Sharing. It is something that was taught to us right from kindergarten. We have always considered sharing as a quality to be used only in personal life with friends or families.
Today, in the corporate environment, if a person says that he wants to share his work with another colleague of his, people would laugh at him and judge him to be naïve and immature. Sharing anything in a corporate set up is considered a gross mistake going by today’s standards as one can take advantage of this and move up the ladder leaving the person sharing his insight, idea, etc behind.
This has led to a gross ignorance towards the power of sharing which is making us and our businesses, shallow and under-utilized assets of innovation.
By sharing I don’t mean to share arbitrarily anything and any idea. But the concept can be used elsewhere to increase your business capability ten-folds and I am not even exaggerating when I say this.
Let’s consider an example.
You are looking forward to starting a small venture of yours which focuses on providing customers with tourism around your city. You are excellent in tourism services and know the areas where your customers will enjoy. But you may not have an edge in providing hotels or food to your customers. What do you do?
Are you thinking of outsourcing these services to a third party? Well, that can be a short-term solution but if you are looking to engage with your customers for a long term and level up your customer loyalty, then shared capabilities is a far better solution.
Imagine where you have partner enterprises who consider your customers as their own customers and provide them with product/service quality that matches with your own brand. This can not only improve your reach and engagement but provide your customers with experience worth their money. Sharing your capabilities with others in the same industry can make you a giant which has value proposition in the market.
How does a shared capability business model work?
Say, you are a provider of brand and social media management. You specialize in these services, but your customers also want creatives, content creators, digital marketing, near field communication (NFC) and market analytics and social analytics.
If you apply the shared capability model, you will have partners for each of the services I mentioned above. Since each of them would be an expert in their respective service, your quality is not at all compromised. They will share their resources which will increase your customer base and same will be applicable for your partners. Your work, your art will be safe in the process as just services will be extended but internally, the resources held by individual businesses won’t be kept open like how it happens in a joint venture.
Don’t confuse this model with Partnership. This is way simpler and hassle free a model as compared to partnership which requires us to comply with laws of partnership. Partnership requires sharing of financial resources or physical assets for doing only one kind of business.
Shared Capabilities model requires you to show a combined front to your customers and share your capabilities with other businesses to increase your service capabilities and customer base. You don’t need to have a common brand neither a common infrastructure. You maintain your individuality and still capitalize on sharing. Works for all the parties involved in the shared capability business model
Revenue sharing is one of vital question that arises when you consider this model. You can do it in any of the following ways:
The main aim of shared capability business model is to enhance customer experience through increased and expert business capabilities, ease the accounting and financial matters and provide a platform to those start-ups or organizations which have service capabilities but lack in customer base.
Blockchain can enhance this model even further.
If you build a Ethereum or any other blockchain business’ “smart contract” between the partners and have a revenue sharing ratio, it will become very easy to operate this model and you won’t even need to worry about the revenue being properly shared amongst the shared capability businesses.
Your smart contract can be coded in such a way that whenever one of the businesses receives a request from a customer for X and Y services, the front end will show that the customer is receiving service from only one platform, but X and Y services will be carried out by business X and business Y individually. The status of the services can be tracked and at the time of payment, the revenue will be divided between X and Y, if the ratio determined by all service providers for the shared capabilities platform is equal. The promoter of the shared capabilities model can charge a small transaction fee and earn revenue from the same via validating the transactions.
You can read more about ‘Smart Contracts’ here.
Shared capabilities platform/business model can change the way businesses are done and gives a level playing ground to small enterprises and start-ups!
Aman is a Global Assurance Trainee at KNAV International LTD. He is passionate about business and technology as well as the different policies and initiatives taken by the Indian Government. He drafts policies and suggests key areas for development purposes to his local government through their portals on web and mobile. Aman holds a Bachelor of Commerce from the University of Mumbai and is also pursuing the Chartered Accountancy final exam.