The Rise of the Collaborative Economy

On
any given day, millions of people around the world log in to Waze, a free GPS application, to contribute and
access traffic data and incident reports in a collaborative, peer-to-peer
system that provides real-time reporting on road conditions and routes based on
user input. This community-driven application is just one more sign that we’re
shifting away from an industrial economy and towards a more collaborative
model.

We’ve spent the last 200 years trying to create an economic
system that values standardization and commoditization. The Industrial
Revolution brought consistent products, consistent quality, and lower costs
through mass production, and these are things we still value today. It seems,
though, that we’ve taken this approach as far as we can, and have maxed out its
benefits.

Wealth, power,
and influence are distributed among diverse individuals

What we’re seeing now is a shift toward a more open,
collaborative system. A collaborative economy is more about the use of
something than the ownership of it. People contribute information and ideas in
an effort to find new ways to efficiently use existing technologies as well as
drive innovation. Wealth, power, and influence are distributed among diverse
individuals rather than controlled by a select few. People, not corporations, are
at the center of the collaborative economy. The more people participating, and
the more diverse their areas of expertise, the better this model will work. And
because there’s so much diversity and openness, the collaborative economy is
all about flexibility and experimentation, and, as a result, adaptation and
evolution.

Making use
of the old model

What we’re finding everywhere is that people have a real
desire and ability to participate in the economy as producers – and not just consumers
– of goods, and are providing products and services among and between
themselves. And rightly so, because in a collaborative economy, we’re able to
take advantage of all the intangibles that people bring to the table. Individuals
can deliver a specialized, unique, and customized product or service much more
easily than big businesses can. No matter how hard big businesses try, they
deliver a standardized product because that’s the whole point of what they’re
doing – that’s how they drive costs down.

The corporate model comes with a lot of benefits, and much
of what we’re seeing in this new collaborative economy is making use of the old
model. We’re already seeing a trend towards a new system and way of thinking
that I call “Peers Incorporated” – a partnership between corporations and individuals
that leverages the best of what they each have to offer.

Providing
an incredible diversity of the service or product

In this model, corporations and individuals work together to
capitalize on their respective strengths: Companies can take advantage of
economies of scale, persistent investment, and the ability to provide
standardized contracts, rules, and recourse – all of which are bound up in a
brand promise – and, importantly, they build a platform for participation. Individuals
then take advantage of that platform to do what they do best: provide an
incredible diversity of the service or product offering through localization,
specialization, and customization.

We’re seeing evidence of this Peers Incorporated model
everywhere we go. Smartphones, for instance, need to be industrially produced
so there’s a lower price and a consistency to the way they’re made, and to their
quality. But the collaborative economy is also at work here, as people develop
hundreds of thousands of apps on a platform that the smartphone provides. And
smartphone companies have gone to a lot of work to make sure it’s easy for
individuals, small companies, and innovators to get on top of that platform.

Wikipedia
and eBay

This collaborative process results in impressive innovations
that would otherwise be very costly for traditional companies. While a
traditional company might have an innovation division of 10, or maybe even 100,
people, the Peers Incorporated model allows thousands – or even millions – of
people to participate in the innovation process, with incredible results.
Consider organizations like Wikipedia and eBay, whose success is derived from
the contributions of hundreds of thousands of people who are not affiliated
with the brand.

Once the right platform is in place, the Peers Incorporated
model delivers the speed of collective action, with the benefits and beauty of
individual creativity, ingenuity, and innovation. That’s a powerful combination,
and one that can be applied across sectors: crowdfunding in the financial
sector, ride sharing in the transportation sector, and online learning
initiatives like edX in the education
sector, for instance. Again, it’s a combination of big tools and big production
with things that are very individualized.

How can we
recycle more, share more?

These sorts of open platforms are transforming the way we
interact with each other and think about our impact on the world. People are
increasingly interested in the source of things they buy – they recognize the
value of buying local products, and they want to know that the things they
purchase were produced ethically and in a way that has a low impact on the
environment. This is all part of the collaborative economy. But while
environmental sustainability, ethics of production, and a sense of community all
motivate us to rethink our practices, economics is still the biggest driver of
change.

What we’re finally beginning to realize is that we are
wallowing in excess capacity: There are resources at our fingertips that are
already bought and paid for and are not being used to their full potential.
Turbulent economic times and the knowledge of our impact on the environment are
making us rethink this, and question how we can better use the resources that
we already have. How can we recycle more, share more, and ultimately get a
better return on our investments? If you’ve already purchased a car, for
instance, and are making use of it yourself, perhaps there’s an excess capacity
that you can take advantage of by participating in a peer-to-peer car-sharing
service like Buzzcar, making some extra
money off an investment that you’ve already made.

This fundamental shift in the way we think about the
individual’s role in the world brings unlimited opportunities to the fore. As
individuals increasingly share ideas and information, leverage their excess
capacity, and work together to create a more open, dynamic economy, we begin to
see the strength of people-powered innovation. If we embrace this shift toward
a collaborative economy, companies, individuals, and the environment can all
win.

Robin Chase
is the founder and CEO of Buzzcar, a peer-to-peer car-sharing service. She is
also the founder and former CEO of Zipcar, the largest car-sharing company in
the world, and GoLoco, an online ride-sharing community. She has been listed as
one of Time Magazine’s 100 Most Influential People, Fast Company’s Fast 50
Innovators, and BusinessWeek’s Top 10 Designers.

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