Sharing and Caring: How Car Sharing Flourished Differently in Helsinki
This article is a case-study response to Daniel Mai’s article “Sharing without caring: How a lack of community undermines the principles of the sharing economy in the mobility space.”
https://humanfutures.studio/articles/2020/1/7/sharing-without-caring
The first free-floating car-sharing service in Helsinki was launched in 2017, when the German-based operator DriveNow, owned by BMW and Sixt, teamed up with OP Financial Group to bring the service to the Finnish market. It was a new addition to the Finnish mobility-space, but it required some culturally-appropriate alterations to the model to fit into Helsinki. Because DriveNow operates in many cities across Europe, it has a true borderless user experience promise in its core. Similar to Uber, registered DriveNow users enjoy the same user experience in cities around the world with a single membership. But as DriveNow entered Helsinki, it needed to adapt to the existing culture of sharing and the transit options to find a value proposition relevant to the city’s inhabitants.
In his article “Sharing without caring: How a lack of community undermines the principles of the sharing economy in the mobility space,” Daniel Mai demonstrated how a lack of attention to the cultural details governing sharing and the management of commonly held property precludes the smooth functioning of a car sharing offering. This led me to think about how the sharing economy in general, and car sharing, in particular, plays out differently in a more community-driven context like Helsinki. The DriveNow example is interesting because the venture entered Helsinki specifically positioned around a circular economy, and it worked as a result.
DriveNow has announced it is pulling out of Helsinki at the end of February 2020. It was positioned well, and was, for the most part, well integrated into the community. Had it been positioned around just as an alternative to car rental services, without the community core, it would have been colder, messier, and yet maybe even been a better short-term solution from the business case point-of-view. But it would not have been able integrate into the sharing culture of Helsinki as successfully. While this venture may not have been entirely successful, it is certain that another will get the balance right in a few years. Understanding how to balance the market and the culture simultaneously will be essential to develop this new service.
Finding the Balance
Despite strong support from a pan-European jet set, the most important area for any car-sharing service is the city it operates in. For the most part, the service providers apply a common template for each city based on a set of universal principles. However, to succeed in a new context, any universal value proposition and user experience must be adapted for the local environment. This is especially true because the majority of the revenue the service can generate comes from the active local members who live, work and enjoy life in their own hometown. The adaptation of the car-sharing service is dictated by the city context and is shaped around what its residents appreciate. Success, then, is dependent on a company’s ability to fit with the prevailing logic of the existing sense of community, attitudes towards sharing, and the transit environments.
European cities are very different when it comes to the size of the opportunity for successfully launching and growing a car-sharing service. The size of the city is always the fundamental determining factor, but the regulatory environment and different local traffic contexts also have an effect on how the locality perceives cars and car-sharing. Some cities are borderline hostile toward private cars. Oslo, the capital of Norway, decided to ban private cars from some areas altogether in 2015, whereas other cities remain friendly toward private car ownership.
Beyond this, the prevailing culture of sharing determines how this market must be addressed by any service provider. Where there is a strong sense of common ownership, the new service will be easier to launch. Where this is somewhat lacking, like in Daniel Mai’s article there are major complications that need to be accommodated.
In some cities, the sharing economy narrative seems to work better for raising the awareness and interest for car-sharing. In these cities, the relationship with cars is often very pragmatic in nature; they take you safely to places where public or private transportation fails. Whereas in some cities the relationship toward cars is more classically individualistic. The difference can be seen clearly in the car models the operator has on its fleet. SUV’s with all-wheel drive and spiked tires in Helsinki for safely taking your whole week’s worth of groceries home with you, and convertibles in Milan for cruising with your friends in a luxurious Beamer.
Daniel Mai pointed out that car-sharing operators tend usually be in favour of product-driven and individualistic way of positioning their offering. But this seems to be in direct conflict with the motives of members that buy into the sharing economy narrative. There is a tension at the core of any of these offerings which needs resolving, otherwise the proposition is fuzzy. If the city-level positioning of a car-sharing service remains unclear or not well thought through, then the service itself might not be used how it’s intended.
Environments that support sharing-economy services well share a few important characteristics—many of which can make life easier for any service provider trying to capture the attention of the residents. Cities that already host active local communities that have a voice in urban planning are usually positively in favor of new sharing economy services. Additionally, cities with residents that have a strong sense of social responsibility towards public and private spaces, like Finland, Japan, and Switzerland, provide the ideal spaces for scaring economy offerings to flourish.
Despite this, it is up to the service provider to adapt their offering to these conditions. A failure to consider both the civic context and sharing culture will result in a potentially fatal mismatch. The bottom line is there cannot be a universal playbook on how to operate a free-floating car-sharing service. The factors that make the service meaningful and relevant depend on the local culture. How this is manifested varies with how the city is constructed, operated, managed need to take into account. This is especially important when the business model for launching and operating of the service is too universal, rigid, or proscribed.
