Efficiency of Integration
Economy of Scale is a concept that comes from centralist, scarcity-based economies, and is not part of OSE's core. However, Economy of Integration or Efficiency of Integration is a core OSE principle.
Instead of EoS, OSE envisions efficiencies in distributed economies. These efficiencies come from:
- Economy of Integration - instead of focused point products, or high level of task division, integrated product lines (product ecologies) and higher value per product (company builds several aspects of a product, not a small part). For example, an integrated builder can build the entire house, instead of hiring 3rd parties including 17 different trades, construction managers, surveyors, soil scientists, general contractors, developers, realtors, designers, architects, financiers, and engineers. This naturally allows the integrated operation to capture significantly more of the value of production. The formula is .1*N - where N is the number of third parties, and 0.1 refers to a typical 0.1 of the cost structure. All together, the revenue (discounting materials, which are similar in the centralized vs distributed way) from any enterprise should be 100% to 200% greater. It should be noted that such a paradigm is very difficult in current wartime economies, but is enabled in a paradigm of open collaboration. Open source design and enterprise is thus a prerequisite for improving the product quality 10-100x.
- Efficiency of Modular, Lifetime, Open Design - this refers to product ecosystems, and modular design that allows for a capacity of lifetime maintenance by the user. Part of this is open design, CAD for 3D printable parts, and an active effort on the part of the producer to provide access to fabrication machines for lifetime service. Any product that we sell includes a credit or insurance policy consisting of open blueprints, and hours of shop time, pending the User's willingness to undertake repair/service training, which is included in the price of the warranty. This is OSE's commitment to lifetime design, which is part of its integrated operation as a production education organization.
- Intersectoral Integration
Comparison to Industry Standards
The world of business is already familiar with vertical, horizontal, forward, backward, and balanced integration .
The difference between standard vertical integration and the way that OSE engages in ecological integration is:
- OSE does not integrate vertically via M&A as a general principle. Instead, it grows the integrated capacity in house via open source economic means. This is to foster replicability - there are only so many companies that can be snapped up.
- If OSE engages in horizontal integration, it helps the other entities towards open source ecology principles by diversifying the entities into more integrated operation.
- Intent of distribution, not monopoly. Instead of increasing size as in vertical integration, OSE aims to keep the scale of each operation as small as possible to promote distributed enterprise. Further, OSE does open source enterprise, which means the playing field can remain balanced.
- Rapid Learning Integration. Integration in the OSE way is more comprehensive. By its focus on Rapid Learning and Rapid Learning Infrastructures, OSE aims to include as many formerly outsourced capacities as possible, always aiming to take this deep level of integration as an opportunity to transform the outsourced, mundane tasks into more efficient, open source forms.
- Total Integration. Integration in the OSE is total, up to the point of collapsing the distinction between public and private, personal and political, and personal vs work life.