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Smatization and Platform Economy

Prof. Suhono Workshop


March 21, 2017
Kyoichi Jim Kijima
Visiting Professor
Smarter cities for smarter growth
A citizen-centric approach
Growth, economic value and competitive
differentiation of cities will increasingly be derived
from people and their skills, creativity and knowledge
to create and absorb innovation.
Cities need to apply advanced ICT, analytics and
systems thinking to develop a more citizen-centric
approach to services, or value co-creation.
By doing so, they can better attract, create, enable and
retain their citizens skills, knowledge and creativity
Based on https://www935.ibm.com/services/us/gbs/bus/html/smarter-cities.html
What is Smartization?

Realization of
Convenience
Smart Value Comfortability
Efficiency Support
Eco-friendliness
Smart
Safety
Algorithm
Security
Basic Value
Credibility
Reliability ICT
1. PLATFORM ECONOMY AND
SHARING ECONOMY
Sharing Economy in Indonesia
GOJEK
Award-winning Indonesia's best
time saver app
With more than 250,000 drivers
nationwide, this all-in-one app
offers all the transportation,
delivery, lifestyle and payment
services you need to live your life
with ease.
You name it, we do it instantly.
(From the website)
Sharing Economy and
Algorithmic Revolution*
Sharing Economy or On-Demand Economy
is a special case of Platform economy.
Uber, AirBnB and more

IoT, AI, Deep Learning and other buzzwords


could be discussed in terms of Algorithmic
Revolution.

*J. Zysman. 2006. The algorithmic revolution---the fourth service


transformation. Communications of the ACM. 49 (7)
PiperJaffray, 2015. Sharing Economy: An In-depth Look at its Evolution and Trajectory across Industries 7
<http://collaborativeeconomy.com/wp/wpcontent/uploads/2015/04/Sharing-Economy-An-In-Depth-Look-At-Its-Evolution-and-Trajectory-Across-Industries-.pdf>.
References Unevenly distributed
Companies Est. Main Office Type Companies Est. Main Office Type
Airbnb 2008 San Francisco Private Feastly 2011 San Francisco Private
AirPooler 2013 Cambridge, MA Private FlatClub 2010 London, UK Private
AllTheRooms 2013 New York, NY Private FlightCar 2012 Cambridge, MA Private
BlaBlaCar 2006 Paris, France Private FlipKey 2008 Boston, MA TripAdvisor
Boatbound 2012 San Francisco Private FLOOW2 2012 Luxembourg Private
Breather 2012 Montral, Quebec Private Flytenow 2013 Boston, MA Private
Carma 2007 Cork, Ireland Private Freelancer 2009 Sydney, Australia Public
Carpooling.com 2001 Munich, Germany Private Fundly 2009 Palo Alto, CA Private
CircleUp 2011 San Francisco Private Getable 2010 San Francisco Private
Cohealo 2011 Boston, MA Private Getaround 2011 San Francisco Private
CouchSurfing 2004 San Francisco Private GetMyBoat 2012 San Francisco Private
Crowdcube 2010 Exeter, UK Private Guevara 2013 UK Private
CrowdFlower 2009 San Francisco Private Hailo 2011 London Private
CrowdRise 2010 Detroit Private Holidu 2014 Munich, Germany Private
CrowdSource 2010 Swansea, IL Private HomeAway 2005 Austin, TX Public
Deliv 2012 Menlo Park, CA Private Homejoy 2012 San Francisco Private
DogVacay 2011 Santa Monica, CA Private Homestay 2013 Dublin, Ireland Private
Drivy 2010 Paris, France Private HourlyNerd 2013 New York, NY Private
EatWith 2012 San Francisco Private HouseTrip 2010 London, UK Private
Etsy 2005 Brooklyn, NY Private Indiegogo 2008 San Francisco Private
eYeka 2006 Paris, France Private Instacart 2012 San Francisco Private
8
Reference Unevenly distributed
Companies Est. Main Office Type Companies Est. Main Office Type
JustPark 2006 London, UK Private Rover.com 2011 Seattle, WA Private
Kickstarter Inc 2009 New York, NY Private ShareDesk 2012 San Francisco Private
Krrb 2010 Brooklyn, NY Private Shuddle 2014 San Francisco Private
Lending Club 2007 San Francisco Public Sidecar 2012 San Francisco Private
LiquidSpace 2010 Palo Alto, CA Private Storefront 2012 San Francisco Private
Luxe Valet 2013 San Francisco Private Style Lend 2013 San Francisco Private
Lyft 2007 San Francisco Private TaskRabbit 2008 San Francisco Private
MonkeyParking 2013 San Francisco Private Tilt 2012 San Francisco Private
Elance-oDesk 1998E , San Francisco Private Tok Tok Tok Franche-Comte, Private
2005 o France
9flats.com 2009 Berlin, Germany Private Tripping 2010 San Francisco Private
Onefinestay 2009 London Private TurnKey 2012 Austin, TX Private
Parking Panda 2011 Baltimore, MD Private Uber 2009 San Francisco Private
Pathway GDS 2012 London Private UpCounsel 2012 San Francisco Private
Peerby 2011 Amsterdam Private Vacatia 2012 San Francisco Private
Pillow 2014 San Francisco Private Villas.com Amsterdam Priceline
PivotDesk 2012 Boulder, CO Private Wefunder 2012 San Francisco Private
Postmates 2012 San Francisco Private Wimdu 2011 Hamburg, Private
RelayRides 2008 San Francisco Private Germany

