Distributive Enterprise

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Short link to this page: http://bit.ly/1rxK4Gf

Publication

We have published the Distributive Enterprise concept first in 2012 - see the MIT Innovations Journal article.

Download full article: File:Jakubowski-thomson.pdf

See corresponding blog post - http://opensourceecology.org/towards-the-open-source-civilization/

Thomjak.jpg

Overview

A Distributive Enterprise (DE) is a Social Business that focuses on open economic development - open collaboration in innovation. This means that all of its product design and business operations are open source and intended for replication. Our work is documented under OSHWA and OSI compliant licenses.

While the Distributive Enterprise concept is simple in concept - it essentially means cooperating and sharing - it is quite challenging to implement in practice becuase true and open collaboration is rare. This is especially true when it comes to economic development or product design. Proprietary design, trade secrets, and patent protection is the norm. This leads to Competitive Waste, and OSE is working on a collaborative, open way of doing business.

It is useful to compare Distributive Enterprise (DE) to other forms of apparently 'open' or 'collaborative' efforts. For example - this is not like Tesla cars which Elon Musk went 'open source' (technical design was never released under an OSHWA or OSI compliant license, though we do give Musk the credit of promising not to pursue sanctions against other companies who use Tesla patents). We also contrast Distributive Enterprise with typical open innovation, which is not 'open' as it typically manifests in the form of proprietary consortia. DE is also not like typical crowd-sourcing, which typically manifest as mechanisms for efficient enclosure of intellectual property from the crowds. DE should also be contrasted with a typical cooperative - which typically takes on a proprietary form. For example, successful coops such as Mondragon still rely on proprietary design. DE should also be contrasted with Chinese Open Source. Many other poignant examples of public enclosure can be cited here. This pattern of commons enclosure is a persistent institution hidden in plain sight, and even well-intentioned critics of public enclosure do not appear to understand the technical definition of open source. For this reason, I will use capital Open Source to emphasize the difference between what people think is open source, as opposed to true Open Source - which simply means pursuant to OSHWA and OSI standards.

A Distributive Enterprise is a transparent enterprise which maintains the open replication of such an enterprise - independently by others or with incubation assistance - at the core of its operational strategy. It is related to the concept of a franchise, except all of its 'intellectual property' is open for use, modification, and economic activity by anyone anywhere. As such, this differs from a traditional franchise - in that the Distributive Enterprise (perhaps to be called Open Franchise?) is dedicated to the balance of power between people and countries. Entrepreneurs are encourage to replicate the distributive enterprise and 'compete' in a truly free market.

The revenue model for a Distributive Enterprise can involve training or production. The training model may be similar to a traditional franchise, except all knowhow is published and open source, so that people can study and build upon our work. For the entrepreneur who wants a fast track, we offer training, operations support, marketing, and branding services. While an open source brand may be trademarked - we still publish openly so anyone can replicate our work under their own brand. Startup assistance can be a service that the Distributive Enterprise provides as a valuable, paid service.

OSE sees itself as a standards, training, and licensing body for promoting the replication of best practice, open enterprises worldwide. OSE operates as an entity which develops products and business models, and publishes them on the internet for free. OSE also provides value-added services at a fee, sells products that it develops, and trains others to replicate enterprise. We consider this a post-scarcity business model - where we see our franchisees and independent replicators as part of a greater development community that has the potential to collaborate and improve our products. OSE structures itself in a way that encourages such collaboration, so that while we accept defection, by design we tend to discourage it. The promise is simple: by collaborating, we can grow the pie for everyone, as opposed to competing so that the pie grows only for some. We believe that the former provides more value to society, and thus open source collaboration is more likely to succeed than proprietary development.

Open Brand

Open brand is an extreme of open source economics, and OSE does not have an open brand. The OSE brand has been trademarked, just like Arduino. Open brand means that anyone can use the brand without permission, which OSE does not allow unless the party involved is closely aligned with and working actively on the OSE Vision. Because OSE follows OSE Specifications and has a specific development path at OSE Roadmap, we allow the use of our name only by people who are collaborating with us in a coordinated fashion that respects our mass collaboration protocols. See Collaborative Literacy.

