ImagineeringTomorrow: Creating success with new economy partners

Investopedia defines Shared Economy as “an economic model in which individuals are able to borrow or rent assets owned by someone else”


Renting and borrowing has been prevalent for centuries, however creation of an economic model with technology leverage is a more recent phenomenon. Sites such as Craigslist (founded in 1995) popularized web-based distribution service to friends and community in social and trusting ways. An economic model on it however was built only in 2004, when Craig Newmark started charging $25 to post job openings (albeit the seminal act of e-commerce was in 1971 to arrange the sale of cannabis!).

Technology and social behaviors have moved transactions economy from classifieds and assisted sale of products to borrowing assets owners aren’t frequently using, such as a car, house or even household items. Certain business models have also created services’ platform to offer critical skills and services at flexible rates which have evolved to individuals participating willingly and freely in a contractual model. Such temporary positions for short-term engagements created a trend towards Gig Economy.

Different studies have predicted 35%-40% of American workforce befitting the definition of Gig workforce, which is trend fast replicating across geographies and industries given the convergence of Shared and Gig economies. Cases in point are Uber and Lyft where majority of drivers (car owners) don’t rely on car-hailing platforms for their primary source of income.

Certain organizations are relying on this convergence to redefine their customer value proposition. As an example, one of the largest tractor manufacturing companies in the world, TAFE, offers its farm equipment on rent, along with an optional driver. Farmers don’t have to make upfront investments and can use the equipment during appropriate seasons without the hassle of maintenance and spare parts.

Software, telecom and product development companies have used the principles of gig economy to create agile work practices. However, managing such workforce and practices within the organization as against engaging with a broader external partner ecosystem raises peculiar challenges.

We asked a group of Imagineers (contributors’ names at the end of the article) to share thoughts on how they would structure and ready an organization to harness the potential of Shared and Gig Economy. Three guiding principles emerged from the discussion:

1) (Re)define Core and Context
One of the core values of Astra Zeneca, a global pharmaceuticals company, is to “Follow the Science. Put Patients First”. Following its purpose, Astra Zeneca moved away from traditional geography or function-based organization structure to one that is disease and customer-centric. In line with the said purpose, organization had to become borderless, which meant talent should be available beyond internal and external “boundaries”. AZ worked hard to create communities of doctors, scientists and patients, and a platform where ex-employees and freelance scientists could research on newer and market-relevant drugs. They currently work together to meet AZ’s goals.
Once the core of saving lives was clear, everything else got synced up. That became central design principle for the organization’s structure, and rest was contextual.

2) “One” Partner Network
In a true Shared and Gig economy, contractors or freelancers may work with multiple companies simultaneously and possibly, on multiple jobs too. It helps to align them to your core value proposition, and create strong processes to ensure service and operational parameters are controlled despite a fluid semi-permeable work structure.

Uber’s mission is to “Make transportation as reliable as running water, everywhere and for everyone”. Drivers are critical to this mission, hence Uber evolved its business model to “create job opportunities and higher income for drivers” (surge pricing is an example) without compromising on building smarter transportation solutions. Through its robust algorithm based app, Uber brings transparency, reliability and efficiency to the cab hailing experience. The front end and the back-end of customer’s experience operate seamlessly.

Influential companies of the future wouldn’t be ones with highest employee base, rather those that adapt best to create and manage a truly integrated “One” partner ecosystem. Traditionally, organizations are structured to create stronger control at the core. As partners become contextually critical, their relationship needs to be built over purpose and strengthened through processes.

3) Hawk Eye on Risks
An organization operating in either Shared or Gig economy should be designed with a pro-active view of reputational, operational, compliance and financial risks. In this context, challenges with a delivery start-up, Foodpanda, have been well documented. Orders were booked for restaurants closed-down, payments were not made to retail chains due to technical issues, and billing frauds were rampant, which lost face for one of the world’s largest online food ordering marketplaces. Such loosely held providers (e.g. restaurants) can deliver significant reputational and financial damage unless operational controls are institutionalized through the customer value chain.

Second, platform providers need to singularly own the customer experience. In a “federal” structure, accountability can be built only basis data and continuous feedback. Uber measures outcome of every trip, solicits “compulsory” feedback and acts on the complaints with alacrity. A truly digital platform builds its organizational processes around customer’s journey, not around functions such as sales, marketing, production or customer service. Customer interacts with an organization’s brand, and can use social media to quickly dissipate painfully-gained competitive advantage. Foodpanda, in contrast, wasn’t keeping track of delivery of its orders.

Third, network-led economy mandates that organizations invest in partners’ capability as they would in own. Traditionally, large automobile OEMs have invested in building suppliers’ capability through imparting knowledge and skills on quality and lean methodologies. In the new era, organizations operating in external network need to assess an individual’s profile, skill level as well as fit into the much-cherished work ethics and culture.

The above 3 principles - Know your Core, Manage the Context and Keep Customer at the Center of digital business transformation are key to an organization’s success. As Charles Dickens once remarked “a small key opens a heavy door”, so would hopefully these open new ones for you!

(The article is authored by Tarandeep Singh, Partner, Talent & Performance Consulting - ‎Aon Hewitt. This article is part of the six-article series, ‘Aon #ImagineeringTomorrow: A Co-creation Journey’, with Aon Hewitt)

(Image: Thinkstock)