If it were this simple …

I’ve recently read Umair Haque’s article “Edge Patterns: From Owning to Sharing”. Generally, I am a fan of Umair’s writing, but this one was a bit in the category of things that lack the “how to do this in reality” component. It surely sounds nice that “yesterday, we built advantage on owning assets. tomorrow, we will build advantage by sharing assets.” [my response: and today, we are really not so sure how to build advantage.]

Everyone who talks about sharing mentions Zipcar, and Umair is no exception. My question: if the idea is so awesome, why are there not more examples? I find it hard to believe that everyone else lacks vision, and/or is so backwards that they fail to see the business potential of “sharing”. Maybe they fail to see it because in order to create the advantage on sharing, there needs to be some business model based on it. Linux is the most famous example of investing free labor in return to intangible compensation (recognition, prestige, development of one’s own skills), but Linux can hardly be categorized as business. So what kind of business model should we be hoping for? Apparently, the one with a different locus of value, which focuses not on the product itself, or on the customer itself, but on the relationship between the two. And then it charges premium for bringing them together — and consequently for maintaining and managing this relationship. It does not sound so new now, does it? If you take away the “premium pricing” component, you get any social media “business” where people and products are brought together for, um, no charge at all.Another thing is, NikePlus has already tried something like this — that is, to own & operate a relationship between people & products, as is iTunes. And the problem is, you can’t really lock this relationship down (which is the problem of all closed systems). And, if you don’t lock it down, you can’t make money, etc. etc. Zipcar is a closed system too, and I wonder how it is going to compete once others start offering the same service, like Hertz. What’s the source of advantage going to be then? Price, place, promotion, blah … all the “boring” stuff of the old business model. Or … something else that no one really has figured out yet on the level of the real-world examples.

In fact, the question is not necessarily the one of “the fabric of value creation is breaking apart”; the challenge is the one of the relocation of the value. Everyone will choose to share once the real or perceived value of sharing surpasses the value of owning.

The “economic” point that “the pressure for sharing in a hyperconnected world is too strong to resist” is, in fact, hardly an economic one as Umair claims (“too strong to resist”? what’s that, an urge? an itch?). If there’s an economic claim to be made, it’s the one of benefits: when there are more economic benefits in sharing, more people/businesses will do it; and more b-models based on this will emerge. Until then, we are stuck w inscrutable terms like “value creation, next-gen.” Sounds like something from Star Trek.

This post was first published on January 11, 2009