System revolutionaries: Sharing economy will destroy inactive incumbents, says Forum for the Future
EXCLUSIVE: Forum for the Future's director of sustainability David Bent believes the rapid growth of innovative new business models such as the sharing economy and servitisation is putting large, incumbent firms at risk of being left behind in the transition to a sustainable future.
Bent, who has helped develop sustainability strategies for the likes of Nike, Unilever and M&S, says sharing services such as Airbnb, Uber and Zipcar are now at the forefront of a communal culture shift which threatens to 'destroy' traditional business models.
Speaking exclusively to edie, Bent said: "There has been a massive growth in service-orientated business models, which is fantastic to see. It's great that they have sustainability co-benefits as well, but they don't win on that basis. The principle reason they're so successful is that customers like using them - they can provide a good enough service for less, which is a powerful offering.
"Big businesses are at risk of being left behind with this. When it comes to disruptive change within an industry, it's rarely the incumbents that lead the charge - they actually tend to be the ones that are effectively destroyed. The vast majority of incumbent businesses have habituated themselves to get slightly better at what they're already doing rather than exploring new business models, often because they can't allocate enough resources."
Here's where a disruptive innovation mind-set is key. Bent cited the example of tech giant Sony losing out to Apple in the mp3 player market. "It was Apple that came in and quickly took control of that market because the Sony engineers who were working on the Sony mp3 player kept being dragged off to the development of the CD Walkman.
"They were allocating their resources to their past business rather than their future business."
For an incumbent business in an industry which is becoming threatened by these digital, peer-to-peer service offerings, time is certainly of the essence. A 21-strong collective of 'sharing economy' businesses, ranging from time banks to car-sharing clubs, recently threw their weight behind a new trade body - Sharing Economy UK - to champion the emerging sector.
David and Goliath
As Bent points out, now is the time for big businesses to act. "If incumbent businesses do nothing then these new business models based on the digital economy will wipe out the incumbents.
"Big businesses need to be the Goliath dancing with David - not being afraid to make these smaller companies more successful. A well-established company will already have access to a strong customer base, so they can effectively be a channel to market that is also a way for the small business to grow and be successful."
Bent recently became a policy fellow at the Centre for Science and Policy at the University of Cambridge, where he is investigating the role of business in the transition to a global sustainable economy. For businesses looking to lead that sustainable transition, Bent said experimentation will hold the key.
"Most businesses are not ready for the future, and most would rather be disruptive rather than disrupted. The next thing they must do I to be willing to experiment - try out new, more sustainable ways of doing business. Don't bet the whole house on something, but if it is successful, it will take you in the right direction."
David Bent at Sustainability Live 2015
David Bent, director of sustainability at Forum for the Future, will be chairing a session on new business models at Sustainability Live 2015 in April.
The session, titled 'New models: the system revolutionaries', will take place at edie's brand new high-level conference during the show; exploring the transformational change needed by businesses to create a sustainable future, with a closer look at the circular economy, sharing economy and servitization.
View the full agenda for the Sustainability Live 2015 Conference and register to attend for free here.