a roadmap to socially-responsible, sustainable economic and technological growth
Ingredients of advance for any social and economic system
- Humankind has progressed because of its ability to collaboratively solve problems and share risks
- We need modern rather than traditional and open instead of closed forms of trust
- Vital to encourage institutional and entrepreneurial innovation and joint risk-taking
- Self-organisation and reciprocal co-operation in pursuit of innovation and change in an open social system
- Know how to:
- Design institutions that foster social and economic growth and innovation
- Satisfy community, individual and, market needs
- Turn scientific invention and discovery and technological change into both useful products and services
- Dilemma: Who should own knowledge - Ownership rights?
- Ie. Human Genome Project - Who do you trust?
- Organisation(s) or the government(s)?
Financial Markets and Trade
- Debate: Globally interconnected (fragile) and deregulated trade and investment or state-regulated, defensive nationalism and protectionism?
- From shareholders to stakeholders
- From financial engineering and creative accounting to financial and management accountability towards the surrounding community and environment
- Ie. Enron & Arthur Andersen
- Ie. Monsanto and GM food
What about Technological Innovation?
- Market-pull or Technology-push?
- Disruptive or sustaining innovation?
- Europe vs. America?
- Awe at technological change commits one to deliver constant change to awe at...
- Helpful or dynamic and confusing?
- Constant demand for the newer version of CD players and MP3s or Napster as environment's savior?
Organisations and Determinants of Organisational Structure
Why Organisations exist?
- Organisations work more efficiently than a group of independent contractors?
- The issue of co-ordination and trust
- Closed and centralised mindset?
- Organisations are repositories and distributors of commercially valuable know-how
- Organisational memory: routines and procedures
- Organisation aids knowledge
Determinants of Organisational Structure
- Industrial-organisational structure dependent upon market characteristics as defined by
- communication, transaction and
- transportation costs, and
- production technology and social needs
- Ie. from craft production and merchants to mass markets, mass production and, economies of scale and scope
- Ie. "Argaunauts": project centric organisations that disbanded once the "mission" had come to an end
- Contemporary analogy: Hollywood and Silicon Valley
Introduction to Organisations
- Hierarchy is built on three assumptions:
- The environment is stable
- The processes are known
- The output is given
- Do they still hold true?
- Army and Church were the first multi-layered organisations
- Of course hierarchic and centrally planned
- Why? Knowledge should not flow out of the system boundaries
- He realised that the crucial asset of business "knowledge" was well guarded in the heads of workers and strived to empower managers to understand the production process
- Ironically, the man who realised the power of communicating knowledge and had tried to do exactly that, had formulated a mindset that regarded the organisation as a machine and the workers as cogs
- Dual lesson:
- an organisation needs rules
- Hierarchy results in communication breakdown
- The former got well accepted but the latter goes still unknown
Breakdown in Communication
Employee E needs to contact employee O but cannot go to O directly due to hierarchic (bureaucratic) impediments. So by following the line of authority, the ladder must be climbed from E to A and then descend to O, stopping at each rung and, then back all the way again
- He maintained that bureaucracy is the most efficient organisational design as long as the economic and social environment do not change radically
- This was in year 1924. Have things changed since then?
- Fordism and the assembly line
- "Any colour they want as long as it is black"
- Workers regarded as cogs, incapable to think, improvise, and stop the production process
- Outcome: US automobile industry seriously damaged by Japanese competition (and management practices)
Japanese management at Toyota
- Close relationships with suppliers (Just-In-Time) to minimise costs and boost innovation
- Personnel and ideas move freely within the subcontracting network and the network is built on trust
- Employee empowerment (Job-rotation and self-managing teams that were encouraged to improve the production process)
- The production model seeks to ensure product quality and satisfy the customers' needs
Why Libre Software has anything got to do with organisations and management styles?
LS is more than software and the LS development model is more than another way of developing software. In stark contrast to what most people think, libre software development is neither an anarchy nor it is a miracle that its model is successful and sustainable
Why should we be concerned with the paradigm shift demonstrated by organisation of LS projects?
- Libre Software development presents a fundamentally different perspective on co-ordination and organisation of production activity
- The software industry is an invaluable source to identify emerging changes and trends
What is Libre Software?