RocketHub 2009 New York, NY Private Yard Club 2013 San Francisco Private

Roomorama 2008 New York Private YourParkingSpa 2006 San Francisco Private
ce
Roost 2013 San Francisco Private
9
Silicon Valley (incl. San Francisco):40, USA:18, Europ:22, Others:2
Sharing economy is a special case of platform
economy
Platform Economy

Generate Algorithmic Revolution


Sharing Economy
Value co-creation Process
Customers Providers
Direct Interaction based on Algorithm
Empowerment based on Algorithm Empowerment based on Algorithm
Value Orchestration Platform
Why sharing economy is
platform economy
Because
They invites customers and providers to "get on
board" and facilitates value co-creation process
and leaves the control entirely to providers and
sometimes to customers as well.
They match needs and wants on individual basis.
They possess only platform and algorithm to
support the both sides to interact directly.
They facilitate customers and providers to share
providers unused resources with customers.
Sharing economy is a special case of
platform economy supported by algorithm

Direct interaction between the two sides


e.g., Transaction cost down,
User-friendliness up, con venience up
Both sides affiliate the platform and are
empowered by the platform.
e.g., price recommendation (AirBnB)
Guarantee of reliability, safety and credibility
of the both sides
12
Sharing economy is a special case of platform
economy
Platform Economy

Generate Algorithmic Revolution


Sharing Economy
Value co-creation Process
Customers Providers
Direct Interaction based on Algorithm
Empowerment based on Algorithm Empowerment based on Algorithm
Value Orchestration Platform
Sharing Economy:
A Special Case of Platform Economy:
Uber
Customer Provider
Direct Interaction

Affiliation and UBER Affiliation


and
Empowerment
Empowerment Empowerment

Sophisticated Algorithm

Service Platform + Algorithmic Platform = Sharing Economy


New Value as sharing economy

Reliability and credibility


Convenient, efficient, Regulation
customized and
easy-to-use service
Unreliability and incredibility
Implies Leads to
Direct Interaction between
a huge number
a high variety of customers and providers

Enables
Algorithmic revolution Solve by empowerment
ICT of the stakeholders
Reliability and Credibility of Sharing Economy
Guaranteed level of Reliability
If guarantee of quality of the provider in advance is
more difficult and if damage caused by Inferior
quality is more serious,
then guaranteed level of reliability should be lower.
Guaranteed level of Credibility
If possibility that customer and provider deceive
each other is higher and if damage caused by
deceiving is more serious,
then guaranteed level of credibility should be lower.
Guarantee of reliability and
credibility by regulation
(Discussions under way in Japan)
Low Guaranteed level of Reliability
Heavy
AirBnB regulation is
necessary
Anytimes Anyca

Uber (Positioning is still


tentative)
Spacemarket

Guaranteed level of
High Akkipa
No regulation is necessary Credibility
Low
High 17
Guarantee of reliability and
credibility by regulation
(Discussions under way in Japan)
Low Guaranteed level of Reliability
Heavy
AirBnB regulation is
necessary
Anytimes Anyca

Uber (Positioning is still


tentative)
Spacemarket

Guaranteed level of
High Akkipa
No regulation is necessary Credibility
Low
High 18
Contents of the services
Anytimes: : Lending and borrowing of house
keeping service on individual basis
Anyca: Lending and borrowing of a private car
Spacemarket: Lending and borrowing of rental
spaces from a meeting room to a temple
Akkipa: Lending and borrowing of a parking
spot on a daily basis
2.WINNER-TAKES-ALL:
MORE GAP-WIDENING SOCIETY?
Winner-takes-all:
More Gap-widening Society?
Hotel Industries and Airbnb Taxi industries and Uber

Hilton Group Airbnb Many Uber


Employees 132,000 800 3,300
Hotels and others No facilities Vehicles and No vehicles
Assets
others
Slow growth 353 times in five Decreasing 50 thousand new
Growth rate and oligopoly years tendency drivers each
month
Revenue Low earning High earning rate Low earning rate High earning rate
Structure rate
Intra-group Price Intra-group Bilateral
IT competence Recommendation evaluation
Algorithm
Gradual The top easily Semi regulated 250 lobbyists for
Competitive
grouping keeps the market political disputes
environment
position
Too strong businesses are unevenly distributed on the Globe!21
Challenges in the near future
It seems very possible that very few clever
people who can develop and use smart and
sophisticated algorithms take all and others
just follow them.

More Gap-widening Society is emerging?


kijima@kijima-lab.com

THANK YOU!