How to Manage the Economy of Access

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The economy of access is creating some difficult management issues that need to be resolved. The Access Economy is a fairly recently emerged concept that is considered by many to be a more appropriate expression to describe what has become known as the “Sharing Economy”. The principle behind the access economy resides in the idea that people are now more interested in having access to goods and services, than owning stuff.

This new type of economic system poses many challenges, as it totally  revolutionizes established concepts and ways of behaving in the business world. How is it possible to compete in this type of economy? Unlike a hotel, house sharing websites have very low operating costs. They don’t have to rent hotel rooms. As Steve Denning (2014) of Forbes puts it, the “marginal cost of producing additional units in many fields is moving steadily closer to zero.” This has been approached by Jeremy Rifkin in his outstanding book ” Zero Marginal Cost Society”. How to solve what seems to be a conundrum?

Denning suggests that there are three possible solutions to this problem.

Looking at the Legal Issues

The first approach proposed is looking at legal routes of stemming the success of these new businesses. For example, in 2014 various house sharing platforms faced significant problems in New York State as a result of its activities. The legal challenge posed was that it was suggested that people renting their apartments or rooms out on house sharing platforms were breaking the law by behaving like accommodations that were unregistered. It was argued that this was illegal. Other types of action have been taken in different industries. For example it is explained that rideshare platforms faced considerable problems in a variety of places. In London many will remember the black cab drivers holding a major protest against Uber, since it was predicted that this organisation would swipe many customers from black cab drivers.

There are good reasons for industry incumbents like black cab drivers and traditional hotel chains considering legal action to stop the major sharing economy organisations. After all, the AirBnb success story alone demonstrates what can occur in the access economy if it is left unchecked. It is believed that AirBnb has, or will soon surpass Hilton and InterContinental for the number of rooms offered around the world. Millions of rooms have been booked in no less than 33,000 cities, and there are a whopping 192 countries listed on the site. The growth has been phenomenal. After all, AirBnb didn’t even exist in 2007. Trying to slow the tide this way may be detrimental to innovation, but probably not. In the end these access economy organisations have a lot of interest and are very successful. Change will happen one way or another.

Joining the access economy

The second strategy proposed is that if the organisation is not able to fight the new access economy entrants legally, then maybe it is possible to find a way to join them. An example provided of this is Apple. Apple looked at what was going on with Napster, and instead of getting on its high horse decided to fundamentally change the music industry by developing iTunes. We’ve seen how that went: very, very well. Many music companies were obliterated in the process, and it has transformed the music industry, as well as improving the way that people can access music. Meanwhile it is pointed out that Avis decided not to fight Zipcar, but to buy it.

Perpetual innovation

Other companies have taken a third strategy which is trying to offer solutions. Of course, this is problematic because users can fairly easily find solutions for themselves online without too much trouble, so they do not necessarily need to pay for them. This requires that organisations wanting to take this approach have to be creative. They have to “delight customers” through perpetual innovation. This requires a shift in the culture of the organisation to achieve. In fact, it may be seen that organisations have to continue innovating permanently if they want to survive. Companies that continue to delight their customers will retain those customers, but as soon as they stop doing that and if there are also reasonable enough and more cost effective alternatives out there, customers will look to those instead. Companies are recommended to look at creating solid partnerships – in fact, creating an ecosystem of partners that can help them to achieve their goals. This can help a company to keep innovating. For example in the case of Apple it is possible to see that the organisation has sustained the iPhone by encouraging developers worldwide to develop apps. This helps to keep the iPhone interesting, innovative and of value to its customers.

Like it or not, the access economy is changing the world. Businesses will have to find new ways to innovate and attract customers, or they may be likely to fail.