Why the sharing economy needs a democratic revolution?

Chris Martin, The Open University

The rapidly growing influence of Silicon Valley owners over sharing economy platforms is a troubling development. The growing strength and pervasiveness of these platforms means their owners have significant power to impose their visions of what it means to be a citizen or worker in cities across the globe.

Airbnb, for example, seems free to distort property prices and create a grey, unregulated market for short-term accommodation. Uber meanwhile continues to erode hard won labour rights and turns a blind eye to acts of discrimination committed by its drivers.

One way to combat this could be a sharing economy which is less concerned with making money, and more focused on creating social and environmental value. A proposed solution is to create a more democratic sharing economy. In other words, a sharing economy where the corporate owners are held accountable by the wider public, and users and workers govern platforms together.

But democratising the sharing economy is no mean feat. Research I’ve conducted with colleagues at the Open University and the University of Leeds shows how platforms can work. But they also face the challenge of maintaining their democratic nature and not becoming centralised and more commerically-driven.

For-profit democratic sharing economy platforms are very few and far between (we couldn’t identify any successful examples). So we turned to the non-profit sector and looked at Freegle, a democratically-governed UK offshoot of the Freecycle Network, in our study.

Freegle is a grassroots organisation which runs an online platform, very similar to Freecycle, which helps keep unwanted items out of landfill. The platform enables people to freely and directly give unwanted items such as furniture and electronics to others in their local area. Since being founded in 2009 Freegle has grown rapidly and claims to have approximately 2.3m users across the UK.

The promise

Freegle was established by hundreds of volunteers who left the Freecycle network. The volunteers left after a long running dispute with the central Freecycle management over the erosion of Freecycle’s grassroots ethos. So, first and foremost, Freegle provides some promising evidence that democratic sharing economy platforms, at least in the non-profit sector, can emerge from well-established centralised platforms.

Working together.
Mosman Council, CC BY

Freegle has also been successful in building a community of hundreds of volunteers across the UK who govern the platform. Major decisions about the future of Freegle are discussed in online forums and then voted upon by volunteers. In particular, the development of a financially sustainable business model, aligned with Freegle’s grassroots values, has been the topic of extensive discussion.

These discussions and democratic processes have been key to Freegle resisting considerable external pressure to become more business-like. So, we can hope that similar democratic processes could help for-profit sharing economy platforms become less business-like and more focused on their environmental and social impact.

Within the community, volunteers provide each other with a great deal of mutual support and share their knowledge. Discussing issues such as how to increase the number of people using the network, and whether or not certain items (such as potentially dangerous chemicals and potentially offensive magazines) should be offered on the platform. So, we can also hope that more democratic sharing platforms would create opportunities for users to learn from each other and develop new social relationships.

The perils

There are some downsides to running a democratic platform, however. The most prominent being that Freegle’s democratic model has made growing the network even more challenging than it might otherwise have been. Lengthy decision-making processes, based on discussion and voting, have meant that opportunities to expand have been missed.

It also means that financial backers geared toward supporting more streamlined for-profit companies have been deterred from investing by the complexity of Freegle’s structure. These issues suggest that efforts to create a more democratic sharing economy may face considerable resistance; in particular from actors with a more commercial focus.

Perhaps more worryingly, in the six years since Freegle was founded there is strong evidence that democratic participation has fallen. This seems tied to the enthusiasm of Freegle volunteers ebbing away. In turn, decision-making has become more centralised.

This is a trend often seen in democratically governed organisations outside the sharing economy, including cooperatives and grassroots associations. It raises an important and challenging question: how can democratic participation in the sharing economy be sustained over time?

Finding a solution to this is extremely important if we want to make sure that these platforms are accountable to the people they promise to serve and not just those governing (or profiting from) them. And if we want to see the sharing economy live up to its promise of helping us transition to a more sustainable and equal economy.

So does the promise of a more democratic sharing economy outweigh the peril? For me it does. Silicon Valley platform owners are likely to disagree, as democratic governance would erode their profit margins. So, it will be left to citizens, social movement organisations and governments to promote greater democracy. As our research into Freegle shows, however, these efforts should be informed by the knowledge that democratic organisations face challenges and external pressures which corporations do not.

Chris Martin is Research Fellow at The Open University

This article was originally published on The Conversation. Read the original article.

What businesses can learn from Singapore?

9 August 2015 Singapore celebrates its 50^th birthday.

The city-state has grown to become one of a world’s most significant financial hubs and the most important one in the Asia Pacific. Today, ignoring some slight discomfort of a negligibly small community, Singapore is a finest example of a great state by many theories. Come to think of it, it has only been a country since 1965, after being expelled for economic and political differences by Malaysia.

Let’s take a look at this tiny island nation’s story, from a sleepy port city to a thriving first world in just 50 years, and lessons that can be learnt by the businesses.

