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- 1. - 1 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Does the Sharing Economy really Share?
- 2. - 2 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Conclusion Shift from a Consumeristic Economy to a Cooperative Economy by way of economic and social equality, accountability and stability
- 3. - 3 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 4. - 4 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 5. - 5 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Sharing Economy: a revolutionary way of doing business “Sharing economy, also known as collaborative consumption, is a business concept that highlights the ability (and perhaps the preference) for individuals to rent or borrow goods and services rather than buy and own them”1 Trust Economic downturn Scarcity of resources Sharing Economy “I don’t need a drill, I need a hole in my wall” Traditional “Consumeristic” Economy Current “Sharing” Economy 1 http://searchcio.techtarget.com/definition/sharing-economy Internet 1 2
- 6. - 6 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Personal liabilities Increased individual risks Uncertain regulations Uncertain service security Uncertain service quality No Labor Rights protection Diseconomies of scale Increased risk of ‘Adverse Selection’ and ‘Information Asymmetry’ The majority of sharing economy platforms still have control over the prices of the service provided More choice for the customers Better pricing in the market Reduced transaction costs Increased entrepreneurial ‘spirit’ New and faster innovations Increased job flexibility Better use of scarce resources New and unique experiences UPSIDES DOWNSIDES Sharing Economy: are we sure the upsides outweigh the downsides?
- 7. - 7 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Which forces affect the Sharing Economy System? SOCIAL TECHNOLOGICAL ETHICAL LEGAL ENVIRONMENTAL ECONOMIC Individual growth Demographics Change in consumer mindset Unemployment Regulations Individual growth Income inequality Discrimination Technological changes Economic cycle Scarcity of economic resources Barriers to Entry Economy of scale Network effect Investors’ interests in the System Unemployment Scarcity of natural resources Negative externalities (e.g. pollution)Legend: High impact / High Uncertain Driving forces Other driving forces
- 8. - 8 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Need for investments in new assets Government incentives Rise of big players Lobbying power + + + + + + + Need for utilization of existing assets Seizing new IT opportunities Sharing Economy + - - + 2 Faster Capital & Cash inflow + Rise of big players + + Social welfare - + + + + Accountability Security Labor rights New & easier way of doing business - + Desire to grow Opportunities for new players Ability to respond to economic shocks Consumeristic Economy- + 1 Economic system fragility The current Sharing Economy ultimately leads back to a consumption driven economy fostering social inequality Social welfare - - +
- 9. - 9 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Need for investments in new assets Government incentives Rise of big players Lobbying power + + + + + + + Need for utilization of existing assets + Seizing new IT opportunities Sharing Economy + - - + 2 Faster Capital & Cash inflow + Rise of big players + + Social welfare - + + + + Accountability Security Labor rights New & easier way of doing business - + Desire to grow The current Sharing Economy ultimately leads back to a consumption driven economy fostering social inequality Opportunities for new players Ability to respond to economic shocks Consumeristic Economy- + 1 Economic system fragility - Economic system fragility Social welfare - +
- 10. - 10 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 11. - 11 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society How is the Sharing Economy infiltrating the Hospitality Industry? Threats of Substitutes Technology ( Video Conferencing ) – Making the world a smaller place Peer to Peer Accommodation / Home sharing Mobile Homes / Camping Cruises Power of Suppliers Labor Supply / Contracted Workforce Furnishing Catering Utility Providers Industry Rivalry Concentration Price, Quantity, Services Competition Brand Recognition Powers of Buyers Wide Range of Options Available Relationship Specific Bookings Discount Packages Hospitality Industry Barriers to Entry Infrastructure costs Government regulations Labor costs Branding costs Locations Legend: Affected by the advent of Sharing Economy Not affected by the advent of Sharing Economy