- Use the software as you wish, for whatever you wish
- Be able to improve it, fix its bugs, augment its functionality and, studying its operation
- Redistribute it to other users who can use it according to their own needs. This can be done for free or at a price, not fixed beforehand
- Condition: Access to source code
Logic of Libre Software
- Liberty of Information
- Software is not a manufacturing industry
- "Tragedy of the commons" is irrelevant - diminishing returns are not applicable because software is a network product
- New business models and sources of revenue enabled
- ie. Give away the razors, sell razor blades
Software Industry: Development Models - The Cathedral & The Bazaar
- Closed system
- Nearly all product development at one site
- Central planning - co-ordination by hierarchy
- Quadratic complexity
- Relatively homogeneous actors
- Proprietary knowledge (IPRs)
- Limited parallelism and limited scope for self - organisation
- Users producers separated
- Open evolutionary system
- Emergent co-ordination
- Self organisation around ethical rules
- Massive parallelism
- Highly diverse actors
- Evolutionary management
- Quadratic complexity doesn't hold
- High modularity
- Public ownership (copyleft)
- Users producers overlap
- Release early and often
- Stimulate the community
- Reward developers (credit attribution)
- Self selection of tasks
- Efficient allocation of resources
- (Programmers' time and work)
- Work done of superb quality
- (if work is not of quality, another hacker will fill the gap)
- Management accountability
- Transparent decision making
- (mailing list - virtual roof)
- Trusted lieutenants
- Natural selection by the community
- Community level management?
- Enables parallel development
- And decreases the need for co-ordination
- Peer review
- Given enough eyeballs, all bugs are shallow
- Quality - security
Parallel release structure
- Exploration vs. exploitation trade-off defied
- Whenever resources are allocated to the search for future innovation, resources dedicated to the exploitation of existing capabilities are sacrificed and vice versa
- Interdependent R&D process
- Efficiency and innovation (both disruptive and sustaining innovation ensured)
- No forking
- Treating your users as co-developers is your least hassle route to rapid code improvement and effective debugging
- Unprecedented growth
- Potential parties to a shared infrastructure can rationally trust it more if they can see how it works all the way down, and will prefer an infrastructure in which all parties have symmetrical rights
Advantages of Libre Software
Availability of source code and the right to modify it
- Enables unlimited tuning and improvement
- Port code to new hardware
- Adapt to changing conditions
- Reach a detailed understanding of how the system works
The right to use the software in any way...
Combined with redistribution rights, ensures (if the software is useful) a large population of developers-users, which helps to build up a market for support and customisation which can only attract more developers...
There is no single entity on which the future of the software depends on
- A company chooses not to upgrade a software product for an old platform
- It went bankrupt...
Free it to save it
- To make sure it remains supported in the future
- Logical strategy for software developed for in-house purposes
No black boxes are possible
- By having the source code, it is possible to perform a thorough inspection and verify the correctness...
- Critical to the advancement, diffusion and transfer of technical knowledge especially to developing countries
No per copy fees can be asked for modified versions
- Because working knowledge can be gathered at minimal cost, anyone can use the current code base to start new projects
- Internet software systems
- People were able to adopt and integrate them immediately
- Also ensures fast diffusion - adoption
Fewer conflicting priorities due to bureaucratic constraints
- Under centralised mode of software development, progress is determined by economic and bureaucratic restraints
- Ie. the marketing department may have decided that a specific feature is vital to their ad campaign but that no actual users care about
New democratic forum
The collective desires of the community determine the direction of progress without obliging anyone
Total Cost of Ownership reduced
- TCO: 6 stages
- Information gathering
- Acquisition or creation
- Common use and maintenance
- Abandonment and transition to new tech.
- Clear advantages in acquisition, maintenance, transition
Many more are realised...
