Although it’s probably too early to offer candidates for Oxford Dictionaries’ Word of the Year, I’d like to suggest uberization as the word for 2015.
According to Oxford Dictionaries the Word of the Year should “reflect the ethos, mood or preoccupations of that particular year and to have lasting potential as a word of cultural significance.”
Now, my argument for the Oxford’s selection team is that in 2015 we see a shift from focusing solely on the phenomenon of Uber to a broader discussion about uberization, which could be described as utilizing the Uber business model in different sectors (from healthcare to real estate and food delivery).
I’m not sure if this is a winning argument, but with or without the recognition of Oxford Dictionaries this seems a good time to have a look at uberization and more specifically at the question that is of more interest to this space: Is the Uber innovation model others are so eager to adopt sustainable?
I’m probably not the only one in this space having these mixed feelings, but at the end of day I’d rather stay optimistic (how otherwise can you drive change?), which is why I’d like to share with you the most optimistic moment I had in 2014 when it comes to sustainability.
Now, let’s be clear – when I talk about optimism, I’m not talking about burying your head in the sand or daydreaming about a utopian future, but about a very realistic “hopefulness and confidence about the future,” which is exactly what I found in September at TED@Unilever.
Last week Uber raised $1.2 billion in its latest round of funding, bringing the company’s value to about $40 billion. The headline on TheStreet was: “Uber’s $40 Billion Valuation Nears Facebook Territory as Sharing Economy Continues to Soar.”
I find this headline quite accurate except for one thing – Uber is not part of the sharing economy.
I know that it might sound a bit strange, as Uber is one of the more common examples of the sharing economy. But bear with me for a minute while I try to make the case as to why Uber, despite being a business success story, still shouldn’t be considered as part of the sharing economy.
Looking at definitions of the sharing economy, one might actually think there’s no problem with addressing Uber as part of it. For example, in a 2013 report prepared for the European Commission, The Sharing Economy Accessibility Based Business Models for Peer-to-Peer Markets, the authors define the sharing economy as a space including “companies that deploy accessibility-based business models for peer-to-peer markets and its user communities.” Another definition comes from Adam Werbach, co-founder of Yerdle: “With sharing economy there are activities that take underutilized resources bringing them to use through the application of technology and community.”
Both of these definitions could fit Uber, especially with regards to its UberX service, in which ‘regular’ drivers use their own cars to provide customers with rides.
However, I believe that there’s more to the sharing economy than just creating peer-to-peer marketplaces and making a better use of underutilized resources. Take for example the framework Rachel Botsman, the co-author of “What Mine is Yours,” offers. She describes the core values of the sharing economy (or the collaborative economy as she refers to this space) as empowerment, collaboration, openness and humanness. “In terms of the underlying philosophy, it’s about putting these values above the end goal of profit maximization,” she writes.
Now, this might sounds like a narrative taken from a hippie lexicon, but to me it puts the finger right on the spot. The economic viability of the sharing economy is important, but so are the human values it promotes. After all, the hope (at least mine) is that the sharing economy will provide us with the much-needed vision of how a more sustainable future or a more humanized way of living would look.
As retailers debate whether to jumpstart holiday shopping by opening on Thanksgiving, 44 of my students have a new perspective on consumption – they just completed their first “Buy Nothing New” challenge.
For 30 days, the students did not buy anything new other than food and absolute necessities. As their professor, my intention wasn’t to torture them but to give them an opportunity to explore alternatives to consumption — hoping that through their experiences I would have a better sense about their generation’s (aka Gen Y, or Millennials) actual willingness to consider alternatives to traditional retail channels. In other words, the question I had in mind was: Can Millennials significantly integrate sustainable consumption into their lifestyles?
The opinions about it seem to be mixed. While Mary Meeker of Kleiner Perkins Venture Capital describes this generation as transitioning from asset-heavy lifestyles into asset-light lifestyles, a BCG study found out that Millennials “continue to place a high importance on brands. And they do the same for consumerism: majorities of those surveyed said that buying makes them happy and that spending is good for the economy and society.”
So, which one is it?
Interestingly, one part that is still missing from these discussions (well, not entirely) is the environmental impacts of the sharing economy. The general notion is that the sharing economy has a positive environmental impact as it promotes a greater use of underutilized assets. But is this true?
This answer no doubt is complicated. There are even doubts about the environmental impacts of first appears to be one of the greener parts of the sharing economy – bike sharing.
The reason? Apparently, most customers didn’t like this low-calorie option. “More than 100 million customers had tried the fries, but that sales were too weak to continue offering the item throughout its United States stores,” the company told the New York Times.
But this wasn’t the only fry news Burger King had last week – one day before it waved goodbye to Satisfries, the company announced on the return of “the great-tasting Chicken Fries”!
The reason? Again, it was all about the customers. “Sparked by an overwhelming number of enthusiastic tweets, Change.org petitions, dedicated Tumblr and Facebook pages, and phone calls from devoted fans, these voices are the reason this cult favorite menu item is back.,” the company reported.