- 12. - 12 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Airbnb’s Business Model: low costs and the Network Effect Key Partners Hosts Guests Professional photographers Investors Payment processors Revenue Streams Commission from Hosts upon every booking Commission from Guests upon every booking Cost Structure Platform set up & maintenance costs Salaries to permanent employers Payment to freelance photographers Key Activities Building Hosts network and Hosts management Building Guests network and Guests management Key Resources Financial: relations in the Silicon Valley Human: best technicians and web designer Technology: User- friendly well designed web platform Value Proposition Hosts: › Earning money renting the place › Insurance offered by Airbnb › Free photo shooting Guests: › New opportunity (homestay vs Hotel) › Decreased prices Customer Relationship Customer service Social Media Promotional offers Home insurance Channels Website Mobile apps (i.e. Android, iOS) Customer Segments Hosts: › People owning a house willing to rent › People willing to meet new people Guests: › Travelers › Casual guests looking for comfortable accommodation at affordable prices Source: http://nextjuggernaut.com/blog/Airbnb-business-model-canvas-how-Airbnb-works-revenue-insights/ Network Effect
- 13. - 13 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Airbnb: Issues with Regulation, Reputation, and Risk Regulation: Local governments impose taxes and fines › Hotel Tax within San Francisco › Fines imposed on Airbnb and Hosts Legislation to restrict Airbnb short term rentals › Proposition F in San Francisco › Caps on Short Term Rentals: 90 nights in SF, 30 nights in NYC Reputation: Local residents view Airbnb as a negative force causing evictions Airbnb becomes a scapegoat for housing shortage, increasing rents Risk: Liability: Safety of Hosts and Guests Discrimination and Inequality Case: City of San Francisco vs Airbnb Airbnb fights back - amidst Prop F uproar Airbnb tries to remind the public of their contribution to local economy
- 14. - 14 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society How Airbnb and the other Stakeholders impact society as a whole? Stakeholder Interests/Expectations Actions Negative Impact Airbnb Initial: Source of income during recession Existing (2014 Mission/Vision): "Belong Anywhere" Owns a platform where they can easily connect hosts with guests. Lose distinct cultural flair amongst locals / mass tourism takes precedence enabling gentrification New Guests Get a place that mimics home Utilize the asset suited with their chosen price, needs and lifestyle Increases buyer power Gain better understanding of the local's cultures Airbnb Hosts Individual growth; extra income Use Airbnb platform to choose and approve potential guests Promotes discrimination and / or inequality Local Government Aims at stimulating local economy and social development Imposes Transient Occupancy Tax to Airbnb Owners (eg SF Local Government) Produces displaced citizens as Airbnb hosts force up housing prices to accommodate taxes Hospitality Industry Aims at providing outstanding lodging facilities and services to guests As their market share got affected, they have to lower down their employee headcount or reduce payroll Reduced market share causes the decline of local’s labor force Locals Displaced Stay in the area with reasonable price Relocate due to higher rental prices Increases number of displaced residents in the area Mass tourism takes precedence Neighbors NONE (externalities) NONE (externalies) Irresponsible guests are disrupting peace and values of the area Real Estate Industry Meet the market's demand of purchasing or selling real estate needs Get paid and commissioned from selling spaces outside shared economy system. Some leave the industry and join Airbnb bandwagon Licensed real estate agents lose their jobs Weakens the real estate industry as experts leave VOLUNTARYINVOLUNTARY
- 15. - 15 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 20Airbnb in the new System3.2 16Principles, Structure and Roles3.1 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 16. - 16 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 20Airbnb in the new System3.2 16Principles, Structure and Roles3.1 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 17. - 17 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society The New World: Cooperative Economy “It promotes decentralization which means there will be no capital outflow outside the regional community being aligned with the principle of economic efficiency and economies of scale.” GUIDING Principles PROGRESS Measures An autonomous association of people in which they work collaboratively as shareholders to meet their common economic, social and cultural needs and aspirations A cooperative enterprise focus on creating equality by providing equal opportunity to people to take part in the economic activity of the enterprise by means of sharing their assets and creation of new assets ultimately enabling them to drive their financial and social welfare on their own Voluntary and Open Membership Democratic Control Independence Community development Literacy levels Environmental sustainability Bio-diversity Income distribution Purchasing capacity
- 18. - 18 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Pillars of the Cooperative Economy STABILITY ACCOUNTABILITY EQUALITY Bringing transparency to the System Distributing profit and risk Enhancing and enforcing ratings systems Providing Stability within the System › Self-Regulation › Self-Reliance Demanding equality for the System: › Creating equal opportunity › Reducing discrimination The Cooperative System utilizes three key pillars which work in conjunction to create a self- regulating, sustainable system
