Tag Archives: Economy

What are Pros and Cons of the Sharing Economy?

The sharing economy is an idea that is very much present in the zeitgeist, but many of us don’t really have a comprehensive understanding of exactly what it is and where it came from. Whatever your level of understanding, the sharing economy is going nowhere, so taking a little look at it and its potential triumphs and pitfalls can’t hurt.

What Is the Sharing Economy?
The acceleration of digital technology kicked off by the birth of the internet’s universal accessibility has birthed many a new concept. The growth of the sharing economy is one of those concepts. Sometimes referred to as collaborative economy, this economic model is defined by the sharing of personal assets and services between individuals using the internet. It allows people to share their own resources, whether material or skills-based, either in kind or in exchange for money or incentives.

The assets that you offer can be anything from your time to your car or even your home; for use by another person for a limited time period.  A famous example of a platform that depends on this model is Airbnb, the site/service that allows you to rent your home/property for temporary use. This economic model spans many sectors including technology, communication, lodging, agriculture, labour and finance. It is hugely popular for several reasons, one of the utmost being its flexibility.  The exchange of services can be agreed upon under any terms; one may ask for financial payment in return, but social and environmental based exchanges are also popular.

The sharing economy is essentially the closest thing we now have to the old tradition of bartering. There is a lot of confusion about what exchanges this economy refers to, as there are a lot of new economic models out there with which to get it confused. Here is a quick summary on just some of the economic models that the shared economy is not…

Gig Economy. Single projects or jobs for which a worker is employed. There is no skill or asset sharing here, it is a worker being employed in exchange for money in order to carry out a specific job.

Freelance Economy. Similar to the gig economy, except that jobs or projects tend to be more involved, in-depth and longer in length (sometimes lasting months or even years).

Peer Economy. Or P2P for short. This is where two individuals directly interact to buy or sell goods and services.

Crowd Economy. This refers to money making models such as crowdfunding or crowdsourcing; this generally results in an online community of people who participate with each other through a platform in order to achieve a single goal.

Now let’s look at some of the arguments for and against the sharing economy…

PRO: Recycle, Reuse, Repurpose
It is a great way to avoid waste. If you have an item or resource that you are not using quite as much as you used to, this model offers a great way for you to loan their use to others. You can not only make money out of something that you are not currently using, but you can also offer another person access to what they need for a reasonable, non-commercial price. Most importantly though, it prevents possessions and assets from going to waste.

CON: Scam Threats
One of the issues with this system is that buyers are more open to fraud and trickery, as there is no real protection against this kind of situation occurring. All you have to go on, with regards to the person you are dealing with, is their promise and the apparent character they present. Protection against this is slowly getting better, but the speed at which technology advances can make this kind of issue hard to regulate.

PRO: Opportunity
In a world where getting a job is increasingly difficult, many doors seem to be closed, and innovation appears to be very expensive, this economy gifts pretty much anyone with the opportunity to turn a dime, or simply be more productive.  It means that individuals can set their own terms, their own hours and have the flexibility to make their lives work for them.  It invites communication between individuals, which creates community, diversity, interesting ideas and ultimately brings people together. The presence of this economy offers liberation for those who are prepared to get into it.

CON: Lack of Benefits and Lost Revenue
Individuals who earn their full living in this economy do not have access to the benefits that those working for a company do. The benefits might include sick leave, pension schemes, maternity/paternity leave and bonuses. It can also impact on the success of other businesses. A famous example of this is the impact that Uber has had on the traditional taxi hailing services.

PRO: Employment
Unemployment is always an issue, but this economy goes some way to making a positive dent. Not only are there more jobs available because of the rise of companies such as eBay and Amazon (in many cases, these are jobs that can be performed from home), but the sharing economy offers a platform from which to advertise on a global scale. If you make ornaments, for example, you can access an entire global market, which is a huge change from the artisan and small business landscape of only a decade ago.

CON: Tax
As the laws around claiming financial gain from online platforms are not that tight yet, governments report a loss in tax revenue. Just like any economic model, there are arguments as to its success, fairness and validity on both sides. But one thing is for sure, like it or not, the sharing economy is here to stay! Where do you stand?