Details

The company which develops the Distributive Enterprise is called the Source Distributive Enterprise. For economic relevance, an important question is whether the Distributive Enteprise model can scale to the development of DEs for any good or service, and whether widespread replication of the Source DE is feasible. This is one of the questions that Open Source Ecology is experimenting with.

The revenue model for the Source Distributive Entrprise is recommended to be a mix of education, production, and social entrepreneurship. Education means teaching new entrepreneurs to replicate the original Distributive Enterprise. Production is the actual engine of prosperity, as opposed to its re-distribution (governance). Social business specifically refers to Social Business as in Muhammad Yunus's work - except with an Open Source component.

Demonstration of feasibility means that the company that develops the enteprise dogfoods the enterprise - and demonstrates the revenue potential. This operation, once documented - serves as the basis for other replications. A DE is self-sustaining when it demonstrates a sustainable economic model just from running operations of some product or service.

Feasibility starts with feasibility as an owner-operator type of enterprise: a small family business. At the point that solopreneurship is achieved, the DE also Open Sources the management and operations of a scalable organization. However, the scalability in the OSE definition is distributed scalability - meaning setting up multiple enterprises worldwide, as opposed to centralized production. The principles of efficient productivity on a small scale still apply, as does environmental regeneration via sourcing as much of the feedstock from the local area.

Because the nature of a DE is distributive - the combination of education and enterprise is a recommended enterprise case for other DEs. Open Source Ecology is a Distributive Enterprise by virtue of its core operations. We provide education, and specifically, social enterprise education - fucusing on disruptive movement entrepreneurship.

OSE is exploring how a Distributive Enterprise can become a business model that can apply to any product or service. OSE believes that acceptance of Distributive Enterprise model as a better way to do business - by virtue of Open Source - is a prerequisite for transforming the current economy.

Main Points

The main point to get across with the concept of Distributive Enterprise is that we can create a new economy by substituting existing enterprises with open source, distributive counterparts. The idea is that instead of centralized enterprises - executed through the most powerful institution in the world - the corporation - distributive enterprises that do not follow the same rules as corporations can become the dominant player. In other words, the creation of the open source economy may be seen as the replacement of corporate structure with a regenerative institution that does not have some of the controversial aspects of corporate governance. Here a definition of terms is required - what exactly is the corporation? See The Corporation.

The model for OSE growth is that distributed enterprises can provide the efficiency benefits (efficient production) of global corporations, minus the social and environmental damage. To this end, OSE is demonstrating the feasibility of Distributive Enterprises, Extreme Manufacturing (currently implemented through the Extreme Manufacturing Workshop model), and extension to the Open Source Microfactory. The open source microfactory is intended to blend the social production of Extreme Manufacturing - with an enterprise ecosystem that also includes plain production. 'Plain production' means selling products, kits, parts, and services - whereas Extreme Manufacturing falls into the Experience Economy: the experience of efficient, hands-on, and social produciton. Distributive Enterprise includes both Extreme Manufacturing and the Open Source Microfactory. Both leverage automation in their pursuit of high efficiency. Efficiency is required in order to be competitive with centralized production.

The enterprises included in Distributive Enterprise are prioritized based on market size and the potential to meet needs to foster an economy of thriving. Any common and mundane product in daily use should be prioritized: steel, paper, food, homes, cars, fuel, etc. Exotic innovation of new products is not necessary - the goal of OSE is to substitute open source products for common proprietary products.

This begs the question - is for example paper or milk or steel proprietary or evil? What's wrong with existing products? One way to look at it is that all the products we are talking about are made or sold by centralized corporations, which can be described from one point of view as pathological, in reference to their public corporate form. See The Corporation. Centralized corporate form lies under the car you drove, food you ate, fuel you burned. And the claim is that the products you use are thus fundamental to the permanent, competitive, military economy. And the money system is also founded upon the agglomeration of power. Thus, we are in a world that further concentrates power. People suffer as a result, not to mention the environment.

What is the end point of the OSE project? See discussion on the Tipping Point for a clear definition of the end state.

The proposition is simple - to end suffering based on access to physical resources. We start on 3 Fields: Housing (Seed Eco-Home and Aquaponic Greenhouse), 3D Printing, and CNC Torch Table, where all heavy machines for industry can be made largely with a CNC torch table.