- 19. - 19 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Cooperative Economy: What will it look like? Regional Community National Cooperative Grid Central Government Regional Community Cooperatives: Enterprises driven by the shareholders Shareholders: Local people working in cooperatives Board of Directors: Governing council of cooperatives Elected Representative: Chosen representative of the cooperative in the regional community organization. Regional Community: Responsible for development, judiciary and legislation of the community. Manages utilities, education, transportation. National Cooperative Grid: Chosen representative from regional community collaborate to form national organization. Central Government: Responsible for global representation, security and national disasters. Roles
- 20. - 20 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 20Airbnb in the new System3.2 16Principles, Structure and Roles3.1 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 21. - 21 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Accountability: › The Neighborhood Collaborative enforce ratings, and are responsible for monitoring the risk involved regarding local government regulations › They gain shares in Airbnb, earning more for their assets and creating a voice for the prosumer. Giving Airbnb the benefit of marketing, research and development and new innovations Equality: › Prosumer (Host) enters into a Neighborhood Collaborative, in which every member is equally represented by one vote which sets the agenda to be brought to Airbnb by the Collaborative Representative › Ratings Enforcement prevent Discrimination, also lessening risk for Airbnb. Stability: › The Collaborative self-regulates, allowing local residents to interact with Hosts. Collaborative Ratings Enforcement alleviate safety concerns. Airbnb’s reputation is strengthened. How could Airbnb contribute to the success of the new System? Implementing a Collaborative Approach, Airbnb will contribute to the success of the Economy by bringing the Sharing Economy Giants together, setting a precedent for a new model of business. (SOMA) Neighborhood Collaborative (Mission District) Neighborhood Collaborative (Outer Sunset) Neighborhood Collaborative San Francisco Regional Collaborative Representatives
- 22. - 22 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 23. - 23 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Is the System Antifragile? – Testing through the five main Driving Forces ECONOMIC CYCLE SCARCITYREGULATION TECHNOLOGY NEGATIVE EXTERNALITIES ON THE ENVIRONMENT Regional Community National Cooperative Grid Central Government Regional Community
- 24. - 24 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Test # 1-2 – Scarcity of Economic Resources & Technological Changes Who: › Shareholders How: › In abundance, prices of assets are reduced. › In scarcity, prices of assets are increased. › In scarcity, the system is not able to satisfy customers’ needs. SCARCITY OF ECONOMIC RESOURCES: Abundance of resources/assets Scarcity of resources/assets TECHNOLOGY: Attacks behind Internet technology affecting Client’s internet platform (platform isn’t available) More people accessing internet In abundance, focus for sharing assets will be shifted to other priorities such as innovation and environment sustainability In scarcity, the system would use reserved funds to continue its economic activity Sharing transactions are less costly than owning an asset. Measure of assets will control the production according to seasonality. Who: › Shareholders How: › Less technology reduces the connectedness between cooperatives and customers › More People accessing internet increases congestion in the system. More people joining the network affecting client’s response Have a communication back up plan with clients. › Emergency Telephone line. › Face to Face communication. › Invest in R&D to create new platforms for interaction between people. More technology improves process of recruitment of new members, making it more efficient. Improve communication process with new members and people willing to join the system/company. IMPACTS ON THE SYSTEM HEALING THE SYSTEM
- 25. - 25 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Test # 3-4 – Regulations & Negative Externalities on the Environment Who: › Community › Shareholders › Government How: › Lessen availability to natural resources. › Reduction of Social welfare. › Necessity to find new ways to be environmentally conscious › Economically affected REGULATION & NEGATIVE EXTERNALITIES ON THE ENVIRONMENT: Reduction of natural resources More Taxes imposed Penalties misusage of resources Cooperatives fully utilize their existing resources Each individual is accountable for the usage of resources Transparency within the system will allow people to be more conscious of their acts IMPACTS ON THE SYSTEM HEALING THE SYSTEM
