Comments for Incumbents and the sharing economy: the example of GM « Ubérisation » ou la naissance d’un nouveau paradigme économique | Les ateliers du devenir – le blog 6 October 2016 […] Vendre l’usage du produit plutôt que le produit lui-même, comme Daimler l’a fait avec son service de partage de voitures car2go, Aider les clients à revendre leurs biens (à l’image de la plateforme de revente de meubles proposée par Ikéa); Exploiter les ressources et capacités inutilisées (par exemple, le partage de bureaux en collaborant avec une plateforme comme LiquidSpace);…Read more[…] Vendre l’usage du produit plutôt que le produit lui-même, comme Daimler l’a fait avec son service de partage de voitures car2go, Aider les clients à revendre leurs biens (à l’image de la plateforme de revente de meubles proposée par Ikéa); Exploiter les ressources et capacités inutilisées (par exemple, le partage de bureaux en collaborant avec une plateforme comme LiquidSpace); Offrir un service de réparation et de maintenance (comme Best Buy l’a fait en rachetant Geek Squad, spécialisé dans la réparation d’ordinateurs);Utiliser l’économie P2P pour cibler de nouveaux clients (à l’instar de Pepsi qui s’est allié avec la plateforme Task Rabbit pour lancer un nouveau soft drink); Développer un nouveau modèle d’affaires via l’économie P2P (comme la plateforme Kuhleasing.ch créée par des fermiers suisses pour louer des vaches et des séjours à l’alpage, ou comme GM le fait via son acquisition de Sidecar). […] Show less Reply Verschoore Quentin 16 March 2016 Here the economic policy of GM is really interesting. Indeed, even if they still focus on their core business, based on the owner-driver model, they diversify their policy and anticipate through investing in projects, start-ups, structures that will most likely constitute the future, which might be not too distant. As far as I am concerned, did I think about the…Read moreHere the economic policy of GM is really interesting. Indeed, even if they still focus on their core business, based on the owner-driver model, they diversify their policy and anticipate through investing in projects, start-ups, structures that will most likely constitute the future, which might be not too distant. As far as I am concerned, did I think about the aspects of the nimble execution when I read this article. Effectively, it has to do with the ability that some companies have to adapt to their environment through seizing opportunities while still providing high performances inside of their core business. As counterexample could I mention the fact that Nokia, which used to be an important leader on the phone market, neglected the apparition of the smartphones and lost a lot of its market shares. We know we are living in a changing world where the sharing economy has already started and will continue to disrupt our economical model. As we saw with the Uber services, the impacts could be drastic and damaging for some sectors such as the “Taxi services”. Therefore, in my opinion it would be a serious negligence if such companies, owing huge financial funds and not only from the automotive industry, didn’t invest in such opportunities. Moreover, through increasing the number of start-ups with whom they collaborate, GM can benefit from different types of synergies and opportunities (license to Sidecar’s patents, foot in the hailing economy, use of precise high-definition maps of Mobileye,…) and will be able to put all those assets in their autonomous car project, allowing them to implement a safer, cutting edge car probably generating huge returns on investment. Quentin Verschoore, student at the LSM. Show less Reply Tombal Martin 16 March 2016 It is difficult to deny today the growing strength of the sharing economy. Applications as Uber and Airbnb are used every day by millions of people around the world. Car companies such as GM are realizing that the business model is slowly evolving, and that they have to react if they do not want to be out of the market…Read moreIt is difficult to deny today the growing strength of the sharing economy. Applications as Uber and Airbnb are used every day by millions of people around the world. Car companies such as GM are realizing that the business model is slowly evolving, and that they have to react if they do not want to be out of the market in the coming years. First I think GM is adopting the right strategy to treat this opportunity. They are not rushing into the sharing economy by devoting all their resources to change their business model. GM is aware that even though the business model is evolving in big cities, they still have a large market outside those cities, and they are still focusing on it. The consulting firm Mckinsey recently published an article on the key factor for sharing economy’s success. One of this factor is “identify common ground and build alliances’. The idea behind it, is that both incumbents and new sharing companies have a distinctive target on the same market. By making alliances, incumbents can then have access to a part of the market they would not have been able to reach if they would have stick with their old business model. On the other hand, the sharing companies, do not always have the resources to fulfil the needs of all their customers. Teaming up with incumbents is a possibility for those companies to have access to greater resources. This was actually what drove Avis, the famous car renter to launch itself in the sharing economy by purchasing