Photo by Pop & Zebra on Unsplash

President’s Letter

annual dinner 2010

SMF Ernest Poku
Each time I look through the profile book it impresses me how unique a group the Fellows are. Although we work in a wide variety of industries and roles, we all share a common perspective and experience. We have also all participated in the vision of Lord Sainsbury.

The Society has in essence two broad aims. Firstly to add value to the UK and international economy by supporting the aims and vision that Lord Sainsbury expressed in setting up and supporting the scheme and associated bursaries that we have all benefited from. Secondly, to add value to each individual Fellow by organising and encouraging interaction, and otherwise supporting our careers.

We are entering a period where the future form and role of the society may well be decided. There are now almost 300 Fellows, representing a considerable network of talent covering all major sectors and functions, and many countries. The debate on what makes us unique, what aims we should have and how we can realise them is coming to a head.

Recently, a strategic review was initiated to better understand what role the Society should or could fulfil. To further understand the Fellows’ profiles and their current views on the scheme we have asked Hall Associates to undertake a telephone review. You will therefore be contacted over the next few weeks and asked a range of questions. At one end of the spectrum we can be a mere alumni association, at the other, we can seek to positively influence views and attitudes across commerce. We are interested in your views on the Society’s future role and how you would like to be involved.

Re-Engineering the Board
You will have found enclosed our publication Re-engineering the Board to Manage Risk and Maximise Growth, or “HR Pack”, targeted at key HR decision makers. This pack was designed by our Communications Group to challenge the view that accountancy and legal training are the best qualifications for effective boardroom directors, and to highlight the strengths of the engineering mindset. Most of our outward communications to date have been via Public Relations. The HR Pack is a deliberate break from this approach and provides a more direct channel. If the evaluation of this new approach is positive then we intend to look at additional opportunities for new publications and forums for challenging views and arguing for wider adoption of our values. Please give us your feedback on this pack.

Website & Improved Engagement

We will shortly be launching a new website and interaction platform. Many of you will already be members of the SMF group on LinkedIn but this new website has vastly increased functionality and a new social engine to allow for private communications between Fellows.

As Fellows are geographically dispersed, the website is also intended to provide a material forum for useful interaction on a variety of initiatives irrespective of geographic location.

How we support each other and add value as a community will no doubt dictate the future success of the Society. We hope that the website will enable a higher degree of interaction and engagement by delivering value to every Fellow that uses it.
As you know, the SMF bursaries are funded by Lord Sainsbury via his Gatsby Charitable Foundation. However, the Society itself has been funded to date almost entirely by Lord Sainsbury’s private funds. Whilst we have been informed that the future of the scheme continues to be assured, and all recent feedback on our performance has been most positive, we have also been asked to take a hard look at whether there is a point at which the scheme becomes self funding.

We are currently reviewing whether to incorporate the Society and establish a registered charity to further pursue this question. A key benefit of this incorporation would be a tax efficient vehicle for those Fellows who have expressed an interest in investing back in to the scheme.

We also collect annual subscriptions from the Fellows. These subscriptions go directly to supporting the Society’s aims. They are not a ‘social fee’ but, rather, they underline the identity and activities of the Society and point to the responsibilities of the individual recipient of the award. We continue to ask for your support in collecting these fees.

Mentoring and Other Activities
An outstanding success of last year was the launch of the mentoring scheme. Fellows have been partnered with mentors at the very highest levels of UK PLC. We intend to look not only at how we can extend the scheme in size, but also how to access new key sectors of Fellow involvement such as Finance and Entrepreneurship.

We also launched the successful Energy Roundtable. This is a forum – currently physical but soon also to be online too – to exchange latest ideas between those with a role or interest in the Energy arena. We would like to have additional roundtables in areas of key importance to the economy such as Finance and Manufacturing. Please let Cathy know if you would like to be involved in this.

Other activities where our involvement continues include supporting the next generation through the RAEng’s BEST Programme and the Engineering Leadership Award scheme. If you feel you now have the time and would like to become further involved please do not hesitate to contact Cathy or myself.

There is no easy way to measure the sphere of influence that the Fellows have. However, by rising to the challenges we are set, and increasing our ability to collaborate, we can exert a positive influence of a disproportionate magnitude to our size.

Lastly, I would like to warmly thank outgoing President Ernie Poku for all of his hard work, initiatives, and achievements during his term of office.