Hierarchy vs decentralization

The culture of openness is not settled yet. I think it is not enough to look at these well-known open projects (often representing early successes like Linux and Wikipedia) to predict where we're heading. I personally see most of these first open projects as hybrid structures. It is hard to collaborate in a overly competitive culture. It is hard to be entirely open in a culture of secrecy and predominantly elitist. It is hard decentralize in a culture of control. I always like to say that it almost takes two brains to operate in the old paradigm and in the new. Two different paradigms! (Don't take the term paradigm lightly) I see organizations morphing towards openness and decentralization, towards distributed analysis, planning, and decision making.    

Decentralization doesn't mean flat, nor chaos. In my view, this term refers to governance and decision making, but NOT to value creation processes. I use hierarchy almost as the opposite of decentralization, referring to power relations. 

In SENSORICA we are trying to eliminate power relations (= instituted power over others - power to fire someone, to tell someone what to do and when to do it, or like in the army), to build a value-based organization (value as in economical value, not as in moral value). Using my terminology, SENSORICA would not be a hierarchy in this case. This is why we call it a decentralized value network. SENSORICA would be decentralized but it doesn't mean that there is no structure! The structure comes from voluntary subordination. It comes dynamically, this is why we call SENSORICA an open, decentralized, and self-organizing value network. So there is organizing, there are very well defined roles, there is an established flow of processes, but there is no power structure. Power relations are not operational within this value network. 

How tight can this organization be without power relations? I believe we can make it tight enough if all members have access to all the data, if members have access to analysis tools, if they can communicate and coordinate effectively, if some roles are well defined within the community, if other constraints like reputation and access to revenue are operational, if the incentives are clear, etc, etc. 

I think that power relations are fading away. They play a crucial role in a world deprived of efficient means for peer-to-peer communication and coordination. Power brings accountability, which is what enables information to travel unaltered through a geographically spread and numerous society, from person to person. Information is crucial for large social systems to sustain themselves. Hierarchy is an attractor in these conditions. The only way to form large societies in this context is to structure them hierarchically, with a center of analysis, planning, and command, relying on accurate information that propagates through trust and accountability (power = if you lie to me I kill you). 

The new technology changes everything! It enables peer-to-peer communication and coordination with no temporal and spatial barriers (at the scale of our planet). This constitutes a cataclysmic event in the history of humanity. Societies are now going through metamorphosis. Almost everywhere we look around we see decentralization going on. It's a slow and continuous process, we see a lot of intermediary structures, but the question is where is it going? 

As systems decentralize the world is NOT becoming a mess. It just gradually transitions from one form of organization to a different one, in which power relations play a smaller role. 

No boss doesn't mean that decisions are not taken! They are, in a distributed and even continuous (instead of discrete decisions) manner.  

Openness is necessarily part of this transition, because in order for the system to sustain itself information needs to be accessible to all members. 

More to come... 

How an open enterprise can service its customers

I am working on a service system for SENSORICA.

• We want to implement a globally distributed service system. 
• We want to make our service system transparent. 
• We want to create a decentralized service system
• We want to create a self-organizing service system
• We want to automate logistics as much as possible.
• We want to provide as much control over our services to the customer as possible. 
• We also want to give the customer the chance to play an active role in shaping/improving our products and services. 

Please provide feedback.

See the Services page.
Se the SENSORICA service system document.

Why would you join SENSORICA?

I am trying to answer this question, please provide feedback. You can edit the text, or you can use the comments associated with this post. 

To access the text in the VIEW mode click HERE. 

To access the text in the EDIT mode click HERE. 

This text is published on SENSORICA's website HERE.

Tibi

Duty vs passion

The main difference between SENSORICA and a corporation is that members of SENSORICA are only remunerated if their input reaches the market. Corporations pay their employees per hour and are obliged to focus activities. In this context, passionate work that is not aligned with immediate business goals is restricted, which limits the creativity of the organization.

Google understood that passion is the source of innovation. They allow their employees to spend 20% of their time on personal projects. G-mail, Adsense, and Google News were initiated by self-motivated employees. 3M developed a 15% time rule in the 1950s. Other companies are trying it too, but not everyone can afford it. There needs to be a large profit margin to sustain this type of couture, taking into consideration that creativity and innovation are highly unpredictable.

On the other side, gift economies like Linux, Wipedia and other open projects are thriving on pure passion. The adverse side is that contributors are not remunerated directly and in a tangible way for their work.

SENSORICA situates itself somewhere in between. Everyone is free to engage in passionate activities, and everyone understands that not all activities will bear fruits in the form of successful products. In other words, not all activities will be remunerated in a tangible way; this is the gift economy part of it. The members that are more motivate by tangible revenue will adhere to collective activities that promise market success. That is their choice, and this choice is informed by internal systems of market analysis and strategy.

The value accounting system we are designing must be compatible with this idea. All activities are recorded in detail and are evaluated. The revenues form every product exchanged on the market are redistributed to SENSORICA's members according to their individual contributions to every particular product. These contributions are recovered from the database on logged activities. Some activities might be counted as part of a product a short time after their completion, for others it might take a longer time. Some input might never see the market.