Zipcar, a growing car sharing company. Avis spent 500 million dollars to acquire the car sharing company. The main aim of this purchase was to increase fleet utilization during the week-end. Avis was having trouble to rent their whole fleet during the week-end and Zipcar, was on the contrary facing too much demand on those period. By purchasing Zipcar, Avis managed to increase their fleet utilization. Another thing that I find interesting on GM’s strategy is that they already have a long term vision of the sharing economy. By that, I mean that they already are investing in the future of the business model, by trying to develop self-driving car that will be use in the future by the on demand transportation industry. Whatever some people may think, self-driving car is not science fiction anymore. Yes, Google still face some issues with his car, but the system is improving. Mercedes for example have developed a car that rides on her own on the highway. The only thing the driver has to do is to use the indicating light if he wants to switch lane. This is to say, that the car of the future, may be more the car of the present than we might think, and investing in it today is for me an interesting strategy from GM. References : – http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-the-sharing-economy-can-make-its-case – http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy – http://www.bloomberg.com/news/articles/2013-01-02/steve-case-on-avis-zipcar-and-the-sharing-economy – http://www.forbes.com/sites/timworstall/2013/01/02/explaining-the-avis-takeover-of-zipcar/#62adb88635b0 Show less Reply Léopold Van Oost 16 March 2016 Thanks to this article, we can easily conclude that General Motors is working on a strategy for the future of the company. With the emergence of all kinds of peer-to-peer services such as Uber and companies with new business model such as Cambio in Belgium, car manufacturers have to rethink their business model to stay on track. Indeed, it has…Read moreThanks to this article, we can easily conclude that General Motors is working on a strategy for the future of the company. With the emergence of all kinds of peer-to-peer services such as Uber and companies with new business model such as Cambio in Belgium, car manufacturers have to rethink their business model to stay on track. Indeed, it has become very difficult for people to own a car in big cities. First of all, cars are expensive, you need to pay the fuel, assurances and you need to have place to park your car. In the same time, big cities are having very good networks of public transport, cabs and Uber. So, a lot of people do not own cars anymore in those cities, and if they need one, they rent it (1). That is why big car manufacturers are working on those new strategies. An example, still related to car manufacturers, is the BMW Drive Now service of BMW in San Fransisco (2) but also in several European cities. The idea is quite simple, after a registration on the website (with a registration fee of 29€), you can book a car for the amount of time you want. The user can drive the car wherever he wants for a minimum of 24 cents per minute of use. After that drive, the car can be left anywhere in a specific area of the city. The users can drive BMW cars (standard or electric cars) or Mini cars. In the same idea than General Motors, BMW created this service in collaboration with the car renter Sixt (3). As the owning of car is more and more complicated in big cities, there is no doubt that the service will be developed by BMW. BMW is not the only company to diversify its activity. For example, U-haul, the American company that rent trucks and storage space, developed a crowdfunding platform: the U-Haul Investors Club. The platform allows people to invest into the company. The objective is to get “funding with lower lending rates while creating “a special kind of loyalty over the long term.””(4). To conclude, I think that most of the big brands, as General motors, BMW or U-Haul, are going to work on their business model to adapt it to the current habits of people and to keep a good customer satisfaction. Ressources: (1) http://www.fastcoexist.com/3048223/owning-a-car-in-a-city-is-shockingly-expensive-dont-do-it (2) http://reports.weforum.org/digital-transformation-of-industries/what-the-shift-from-ownership-to-access-means-for-industries/ (3) https://de.drive-now.com/en/# (4) https://www.visioncritical.com/thriving-collaborative-economy/ Show less Reply Sacha Navez 16 March 2016 "We think our business and personal mobility will change more in the next five years than the last 50, GM President Dan Ammann said in an interview with Reuters.” http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN0UI1A820160104 We can also read that Toyota and Ford, invited competitor car companies to join them to counter the push by Apple, Alphabet, Tesla Motors Inc and others into self-driving cars,…Read more“We think our business and personal mobility will change more in the next five years than the last 50, GM President Dan Ammann said in an interview with Reuters.” http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN0UI1A820160104 We can also read that Toyota and Ford, invited competitor car companies to join them to counter the push by Apple, Alphabet, Tesla Motors Inc and others into self-driving cars, or what the industry also calls autonomous vehicles. http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN0UI1A820160104 Global