To improve the lives of people who live in cities, we need to tap into the opportunities presented by the sharing economy: an economy based on “access over ownership” and decentralized networks of people connected by new technologies. This is a noble goal: the sharing economy can help the environment, save costs and foster closer community relationships.
However, there are many obstacles. One of the most thorny challenges that must be overcome is out-dated policy.
Around the world, we have built policy and regulatory regimes for an ownership society. We know precisely how to insure a car when it’s owned; when a car is shared, however, standard auto insurance policies typically crumble. When we take into account the fact that putting one car into shared use takes between nine and 15 cars off the road — thereby reducing congestion and CO2 emissions, without any additional investment — the urgency of policy reform becomes all the more evident.
Outdated policies do not mean bad policies, nor in reality has policy ever kept up with technological innovation. We have always had to adjust policy as new products, business models, markets and exchanges evolved. When the car was first introduced, it entered a world of horses and buggies. When the ATM was invented, it entered a world of human tellers and strict banking hours. We didn’t know how to regulate these new things at the outset. But not only have we learned how to do so, we cannot imagine life without them today. And so it shall be with the sharing economy as well.
Four steps to get the right policies
The policy challenges for the sharing economy have deep and complicated roots, but they are also eminently solvable. In my work with sharing economy companies, policy-makers and governments worldwide, I have had the opportunity to see first-hand how forward-thinking leaders can embrace this new space thoughtfully, responsibly and creatively. In my role advising cities of all sizes across developing, growth and developed markets, I have identified the following stepping stones to successful policy reform:
• Educate: many cities in the world still do not know what the “sharing economy” is. They may have heard of Uber or Airbnb, but these two companies represent only a very small slice of a much larger and diverse sharing-economy ecosystem. To fully understand the breadth and depth of what’s going on, it is essential to invest in education and awareness-building. I am routinely shocked by policymakers who ask for my advice on how to regulate sharing economy platforms without ever having used them. There is no scenario more awkward — and potentially dangerous — for effective policy reform than this.
• Participate: in my experience, most cities are more preoccupied with regulating private-sector sharing-economy operators than actually considering how they might harness the sharing economy themselves. This is unfortunate because by failing to “walk the talk,” cities are missing out on cost savings, opportunities to create social value, and potential game-changing innovations. A few cities, including Seoul and Amsterdam, are exceptions to this. They are leading full-blown Sharing City initiatives and can serve as role models for other cities. For example, Seoul has established a Sharing City team within the municipal government (part of the city's Innovation Bureau) and it has invested public funds in more than 50 local sharing economy initiatives. The city of Amsterdam has launched The Green Deal, the world's largest carsharing collaboration amongst more than 30 key stakeholders including carsharing companies, insurance companies, and four major municipalities.
• Partner: there is no better way to learn about the sharing economy and directly benefit from it than via partnerships, and there is a wide variety of partnership opportunities available. Some cities have replaced government-owned car fleets with car-sharing services. Others have partnered around data integration, tourism and destination marketing (for example, Airbnb has partnered with the governments of Rio de Janeiro and São Paolo to be the official alternative accommodations provider for both the World Cup and the Olympics. For the World Cup, around one fifth of all visitors - approximately 120,000 people - used Airbnb, boosting the local economies in favelas and other areas which don’t usually see many tourists. Partnerships are most successful when they are linked to specific government goals that are independent of the sharing economy (e.g. traffic reduction, hosting a big event) which the sharing economy can help achieve.
• Regulate: regulation is where many cities want to start, but in fact it should be the end goal. I have often seen that when governments undertake thoughtful processes of education, participation and partnership, by the time they reach the regulatory reform process, they know what is appropriate and reasonable to do. Ideally governments are also able to apply the same kinds of technologies that power the sharing economy to the policy reform process itself: community-centric, participatory and iterative.
To reap the dividends of the sharing economy, city leaders and policymakers worldwide must not only wake up to the extensive and often mind-boggling changes that technology and the Fourth Industrial Revolution have brought. They must also find the political will to undertake an ambitious course of policy reform that is light enough for new platforms to thrive, substantive enough to protect the social safety net, and acknowledges that our future is shared.