The reputation and the role systems will also pick up data from the database of logged activities. For example, members that contribute to viable products on a regular bases will be recognized as being revenue oriented and major contributors to the tangible wealth of the community. Other members that are mostly driven by passion will be attributed other roles and will gain a different reputation. Non-tangible value is still value, and some of us are driven by it. And one cannot exclude the possibility that one day an individual passion-driven contribution can find itself at the core of a very successful product.         

Revenue in SENSORICA is conditioned by market exchanges. This allows us to incorporate a gift economy within our model. Development can be market-driven or passion-driven. We get the best of both worlds.

See the first comment to this post for more clarification on the impact these new ideas have on our value accounting system.

References
Thoughts on Google’s 20% time

Emergent structure

Two weeks ago I had the privilege to spend some quality time with Venkatesh and discussed in depth about the concept of legibility, proposed by James Scott in "Seeing Like a State" and developed by Venkatesh  in his recent book Tempo. A few days ago I watched the BBC documentary The Secret Life of Chaos. These two events had a profound effect on my views about SENSORICA's structure.

I think SENSORICA should NOT have a predefined structure. Roles within our value network must be emergent and fluid. Circumstances define functional roles. As conditions change the organization reconfigures itself. SENSORICA will mold to changing patterns underlying our society and our economy.

We need some level of legibility to connect different value networks (like SENSORICA) together into a super-network. This connection is first established at the level of the value system, to allow an unhindered flow of value between all the nodes. Knowledge must also be able to flow freely within the super-network, therefore some level of codification is required. Individuals must be able to start producing value shortly after they migrate from one sub-network to another. The accommodation time and the learning curve must be reduced in order to renter the super-network rapidly reconfigurable/dynamic. But we also need to realize that there is a price to pay for too much legibility, as Venkatesh brilliantly points out (see this short video).

How are we going to induce self-organization? What guarantees temporal stability? How can we make sure that emergent patterns optimize creativity and productivity? How can we make sure that the outcome will be a humane and ethical environment? I put all my faith into the human being.

I believe that humans are capable of spontaneously creating stable social patterns if their goals are aligned and if they know how to achieve their goals. We don't need to create a structure, we only need to create the conditions for the structure to emerge and evolve. I am in the process of designing data analysis and visualization tools that I believe will induce self-organization. At this moment I see 3 important systems: value, reputation and roles. Follow the previous link for more.

On reward mechanisms

For the last week I've been thinking about how we should deal with contributions from different members to the products we develop, and in general about how we should deal with open hardware and software communities.

If someone designs an electronic board to be used in one of our products and releases the blueprints (SENSORICA creates creative commons), there needs to be a mechanism to reward this contribution. All members of SENSORICA who market products developed within our community MUST respect everyone else's contribution. Assessing the value one adds to a product is one thing, making sure that contributions are rewarded is another. We need to write an agreement that every member must sign. It is an engagement to comply with SENSORICA's most basic principles.

This document is a contract between all members. In a sense it is legally binding, although enforcing it at the global scale becomes a real issue. I put my trust in our reputation system (we are implementing it), which must be capable of deterring parasitic behavior. As SENSORICA becomes a stable source of revenue for its contributers, it becomes suicidal not to comply with these principles. A tarnished reputation will go a long way... The world is turning into a village, word get's around fast, and persists.

As a first step, we'll go through an exercise of evaluation of everyone's contribution and carve that on a stone somewhere. This is in essence a negotiation process, a subjective process of evaluation followed by a consensus on the % of total value that every contribution represents. I'll set up some experimental tools to facilitate this process. See the Value Exchange Mechanism and the Back Office Catalog documents for inspiration.

Let's move now to open communities. To reduce costs and to insure continuity for our customers we'll incorporate open software and open hardware as much as we can into our products. SENSORICA could, in principle, tap into these pools of value at no cost. We could integrate open source software into our products, and even charge extra for it. But this is NOT ethical. And if you think ethics should not be part of business thinking, think twice... Ethics is actually becoming a must in the global, interconnected, and democratized economy. Not being ethical will make you lose market as well as your ability to tap into the wisdom and the intelligence of the crowd. Open innovation is extremely sensitive to ethics. If we want to tap into this unlimited source, we absolutely need to embrace the highest ethical standards. I proposed to our group to set up a fund for open communities. For every product sold, we should set aside a % of the revenue, which we will inject back into these communities.

If we get individual attention from some members of these communities, if some open source piece of software or hardware is customized by someone for SENSORICA, this individual becomes a member of SENSORICA and will be rewarded as mentioned above. But because we build on value already created by this open community, a % of revenues should go back to it.

How is the fund going to be redistributed back within these communities? I don't know... But I am sure we'll find a way to do it when we'll get there, a way which will not interfere with the gift economy operating within, a way which will not destroy these wonderful ecosystems.

What do you think?

Presentation: SENSORICA

I am working on the first presentation about SENSORICA, for a meeting with some government agents working for different business development agencies, who are starting to open their eyes on open innovation. Your feedback is valuable.