Bruno Freitas, Executive Partner at Plug, one of São Paulo’s hottest places to work This month we had the chance to connect...
Some weeks ago we talked about how coworking was making our cities smarter. On the same degree, I think that the whole Collaborative Consumption movement will make the way we produce things much smarter than it currently is.
The idea firstly came to my mind when I was reading the ‘You don’t want the drill — you want the hole’ article on Grist.com. As explained there by Neal Gorenflo the concept does not work with low value assets, but it’s what lies behind the Collaborative Consumption model:
You don’t need to be the owner of an asset, but you need access to its capability to perform an action or to obtain an end result. You don’t really need to own an office, if you can have access to an office-like facility such as a coworking space.
Why spend money on a car if you can simply enjoy its benefits, like moving from point A to point B or showing off you coolness by driving a fancy convertible, without the need of being the owner?
On these premises is built the success of companies like ZipCar, which gives you the access to a car without the need of buying one. Contributing to this success is the fact that car sharing frees the customer from the burdens of ownership: end consumers don’t need to take care of maintenance costs, such as reparations, insurance, gas and additional taxes.
We can think about it as “Car as a Service”.
In 2012 it was calculated that there were 740 millions of underutilized cars in the world, and according to a University of California study, in the areas where carsharing services were available, car ownership dropped by 50%, while for each shared car in the fleet there were 9 to 13 vehicles shed.
By pulling together those data, we could say that if car sharing becomes THE standard, dismissed vehicles will be counted in the hundreds of millions. A massive loss for the automotive industry.
That’s probably one of the reasons why automotive giants are stepping into the car sharing business: BMW launched its own program to keep up with its rival Daimler (Car2Go), while GM is collaborating with existing car sharing companies. This is part of a big paradigm shift as those companies are starting to sell a service instead of selling a product.
We live in a world where things are “Made to Break“, and usually costs for replacements and repairs burden on the consumer’s shoulders, while they are a second source of profits for the manufacturers.
What happens if we reverse the equation? What happens if suddenly costs for repairs, insurances, taxes and gas were to be paid by the manufacturers? It happens that when BMW decides that paying 34 cents to drive an X1 for one minute is an acceptable cost, then maintenance becomes an item on the company’s balance that have to be trimmed down in order to increase profit.
So, if the next version of X1 covers the same distance using less fuel, its increased energetic efficiency will lead to an increased profit for BMW itself (and let’s not even try to think about the profit growth if the same car could run with a costless energy source, such as solar energy). The same happens with repair costs: a more durable car will mean less expenses for BMW, and less waste of resources, while a safer vehicle will reduce insurance costs.
The end result will be a greener, cleaner and safer planet, where safety and sustainability are not perceived as COSTS anymore, but as a source of profit, and where what are now perceived as externality costs, such as pollution and waste, will become real costs on the balance of a company.
The same concepts can be applied to a wide variety of products which could be turned into services. The way these new services will be used and their business models could not be related directly to Collaborative Consumption itself, but they will rest on the same principle: you do not need to own something, you just need to have access to it.
Collaborative Consumption is laying out a new path for us to follow and a big change is at the reach of our hands: maybe the success of companies like Zipcar might well mean that we’re on the right track.
On our end, at ShareDesk, we’re doing our best to make office space more accessible, and flexible for everyone, and a way to bring in some extra cash and build a collaborative workplace culture for those who are taking part in this movement.