So, in most of Burger King restaurants, customers will keep enjoying the same number of options after these changes, only instead of one with 270 calories, 11 grams of fat and 300 milligrams of sodium (aka Satisfries), they will have one with 290 calories, 17 grams of fat and 780 milligrams of sodium (aka Chicken Fries).
However, there’s more to this story than just calorie, fat and sodium accounting. Here are four lessons we can learn from last week’s news:
How much is a happy employee really worth? I bet many companies still ask themselves this question, wondering what the real value of employee satisfaction is.
Fortunately, academic researchers are here to help with a new study looking at the relationship between employee satisfaction and stock returns, using lists of the “Best Companies to Work For” in 14 countries as their database. In addition, the researchers investigated how this relationship depends on the country’s level of labor market flexibility.
And the results? The researchers, Alex Edmans of the Wharton School of the University of Pennsylvania and Chendi Zhang and Lucius Li of Warwick Business School in the U.K., found out that “employee satisfaction is associated with positive abnormal returns in countries with high labor market flexibility, such as the U.S. and U.K., but not in countries with low labor market flexibility, such as Germany.”
In other words, greater employee satisfaction contributes to higher stock returns, at least in labor markets that are more flexible. The difference between the two different types of labor markets, the researchers suggest, may be due to several reasons: First, when firing is easier, employees tend to value more satisfactory jobs. Second, in low flexibility labor markets, regulations usually guarantee minimum standards for worker welfare, and hence employees are less likely to value the marginal benefit of whatever additional perks they enjoy at work.
Should we be surprised by these findings?
How do we create a better future? How do we redesign our economic system to be more sustainable?
Exploring these and similar questions, a growing number of people look for inspiration from the greatest lab of all: Nature. This type of exploration already has a name (biomimicry), definition (“an innovation method that seeks sustainable solutions by emulating nature’s time-tested patterns and strategies”) and even an inspiring visionary leading the way (Janine Benyus).
It also has a growing number of followers, as I could see last week at an event titled “Biomimicry + the Regenerative Economy.” Organized by BiomimicryNYC, a network dedicated to fostering a community of nature-inspired practice in the New York City metro region, it took place at Impact Hub NYC with more than 100 attendees who came to learn more about aligning business with nature from two experts in this field: Amy Larkin and Katherine Collins.
I was curious to hear what Larkin and Collins had in mind when it comes to applying biomimicry to business and economy, because currently we have too many questions and perhaps too few propositions. My hope is that nature can help balance this out, but I’m still not sure how. Hence I was hoping to gain some insights at this event.
A growing number of millennials are living with their parents. This is one of the findings of a Pew survey on Americans living in multi-generational family households.
According to the survey, young adults ages 25 to 34 (aka millennials) “have been a major component of the growth in the population living with multiple generations since 1980 — and especially since 2010. By 2012, roughly one-in-four of these young adults (23.6 percent) lived in multi-generational households, up from 18.7 percent in 2007 and 11 percent in 1980.”
It’s not necessarily that millennials love their parents nowadays more than ever and have hard time leaving the house. Apparently, there are number of reasons for this phenomenon, including millennials’ delayed entry to adulthood, but also, and probably mainly, economic reasons.
According to a State of the Nation’s Housing report released last month by the Joint Center for Housing Studies at Harvard University “tight credit, high unemployment and record levels of student loan debt are moderating growth and keeping young people and other first-time homebuyers out of the market.”
So, this is good news, right? Millennials seem to adopt a more responsible economic behavior, avoiding the same reckless financial decisions that got so many people in trouble only a few years ago. And besides, aren’t multi-generational households more sustainable? After all, they use resources more efficiently, serve as an economic safety net and may even help family relationships.
Sometimes it looks like Uber has become the world’s favorite punching bag, from taxi drivers across Europe complaining that Uber is “not playing by the rules” to American customers annoyed with the company’s surge pricing tactics.
Why? Leonard didn’t like the fact that Uber significantly reduced the prices of UberX rides in New York and other cities, making them cheaper now than taxi rides. He suggested that Uber’s deep pockets (it just raised $1.2 billion) could enable the company to lose money on every ride, claiming this is an “anti-competitive market behavior.”
And the connection to Rockefeller? “The founder of Standard Oil built his monopoly by exploiting size to leverage discounted access to railroad transport. Such economies supported price cuts his competitors couldn’t match,” Leonard writes. He’s afraid that we’re about to witness a somewhat similar scenario in the taxi industry, where Uber will use its funds to drive taxis out of business, and then will increase prices, making its investors rich at the expense of the public.
Leonard, as well as others sharing similar concerns, questions the legitimacy or fairness of Uber’s business tactics, especially given the fact that it operates in many places within a “grey area” of the law. Yet, behind these arguments lie even more fundamental questions: Is Uber still considered part of the sharing economy? Is it exploitative? And if you answer ‘yes’ to both questions, what does it say about the sharing economy?
