Tuesday, November 4, 2008

Time for Cooperative Capitalism



Crisis describes our times. The perilous state of the American and global economies, environments, and personal finances have me convinced that we’ve got to start working and thinking more cooperatively.

Last June I began to give public voice to these ideas and approach that has been taking shape in my mind for a long time -- Ann Arbor (June 11 ppt) and at the Personal Democracy Forum in NY (June 24).

For many years I’ve been attracted to the beautiful efficiency and widespread benefits of shared resources (cars, rides, networks). And over the last few years, I’ve been espousing the need for business and government to think more expansively about the web 2.0 phenomenon – where end users create content and value by building on a common platform (eBay, wikipedia, flickr, Facebook being some famous examples). We need to envision collaborative financing (lending circles), collaborative infrastructure (mesh networks), and collaborative consumption (car-sharing). It is time to push this idea and approach as far as it can go. A way to think about this approach is “cooperative capitalism.”

Here is the formula:
1. Identify excess capacity.
2. Build a platform for others to share/engage with this excess capacity.
3. Appreciate unanticipated benefits

My favorite example at a city level is Bogota’s Ciclovia:

1. The Penalosa brothers (Mayor Enrique and Gil, Head of Parks & Recreation) noted that on Sundays traffic throughout the city was very light.

2. Every Sunday from 9am to 2pm, more than 72 miles of roads are closed to car traffic and open to pedestrians and bicyclists. Tens of thousands of residents get out and use the ‘new trails and paths’ every week. Cost to the city for this highly prized and transforming resource? Just the cost putting up and taking down the barriers.

3. Unanticipated benefits include a healthier population, a stronger community, and increased bicycle use every day of the week.

My favorite opportunity at a city & national level (see my TED talk for a big vision explanation):

1. The wireless devices being used for open road tolling (and in the future for congestion pricing and road pricing) cost about $28, are single purposed, closed, and in active use for about 30 seconds a month. That is a lot of excess wireless capacity!

2. Create an open source mesh (ad hoc peer to peer) communications platform that would turn the device in the cars into nodes (routing and repeating data bits). The software could also be used in all wireless devices (laptops, cellphones, pdas, traffic lights, smart utility meters, etc.), creating a mobile internet (collaborative infrastructure). Each person will have paid for his/her own device (collaborative infrastructure financing).

3. While spending what was required to do the task of open road tolling or congestion pricing and buying in a manner that used an open standard, and an open device, we have now made this investment leverageable for any number of innovative uses, created a robust and resilient nationwide network for local data transmission, and laid the foundation for the next economic engine for the US and world economies. I have a lot to say on this topic, best not here. Email me if you want to see the white paper.

We can glean from the above example some generalization principles that the US government should apply to the relevant procurements: require open standards, open APIs, give preference to responders that leverage existing infrastructure, investments, organizations – in other words – value and encourage cooperation among companies rather than reward closed proprietary systems that shut out such opportunities.

Examples at the corporate level would include Zipcar of course, which enables all the idle capacity of cars to be put to good use through its technology platform that makes sharing cars fast, easy, convenient, and cost-effective. Last year I visited Siemens New York office where the bulk of floor space has been turned over to cubicles that are not owned by any one person, but rather used as needed by its nomadic workforce that shows up in New York only periodically – dramatically reducing the amount of office space needed if each one of its employees had their own office. The unexpected benefits of open platforms abound -- users can innovate, or point the way for innovation (see Innocentive.com for a new way of thinking).

And at an individual and household level, what can we lend and what can we borrow? What can we buy used, and what can we make sure we put back into the marketplace? Think of eBay as collaborative consumption.

This way of thinking isn’t bad for the economy. Remember that our starting point is that everyone is going to spend as much as they have to spend. We – families, companies, governments -- all have so much we want to accomplish with such limited financial resources that the most logical, rational, profitable, and self-interested thing to do is to spend it as efficiently as we can: maximizing the benefit of each dollar spent, while minimizing the resource consumption. Since we know we are going to spend every cent, let’s get the most possible value out of that spending.

Think of our times. Cooperative capitalism is not just an interesting approach, it is an imperative.

*****

Blog posts are supposed to be short and to the point – that is satisfied by the above. For a little more background on why the current financial crises leads me to move from thinking that these are just interesting ideas, to a much stronger concept of “imperative,” read on.

We are living in a world of very precarious revenue sources at all levels of the economy – household, corporate, and governmental. Americans are at their lowest savings rate since the 1930s. In August, the GAO estimated the 2008 Federal deficit to be $410b, 3% of the GDP. The addition of the $700 billion bailout has the potential to double this to 6%. On October 1, our national debt passed $10 trillion dollars (that’s a 1 followed by an unlucky 13 zeroes).