- 26. - 26 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Test # 5 – Economic Cycle Who: › Shareholders › Government How: › Economic Boom: People have less incentive to share. › Economic Bust: People have more incentives to share, creating congestion in the System Lack of faith in the system A Global Crisis would affect the System in a community level As wealth increases, so are the incentives for everyone to remain the System and keep contributing in the System As the System successfully elevates everyone's welfare, people will focus on other priorities such as global issues (i.e. environment, innovation) In a Economic Downfall, the system would use reserve funds to continue its economic activity In a community level the issue would be addressed by decentralization IMPACTS ON THE SYSTEM HEALING THE SYSTEM ECONOMIC CYCLE
- 27. - 27 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society 27Conclusion5 22New System Simulation4 15Cooperative Economy: Principles, Structure and Roles3 10The Hospitality Industry: Threats by Airbnb2 4Sharing Economy: Principles, Forces and Issues1 Agenda
- 28. - 28 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Conclusion Shift from a Consumeristic Economy to a Cooperative Economy by way of economic and social equality, accountability and stability
- 29. - 29 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Back up
- 30. - 30 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Source: http://www.statista.com/chart/2323/the-rise-of-the-sharing-economy/ How accepting the public is with sharing communities
- 31. - 31 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society • Cooperatives overcome the historic barriers to development in the ways they aggregate people, resources, and capital (Ziewacz 1994). Of 162 non-agricultural cooperatives in one study, 44% of the respondents said they could not have opened their business had it not been organized as a cooperative (Bhuyan et al 1998). • The economic activity of the 30,000 cooperatives in the U.S. contributes an estimated $154 billion to the nation’s total income. The co-ops have helped to create over 2.1 million jobs, with an impact on wages and salaries of almost $75 billion (Deller et al 2009) • Cooperative businesses have lower failure rates than traditional corporations/small businesses: after the first year (10% failure versus 60-80%) and after 5 years in business (90% still operating versus 3- 5% of traditional businesses) (World Council of Credit Unions study in Williams 2007). Evidence also shows that cooperatives both successfully address the effects of crises and survive crises better (Borzaga and Calera 2012). Source: http://www.geo.coop/story/fact-sheet Numerical Facts: Benefits of Cooperative Economy
- 32. - 32 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Stakeholder Analysis 1/2
- 33. - 33 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Stakeholder Analysis 2/2
- 34. - 34 -Hult International Business School – MBA Class 2016 – Golden Gate – Team 8 Mod. A – Global & Business Society Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Labor Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation. Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. Does our conclusion follow the un global compact principles?
Hinweis der Redaktion
- Good Afternoon Ladies and gentlemen and thank you for being here with us. Today we are gonna take you through our analysis of the Sharing Economy system specifically looking at Airbnb and the Hospitality Industry. We’ve seen that in reality The current Sharing Economy ultimately leads back to a consumption driven economy fostering social inequality and we recommend creating a shift to a Cooperative Economy by way of economic and social equality, accountability and stability.
- Good Afternoon Ladies and gentlemen and thank you for being here with us. Today we are gonna take you through our analysis of the Sharing Economy system specifically looking at Airbnb and the Hospitality Industry. We’ve seen that in reality The current Sharing Economy ultimately leads back to a consumption driven economy fostering social inequality and we recommend creating a shift to a Cooperative Economy by way of economic and social equality, accountability and stability.
- First we are going to address the Sharing Economy, then the Hospitality Industry and its Threats, then we will draw our new System – the Cooperative Economy and we will finally test it against the main forces
- The idea of sharing goes back to the beginning of mankind but what’s happening in the New Millennium that drove our generation to a new way of conducting business? The advent and diffusion of INTERNET An increased level of TRUST among individuals The repetition of SHOCKING ECONOMIC DOWNTURNS The acknowledgment that the current rate of depletion of natural resources is no more sustainable But, are we sure the upsides of Sharing economy outweigh the downsides?
- In fact, we might be underestimate the downsides of it. And those have to do with increased personal risks, uncertain regulatory policies and potential inefficiencies in the economic system. Which are the main forces that affect it?
- The analysis of both the current situation and the future possible development pointed out many forces but we identified five as the potentially most disruptive ones: REGULATIONS, SCARCITY OF ECONOMIC RESOURCES, TECHNOLOGICAL CHANGES, NEGATIVE EXTERNALITIES ON THE ENVIRONMENT AND ECONOMIC CYCLE. But how the forces are currently making this system fragile?