Proposed Business Model

Case Studies

See our proposed Business Model for a first instance of a Distributive Enterprise - here for the specific case of manufacturing 3D printers:

edit

And specific prototyping in our first distributive enterprise experiment:

Distributive Enterprise Survey

Here is an explanation of the Distributive Enterprise Survey:

Please help Open Source Ecology by filling it out so we can vet our assumptions and enterprise model. The survey and survey responses are at http://bit.ly/1LWnmfJ. Please pass this survey on to people interested in enterprise innovation.

Discussion

First and foremost, all aspects of a Distributive Enterprise, from software to hardware to process follow Open Design. No Fake Open Source here: meaning that our software, firmware, and software platform is open source; that we document the revenue model, operations, etc.

The assumption of a DE is that significant potential exists for distributed market domination by a DE in any sector. OSE theorizes here that a DE is destined to become a dominant market force, as long as true Economic Time Binding mechanisms are developed within the field of Open Source Product Development. This is based on an assumption from game theory, which states that cooperators win - and as such, collaboratively-developed enterprise can become a dominant market force. The assumption is that cooperation allows many individuals to build enterprises, enabled by the instant communication of the internet age. When applied to large-market items (billion dollar and larger market items), which are currently monopolies or behave in a monopolistic fashion, the result of a DE is significant improvement in the distribution of wealth.

'Market domination' via DE is a misnomer, in that such 'domination' occurs by the force of many distinct actors. Thus, it is not the typical 'domination' associated with a single or small group of dominating agents. For this reason, OSE uses the term distributed market domination.

Further, theory and practice of open source software - and now hardware - indicates that the best products arise when open source development is operative. The best case of this is shown clearly with RepRap - the open source 3D printer - which now forms the basis of a billion dollar industry [1]. The promise of Distributive Enterprise is that lowering barriers to entry carries true democratizing potential, and as such, will be the dominant market force when barriers are lowered to a sufficient point. Practically speaking - if the best product of some sort is developed (under the assumption that intellectual capital is the largest enabler of economic power) - then adoption can be widespread when intellectual capital has reached the point of allowing import substitution for items that were previously possible only in the centralized production scenario.

The benefit is allowing more companies or individuals to produce better products. Customers benefit by increased access to quality goods and services. By pooling knowledge, all the businesses in the network benefit from better design and lower development costs.

(Discuss how the ecosystem generates value for the network, and more value than democratic capitalism, while not requiring protectionism)

The goal is to create an economic system that promotes not only production of wealth, but also, its distribution. Peak performance organizations - ones that are ethical and distributive - are the intended outcomes. In general, a distributive enterprise tends towards regenerative development.

Someone interested in replicating an enterprise has several options. One option is to download all knowhow, designs, and enterprise plans for free. Or, the person may be trained by the DE organization such as OSE. OSE is currently developing immersion training for social entrepreneurs.

The DE model allows free download of plans because downloading does not take any energy on the part of the entity or person who produced the plans. However, if the Developer is teaching or putting in effort, it is good for the Developer to get paid. This is an ethical model which allows replication to happen freely, while allowing the Developer to be financially sustainable. Thus, the developer may focus on further innovation - which is the essence of open source economic development.

There are several models for financial sustainability of entities or individuals who publish their intellectual property (IP) openly. Some of these financial models require a fundamental mindset of abundance, but others can be understood from the mindset of scarcity. From an abundance mindset, 'the more you give away, the more comes back to you.' If one does not believe in such abundance, a revenue model based on production or education will suffice. In the case of production, it is likely that this person's sales will be driven by the marketing of the developer's primacy in a given field. This production scenario further assumes that work or production can be outsourced readily using advanced production and communication technology available today. The education model, on the other hand, revolves around the high value of skill that can be converted to tangible earning by teaching, holding workshops, or other means.

In practice, it is typical for the developer who shares his IP to have mastery and primacy in a given field of endeavor. In such a case, that individual is in high demand for various contracts, consulting gigs, speaking engagements, and many other opportunities - and marketing is ascertained by their fame. THere tends to be a positive feedback loop - reifying the notion that 'the more you give the more comes back to you.[ Making a living is not an issue in such a mindset, and the individual with that mindset operates as a high-performing peak player.