- Enables the creation of new markets and business opportunities
- Developing countries enabled to adopt advanced technologies at a low cost and leapfrog into the Information Age
- Customisation to suit local needs and cultures
- ie. KDE is translated into 42 languages
New Business Models
Loss leader/market entry
- ie. Mozilla project
- Build brand loyalty
- Enlist the effort of developers
- Sell peripheral related products and services
- Companies selling hardware can make LS a value-added part of their offering and differentiate with brand and functionality
- ie. VA Systems
- ie. O'Reilly and Associates
- Service Enabler
- ie. Quake and Doom are popular games with open APIs that empower customers to create their own versions
- Provide consulting and searching services related to the selection of LS applications for specific needs
- ie. Although the code is open, only Netscape/AOL can call future versions Communicator
- ie. Cygnus's trademarking of eCos and sourceware name
- ie. Red Hat's compatibility certification program
- Provide the context for LS projects to take advantage of the LS phenomenon
- ie. VA Linux's stewardship of Linux.com site
- ie. O'Reilly and HP's sponsorship of SourceXchange
- ie. O'Reilly support for Perl community with community web sites
- Why: give and take goodwill (encourage reciprocal relationships) and promote related products and services
When, why and how-to "open code" a project
When LS is a rational organisational design
- To avoid market fragmentation - vendors offering incompatible versions of the same product
- To dethrone a product or vendor lock-in
- To manage the industry in a way that all participants will be well equipped to seize benefits - keep the market competitive
- When the users' contribution is sought (direct interaction between users and implementers)
- Bring together a global community - industry on equal rights to discourage political maneuvering
- When the project has over reaching consequences that demands for intra-industry co-operation and/or massive knowledge
- Customer empowerment
- Efficient collaboration work techniques
- Internet enabled communication
- LS leverages the Internet to access a larger community of the best and brightest - increase development cycle times whilst reducing interaction costs
- Unity of vision and continuous innovation
- Inherent culture of innovation
- Knowledge: creation and exploitation
Re - inventing management
- From hierarchical management by objectives to collaborative management by community consensus
- From corporate governance and central planning to community governance and networking of knowledge and human resources
The glue that holds the network together
- Healthy competition within and between LS projects
- Parallel development
- Transparent decision making
- From management to leadership
- Emergent self-organisation around ethical rules (community ethics)
- ie. Forking must be justified
- ie. Distributing changes without the leaders' approval is frowned upon
Old economy paradigm
- Creative companies sponsor creative projects and attract creative people
- Creative companies beget creative industries and careers
New economy paradigm
- Creative people enact creative projects
- Creative projects mobilise creative communities
- Creative projects generate creative companies, industries and careers
Starting a LS project - prerequisites for growth
- Aggregation points (virtual roof)
- community building/awareness
- Scratch an itch: market pull
- Not anything boring
- Modular and simple
- License ensures collaboration within and between LS projects
- Trust - meritocracy - transparency
- Delegate everything you can
- Exploit the power of parallel situations
- Release early and often
Extending the Boundaries
Implementing Libre Software development methods and principles to other domains of economic and social activity
Applicability of LS to other industries
- Education (decentralised web-enabled learning environment)
- Music industry (online content production and Internet distribution)
- Automobile industry (collaborative R&D and "zero-emission" vehicles)
- Banking (Community Development Banking, ie. ShoreBank in Chicago)
- State Organisation (ie. Free State Project)
- Human Rights
- Telecoms (pervasive and wireless computing - P2P)
- Pharmaceuticals (collaborative R&D and ownership rights ie. Human Genome Project and Open Source Bioinformatics)
- News Sources: OS Intelligence, weblogs and online self-organising social systems (ie. Slashdot, NoLogo)
- TV content (ie. NerdTV)
Education becomes life-long Learning
- From MIT OpenCourseWare Pilot...to decentralised (P2P?) & modular Web-based learning environment
- Open Code the base technology (platform) - infrastructural layer and close code the (G)UI or/and the end-user applications that sit on top of it
- Condition: Well-defined interfaces between the OC platform and the proprietary end-user part
Deconstruction of the Music Value Chain
- Most of the money consumers pay for CDs covers costs not directly associated with the production of the master pieces. Two thirds of the delivered cost of a CD comes from activities directly threatened by digital distribution over the Internet
- Until recently, record companies had to build factories where CDs are pressed, depend on physical distribution for their products and promoted their "merchandise" over traditional media that face a trade-off in reach or richness, unlike the Internet
- Whereas music conveyed over the Net renders these assets - activities obsolete. Money previously wasted can be saved since the reduction in CDs produced, apart from reducing manufacturing costs, results in fewer CD retailers, with their overhead, marketing and inventory costs
- In this way, 60% of the delivered cost of today's CD can be saved, instead of being wasted on manufacturing, retailing and marketing that so far has failed to deliver but it was the sole way to generate consumer awareness of new acts
- The future: Subscription fee based model
- whatever, whenever, wherever
- "Jukebox in the sky" - "eat all you can" model
- Economic Logic: Today's average consumer spends $70 on CDs. If consumers instead paid a subscription fee, say $10 a month, for unlimited access to music and therefore spend twice as much a year, the global industry revenues could well double
Automobile Industry - "The Open Source Development Model"
In the automobile industry, each company does its own R&D. Every innovation is patented before it ever reaches the public, which may take five years for the improvements to be incorporated in an actual car after they were originally developed. If the automobile industry started taking on an open source development model with sharing across companies and countries, the cost and prices would eventually drop, innovation and development would speed up and exceptional features would be shared across many makers and models. The auto industry could finally come up with the safe, clean energy car. The problem is that the car companies do not seem likely to support something that they perceive could put them out of business, even though this would not happen since nothing stops them from developing on their own and incorporating developments from their "open design shop" into their own products...