And yet, despite our incredibly tight – and shrinking – budgets, we face spending imperatives of unparalleled proportions. In the US, the explosive highway and infrastructure building of the 1940s-1970s, are now meeting the end of their 30-50 year anticipated life spans. We have much rebuilding to do, just to stay even, and we have much new building needed to accommodate our growing population and 21st century transportation and communication needs.

We have an energy and climate crisis, that demand we rethink, retool, and build anew our power plants, our factories, our office, our stores, our homes, and our travel patterns. We have a broken healthcare system that without a fix will swallow the budgets of business and government, and then, despite those expenditures, leave many uninsured.

And of course, we Americans live in a world of 6.3 billion people, rising rapidly to 9 billion. And we all know this world cannot sustain the current use patterns many ‘enjoy’ if applied to everyone.

A friend of mine, Juan Enriquez, just gave his 20 minute analysis and prescription last week at PopTech, on the need for the next administration to start a program of austerity. He gives a compelling argument and has some nice visuals. And last week, Bruce Nussbaum blogged for Businessweek an opinion piece called “Zipcar Capitalism, a new economic model?,” an approach the author says he will bring with him to the World Economic Forum this week in Dubai. Both of these argument are running down the same path I am.

16 comments:

Kai Carver said...

Great post!

I'd be interested in the white paper.

Anonymous said...

robin, i love your brain!
ariana vanderbeels

akvarma said...

Robin - Great article. Interesting to see the additional kinds of business models that will evolve from this paradigm. Would appreciate your white paper.

Saul Kaplan said...

Robin You are right on point as usual. Business model and systems level innovation is the way to make progress on the big challenges of our times including health care, education, energy independence, public safety, and quality of life. These are all systems issues which will require systems solutions.

At the Business Innovation Factory (www.businessinnovationfactory.com) we are enabling collaborative innovation by creating a real world lab to explore and test new networked business models.

I love your idea about looking for underutilized capacity to leverage in purposeful ways.

Saul Kaplan

Chuck said...

I would also love to have the white paper.
Keep your blog going, its one of the web's most inspiring places.
Thanks
Chuck

Robin Chase said...

Chuck, Thanks for kind words. I need an email address, your identity isn't open.

Chuck said...

c.deliedekerke@gmail.com
Sorry about that, and thanks again.
C

Brian Chen said...

Hey Robin, I stumbled upon your blog after listening to your TED Talk. I would love to read your white paper. brian.chen@alum.swarthmore.edu.

Thanks,
Brian

Kevin McLaughlin said...

Robin

You are definitely trying to open the box!

I'm not sure I agree with one detail though - Zipcar (AutoShare, etc...) are not really an 'open network', but rather a proprietary network. If any vehicle could 'plug-in' to Zip's network (eg when I arrive home for the weekend, plug-in my car for others, and share our other car with my wife & kids, for instance), I would call that open?

Robin Chase said...

Kevin, yes, we agree about what would be truly open. But relative to my personal car, Zipcar is an open car in that anyone who is a member can drive any particular car.

Anthony Mondia said...

Although this is an old article, I would like to ask what the difference is between ZipCar Capitalism and a consumer cooperative, something that's existed for over 150 years?

Robin Chase said...

Anthony, good question. With a coop, people are sharing buying power to reduce the price of what they want to buy. As I write that, I see that Zipcar could be interpreted that way.

But the way I really see Zipcar is that people are physically using the exact same asset because of its excess capacity when used in the old fashioned (one owner/family one-car) way.

Today, I've gone even deeper into this idea of collaboration of excess capacity by founding www.buzzcar.com People renting out their own carsto other people.

lina said...

Robin, I've become a fan. I have a car I would like to rent in chicago, but do not see anything like buzzcar here. I have also tried goloco website, but to no avail.
Keep up the good work!

Robin Chase said...

Gabe Klein, who I once hired to head DC's Zipcar office, then become DC Commissioner of Transportation, has just taken that same job for the city of Chicago. Expect some great progress in transportation alternatives in that city.

UrbanCryptography said...

Dear Robin,
I am very intrigued by your notion of excess capacity and how it can be used. Please could I have the aforementioned white paper?
urbancryptography@gmail.com
Thank you,
Charlie

UrbanCryptography said...

Dear Robin,
I am very intrigued by your notion of excess capacity and how it can be used. Please could I have the aforementioned white paper?
urbancryptography@gmail.com
Thank you,
Charlie