Own less. Live more. That is the mantra of the sharing economy: an ecosystem where people rent, borrow, or trade instead of own. It’s a shift away from the traditional model of ownership-based consumption—one that redefines how we live and how we lead. In this new economy, leadership has become more collaborative and decentralized than ever before.
While the sharing economy has only grown in popularity over the past few years, it’s more than just a catchy catchphrase; this concept has revolutionized our lives in many ways, from transportation to vacation homes and even business models. It’s also changed our concept of leadership—from traditional hierarchical structures to collaborative, innovative networks. It’s an ecosystem where ideas, not people, become the source of value, emphasizing access over ownership: use what you need when needed and then move on to the next task.
TechCrunch reported, “Uber and Airbnb have long been the poster children for the sharing economy.” But, they are far from the only companies leveraging this disruptive model. Lyft and Zipcar are also leading the way in creating platforms where vehicles can be accessed instead of owned. And just this week, The New York Times reported, “The sharing economy has come to apartment buildings—and landlords have discovered a new way to attract tenants.” Igloocompany—a provider of remotely controlled smart locks and lock boxes used by Airbnb, Skipperi, and Turo—allows for seamless access to rental properties without needing physical keys. This, in turn, helps individuals offer their property for rent on a short-term basis more easily and securely. Hourly Spaces and Peerspace are taking advantage of this trend by providing a platform for landlords to rent out space in their buildings on an hourly or daily basis, which according to The New York Times, turns “living rooms into venues for corporate retreats or baby showers, charging as much as a guest is willing to pay.”
Evidently, as the sharing economy continues to evolve, it will transform traditional economic modes across multiple industries. It will also create a new wave of opportunities for participants in the gig economy and increase access to goods and services that may have otherwise been out of reach. Through a representative, Igloocompany’s CEO, Anthony Chow, shared his views on this emerging economic trend: “Our growth parallels the expansion of the sharing economy. We’ve seen the compound annual growth rate (CAGR) of digital key issuance from our access management platform increase from 46% in the several years leading up to 2020, jumping to 57% during the last three years. This illustrates how increasingly integral digital solutions have become to the sharing economy. Trust and ease of access are the backbones of this economic model.”
Continuing the thought, we can see that Uber transformed the transportation sector by mobilizing private vehicle owners to offer rides to commuters. Airbnb did the same for the hospitality industry by enabling homeowners to rent out their homes or rooms to travelers. Moreover, other companies like TaskRabbit and Upwork have remodeled the labor market, facilitating freelance gigs and remote work opportunities. This peer-to-peer marketplace promotes economic efficiency, sustainability, and a new way to work and consume.
That said, according to Roberto Vassolo, a professor at Argentina’s IAE Business School, the optimal utilization of capital in sharing economy models generates clear positive environmental effects. In an interview, he said, “However, these benefits can be overshadowed socially when the final wages received by service providers on these platforms do not meet minimum standards.” This means that businesses relying on the sharing economy need to be wary of the long-term effects of their business models and ensure fair wages for workers.
For instance, Uber and Airbnb have experienced several legal battles globally, resulting in hefty fines and, in some cases, a total ban on their services. These conflicts underline the need for thoughtful and adaptable leadership in navigating the often murky waters of regulations. According to Chow, leaders should, therefore, stay informed and engage with regulators to address any concerns and seek guidance. “Compliance with local regulations is crucial to the long-term success of sharing economy businesses.” After all, sharing resources and services should benefit all stakeholders.
Vassolo agreed and predicted that sharing economy businesses will increasingly come under scrutiny from the public. “The ability to effectively manage and navigate public opinion will become a vital skill for these companies.” According to Vassolo, that’s because “The rapid growth of these companies carries the risk of neglecting the ultimate wages of those who provide services on these platforms. One of the most sensitive issues will be ensuring compliance with minimum wage regulations.” He’s not the only one who believes that careful attention must be paid to the effects of sharing economy businesses.
Right now, there is an ongoing debate on whether gig workers should be classified as employees or independent contractors, with implications for workers’ benefits, safety, and job security. The Financial Times reported, “EU member states have reached a long-awaited agreement on rules that pave the way to give greater employment protection to the bloc’s 28mn gig economy workers.” Last month, an agreement was reached on industry rules allowing workers, such as Uber drivers and food delivery riders, to receive social security and other benefits in the future. The deal resolved long negotiations among the 27 member states that had been delaying the drafting of the legislation. And so, it is up to the leadership of sharing economy businesses to ensure that ethical concerns are addressed and adequate working conditions provided for their employees.
Despite the challenges, the future of the sharing economy looks promising. The post-pandemic world has further accelerated its growth as people become more accustomed to remote work, online transactions, and sustainable consumption. This is why, according to Terence Mauri—MIT’s entrepreneur mentor—“Now is the time to develop and master strategies for sustainable sharing economy business models.” Mauri said in an interview that “We’re standing on the precipice of a modern-day Cambrian explosion. Within the next 100 years, much of the global economy could look radically different from today’s world thanks to extreme disruption and distributed everything.”
And so, the sharing economy appears to be here to stay. It is up to its leaders and stakeholders to ensure that this new type of business model is implemented in a way that not only benefits its workers but also contributes meaningfully towards sustainable development. But, with the right policies and regulations, this could indeed become the case. Together, we can strive to create a more equitable and sustainable sharing economy that works for all of us. Let’s make it happen.
