STRATEGY

Welcome to the 'Company as a Service' Paradigm

Your product is not a product. It is a means to deliver services to a new kind a consumer.
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The advertising age had a good run, from the birth of mass media until the point it went social. Then consumers began to talk back online--in Amazon reviews, Yelp ratings, and Facebook posts--and the customer experience age was born. Today snarky comments are the least of marketers' worries, as we enter what the Altimeter Group calls "the collaborative era."

"As consumers collaborate (or in some instances even conspire) to work around further consumption by sharing their goods and services, brands are fearful they may have no place in the future," writes Francine Hardaway in Fast Company. In its headline, the article asks, "Will the Sharing Economy Destroy Brands?"

At a time when consumers are buying less and sharing more, the answer is a resounding "it depends."

According to Jeremiah Owyang (@jowyang), a partner at the Altimeter Group, success in the collaborative economy hinges on whether companies pivot alongside a value chain that is being forever redefined with the consumer in the middle. All companies--not just those in the travel, media, and hospitality industries--must begin exploring the B2B and B2C sharing opportunities that new technologies make possible.

Owyang offers various strategies for embracing the collaborative economy, including:

1. Transform your company into a service. 
Consumers no longer want to buy one product one time; they want to use your service when it suits them. Think Zipcar. Another company successfully exploring this model is BMW with its on-demand service, which according to Owyang aims "to 'sell' one single car dozens of times in a day, generating new value for the customer and new revenues for BMW." As he notes on his blog at web-strategist.com, "For some luxury brands and high-consideration goods, providing subscription models gives access to a younger or emerging market base that can't afford your goods at full value. This builds a new relationship with this emerging market, loyalty, and is an entry point as they grow in their consumption needs."

2. Motivate a marketplace.
When Patagonia saw its customers flooding eBay with lightly used windbreakers and fleece vests, the company leaned into the trend, partnering with auction site eBay to create a Patagonia Common Threads channel where consumers can easily buy and sell gently used clothing and gear. "At a macro perspective," Owyang writes, "reducing excess products being sold that are used effectively isn't just smart for planet Earth, but also the sign of a responsible consumer and corporation."

3. Provide a platform.
Etsy and eBay have done this, seemingly, since the beginning--and they've done it well. There is value in encouraging customers to connect with one another. "Most brands have a long way to go to disrupt their existing models before customers do it for them," writes Hardaway (@hardaway) in Fast Company. "They must develop a new value chain in which they put advocates front and center, and allow marketing people to fade into the background."

Related articles
When Business-Model Disruption Is the Status-Quo
Your Greatest Business Opportunity: Solving Social Deficits
Disruption Lessons From Airbnb

IMAGE: Shutterstock
Last updated: Oct 28, 2013

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The Build Network staff curates provocative, actionable leadership advice for executive teams running sustained-growth companies.




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