- In fact, both systems - the traditional consumeristic one and the new sharing economy - are flawed. Starting with the Consumeristic Economy our analysis outlined that the outcome of a consumption driven economy will always drive back to an increasing income and social inequality. We thought the solution could have been found in the Sharing Economy but…
- …drilling deeper into the system we found that even though the starting premises are based on a different way of consumption ultimately the current sharing economy system is extremely fragile and leads again, as its predecessor, to a decrease in social welfare. The only difference is that this time the business cycle will be acellerated and potentially more disruptive. Let’s look at our case study of the Sharing Economy in the Hospitality Industry.
- Let’s now dig deeper into our case study of the Sharing Economy in the Hospitality Industry.
- The Hospitality Industry is a highly competitive industry based on high capital entry costs which is now being affected by Airbnb. As we can see, they are disrupting and infiltrating the system and posing a real threat of substitution.
- How does Airbnb’s Business Model disrupt the Industry? Costs of Airbnb are low, as they do not develop infrastructure, rather they rely on the assets of their hosts. Revenue streams depict the charge to use the platform, commissions from hosts and guests. The Value Proposition utilizes network effect which gives reciprocal value to hosts and guests and ultimately the company.
- Currently, Airbnb faces issues within the sharing economy model. Because Airbnb currently operates as a platform to connect users, it bears the brunt of the responsibility of three main issues: There is regulation continuously being introduced to local government by powerful incumbents (Hotel Industry in both SF and NYC) and disgruntled local residents. Because of this, their reputation is tarnished and cities view Airbnb as a cause of many of the local housing problems. Ultimately, the risk is completely on Airbnb, they are charged with liabilities even though hosts practices are not monitored closely.
- So How Airbnb and other Stakeholders impact society as a whole? How did they influence each other? Lets take a look at our three major Stakeholders – Airbnb itself, hosts and local residents. Airbnb’s initial motivation was to get another source of income and they wanted to help society do the same. With this, they created a platform that CAN EASILY connect hosts with guests. The Airbnb Hosts have an unregulated avenue where they can approve rental applications from guests solely based on their own preferences. This easily allows for discrimination and inequality. There is also a negative impact on local residents, the tax payers. Because Airbnb hosts force up housing prices to support mass tourism, taxpayers are forced to move out or relocate – this impacts local culture or the social welfare of the community. These are all valid concerns, so how do we fix them?
- We are coming up with the Idea of Cooperative Economy: Let me explain what is our idea of the new world. What is a cooperative? An autonomous association of people in which they work collaboratively as shareholders to meet their common economic, social and cultural needs and aspirations. The guiding framework is based on: Voluntary and Open Membership Democratic Control Independence and Community Development. Progress Measures will be more wide and close to humanity which includes: Literacy levels, Environmental Sustainability, Bio-Diversity, Income Distribution, Purchasing Capacity. Cooperative economy emphasizes on decentralization, which narrows down the whole system making it easy to be managed in an efficient way.
- Foundation of cooperative economy stands on three pillars: Accountability: Shareholder model and rating systems brings more transparency ultimately making the system more sustainable. Equality : By allowing everyone to take part in the cooperative, it promotes a sense of equality among the community which creates harmony and aligns everyone to a common vision. Stability : As policies, rules and incentives are decided collectively making the system self regulatory, the system becomes stable and more secure.
- How the economy works: 1.Cooperatives charges membership fees in order to make people the shareholders. The fees are used to develop a reserve fund which is used for the overall development of the cooperative and can be used in the case of unforeseen crisis .One part of the fees directly goes to community fund which is responsible for the development of the community. 2.Cooperatives are run by shareholders by directly interacting with each other avoiding intermediaries. They are responsible to make economic decisions of the cooperative collectively. It provides an equal opportunity to everyone in the cooperative. The local people share and allocate the resources based on consumption. Incentives play a major role to prosper growth while keeping in mind the generic interests. Incentives are based on performance and are publically displayed to avoid any conflicts. Cooperatives pay taxes to the government for the global issues as well. 3.The board of directors of the cooperative is elected by the shareholders based on one member one vote and guiding principles held by ratings. These ratings include social and ethical conducts, past performance and background. Ratings are contributed by the shareholders. 4.The Board of Directors then elects representative which takes part in the community organization which works for the development of the community. Community agendas are defined by the representatives of various cooperatives. Then the agenda is selected by public voting. Everything is transparent and is publically disclosed by the mediums of reports and internet. 5.Regional community representatives collaborate with other regional community representatives creating a national cooperative grid.
