The control is also relatively low and the platform participation is based on minimum standards or guiding principles set by the platform owner; however, charging consumers is not allowed; however, payment may be made in the form of free services provided by the consumers in return.
Regardless of whether your company operates in the sharing economy or follows a traditional business model, it is essential to have a thorough understanding of how sharing economy platforms operate. This understanding becomes even more critical for you, if your business is competing within or against the sharing economy.
Sharing economy platforms operate on business models that require less or no capital investment in operating fixed assets or no employees compared to traditional businesses, providing them with the flexibility to adapt to environmental changes and take advantage of new business prospects.
This heightened flexibility intensifies the competition for established players. The leading sharing economy platforms, with their technological expertise and data proficiency, are in a prime position to explore future opportunities.
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Product as a Service is one of The Five Business Models of Circular Economy.
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