The Face of Innovation
Obviously, innovation is seen as very fashionable these days. With no surprise, we can search for “top innovators under 30”, “top start-ups to watch” and “top-gadgets” that can improve the way we live. These characterize the private sector well as the risk-friendly, creative, and flexible incubator, where the tendency for “ready-to-play” wealthy investors and ambitious entrepreneurs to gravitate to Silicon Valley dreamland has become the driving force for the birth of innovative solutions.
Since Professor Clayton Christensen began using the term “disruptive innovations”, which refers to the selling of cheaper products that can eventually disrupt an existing market, it seems that everyone is now “disrupting” and that every day is seen as an instance of innovation. Similar to Professor Christensen, the German sociologist and philosopher Jürgen Habermas pointed out that our complex societies are clearly susceptible to interferences and accidents and that these offer ideal opportunities for a creating prompt disruption of normal activities. It seems to be natural, then, that while millions of innovative applications based on principles of sharing have proven to be of high economic value the Sharing Economy platforms predict to generate revenues of 335 billion by 2025, shaking the future of many traditional economic sectors. [1]
For example, UBER, the Sharing Economy prodigy child for transportation network, possessing no cars and without officially employing has already managed to disrupt taxi industry in over three hundred cities worldwide, bringing about lawsuits and causing employee protests. Though, in this emerging scenario of disruptive innovations and the Sharing Economy, it is obvious that the effectiveness of the public sector is diminishing, leaving important services uncovered and without innovation hopelessly leaving the sector of society impaired. As described in the latest innovation report on European Public Sector Innovation, the public sector is stereotyped as an “outdated infrastructure that lags behind the needs of modern citizens and today’s businesses”. [2]
The Public Sector in Transition
If we look at the major economic shifts in the history of human civilization, we can better understand the very nature of public sector’s persona and why disruptive innovations and Sharing Economy Platforms seem to be uncontrollable. In the egalitarian hunter-gatherer society, nomadic culture and social ethics were strongly favored; agrarian society was dominated by a form of sedentary community lifestyle with smaller organizing bodies monopolizing decision-making processes; the labor-intensive economies of industrial revolution empowered the mass production economy and created passive consumers. Finally, with the explosive growth of Internet in the mid 90’s the transition to a new kind of information society and knowledge-based economy began.
The organizational dynamics underlying the above outlined transitions primarily focused on preserving institutional stability. The results where that institutes became more complex and, of course, top-down regulated. The institutional context was reinforced by technological conservatism and a risk aversive environment with communities that expected reliability and stability from institutions. On top of this soon-to-be “melting iceberg”, the innovation process was largely being patronized by large institutions such as the state and the military, leaving little if no incentive or even possibility to spread innovation into a larger part of the economy and society.
However, as social problems and economic insecurities appeared to grow into a more complex net of interdependencies, the above scenario began to clash and the nature of society evolved more and more into a self-organized and largely decentralized set of networked communities without hierarchical systems. This brings us back to Christensen’s disruptive scenario, which is proof of a reversed innovation process being carried out by a bottom-up movement, whose inventions have made their way into society step by step and have caused the public sector to change in attitude.
In addition to this and in support of it, climate change concerns and resource scarcity have further shifted the society from individual perception of ownership to collaborative lifestyles and product service systems. Rapid urbanization, demographic and social changes have underlined values of openness, collaboration, empowerment and humanness. Also, the formation of a new type of socially networked and cooperative individual has made it clear that the bureaucratic infrastructures and hierarchical spirit cannot be of service and support to participatory society, placing at the same time entrepreneurial capacity of the public sector in a quest for more experimental direction.
Understanding Sharing Economy
One of the key characteristics of the transition to an information society and self-regulated market-like institutions is the new paradigm of sharing itself, which encourages people to join services, which not only have profit in mind but more importantly other forms of reward. Today, more and more of us believe that successful change will be brought by practices that are socially, economically and ecologically sustainable and the Sharing Economy model appears to provide an accessible set of tools that will make fruitful cooperation and connections among individuals possible. The question however remains, how can the Sharing Economy be positioned and embedded locally so that it can further spread throughout the society.