A community in the core of the launch of DriveNow Finland
The launch of DriveNow Finland was based on the premise of introducing a new kind of a car-sharing service, in a market without car-sharing. It needed to sync with the realities of local residents. Helsinki, a city with one of the best functioning public transportation systems in the world, already offers a complete mobility package from an everyday life perspective. In this reality, DriveNow could not be a mobility revolution or a car-club for the ones who can’t afford to buy a car but rather had to fill a missing link within an already well-functioning public transportation system.
In setting up the service, what we heard from the local residents was this: a car-sharing service that can fill the gaps in the public transportation system with a credible sharing economy narrative can be the solution to enjoy the communal freedom or car-sharing without the perils of car-ownership. They also felt that being tied to a car that for the most part sits still on the curb, raises feelings of guilt and wasting of resources. In Helsinki at least, there was a local value proposition that paired well with the typical value proposition for car sharing.
The operational model of DriveNow Finland had a strong community component built within its core. Consequently, it was well matched. However, instead of taking a continental car-club approach with the product in the centre, the Finnish version of the car-sharing model was built on the premise that a smarter city is possible if residents would engage with a free-floating car-sharing service.
All DriveNow had to do was to integrate into the existing and active local communities that were organized around the sustainable circular and sharing economy narratives. This would then allow residents to take practical steps that would lead to the future of a smarter city. The positioning of the service was created around the narrative of participating in building a smarter city, a place in the not-so-distant future, which can be made appear closer one car-sharing ride at a time. This gave residents a reason to engage and to continue their ongoing efforts as good citizens of Helsinki.
Operating with a business model that includes a community element is a must in markets where car-sharing is conceptually new. The logic of new member acquisition is heavily dependent on referrals, recommendations, and word-of-mouth. Also, the steep learning curve for the adoption of a complex service makes existing members the best possible mentors for safely adopting and getting the grip of the service.
Conclusion
As Daniel Mai indicated in his article, an ongoing dialogue between the car-sharing community and the operator can develop the sharing economy narrative . This was true in the case of DriveNow Finland where the experience was elevated ahead of the basic universal product by emphasizing the community and reaching out to members as humans beyond the usual market automation prompt. And yet we know now that DriveNow’s experience in Helsinki has not succeeded. There are several points I want to highlight here.
Firstly, the benefits of a proper engagement model for the community include safer, cleaner rides, mobility network expansion, community-generated content, and dynamic pricing. Also, the more active a member was in the car-sharing community, the happier they became. This meant they were more easily retained by the provider. With more happy clients, the business becomes profitable. This also had the happy effect of active members selling their own private cars because of DriveNow. However, happy clients are the product of a well-integrated system with a clear value proposition. Both necessitate being able to work within the cultural expectations of the city.
Second, building a strong community core within a car-sharing service is only half the battle. Simple logistics still plays a part. While the imperative factors for both the business model and the user experience are related to service availability and pricing, they are not enough. The pitfall of a free-floating model is that that supply can be unevenly distributed, and managing it requires moving the vehicles without a paying passenger on board. Even if the experience is on a high level, pricing and availability can push even the most die-hard sharing economy enthusiast to go after alternatives.
The third consideration is timing. The different tempo of how a city develops affects the requirements and restrictions of the business strategy. How fast can a community-driven positioning with a shared sharing economy meaning fulfill the requirements of a business case, when these two streams are potentially mutually exclusive? Keeping pace with the community requires a knowledge of what the community values and how fast it is changing. Without this understanding, a new offering can find itself in a fast-moving river without a paddle.
Finally, a business that targets only sharing economy proponents, might find itself in a situation where the service growth is out of step with the broader audience . Genuinely embracing the principles of the sharing economy does not make a free-floating car-sharing service a viable business very fast in 2020. It is a slow game because it necessitates engagement with the entire community. This requires a deep culturally appropriate engagement with the city and its inhabitants. An overly rigid business strategy can thus be the biggest opponent of a true radically human-centric free-floating car-sharing service. Its pricing model can restrict users with purely pragmatic reasons for using a car-sharing service, and then the game is all about a narrow segment of sharing economy proponents, who have the money and believe in the concept, but still in the majority of European cities, this audience is still rather small.
The DriveNow case offers us some insight into how concepts like “sharing” and “flexible use” are concepts defined in the dialogue between provider and customer. If this dialogue is not healthy, continuous, or timely, then the provider is doomed to miss the mark.
Antti Mäkelä is the founder and partner at Embassy of Design.