AirBnB, Australia, BMW, collaboration economy, collaborative consumption, commercial leasing, CTC, DriveNow, Environment, Gen Y, Hot Leasing, industrial leasing, Millenials, Rachel Botsman, Share Economy, The Australian Financial Review, Uber, US car sales
I read with interest in The Australian Financial Review (2nd Dec 2014) that BMW is joining in the collaborative consumption movement. Otherwise known as the collaborative economy or share economy (yes we have issues with nomenclature). You know when the more staid Germans start adopting new ideas that they really are becoming the new paradigm. Their contribution to the share economy is something called DriveNow. What is different from car rentals you may ask? Well it’s a disruptor to that model (check out my previous blog on disruptors) and something that must be a concern to the car rental market and indeed traditional car manufacturing.
In the same way as the Gen Y don’t want to own the book, but just read the content, or not own the CD but just listen to the music, so people are not wanting to own the car but just get from A to B. What is different about DriveNow is that is operates a bit like the bike schemes most large cities have (except the Brisbane one where the bikes seem always to be parked up not ridden). So it is a one way disposable trip, in other words you just drive then park it. GPS lets BMW know where the vehicles are. Access is via a smartphone app and you pay by the minute. Brokerage company Aviate Global has estimated that 1 sharing vehicle removes 32 personal vehicles. You can see therefore how this can be good for the environment as well; which is a core pillar of the share economy. 5% growth in car sharing by the 2020 could halve US car sales. What is driving many squeezed by the economy and rising house prices is the fact that the second biggest asset we are likely to own, our car, is utilised on average only 4% of the time in a 24 hour day. That’s a lot of idle time.
The opportunities for BMW to tailor the experience through mass customisation to the driver are immense. Imagine getting in your DriveNow vehicle to have you Spotify database available immediately through the car’s entertainment system, the 50 most recent destinations pre-loaded into the Sat Nav, reminders through the car stereo of birthdays and anniversaries pending as you are approaching a florist. Seat positions can be pre-programmed and comfort levels for temperature etc. the possibilities are endless as is heads-up information on the screen as driverless technology takes hold. London cabbies must be quaking in their boots. Uber must be quaking in its boots. Here is old school disrupting the disruptor…the fight back has begun methinks.
While share economy companies are good for the customer and the environment one of the key issues upon which their success relies is trust. Take AirBnB for example. I was fortunate to hear Rachel Botsman do a keynote address some years ago and as a result stayed in Pat’s New York apartment for three weeks. He wasn’t there of course but he did meet us at 11pm when we arrived and he gave us a run down of the apartment and the neighbourhood before depositing his key with us and pedalling off down East 71 Street into the night. He didn’t know us from Adam but there we were in his apartment amidst all of his clutter and his most valuable possessions. Trust. As we now know Air BnB is a worldwide phenomenon. In the case of BMW’s DriveNow initiative trust will also be key, but they start off a high base because the brand of BMW smacks of trustworthiness. It’s quality cars they are offering that are fun and environmentally responsible. Once again trust. As we know from the theory of sales, once trust has been established it makes moving to sales closure much easier.
The second core pillar in making your share economy company succeed is a willingness by the public to ditch the status quo and try your offering. That first encounter they have can be all important. Everyone knows that complaints travel faster than compliments and Baby Boomers will tell 10 times more people about a bad experience than a good one. Gen Y’s will Tweet and/or Facebook about bad experiences. Millennials, according to Nick Bowditch, Twitter’s main man in Australia, will just set up a business in opposition to yours if they don’t have a good experience and disrupt yours by doing things better and faster. So the offering has to be based on trust and be enticing and fulfil or exceed expectations. Nothing difficult here then. At my company we have our own share economy initiative called Hot Leasing . The trust issue is OK as we have been in business approaching 21 years and have a reputation in the market for being ethical and reliable. The challenge for us is the presentation of an idea so radical that it will take time for the market to adjust to a new possibility. Unlike say a taxi journey or a few nights stay in an apartment, our offering requires a massive change in business behaviour with companies moving from long-held leases to a free-wheeling working life where they pay as they go, only interacting with us when they are interfacing with their clients. We are, simply put, the Air BnB of the commercial/industrial leasing space. And we are excited about it. Gradually people are catching on. There is no need to own expensive equipment like forklifts or elevated work platforms etc. There’s no need even to lease or hire them. With us that’s all part of the package. We have a well-developed process for cherishing each and every brand that uses our facilities and the experience of students and trainers exceeds expectations. We await the main-streaming of the share economy so that the more risk averse can start looking at our proposition for what it is; an excellent, low-risk, environmentally sound way to do business.
While on the subject of the environment it is always good to buy local as opposed to buying nationally and buy nationally as opposed to buying internationally. In order to assist with some Australian examples here are share economy companies collaborative evangelists may wish to consider. I’m more than happy to share these with you. After all isn’t that what collaboration is all about?