In the recent years, the Sharing Economy has been used almost synonymously with “collaborative economy,” “peer economy,” and “collaborative consumption” to describe an economic model based on sharing unutilized assets and resources, exchange of capital, services and skills – largely focused on P2P [3] marketplaces. However, considering the current growth of the Sharing Economy services, we can say that there is neither Sharing Economy definition nor the guidelines that could be tailored to the needs of local governments, cities and communities.
This problem has touched not only city officials, but also employees of traditional business sectors and community-led organizations. When Jeremiah Owyangs, the founder of Crowd Companies, published the Collaborative Economy Honeycomb [4] that shows the expanding number of internet-based companies challenging established industries, a new fear of platform monopolism started to materialize. In this very moment, it is not only the public sector institutions that have become overwhelm by the speed of change but also industry executives are feeling the discomfort. The situation is leaving us to ponder as to what form of leadership on the political level is needed to thrive in a wonderland of a new economy, which is primarily based on digitally enabled sharing.
Global and Local of Sharing
In the recently released report “Sharing Economy and Local Governments” a larger number of experts have urged cities officials to develop shareability criteria tied to city priorities and to resist the misleading motto of “virtually anything fits within it” [5]. April Rinne, who leads the Sharing Economy Working Group, stated that it is now time that local governments take up an active role in the collaborative movement by understanding where sharing value manifests and how the Sharing Economy platforms can be anchored in and be of benefit to local communities. Local opportunities for sharing must therefore be taken into closer consideration and extend upward into the politics of evolving nature of the cities.
The necessity, however, to create a transition plan for people who are affected or might be in the future displaced by this new economic model becomes apparent. There is also a need for the revision of regulations to accommodate creative design of new business frameworks, a better procedure to harvest benefits from data sharing, and for proper support for sharing models through social innovation and community engagement. In fact, the latter one – social innovation – has proven to be a key driver in the process of cultivating the culture of sharing on the local scene of events.
Many cities around the world are now becoming known, for their Sharing Economy activities tied to social innovation goals. In the Italian city of Bologna, the Municipality has adopted Regulation for the Care and Regeneration of Urban Commons, giving citizens collective autonomy to the “land as a commons” while in the southern European countries such as those in Spain, Portugal and Greece, local governments are making efforts to support community-led projects and micro-entrepreneurship in the areas of food-sharing, land-sharing and job-sharing.
Also, the UK government and Bloomberg Philanthropies has been investing since 2015 in two sharing economy pilot projects in the Leeds City Region and Greater Manchester. The political campaign advocating this has focused on implementation of new legislations to facilitate sub-letting apartments and renting existing parking spaces; local sharing initiatives in the areas of shared transport, shared public space, health and social care and training facilities for job seekers in sharing economy markets.
What appears to be positive, is how the collaborative endeavor is moving toward to an actual sharing city model and that this development is yielding more integrally tied interests to city-level goals. Focusing on sharing policy innovations in the areas of food, housing, transportation, and jobs, the movement fosters the much-needed dialogue on urban sustainability, community resilience and public sector innovation.
Sharing is the New Smart
In the age of information society, understanding the needs of society in the process of implementing services based on technological and economic implications is one of the biggest challenges we are faced with. However, at the same time it offers a unique opportunity to create more sustainable and citizens-efficient cities.
To no surprise, the over – contextualized vision of growth that focuses on new economic and environmental models but excludes cultural and social inclinations easily puts social cohesion at the risk. Professor Julian Agyeman in the article – “Smart Cities’ Should Mean ‘Sharing Cities’ [6]– states that truly smart cities will be those that deploy modern technology in building a new urban commons to support communal sharing and it is that which will bring about social cohesions and an economic model for all.