Let’s try to look at these questions one by one.
I consider myself a regular customer at Walgreens — I shop there at least once or twice a week. For some reason I thought I knew the company quite well, at least when it comes to sustainability issues, but this week I’ve learned a new fact that I wasn’t aware of:
Walgreens is considering a move abroad to lower its tax rate.
As Andrew Ross Sorkin reported in the New York Times, Walgreens “is now considering moving the company’s headquarters to Switzerland as part of a merger with Alliance Boots, a European drugstore chain. Why? To lower Walgreen’s tax bill even further.”
According to Americans for Tax Fairness, Sorkin adds, “a move by Walgreen to Switzerland would most likely cost United States taxpayers about $4 billion over five years.”
So what does it mean exactly, and what should Walgreens customers like me do about it? Here are five things to think about:
When “Cradle to Cradle” was published in 2002, it generated great hopes that it could lead to a more sustainable future. The launch of the C2C certification by the Cradle to Cradle Products Innovation Institute provided companies with a clear framework on how to adopt the concept, making a paradigm shift seem even more likely.
Yet, even with more than 200 companies worldwide participating today in the C2C Certified Products Program, and with hundreds of product lines representing thousands of different products certified, C2C is still a niche market with little influence on the overall economy.
And so, almost a decade after C2C certifications became available, it’s still very much a promise that hasn’t been fulfilled.
Why? I assume there are many reasons, but the main one seems to be that most companies just don’t recognize the value in adopting the C2C certification. In order to address this issue, the C2C Products Innovation Institute commissioned Trucost, a leading global environmental data and insight company, “to develop an assessment framework with clearly deﬁned indicators to determine the effect of optimization on the business, environmental and social impact of products.”
The result is a 145-page report in which Trucost presents its analysis of 10 C2C-certified products from different companies (and industries), including Aveda, Desso, Ecover, PUMA, Shaw Industries, Steelcase and Van Houtum.
Three years after taking over the leadership of Apple, Tim Cook is still struggling to make his own mark in the company. A profile article in the New York Times published last week described the challenges Cook faces while trying to lead a company, living in the shadow of Steve Jobs and “making Apple his own.”
According to the article, there are still many people — including some of Apple’s shareholders — wondering if Cook can fill Jobs’ shoes and maintain the company’s position as an innovation powerhouse and the most valuable company in the world.
One issue where Jobs’ shoes aren’t too big to fill is corporate social responsibility (CSR): In his day, Apple was famous for its reactive CSR strategy, low level of transparency, little commitment to stakeholder engagement and a generally dated approach to what responsibility in business means.
Cook — who had to address some of the issues that were the result of Jobs’ approach, such as the working conditions at Foxconn — seems to be more open-minded about CSR, promoting an agenda focusing on climate change, human rights and philanthropy.
The interesting question is whether this is enough to build Cook’s own legacy and make Apple not just his own, but also more sustainable? I believe the answer is no. And the reason is not what is in his agenda, but what is missing from it.
Last week at the Sustainable Brands conference in San Diego, gDiapers CEO, Jason Graham-Nye said: “I think sustainability is like fight club. The first rule of fight club is don’t talk about fight club. The first rule of sustainability is the word is so dead.”
And he’s not alone. In one of the conference events, Raphael Bemporad — co-founder and chief strategy officer at BBMG and Tensie Whelan, president of Rainforest Alliance — presented a new report entitled The New Sustainably Narrative, which tries to address the following problem:
“Sustainability doesn’t mean anything real to consumers. Too often, it brings to mind technical issues or seemingly insurmountable environmental challenges.”
I guess this problem statement shouldn’t be surprising news to anyone involved in or following the many efforts to engage consumers in sustainability. The issue it raises has long become the Achilles’ heel of the sustainability movement, making companies wonder what on earth can be done to get consumers on board.
So, what can be done to change the status quo when it comes to consumers with or without using the ‘S’ word?
If I ask you to describe Uber — the ride-sharing service — in one word, what would it be? Probably words like app, better, convenience, surge pricing, luxury, service, sharing, fun, cashless and future would come up.
My guess however is that the most popular word would be ‘disruptive.’ Why? Just look at the headlines of articles focusing on Uber: “Invasion of the Taxi Snatchers: Uber Leads an Industry’s Disruption,” “Airbnb, Coursera, and Uber: The Rise of the Disruption Economy,” “Disruptions: Ride-Sharing Upstarts Challenge Taxi Industry,” are just some of the many examples you can find online with the combination Uber + disruption.
But what does it actually mean? In most cases describing Uber as disruptive or a disruptive innovation refers to the notion that the company brought a fundamental change, not just small-scale modifications, to the taxi market — reinventing in a way the whole taxi experience.
Now, while obviously Uber seems to meet the definition of disruptive innovation as most people understand this concept, it would be interesting to see if Uber actually meets the criteria for disruptive innovation defined by the person who actually coined and popularized the term – Prof. Clayton M. Christensen.