The goal is to address the issue of artificial scarcity and Disparity of Wealth as related both to peoples' lifestyles and to global geopolitics. Another goal is to embody a Higher Purpose in the economic system and in lifestyle choices.

To test the usefulness and purpose of its results - a distributive enterprise dogfoods its own products. Participants in distributive enterprise aim to blend their lifestyle with their work - as an expression of consistency between one's values and one's actions. This leads to a connection of the economy to addressing pressing world issues. As Gandhi said, be the change you want to see in the world.

The Distributive Enterprise concept builds upon the notions of appropriate scale proposed by E.F. Schumacher, upon the concept of economic swadeshi proposed by M.K Gandhi - and it is updated by bringing it into the digital age where information can be shared readily. The Distributive Enterprise model is an expression of human-centered economics of collaborative development.

OSE's theory is that any Distributive Enterprise - once the enterprise reaches viral replicability criteria - will dominate the marketplace compared to proprietary products. Proprietary products carry inherent development, marketing, organizational overhead, and maintenance cost inefficiencies, while open source products are based on principles of optimization and collaborative efficiency. Open source products are aimed at efficient production on a small scale, or for machines, on the scale of one. As a network of many distributed producers, OSE predicts that the combined effort of many small enterprises can produce a volume of good and services that mathes or exceeds centralized, mass production. For this to happen, mechanisms of quality control, the tools for efficient small scale production, self-marketability, and optimization of the design are required. All of these are tractable issues, and are part of the viral replicability criteria.

Open Source Ecology Case

We are an incubator dedicated to training Distributive Entrepreneurs. Our intent with this is viral replication of complete economy kernels - as embodied by the GVCS. For example, the OSE Microfactory + derivative, collocated enterprises can serve as economic revitalization centers in many communities around the world. These are founded on access to technology and knowhow for re-invigorating a community's economy via relocalized production - while maintaining strict quality control standards that meet or exceed proprietary industry standards.

Such an enterprise follows OSE Specifications for Distributive Economics, and focuses on optimization as its key to economic significance and to scalability. This means that the enterprise, in its essential design, has a mechanisms for continuously optimizing design, documenting its process and results, and training producers for enterprise replication. This process is based on the Philosophy of Open. Factor e Farm is an example of a facility that performs all of these functions. We are currently developing a practical training option - where distributive entrepreneurs-in-training help in production runs in exchange for our training.

In summary, a Distributive Enterprise

  1. Is open source
  2. Distributes its business model openly
  3. Dogfoods its products

History

The most important milestone for OSE in 2016 is beginning the world's first Distributive Enterprise (DE) as a way to fund OSE's Open Source Product Development (OSPD) effort. This same DE is a route to enhancing livelihoods via OSPD in general.

To scale the effort of OSE, our main approach that we are developing since 2016 is Immersion Training. The intent is that people leave our program fully equipped to take on a lifestyle of OSPD. This is consistent with the OSE Platform.

OSE Success Metrics for DE

  • Number of DE OM downloads. Infrastructure: page counter, and number downloads.
  • Number of DEs replicated. Measured by voluntary email collection upon Operations Manual download. Specific request to fill out a Data Collection form, and put oneself on a map. Infrastructure: map of enterprises (Piwik?), data survey (number products built, sales volume).
  • Number of specific Enterprise Speciricatiins. Ie, each Enterprise has a well-defined specification as to why it classifies as an OSE Distributive Enterprise.
  • Number of certified enterprises. The benefit of certification is priority access, webinar, Publicity, and transparency of credential.
  • Total production volume
  • Total market value.

