The Shift from Competition to Collaboration

solarI went to business school for my undergraduate degree, so I will always remember Porter’s 5 forces.  The 5 forces have been taught as business strategy since the 1980’s.  This framework is rooted in competition, as it determines the level of competition or rivalry within a given industry, and that competitive understanding provides the basis of the business strategy.  This has been the status quo for so long, so many businesses today have strategies that are competitive at the core.

In a world that is changing faster than we can keep up with, some businesses rooted in this competitive framework may not be able to adapt.  For example, Porter’s 5 forces provide framework for being competitive within a stable industry.  What happens when technological advancements and innovation create whole new industries, or completely flip existing industries?  It’s hard to apply this competitive framework, especially when emerging industries and businesses are starting to become part of shared economies and more collaborative in nature.

This simple graphic shows the shift from competitive strategies to collaborative strategies that we will experience as we head into the future.

collab

Take the example of rides for hire.  The status quo was a taxi or personal driver.  A taxi company rooted in competitive strategy would have likely had a business strategy focused on providing the best cars with the best drivers to create an advantage.  But as we have moved to a shared economy, collaborative businesses such as Uber or BlaBlaCar have emerged and completely flipped the industry.  Uber has even started partnering with other industries, such as food delivery, to create services like UberEats.  This service goes beyond rides for hire and collaborates with an entirely different industry – the restaurant industry.  And, unfortunately, many taxi companies that have not been able to adapt have been left behind during this shift.

What is exciting about this trend is that it opens up many opportunities for social entrepreneurs and enterprises to excel.  This is because social enterprises are collaborative in nature, as they need support from many business, influencers, and stakeholders around them, and social enterprises collaborate with their targets and their stakeholders from the enterprise’s inception.  When a social entrepreneur has an idea to make a positive impact in the world, the idea often needs support from people with additional talents to support the business, social influencers to market the business, and partners with capital to succeed. Because social enterprises provide net benefits for so many stakeholders and the community, the help given from those that support the enterprise is often reciprocated in some way, furthering the necessity and benefits of collaboration.

One example of a highly collaborative social enterprise is WeShareSolar, from the Netherlands.  The name of the company itself even implies collaboration.  This project solves a green energy transition problem in the Netherlands: installing solar panels at home or for small community projects has a financing gap, as the projects are too small to receive bank lending, but the costs are too high for residents or communities to finance themselves.  Furthermore, many residents (43%) don’t have access to a sunny roof in order to consider installing a solar panel.  WeShareSolar provides a highly collaborative solution – it uses crowdfunding to invest in solar projects, and once the solar projects are financed and eventually built, the solar power can be distributed to the grid, therefore providing energy savings to many more people and communities, as well as net environmental benefits by reducing carbon emissions.

WeShareSolar involves many stakeholders in a collaborative way: those wanting solar power but don’t have roofs or cannot afford the panels can still donate via crowdfunding, and wind up receiving the savings produced by solar power.  Crowdfunders can start their investment with as little as €25, and they make an annual return of 3-6%.  For larger projects, WeShareSolar works alongside banks, making solar power for larger buildings or businesses more affordable.  Since this business model is scalable, it can be applied to other industries as well.  The model can also be replicated in other countries, particularly developing countries, that rely more on solar to increase energy access.  Finally, to date, WeShareSolar has already saved 470,000 kg of CO2.

This example embodies the shift from competition to collaboration.  Crowdfunding combines financing from many individuals in order to provide a communal service that provides energy savings in the end – a perfect example of a shared economy.  Additionally, with a competitive business strategy, banks could have been seen as a main competitor.  However, WeShareSolar has found a way to work with banks to scale their offerings, all while providing a net benefit of energy savings and reduced CO2 emissions in the end. By putting collaboration at the core of the business strategy, WeShareSolar has been recognized as a Lighthouse Activity by the UN and has grown into the largest solar crowdfunding platform in the EU.


Sources:

http://unfccc.int/secretariat/momentum_for_change/items/9929.php

https://www.zonnepanelendelen.nl/

 


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