By Dan Barber accessible at http://mojolin.com/articles/open_source_model.php?session=vTVi4tc1GfTb
"Zero Emission" Cars
- Californian Iniative: 10% of cars offered for sale would be zero-emission vehicles by 2003
- 50:50 vehicles: Honda and Chevrolet have small cars with hybrid, battery and petrol engines, which have ranges of 700 miles
- Problem and Opportunity: Innovation is/won't be limited in scope and scale
- "We will solve our environmental problems when industry has innovated solutions which consumers have an incentive to buy"
Financing Social Capital Shorebank (in Chicago)
- Community Development Banking
We viewed a disinvested community as a failing market...revitalising such a community requires recognition that disinvestment is a market phenomenon and can only be reversed by reinvigorating local markets. Permanent, self-sustaining community renewal results from creating an environment in which private investors inside and outside the community are confident that their investments will be rewarded as healthy community dynamics are restored
by Ron Grzywinski, founder of Shorebank
The Free State Project
The Free State Project is a plan in which 20,000 or more liberty-oriented people will move to a single state of the U.S. to secure there a free society. We will accomplish this by first reforming state law, opting out of federal mandates, and finally negotiating directly with the federal government for appropriate political autonomy. We will be a community of freedom-loving individuals and families, and create a shining example of liberty for the rest of the nation and the world
Human Rights & Free Software
- Accountability and verification
- (also goes for public and governmental functions,
- ie. software used for elections)
- Conformance to scientific requirements
- (ie. systems have to stay running for human rights workers taking notes in mountains and rain forests, far from any source of technical support)
- Fitness for users (inequality and illcontrol by governments and copyright-holders/corporations)
- http://www.oreillynet.com/pub/a/network/2002/10/11/platform.html by Andy Oram
The Future of Telecoms
- Pervasive/ubiquitous computing
- "any information service to any device over any network"
- P2P is clearly the future...
- First emerging example: MMS
- From SMS (text-only messaging) to MMS (multimedia messaging services)
- First step is photo messaging: people demonstrably like to exchange photos - p2p drives growth
Global p2p messaging revenue (US$m)
- Can new generation devices and MMS revitalise the mobile industry?
For More Detailed Information on Pervasive Computing...
Human Genome Project
There is no MS Word equivalent...it's the scientific process...
In biological research it's not the software that's important -- it's the data. Since the actual data matters much more than the tools used to process it, there's a big benefit in sharing software. A researcher can get great advantage by getting access to other datasets, which can be achieved by sharing the software tools. Bioinformatics companies are never going to make money by selling their software. They're going to make money by making drugs or other products that come out of their research.
Molecular biology/medicine will be most advanced by the creation of a common infrastructure -- and this is something best done with open source tools
Open Source Intelligence Online Self-Organizing Social Systems
- OSOSS are facilitated by a particular type of software infrastructure, one that is generally web-based and characterised by management decentralisation, such as the "weblog"
- The day-to-day tasks of creating new content, adding commentary, evaluating the quality of submitted material, providing user support and answering questions, and other tasks are distributed across the entire community via the weblog infrastructure
NerdTV by Robert X. Cringely
NerdTV will still be downloaded, not streamed, and a single technical standard will be used for all viewers no matter what kind of Internet connection they have or what operating system they are running. The show will appear each week in a dizzying total of five versions. Of the three video versions, one will be for nerds, one for suits, and the third version will be all the raw footage so you can edit your own version and make fun of me at parties. There will be two audio-only versions -- one MP3 and one Ogg Vorbis
Viewers will be free to share and redistribute the shows under the General Public License, which is something no other TV network in the world is doing. So there!
Variability, Customisation and Responsiveness by David Stark
For goods, technologies, and services that are 'patchy' such as software, there is no reason to implement bureaucratic organisational designs since the flexibility-responsiveness and customisation that end users ask for (in other words the nature of technological change demonstrated by the Internet) requires flexible models of economic organisation
The key word is variabiltiy
Variability produces organisational flux. When the challenges of responsiveness are too great for institutional routinization, organisations' bureaucratic structures are destabilised. Heterarchies-flatter organisational structures with distributed accountability, decentralised decision making and multiple, often competing goals emerge... From product design to organisational design, "permanently beta" settings have this potential to be participatory...
Ie. slashdot and plastic.com as "permanently beta" websites that 'recycle the web in real-time'