The Information Technology (IT) revolution has brought many gifts and some would argue, many headaches, to modern society. Creative destruction has seen whole industries (newspapers, music) destroyed or significantly transformed and new industries (robotics, nanotechnology) rise.
One of the more interesting developments enabled by IT has been the sharing economy, sometimes referred to as the collaborative economy or the on-demand economy. The basic principle is that consumers temporarily pay for a product or service rather than buying and owning it. This arrangement eliminates maintenance costs, ongoing costs, and even insurance, putting more money in the pockets of consumers. Companies such as ZipCar, AirBNB, Uber, Lyft, Kickstarter and soon, Google autonomous cars, are transforming the way people live their day-to-day lives, businesses plan their operations, and governments deliver their services.
The Sharing Economy & Environmental Impacts
The sharing economy will likely have very positive environmental impacts as private vehicle contributions to carbon emissions should decrease as more and more people share gas powered vehicles. One day, gas powered vehicles will be gone, and emissions will drop even more.
The rise of car sharing services is now challenging government policymakers to also take advantage of the benefits by incorporating ridesharing services into transportation systems. It is expected that more and more innovative ventures in the sharing economy will continue to ring out systematic waste typical of mass production economies, and governments will benefit from this.
The path to a more widespread sharing economy is not without its hurdles as evidenced by Uber’s constant battles with entrenched interests and business regulations; some local governments are just too hostile at the moment. The question as to whether Uber and Lyft drivers are employees or independent contractors isn’t important to users who love the service, convenience, and low cost. Some local governments don’t blink an eye at ride-sharing services while others maintain intense opposition leading to slightly altered sharing service business models.
Transforming Influence on Entire Economy
The sharing economy is also influencing all other businesses. Sharing services have significant savings and efficiencies to offer businesses, altering standard business models. Even B2B companies are benefiting from the sharing economy as sharing services improve efficiency, quickness of service delivery, and lead to better profits.
Entrepreneurship & Sustainability
The sharing economy is made for both entrepreneurs and sustainability and represents a better, more efficient modern society. The Internet Society of China estimated that in 2015 China’s sharing economy was worth $300 billion and employed over 500 million people. No other country on the planet, perhaps with the exception of India, needs efficiency more than China.
The following video discusses how the sharing economy is changing the world.