automakers are trying to prevent Silicon Valley from dominating the future of self-driving cars and ride-sharing (Matthew Stover, automotive analyst with Susquehanna Financial Group) and see them as a real threat to their business. http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN0UI1A820160104 “The only way to understand the implications and viability of this business model (Lyft and Uber) is to become an investor, said Stover.” http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN0UI1A820160104 “For incumbent players in mature industries, the immediate challenge is to avoid being disrupted. “ https://www.pwc.com/us/en/technology/publications/assets/pwc-consumer-intelligence-series-the-sharing-economy.pdf As we have seen before, the automotive industry had recognized the sharing economy as an early threat and adopted the model where it was possible. Today, many of them now run their own car-sharing businesses and others have made strategic investments in new entrants—such as Avis in Zipcar and BMW in JustPark. https://www.pwc.com/us/en/technology/publications/assets/pwc-consumer-intelligence-series-the-sharing-economy.pdf Thus, these are two other examples of automakers trying to not suffer from the uberization of their businesses. The question of cannibalization of their own business is not really relevant. If they don’t do it, someone else will invent it. PWC in his report recommends developing a mitigation strategy. “Whether acquiring a new entrant, partnering or investing in them, companies can mitigate the risk of a sharing economy insurgency and even capitalize on sharing economy revenue to bolster their business.” https://www.pwc.com/us/en/technology/publications/assets/pwc-consumer-intelligence-series-the-sharing-economy.pdf Personally, I think that GM of BMW adopt really good strategies. GM has succeeded to question its business and to recognize threats. GM has acquired sharing economy company and integrates it in development. That’s a good example of “innovate or perish” philosophy. And I think that it not only about sharing economy. It’s about innovation in a more broadly way. A good example of such trend is the Goldman Sachs move. They want to disrupt their own sector and to not maybe be a bank anymore. “As proof, the bank announced in summer 2015 that some of its platforms – such as market data analysis and risk management, according to the Wall Street Journal – will now be available in open source.” http://www.usine-digitale.fr/editorial/auto-disruption-goldman-sachs-ne-veut-plus-etre-une-banque-et-35000-personnes-bossent-la-dessus.N383309 “With the secret messaging system Symphony, which it broadly supports the development, the bank is testing a solution that would allow it to disrupt its own sector. With, in the crosshairs, Bloomberg. And a convincing argument: price. “The cost to a user Symphony, represents 1% of that of Bloomberg terminals,” said, convinced Martin Chavez” http://www.usine-digitale.fr/editorial/auto-disruption-goldman-sachs-ne-veut-plus-etre-une-banque-et-35000-personnes-bossent-la-dessus.N383309 In a fast moving environment, companies have to be aware of what could happen in their market and be the drivers of these changes to stay competitive. Show less Reply Loick Marien 15 March 2016 In my opinion, GM’s strategy is quite interesting for many reasons. First of all, the deal with Lyft allows them to enter the ride-sharing/-hailing economy. In that way, they can understand the sharing economy, learn from Lyft, replicate or refine what they have learned with Maven. The risk of losing their own clients to Lyft is not worrisome because most of…Read moreIn my opinion, GM’s strategy is quite interesting for many reasons. First of all, the deal with Lyft allows them to enter the ride-sharing/-hailing economy. In that way, they can understand the sharing economy, learn from Lyft, replicate or refine what they have learned with Maven. The risk of losing their own clients to Lyft is not worrisome because most of them live in the suburbs and this economy is mainly dedicated to those who live in the cities. Undeniably, GM is not really successful in big towns. Thus this partnership is a great way to conquer the big agglomerations. Secondly, GM also knows that the future of the automotive industry will be autonomous cars without drivers. That is what their OnStar system is aimed to. This system is important because it allows GM to get real-time data they need to build their high-definition maps that are crucial for the autonomous cars. Obviously, they need the more data as possible and the partnership with Lyft is a great way to collecting those data. Besides that, all the customers that they reach through this partnership could be potential customers for Maven. Then, their last move was to launch Maven, their own car-sharing company. Their strategy is to mix customization and convenience. Everything is made in a way that we feel in the car that we rent like if it was ours. In that way we don’t have to spend a big amount to have our own personalized car. The goal of Maven is to lessen the dependence from Lyft. We can imagine that GM will in the future end his partnership with Lyft and that Maven will become their main activity in the car-sharing business. GM is not the only carmaker who starts joining the sharing economy. Indeed, Ford, Toyota, VW, Daimler and BMW have all launched car-sharing services. Patagonia and eBay have partnered up to create an online marketplace where