- In the short term Airbnb would implement the cooperative pillars to create “neighborhood collaboratives” in cities that they serve. This would help to create a system where the risks and profits are distributed within this cooperative. The prosumer now has the accountability incurring more profits for their assets, creating more return for their risk. Within this system, the gap between CEO and host will be lessened, the company will be closer to their demographic. In each collaborative, there will be a neighborhood manager which will represent the needs of the collaborative to the cooperative. RATINGS AND FEEDBACK key to the Neighborhood Collaborative: Accountability would be founded on feedback, user to user, user to platform. Service quality- Satisfaction ratings- ratings based on multiple facets, sustainability ratings, ratings on your accordance to community guidelines, faculties ratings. Trust- Transparency, financial disclosures, social benefit disclosure, sustainability disclosures. Airbnb WILL CONNECT THEIR CLOUD TO THE OTHER BIG PLAYERS IN THE SHARING ECONOMY (ie. UBER) IN ORDER TO PROVIDE TRANSPARENCY OF USERS ACROSS PLATFORMS, BRINGING THESE GIANTS INTO THE COOPERATIVE ECONOMY AND SETTING A PRECENDENT FOR A NEW MODEL OF BUSINESS.
- Talking about forces related to Scarcity of Assets, the types of disruptions we proved are abundance and scarcity of assets, the impacts to the System on these cases are directly to Shareholders, and the way these impact the System, is directly on Prices… In Abundance, prices are reduced, In Scarcity, prices are increased and the system would probably not be able to satisfy all customers’ needs. How would the System heal in these cases? It is important to understand that the cooperative system is prepared to shift priorities, what I mean, is that sharing won´t be a priority when there is abundance of assets, the priorities would be sifted to development of new things, for instances, environment sustainability. Reserve funds are also important in the cooperative system, when there is scarcity of assets this will help to continue economic activity. And lastly, the Measure of assets in the system is a key element, which will help to control the production and avoid abundance or scarcity in different seasons. In the Technology forces, we simulated attacks on internet simulating less technology and what would happen if more people access internet… Of course the impact is to Shareholders as well. With less technology – there is reduction of connectivity (or better said – there is NO connectivity) between the Cooperative and the Customer And when more people is accessing internet the congestion in the system increases. How would the System heal in these cases? When there is NO connectivity, there will be a communication back up plan, like an Emergency telephone line, face to face communication, and besides this, there would be an investment on R&D to create new platforms so that the system does not rely only on internet. More people accessing internet triggers more technology in the System, improving recruitment and communication technologic processes. Let’s continue the simulation with regulation and environment forces.
- Now, The cooperative economy will be tested under regulations and how the system will react to these forces. As more natural resources are consumed, vital resources will become scarce, more regulations will be introduced. Environment plays an important role in this system and all stakeholders will be impacted. For this reason, the community needs to find new ways to be more environmentally conscious as itwill ultimately affect their social welfare and economy. The cooperative economy is based on the fundamentals of maximizing the usage of existingresources. Therefore, communities primary objective is to be efficient when allocating and spending theirexisting resources. Each shareholder is equally accountable for the management of resources creating a self-controlling system where users understand the necessity of being responsible. Transparency will encourage everyone to be conscious of their usage as other people in the community will know if someone is not maximizing the use of scarce resources.
- We consider two cyclical nature of the economy – bust and boom cycle and let’s see how our new system thrive from each of those events. During Economic boom when market brings high return to investors, people in our new system will have less incentive to share. How will cooperative address that? Human Psychology tells us that as soon as people realize what works for them (esp wealth wise), they’ll keep on doing it. So as wealth increases, the higher incentives they get to remain in the system. Now for those who no longer want to share, they now have more money and leverage to shift their focus on other priorities such as global environmental issues and or tech innovations. Either way, both for our system. For Economic bust where people have more incentives to share which could lead to consumption congestion, our new system offers the local’s reserve funds to meet the demand of the people and continue its economic activity. If and when great recession happens, our cooperative system will address these issues thru decentralization. The problems are contained in a community level which makes it easier and faster for the public to tackle these issues and fix them. So now that the system has been rigorously tested and proved to be antifragile, we go back to our recommendation - Shift from a Consumeristic Economy to a Cooperative Economy by way of economic and social equality, accountability and stability.