1. Uncompromising passion: A common characteristic of all successful entrepreneurs is that their obsession in whatever they do. Without passion for what you are doing, you might as well stay in a job you don’t like. The first and foremost ingredient to any business is the ‘passion’ and ‘confidence’ of the entrepreneur. The father of Singapore, for all intents and purposes, is Mr Lee Kuan Yew (LKY), who built Singapore into the island nation it is today, guiding it with his vision. LKY had spent most of his lifetime ensuring the well-being of Singapore and encouraged the fellow leaders to do so. Today it’s in their blood. He said in Hard Truths to Keep Singapore Going, “Singapore is my concern till the end of my life. …I have spent my life, so much of it, building up this country. There’s nothing more that I need to do.”
2. Think long term and have a clear vision: Rome was not built in a day. Success needs time and sincere efforts. However, a crystal clear vision and flawless definitions of short and long term goals are imperative for success of any trade. Singapore is hugely indebted to LKY for his vision and determination. Today’s Singapore strategizes all its moves well in advance. Its social, economic, political landscapes are decided and devised 10, 15, or 25 years in advance. As I write this, Singapore has a vision for next 50 years with a clear working plan. In enterprises too, the challenge of maintaining a common vision between different departments is ongoing and vital. Identifying and communicating a clear vision is one of the most important functions a business leader. All business leaders should understand the basic elements of visioning and how to communicate a clear vision to its internal and external customers.
3. Network and make strong allies: In spite of being just a dot in the atlas, Singapore worked hard to make a place in the world economic map. It created unparalleled diplomatic, military and economic relations with the bigger nations and boast of strong allies with US and Australia. Similarly, business is all about partnership and relying on each other strengths. Networking is business, period.
4. Understand your threats, face the disadvantage bravely and turn them into your advantage: Singapore’s Deputy Prime Minister and Finance Minister Mr Tharman Shanmugaratnam explains this aptly in an interview by BBC Hardtalk in May 2015, “…We converted permanent disadvantage into continuing advantage. And that’s a very fundamental attitude of mind. ….We had every disadvantage you could think of for a nation and we did not expect to survive, we were not expected to survive.” After gaining independence abruptly, Singapore faced a future filled with uncertainties in 1965. Singapore faced the dangers of attack by the Indonesian military and forcible re-integration into the Malaysia Federation on unfavorable terms. Singapore developed rather rapidly its Armed Force and introduced the National Service for its male citizens just to stand on its own feet on the borders. For any business, realizing the threats and weaknesses are as important as to create a watertight business plan. No business has ever been made (ethically) big and successful without realizing the distress and discomfort of a possible breakdown. Failure or fear of falling on the face is motivation for driving ahead for all successful entrepreneurs.
5. Strategic planning is not a good-to-hear management term: Strategic planning is important to an organization because it provides a sense of direction and outlines measurable goals. It is a tool useful for guiding day-to-day decisions and also for evaluating progress and changing approaches when moving forward. Singapore realized at a very early stage that it needed the foreign investments to make it big. It began by overhauling the economic structure of the country in order to attract Foreign Direct Investment and were successful. They are now one of the largest investors in foreign countries through their Sovereign Wealth Funds. The World Bank ranks Singapore as the world’s easiest place to do business. It is possibly the cleanest and safest metropolis in the world just to prove that all have been meticulously planned for and achieved.
6. You got to do what you got to do: Singapore did and always does what it deems appropriate. That’s a culture developed by LKY. He was no saint himself and was often criticized from his iron-fisted rule and had once declared that, ‘if nobody is afraid of me I am meaningless‘. But LKY got most things right, especially in his choice of financial administrators and political leaders. Singapore kept government small, the economy open and regulation simple, transparent and effective. Effective business leadership is not a popularity contest. It’s about achieving results with integrity. Successful entrepreneurs make the right decisions and they pay little attention to the popular opinion. These leaders challenge common ideas.
7. Emphasise developing the core areas and build your business around it: Almost all global leaders were skeptical of Singapore’s survival in 1965. Besides the issue of sovereignty, the persistent problems were unemployment, housing, education, and the lack of natural resources (drinking water) and land. We can’t imagine that was Singapore just 50 years back with present day’s scenarios of running drinkable water on the tap, a house for every family at a subsidized rate, proficient public transport, efficient public service and properly manicured greenery around. Successful entrepreneurs don’t try to be a ‘Jack of all trades’, but channelize all its efforts and energies to a focused area of know-how as per their business objective.
8. Value your people: People make a difference, people create system and people also make a mess. Take care of your people. Singapore is a meritocratic society. Be it in the political system, education institutes or in public sectors, Singapore is committed getting the right talent irrespective of source. It invests heavily and aims to create a first-class educational system that allows Singaporeans of all backgrounds to rise up in the society and the corporate ladders. Business leaders, who value its own people and partners, take genuine care of them and believe in paying-for-performance, are the ones successful and robust.
9. Be welcoming, honestly service oriented and expect low income to start with: Singapore discovered quickly that to gain an international recognition as an important nation and economic super power, it required skilled manpower and businesses. Though today it is one of a most expensive city to live in, until now it has a most favoring expats’ terms for world business leader’s to come and make it as their home. Individual and corporate tax is still one of a lowest in the developed countries across the world. There is no inheritance tax, wealth tax and capital gain tax. There is a great deal of emphasis on customer service which is apparent from dealing with taxi drivers to public sector employees.
10. Don’t need a precedent to create one: Why follow suit at all when you can be as innovative as Singapore? Imitating other countries blindly is utterly unfathomable for Singapore. While almost all governments around the developed world are increasing all sorts of tax rates in the last decade, Singapore’s tax system has grown to be more and more competitive over the years. Singapore lends itself particularly well to entrepreneurs and professionals who generate the preponderance of their income online. It has a transparent legal system, safest banking jurisdictions in the world, and the government provides generous allowances for start-ups, royalties and intellectual property. Today, we need business innovators more than any time before. Every organization is feeling the impact of globalization, migration, technological and knowledge revolutions. Innovation brings added value and widen the employment base.

All in all, Singapore teaches businesses to evolve, adapt and re-invent itself. A classy example of a country which is run just as the corporates, successfully and efficiently.