Lesson 7. Rent, Don’t Own

An important mechanism empowering individuals and small teams everywhere is variable cost access to technology, tools, and personnel.

Emblematic of this new reality is cloud computing, which offers the ability to store and manage massive amounts of information with unlimited processing, all on a cost-per-use basis requiring no upfront or capital investments. The cloud also puts small companies on the same footing as—or even gives them an advantage over—big companies, which are burdened by expensive internal IT operations. In addition, the growing body of innovative Big Data analytical tools will give all companies, big and small, an unprecedented understanding of their markets and customers.

Fablabs are small-scale workshops with equipment like 3D printers, CNC machines, and tools with which one can fabricate almost anything. Nearly 2,000 such facilities currently operate globally, giving any individual or small team the ability to rent equipment and be as capital-empowered as an established corporation. The popular payment system Square was prototyped at a fablab.

First computing, then tools and manufacturing. Today, that same rent-not-own philosophy even encompasses employees. Individual “temps” are nothing new, of course, but the concept now includes groups of temporary workers. Organizations can rent staff on demand from Gigwalk and other companies when a large amount of work needs to be done quickly, relieving them of the traditional, nightmarish practice of serial hiring and firing. In this instance, there is no distinction between “rented” staff and the ExO attribute of Staff on Demand.

Be it facilities, equipment, computing, or people, the concept of renting rather than owning is a major factor contributing to an ExO’s agility and flexibility, and thus its success. This, too, can be seen as the culmination of a long-term trend. Over the decades, business owners have steadily moved from viewing business through the lens of a balance sheet to instead focusing on P&L—that is, emphasizing the primacy of profits over ownership. Much of this movement has grown out of the realization that the ownership of assets, even if mission-critical, is better handled by experts. ExOs focus only on those areas where you can add the most value, and outsource everything else. 

Apple essentially rents capabilities from Foxconn to manufacture its products. And Alibaba, the Chinese e-commerce giant, allows an ExO to outsource itsentire manufacturing cycle.