Collaborative Consumption: Drivers, Systems, Implications

Are you familiar yet with Rachel Botsman and her book What’s Mine Is Yours: The Rise of Collaborative Consumption (HarperBusiness, September 2010)?

Her talk at TEDxSydney last May is featured at the TED website on the subpage about “The Rise of Collaboration” (the 15-minute presentation and a transcript are both online here). Time magazine in the Dec 9 issue named her ideas about collaborative consumption and technology-enabled sharing of goods and services one of the top trends of 2010. A piece in the October issue of Harvard Business Review by Botsman and her co-author Roo Rogers set out their thesis in 349 words.

Here’s the idea: there is, as Botsman says in the TED talk, “a powerful cultural and economic force reinventing not just what we consume, but how we consume.” The website Swaptree is a perfect example. Botsman had a set of DVDs from the TV show “24.” She wanted a copy of the movie “Sex and the City.” And right on Swaptree she was able to find someone who wanted that exact swap, solving what economists call “the coincidence of wants” in about one minute.

As Botsman puts it: “An extremely powerful dynamic that has huge commercial and cultural implications is at play. Namely, that technology is enabling trust between strangers. We now live in a global village where we can mimic the ties that used to happen face-to-face, but on a scale and in ways that have never been possible before.”

Her ideas about this concept of “collaborative consumption” started, she says, from noticing “how ridiculously easy it is to form groups for a purpose” with the Internet removing the middleman, and how much conversation there was around “the wisdom of crowds” (see MIT SMR’s interview with MIT Sloan’s Thomas Malone, “A Billion Brains Are Better Than One,” and the story “The Collective Intelligence Genome”).

She and Rodgers started collecting examples. They identified four drivers: a renewed belief in the importance of community. A “torrent of peer-to-peer social networks and real-time technologies.” A wave of unresolved environmental concerns. And a global recession that has “fundamentally shocked consumer behaviors.”

Three kinds of systems have resulted, she says: Redistribution markets, like Swaptree. Collaborative lifestyles, like Landshare, a UK program that matches people with space in their yard with people who want to build a garden there, and Couchsurfing.org, which Botsman says averaged more than 35 million daily page views in Nov 2009. And product service systems, like peer-to-peer car rental, where you make money renting your car to your neighbor.

Botsman isn’t big on IDing what makes these systems work behind the scenes — she says in the TED talk that “there are layers of technical wonder behind sites such as Swaptree, but that’s not my interest” — but there certainly are management implications of her research.

You can find them in the last part of the book. After laying out the context (chapter 3: “From Generation Me to Generation We”) and the groundswell (chapter 4: “The Rise of Collaborative Consumption”), the book concludes with a section on implications (chapter 9: “Community Is the Brand”). Here’s a section on NikePlus, from chapter 9:

Even mega consumer brands such as Nike are shifting their brand focus and advertising away from products and toward building collaborative communities. Nike is spending 55 per cent less on traditional advertising and impressive celebrity endorsements than it was ten years ago. Instead, Nike is investing in nonmedia social hubs such as NikePlus, cocreated with Apple, where runners around the world post running routes, map their runs, offer advice and encouragement to one another, track their progress toward goals, load running songs, and arrange to meet up with other runners in the real world.

. . . What is critical for the growth of Collaborative Consumption is that we are moving beyond an era of defining ourselves just by the swoosh on our T-shirts or sneakers. Now we express who we are by what we join, in this instance the world’s largest running club. Brands are realizing that they need to offer experiences, not just products.