consumers can buy and sell used Patagonia clothing. Patagonia does not earn money from the sales but this system allows them to enlarge their customer base. Ikea did quite the same thing because they also implemented an online market that helps their customers to sell their second-hand IKEA furniture. source : http://dupress.com/articles/collaborative-economy/ Show less Reply Gregory Merguerian 14 March 2016 In my opinion GM has well and accurately evaluated the sector in which it is established. With the non-stop and fast pace world we are living in, decisions must be made. Since GM has been going up and down for many years, it is a nice and safe bet to turn around part of its business and generate profits from…Read moreIn my opinion GM has well and accurately evaluated the sector in which it is established. With the non-stop and fast pace world we are living in, decisions must be made. Since GM has been going up and down for many years, it is a nice and safe bet to turn around part of its business and generate profits from a potentially great opportunity. They will acquire a whole new category of users that wouldn’t go at first for buying a brand new car and who are also maybe “eco-minded”. Since there are more and more selfless driving cars emerging on the market, by acquiring start-ups that help enhancing the selfless driving experience, GM can become one of the major actors in the business and be a step ahead of the other major incumbents. Of course this is not a short-term strategy since I think people are still not ready to use these cars mainly because of safety risks. We have recently seen a video where hackers manage to take the control of a Jeep from a long range, this is typically an issue that the industry must improve and make sure that every car is 100% safe. Another example of an incumbent investing in the sharing economy is Citigroup which is the leading global bank, they have been investing heavily in the P2P sharing model. Actors such as Lending Club and Prosper market place are platforms that have generated yields from 5 to 9%, they have taken advantage of the low interest rate and the passion for new P2P models to thrive on the market. What Citigroup has done is close a deal of 150 million $ with the Lending club mainly to finance loans, they have done the same with SoFi which is a student loan platform. This will allow the P2P lending model to expand even more, the projected amount of loaned money in 2025 is 150 billion $ coming from a low 5 billion in 2014. On one hand people think that banks do that in the only goal of making money but on the other hand people believe banks want to be a bit more entrepreneurial. It also allows them to do things that they wouldn’t be able to do in their main bank. I believe that doing that may increase the relationship the banks have with people, they are often seen as money makers and institutions that do not care about people. By getting active on the sharing economy market, consumers will maybe have a better image of the banks. Sources: http://finance.yahoo.com/q?s=GM http://www.forbes.com/sites/dividendchannel/2015/09/04/general-motors-named-top-dividend-stock-with-insider-buying-and-4-95-yield-gm/#4470de532e2b http://time.com/4166130/general-motors-lyft/ http://www.ft.com/intl/cms/s/2/62f2737e-6210-11e5-9846-de406ccb37f2.html#axzz42hZyoUPk Show less Reply Jordana Viotto 21 February 2016 Very interesting article! The same kind of movement has been happening on crowdfunding. GE Venture Capital announced some years ago that it would dedicate a part of its portfolio to startups coming from crowdfunding platforms. The bank BBVA released a crowdfunding-like service in Spain in order to facilitate money exchanges (particularly loans) among friends and family. Apparently some time after…Read moreVery interesting article! The same kind of movement has been happening on crowdfunding. GE Venture Capital announced some years ago that it would dedicate a part of its portfolio to startups coming from crowdfunding platforms. The bank BBVA released a crowdfunding-like service in Spain in order to facilitate money exchanges (particularly loans) among friends and family. Apparently some time after they terminated the service (no demand?). I have just seen this Nesta survey on the Alternative Finance which adds to this discussion on the incumbents strategy to compete with new business models that potentially threaten their position in the market. Nesta reports that 25% of all loans (£2.2 billion) on lending crowdfunding platforms wer allocated by institutions in 2015. They say “we are likely to see incumbents playing an increasing role: both mainstream financial institutions, who are seeking to learn from their new competitors, and institutional funders, who will continue to provide significant amounts of the funds available on a growing number of platforms”. http://www.nesta.org.uk/blog/another-year-growth-p2p-lending-and-crowdfunding-uk Show less Reply Eva-Maria Scholz 22 February 2016 Thanks a lot for making me aware of the study by Nesta. It will definitively be interesting to watch to the future developments in this sector. Leave a Reply Cancel reply Your email address will not be published. Required fields are marked *Comment You may use simple HTML tags to add links or lists to your comment:<a href="url">link</a> <ul><li>list item 1</li><li>list item2</li></ul> <em>italic</em> <strong>bold</strong>Name * Email * Notify me by email when the comment gets approved.