Opinions

Ownership Is A Thing Of The Past

Will we still own things in future, or will the so-called sharing economy take over the way we use products?

Share this article

Share this article

Will we still own things in future, or will the so-called sharing economy take over the way we use products?

Opinions

Ownership Is A Thing Of The Past

Will we still own things in future, or will the so-called sharing economy take over the way we use products?

Share this article

There's a meme doing the rounds and quite a few people have tried to claim ownership of it. The debate has continued for several years now, but regardless of who said it first, the meme goes something like this: Airbnb, the largest accommodation provider, owns no real estate.

Facebook, the largest content provider, owns no content. Uber, the largest vehicle pool, owns no vehicles, and Alibaba, the largest retailer, owns no inventory.

Of course, it doesn't matter who said it first, ownership is a thing of the past. Many products, services and volumes of content are rented rather than bought. From cars to music and rooms in houses – why buy when you can borrow?

In my latest book 'Powered By Change' I go into this topic even deeper. I’ve taken a few excerpts here that outline the concept more. In general, my assessment is that what's actually happened is radical disintermediation, in other words, the removal of intermediaries in a supply chain, cutting out middlemen in the process.

This term “disintermediation” was originally applied to the US banking industry, back in the 1960s where customers avoided the third-party services of banks for savings accounts and began investing directly in securities, insurance companies, mutual funds, and shares and bonds.

This trend was furthered in the UK by the “Big Bang” changes in Britain’s financial markets in 1986, when electronic means superseded face-to-face open outcry trading, and the historic distinction between stock jobbers and brokers was abolished.

In the late 1990s the term “disintermediation” became widely popularized as the effect that the first wave of the Internet was having on physical sales outlets, with the dramatic shrinkage of video-rental chains, bookshops, and high-street travel-agency branches because consumers could increasingly procure these goods directly from the supplier, or online, without the need for these bricks-and-mortar middlemen.

In the subsequent waves of the Internet’s development, disintermediation has spread to affect providers of fundamental services such as hotel rooms and city taxi- ride services.

Airbnb and Uber now allow customers of these commodities to access whole new areas of supply, directly via the private ownership of other individuals and businesses that were not previously easily available to them.

Other companies are applying similar “sharing economy” models to peer-to-peer lending, foreign currency exchange, house-buying, car-sharing, business crowdfunding, and many other sectors.

Disintermediation of what previously required ownership, is essentially the closing of the gap between supply and demand. This is primarily caused by an increase in the affordability and capability of technology.

This doesn’t need to be a business-to-consumer (B2C) relationship. It can equally be business-to-business (B2B). Disintermediation has neither priority nor preference. Anywhere there is a gap between supply and demand that could be shortened or removed, disintermediation takes hold.

I predict that the sharing economy will grow enormously over the coming decades. I think we will notice a gradual then increasing decline in the ownership of many products, services and volumes of content – to such an extent that the very concept of a standalone ‘retailer/dealer/seller’ will be disrupted in time.

This is a huge opportunity for those who wish to close the gaps in the chain, but a huge risk for those who wish for the gaps to remain in place, so as to justify their position. I think this is a very dangerous choice.

As I urge the reader to do in Powered By Change, please think about disintermediation in the context of your company or business project:

·        What are your current ways of linking what is sold to what is bought?

·        If a system were able to shorten those links, how could it work?

·        How much more value could that be added to both the supply and the demand side?

·        If a competitor were to create that system, how would it impact you?

It’s worth spending some time on these questions and properly assessing the answers. Even if you’re unable to think of an answer, pause and return to the question later. It may be one of the most valuable exercises you do in terms of reducing the risk to you that disintermediation could pose.

If you are in a company that relies on intermediaries, my advice would be to increase your pace of innovation. If you’re looking for a market to disrupt, I’d suggest concentrating on those supply chains where intermediaries continue to hold the chain to ransom. They’re ripe for disruption.

We can learn from the disruptive companies that have already made ownership a questionable option. Just because we commonly observe these methods in entertainment, transport or accommodation, that doesn’t mean they’re not applicable in any other industry.

In fact, I suspect the disintermediation of ownership looks fairly similar regardless of how it’s applied…in the same way as a meme kind of looks fairly similar regardless of who said it first. I guess that’s the point.

Jonathan MacDonald is an international speaker on managing perpetual change and founder of the Thought Expansion Network. His new book, Powered By Change, can be ordered here www.poweredbychange.com.

Related Articles
Get news to your inbox

Ownership Is A Thing Of The Past

Share this article