Monday, August 4, 2014

New (and Very Old) Consumer Attitudes Support Rapid Growth in the Collaborative Economy

Many people assume that the sharing or collaborative economy is something new and innovative, and as a result, it is subject to caution and skepticism, but is this really the case? I often wonder if people considered today's burgeoning collaborative economy models in a historical context, might their caution and skepticism be lessened? Airbnb, LendingClub and Zipcar are new, but the collaborative economy is not; in fact, when considered in a historic context, it is not collective consumption that is new but the idea of private ownership and individual consumption that are quite recent developments.

Ownership was a relatively alien concept for most of human history. For millennia, we lived in tribal societies that pooled resources, skills and output. During the time of the Roman Empire and feudal society, the common man had little right to anything more than tools, with land ownership reserved for nobility who doled out property rights and protection in return for fees and loyalty.

Ideas of personal liberty and private ownership really only flourished following the Reformation, and even then, modern attitudes of ownership and individual consumption were not truly possible until the Industrial Revolution. It was then that the mass production of consumer goods and rise of a middle class to purchase, own, collect and consume those goods led to today's attitudes about private ownership and consumption.

Advertisement from September 1957
"The American Home" magazine
Our current perspective on individual ownership and consumption is really only a few generations old. Still, even as private ownership flourished, collective consumption never truly evaporated. Government services represent a form of collaborative economy, where mass transit and libraries offer people alternatives to the individual ownership of cars and books. Private enterprise also found rare ways to furnish alternatives to ownership, such as laundromats that allow people to rent washers and dryers one load at a time versus owning (and finding room for) expensive appliances.

For much of the last century in the US, collective consumption has been caught up in attitudes about class and standards of living. While poorer urbanites lived in apartments and waited at bus stops, richer suburban dwellers from single-family homes zipped past the straphangers in private cars (or, more likely, over them on the new freeways that connected the suburbs to city centers). While those with more means could avoid sharing walls or rides with others, they could avail themselves of P2P (peer-to-peer) services to avoid doing tasks that were messy or unpleasant, from cutting hair to painting nails to maintaining lawns to cleaning their homes. The ability to privately own more stuff while paying others to do your chores was as much a symbol of status as it was an economic necessity.

"Keeping up with Joneses" became a thing, as families demonstrated their economic power by consuming as much and as obviously as possible. "The Joneses got a new Chevy," said the Smiths with envy, before rushing out to buy the newest model, egged on by mass media advertising that associated ownership and consumption with status and achievement.

Source: Wikimedia
This sort of conspicuous consumption brought benefits such as employment, rising income, economic growth and improved products and services, but it also came at a cost, both personal and to society. We moved further from work, accumulated more debt and spent more time commuting and more hours working. Meanwhile, garbage dumps and automobile scrapyards grew due to the continuous cycle of private purchase, ownership, consumption, disposal and repurchase.

Sharing economy circa 1893; families sharing their homes
for visits. H/T +Jeremiah Owyang Source: Airbnb
In the last several decades, a new word has entered our vocabulary: Sustainability. In 1987, the Brundtland Commission of the United Nations issued a report in which variations of the word "sustainable" appeared 400 times. It defined sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

What started as a buzzword for environmentalists and advocates has now become business as usual in corporate America. Almost two-thirds of businesses say, "My organization makes public our environmental and social goals, and publicly reports progress against those goals." (Alas, only one in five report that the leadership team’s compensation is driven in part by sustainability performance.)

Reviewing the history of ownership, consumption and sustainability is important for two reasons. First, it puts in perspective that our attitudes about individual ownership and consumption are relatively new and that we humans have a rich history of collectively sharing and consuming goods and services. Second, history demonstrates that significant and broad change in consumption habits results from two parallel trends: Technical revolutions (efficient industrial production, available mass media, etc.) and attitudinal changes (adoption of different modes of living and commerce).

The new wave of collaborative economy sites are succeeding not simply because they use technology in innovative ways. No web site or app can encourage people to embrace new behaviors unless they are ready to change--the foundation for change must be present at the same time the capability for change is presented. (That's what found in 1997 when it tried and failed to bring open sharing of one's social networks to a population that would not embrace this sort of behavior for another decade.)

Today, the foundation for a change in attitudes and behavior toward ownership and consumption is in place. Many point to the 2008 economic downturn as a turning point in terms of people's attitudes, but there are many trends that were occurring prior to the Great Recession and are still continuing well into our slow recovery:

Keeping up with the Joneses is simply not as appealing as it once was to Americans, while sustainability is a growing imperative in every corner of our personal and professional lives. These changes in attitudes are beginning to fuel changes in purchase behavior, setting the stage for continued growth in new (and very old) collaborative economy models.

I will continue to explore the data and trends supporting the Collaborative Economy in future blog posts.


Unknown said...

In a time when we're all so very captivated by every little bright shiny bauble, when FOMO rules the day, your slice of historical perspective is very welcome. Keep on keeping on, Augie.

Augie Ray said...

Thank you, Ken. I very much appreciate that!