This is also the case of Seoul City. Byungtae Lee, Director of SK Social Entrepreneurship Center in Seoul has underlined that as South Korea has been transformed from an agricultural economy to the information society in a very short period of time, the country has been faced with many yet unresolved social problems, which have reflected in a lack of trust in public institutions, hyper-competiveness among youngsters and aging population living in poverty -only to mention a few.
However, when Seoul declared itself the first ever “Sharing City”, by implementing Seoul Metropolitan Government Act for Promoting Sharing in December 2012, three primary goals were set within the spectrum of the Sharing Economy. These included the recovering of a sense of community connectedness with trust in local relationships, enabling community rebuilding and resilience at all levels, as well as increasing hyper local opportunities for social innovation.
What is especially worth noticing is that the Seoul City Municipal Government did not take a radically top-down approach to develop the Sharing Economy; it entered instead into partnership-like agreements with emerging sharing initiatives based in Seoul. For example, within the framework of Open Data Plaza project 1,300 data sets [7] were released to the public for use in business or civil society. Thanks to this initiative, the city was able to develop its own application – KakaoTaxi – integrating taxi industry into the broader municipal transportation system and at the same time avoiding the danger of “Uberization”. Also, homegrown versions of AirBnB (BnBHero) have been found to be very successful local platforms.
Chong So Lee, the founder of Korea Investment Fund, a grant giving institution for socially driven projects underlined that social investments and social enterprises that have emerged through Mayor Park’s Sharing Economy program have demonstrated that there are alternative approaches to traditional business models and that it is best for the cities to practice sharing locally, and then promote it internationally. [8]
The convergence of the “smart aspect” with the “sharing aspect” created through the well-crafted policies that the Municipality of Seoul has been promoting in the last three years has been slowly taking a firm root in the daily lives of many South Koreans, culminating in a new type of solidarity with clear benefits for a healthier society. Sharehub, dedicated agency for the Seoul Sharing City, estimated that while sharing has enabled city residents to save 12 billion won annually, the city has benefited from 1,280 new jobs and reduction of CO2 emissions by 29,800 tons [9]. These numbers are perhaps not that impressive on the population scale of more then 10 million people, however they have proven that if locally anchored, the Sharing Economy can successfully catalyze innovation and play an important role in advancing urban sustainability and community resilience.
Conclusion
We can conclude that while the Sharing Economy offers a fertile ground for innovation, it doesn’t necessarily contribute in advancement of urban sustainability. The results are more of a trade off between the disruptive innovations that have received global acknowledgment and the need for social cohesion on the local scale.
Regardless, the Sharing Economy has already proved to be an important factor in the process of democratization of resources, services and production and in order to catalyze the innovative potential resulting from emerging collaborative movements, the city along with local government must employ the Sharing Economy model in respect of its political, social and cultural context.
As this new dimension of sharing has somehow contributed to restoring the sense of trust among individuals, example of Seoul Sharing City, it is therefore more plausible that public sector institutions and local governments could catalyze a sociocultural shift towards the concept of sharing and take on a leading role in the transformative passage towards cities as engines of innovation on not only a local level by united globally.
Quotes
[1] http://www.pwc.co.uk/issues/megatrends/collisions/sharingeconomy/the-sharing-economy-sizing-the-revenue-opportunity.html
[2] Powering European Public Sector Innovation: Towards A New Architecture Report of the Expert Group on Public Sector Innovation, 2015
[3] http://www.web-strategist.com/blog/2014/12/07/collaborative-economy-honeycomb-2-watch-it-grow/
[4] What’s Mine Is Yours: The Rise of Collaborative Consumption, Rachel Botsman, Roo Rogers, 2010
[5] Local Governments and Sharing Economy, One Earth, 2015
[6] http://julianagyeman.com/2014/09/smart-cities-mean-sharing-cities/
[7] http://english.seoul.go.kr/policy-information/key-policies/informatization/
[8] Interviews with Innovators, Arthur Clay, Monika Rut, Timothy Senior, 2015
[9] http://english.sharehub.kr/wp-content/uploads/reports/executive_summary_report_2015.pdf
