More Companies Are Cashing In on Underused Resources

Not everyone wants to own all the products they use. Instead, “increasing numbers of consumers are paying to temporarily access or share products and services rather than buy or own them.”

That’s according to Kurt Matzler, Viktoria Veider and Wolfgang Kathan, who write about the “sharing economy” in their article “Adapting to the Sharing Economy,” in the Winter 2015 issue of MIT Sloan Management Review.

“Well-known examples of successful startups built on collaborative consumption systems include Airbnb Inc., a San Francisco-based online accommodations marketplace, and Zipcar, a car-sharing brand that is now part of the vehicle rental services company Avis Budget Group Inc., based in Parsippany, New Jersey,” note the authors.

But the idea of sharing unused resources and capacities extends further, to companies that aren’t totally built around the collaborative model.

Indeed, the authors write, the opportunity to profit from the sharing economy “is an especially promising strategy when particular assets cannot be acquired by everyone due to the large amount of capital associated with owning them.”

Example One: More organizations are renting out unused office space.

“LiquidSpace, which has been called the ‘Airbnb of work spaces,’ has brought collaborative consumption to the world of office space,” write the authors. LiquidSpace is based in Palo Alto, California, and connects organizations that have unused office space with temporarily renters. These renters might need a desk or conference room for a day or even just a few hours.

“Three main enablers drive the success of LiquidSpace: the pressure of businesses to control real estate costs, mobile and social technology, and employees who like working from home,” the authors write. The company’s app helps freelancers and others seeking office space find workspaces that fit their exact needs: Examples of “environment” options range from a “room with view” to a “cone of silence.”

“LiquidSpace shows how almost any company with office space can profit from collaborative consumption,” the authors write. “Excess capacity can easily be managed; capacity shortages can be flexibly addressed through virtual marketplaces.”

Example Two: More organizations are sharing big machinery and excess labor capacity.

The authors cite the example of Maschinenring, an association first founded in Germany, in the industries of agriculture and forestry. Maschinenring, they write, “allows for the collaborative use of machinery, and it procures excess labor capacity for farms, farmers and foresters in need.”

Sharing big machinery because of the financial costs is not a new idea, the authors point out. The first Maschinenring group was founded in 1958 and started with the renting of machinery. “Farmers soon started to organize into buying syndicates to provide members with the full range of machinery needed for their work,” the authors note.

Later, Maschinenring entered what the authors term “the personnel leasing industry,” helping to coordinate the hiring of farmers in their off seasons by companies that needed temporary work. The role of Maschinenring is dramatic: “Today, more than 258 Maschinenring affiliations serve Germany, comprising around 193,000 farmers — more than 55% of all farmers in the German economy,” write the authors.

The sharing economy is striking a deep chord in both individual consumers and organizations. “Network technologies, social and collaborative software and the changing habits of consumers are all abetting this growing movement,” write Matzler, Veider, and Kathan. “While the shift toward more sustainable modes of consumption represents a major threat to a number of established business models and revenue streams, it also offers several potentially profitable paths by which companies can benefit.”

For more on the authors’ look at how companies are pooling resources, products, and services, read the full article.