Video

Note: this was an application video for the Shuttleworth Fellowship in 2011. We got the fellowship. However, this was before I understood much about management, so the timeliness in the video are not accurate, and cannot be used to extrapolate to the current state of the project. In 2015, we are revisiting the goals. 2015 will be our first focused and explicit attempt of creating a virally-replicated enterprise around the brick press. We have learned that viral replicability criteria are rigorous and not easy to attain, but at this time, we think we understand them enough to succeed. When we say viral replication, we mean that OSE produces the necessary assets - from product design to enterprise plans - and then we (1) dogfood the enterprise as proof of concept of its viability and meaningfulness; and (2), train and assist others in replication. We believe that most of the growth of the production will come from other replicators, not necessarily from OSE. Viral replication is defined as reaching a majority market share for any specific product on a 5-year time scale - MJ, Jan. 2015

Our Scaling Strategy for Impact

A distributive enterprise focuses on replication of itself - by other independent agents - as the core of its operational strategy. By definition, this involves a documentation and training components.

The process looks like this:

  1. Open Source Ecology (OSE) (Factor e Farm is the main development facility) develop a platform for rapid development of the GVCS tools - called the Distributive Enterprise platform.
  2. OSE completes the GVCS Civilization Starter Kit (CSK - or the complete set of tools, synonymous with the GVCS) - by 2016 as a result of the Distributive Enterprise platform.
  3. These tools are evaluated for their robustness, and the CSK v1.0 is modified to produce the smallest, most robust set of modular tools for creating complete economies.
  4. As Civilization Starter Kit (CSK) v1.0 is developed, significant economic impact begins occurring in the surrounding region.
  5. As CSK v1.0 is developed, we begin to focus on Distributive Enterprise training at Factor e Farm.
  6. Many other Civilization Starter Kit producer start-ups begin - either by training at Factor e Farm or via independent collaboration.

As a movement, OSE publishes future versions of the CSK - improving the quality and scope of the tools contained in the set - to achieve an appropriate technology basis for humanity.

The practical implementation is via 5000 independent chapters - are attained by 2023.

Timeline:

Note

Our preferred business model is collaborative development of product design, whereby each participant can gain benefit from such collaboration by engaging in real production. The goal is that we truly remove material constraints from determining the well-being of humans, as production is no longer an issue of control and power.

The simple numbers are to demonstrate clearly that the power of such a distributive enterprise is easily $100k/person/year, whether in Missouri, Brooklyn, or Gabon. We are well on our way to demonstrating this in practice at Factor e Farm.

Unreasonable Economics - OSE's Distributive Enterprise Guidelines

Much of the discussion in the open source community ends at open blueprints, but not training of your own competitors based on the economic significance of those blueprints. Yet that's specifically what OSE is doing because of its ethical commitment to mutually assured abundance. OSE's role is to blend open source with enterprise development - to generate a new type of social entrepreneur - the Distributive Entrepreneur.

Approach to Collaboration

The distributive enterprise concept is a radical experiment at operating with zero competitive waste. This means:

  • Publishing early and often, especially if there is a good chance of 'being ripped off.' If someone else is capable of producing a viral, fully open source design, that can only help. This is relevant even for patent trolling - where someone uses our work to make derivatives that are patented. For one, any future derivatives must likewise be open source, so OSE would be protected, and defensive institutions such as Creative Commons, Electronic Frontiers Foundation, Peer to Peer Foundation, and Wikileaks should be engaged in defending the freedom of information.

Second, if someone takes our work and builds on it - if the improvements are shared alike, then everyone benefits.

Third, if such improvements are made, that can only help the case for Distributive Enterprise.

The question is how this plays out in practice, whether defectors spoil the game for the super-cooperators. Game theory (reference to Super-cooperators, the book) indicates that defectors do not stand to win in a game motivated by ethical concerns.

But most importantly, the question here revolves around our individual responsibility. Is each one of us willing to play their part in not contributing to a legalistic dog eats dog approach to innovation. The choice is ours: to be dominated by ethics or by greed.

Everything about this issue we have already learned in kindergarten. It's up to us how we play as adults.

Links

Resources

Comments

Links

  • 2015 attempt at an open source aquaponic greenhouse business model - Open Source Aquaponics Working Team. This didn't go anywhere as interest in open-sourcing economically significant information on part of the members was limited. Those with economically-significant practices were not willing to share. We concluded that many of the people who did not have the experience would not be likely to share it once they did produce results. Significant barriers to open sharing were identified, and the next step proposed was to move forward with a collaborative incentive challenge.
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