Xpat Opinion: Strategy For The Sharing Economy

  • 8 Sep 2015 9:00 AM
Xpat Opinion: Strategy For The Sharing Economy
By Yusaf Akbar: Strategic thinking is at a crossroads. For decades, strategy theory and practice and the pursuit of competitive advantage has been centered on three complementary perspectives: external positioning, internal resources and capabilities and dynamic agility.

Now we certainly shouldn't entirely abandon these rigorous, evidence based ways of thinking about strategy - they continue to be relevant today.

However, two related phenomena are posing fundamental questions about how companies can capture value and attain industry leadership. These are the Internet of Things and 3D Printing technology.

Both the IoT and 3D printing are encouraging new forms of value creation that have two properties: increasingly hard to monetize and increasingly done by consumers themselves.

Let me give an example: Jane has a large house in a popular city with tourists. She has solar panels that generates more than enough energy for her needs and she sends the surplus into the grid. She owns a 3D printer and makes jewellery and garment accessories that she sells on Etsy. She participates in forums at Etsy sharing knowledge on design craft and creativity. Last but not least, she rents out rooms on AirBnB in peak tourist season.

Sounds unbelievable? Well, more and more people are doing just this and in doing so becoming prosumers.

What does this mean for companies? A lot! If I am an energy firm, I have a challenge. If I make cheap jewellery and distribute through mass retail, I have a problem. If I am an hotelier, I have a serious issue.

In short, a range of industries will have to reinvent themselves as prosumption increases in magnitude.

Instead of maintaining vertical control over supply chains, companies will increasingly have to orchestrate Eco-systems and manage lateral relationships across industries. A serious opportunity and challenge. Oh and one more thing, in her spare time, Jane operates as an Über taxi driver.

Who's capturing the value now?

Source: CEU Business School

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