This two-part guest post asks the question, of what mode of production and (intellectual) property might be optimal for progress in renewable energy, undertaken for an MBA dissertation.
A relative newcomer to open collaboration, I accidentally stumbled upon an article written by Michel Bauwens while I was writing my MBA dissertation on renewable energy. I’d heard of open source, open innovation, co-opetition, patent pooling, and joint ventures, but P2P production, as explained by Michel in “The Emergence of Open Design and Open Manufacturing” was something entirely new for me. In fact, it appeared to be comparatively new to academia in general, with pioneers like Yochai Benkler helping to lay down much of the initial groundwork. Just by way of example, a Google Scholar search of “peer production” produces fewer than 2,000 results (only 30 results for “P2P production”). By contrast, a term like “open source” yields over 600,000 results.
Defining P2P Production?
So what is peer production exactly, and how was it relevant to my dissertation? Well, there are many definitions and characteristics of P2P production, but the following resonates with me the most:
“Peer production occurs when communities of volunteers create open content that is meant to be usable, shareable, and freely redistributable by everybody.”
It doesn’t take much imagination to see the close parallels between peer production and open source. In fact, the two concepts essentially describe the same phenomenon, except that the latter is more often associated with programming code and the former is a broader umbrella term that can be applied to physical goods, code, design, art, finance, intellectual property, and science.
These last three areas (finance, intellectual property, and science) were especially relevant to my work since I was trying to model a new approach to research and development in renewable energy. Prior to my primary research, I had outlined a very rudimentary framework in which one could potentially lower R&D costs and speed up innovation to help take sustainable energy technologies from the lab to the market. This framework was built upon a series of research findings gleaned from articles and academic papers.
Some of these assumptions would later be revised during the actual research, but in essence, I found that:
* Our current dependence on fossil fuels isn’t sustainable. We need to develop cleaner, replenishable technologies.
* Legislation, activism, economies of scale, and conservation can all help with this transition, but my focus was exclusively on innovation (defined as the invention, commercialization, and consumption of renewable energy solutions (RES)).
* The limited success of current renewable energy innovation is not strictly a demand-side problem. The data suggest that if and when solar, wind, and storage technologies become more affordable, consumers will adopt them in greater numbers.
* Researching and designing these solutions can be prohibitively expensive. As a result, many investors are reluctant to jump into the game due to fluctuating oil prices and market risk.
* Open innovation offers a proven model by which companies can more successfully and affordably commercialize inventions.
* Open innovation flourishes when these companies have access to a sizeable pool of new ideas that are easy to search, license, and incorporate.
* An open source community in which individuals collaboratively build on prior contributions can lead to a potentially endless stream of innovative ideas and technologies.
* When properly implemented, dual-licensing arrangements can bridge the gap between open source Inventors on one side and open innovation Entrepreneurs on the other, while generating revenues to fund future research into renewable energy solutions.
You can see a crude graphical representation below, but in essence, investors pool money to create Green R&D, a research company that explores innovation within the energy sector. Green R&D partners with P2P scientists and collaborators (Inventors) who voluntarily contribute to a growing commons of open renewable energy technology. For-profit firms (Entrepreneurs) then use this technology and add their own proprietary IP changes to create finished products for end-users (Consumers). Revenues generated by these finished products result in royalties that Entrepreneurs pay back to Green R&D. A portion of these royalties goes on to fund further research in the commons, and the rest goes back to investors as dividends.
MBA student that I was, I believed that this model was infinitely clever. It was sustainable, profitable, and solved the world’s energy crisis in one go. In the weeks and months to come, I slowly learned that I did not really understand how open economies actually worked. I didn’t even know that I didn’t know. Fortunately, I met a number of exceptionally gracious people along the way who helped me get on the right track (or closer to it at least).
After reading Michel’s piece on Open Design and Open Manufacturing, I decided to contact him out of the blue. He didn’t know me from Adam, and my initial framework was so absurdly constructed that he had little reason to want to know me. However, he responded very quickly and helped launch my research by introducing me to people he felt could offer some assistance. Within days, I was connected to the P2P Foundation, PESwiki, Arduino, Creative Commons, Science Commons, and a host of online forums and chat groups. Through one initial contact, I suddenly had a vast network of brilliant and articulate minds who were well versed in renewable energy, peer production, dual-licensing, open innovation, intellectual property, and corporate governance.
Equally important, these people were eager to offer their assistance for no other reason but to share. If I had ever needed validation of why “open” was better than “closed,” I found it in this network. For whereas I had contacted a number of for-profit renewable energy companies during earlier stages of my research, few of them bothered to respond. Those that did politely told me that they couldn’t offer any assistance.
Over the course of three months, I interacted closely with this growing network, amassing over 200 emails and/or forum posts (many of them quite long) that helped me fine-tune the above mentioned innovation model. The basic research approach I was using was Delphi-inspired, and my goal was to develop creative solutions through iterative discussions with “experts” in a broad range of disciplines. Consensus and anonymity were not really possible, since most everyone in the network already knew each other, but neither my dissertation advisor nor I felt that this would present any difficulties. In fact, piece-mealing input from such a diverse spectrum of contributors was actually quite fitting given the nature of the project. In a very abstract sense, the online forums and my inbox were a “commons” of sorts, my dissertation was an “open prototype,” and I was the “benevolent dictator” who coordinated efforts and green-lit the modular improvements that eventually went into the final product.
What I Discovered
You’ll excuse the heading. These were personal eye-openers and not revelations for all of humankind. I don’t pretend to have made huge leaps of insights that somehow eluded others. But what I discovered over the following months was that:
1. For-Profit Investors Were a Non-Starter
No big surprise there. Investors (in the traditional sense) didn’t have much place in a model built upon openness. This may one day change, or perhaps it may be workable under entirely different circumstances, but with the present framework, attracting voluntary renewable energy scientists and laypeople would be very difficult under any arrangement that generated profits for someone else. The very notion of earnings was antithetical to the entire “open” movement and, if start-up funding was necessary at all, it would have to come through some other means.
2. Start-Up Funding Might Not Be Necessary at All
I had initially started with the premise that renewable energy innovation was prohibitively expensive, given the materials, lab equipment, land requirements, permits, and regulations involved. Investment in these areas is typically measured in millions of dollars with people like T Boone Pickens and companies like VeraSun Energy leading the way if and when credit was available. However, as I began to explore P2P production further, I learned that a Manhattan Project-sized venture did not necessarily require a Manhattan Project-sized budget. The very nature of peer production allows garage scientists to segment components and self-fund modular projects. There are numerous examples in the non-programming world in which individuals, working in isolation or in tandem, manage to achieve results that large-scale companies cannot, despite the latter’s superior resources. Innocentive’s business model comes to mind.
3. Dual-licensing Would Create More Problems Than It Solved
Dual-licensing was a major feature of my original model. I had introduced it as a way to sustain continued R&D after the start-up funding had disappeared. The appeal of dual-licensing was obvious enough; collaboratively created technology would remain open to everyone who wanted to share, use, or improve it, but if anyone ever commercialized this technology, he or she had to pay royalties back to the commons to help fund future research. Voila!
Unfortunately, it wasn’t that simple. Yes, there are many examples of successful dual-licensing, including MySQL AB’s database and the Creative Commons’ CCPlus license. But, there are monitoring and enforcement challenges with dual-licensing once one branches into science, research, and physical products. How does one detect and then measure overlap if an Entrepreneur steals from the commons without paying back into the system?
More fundamental than the logistical difficulties, however, is the message that dual-licensing sends. It implies ownership, which like profits and earnings, runs counter to the open ethos. Under dual-licensing arrangements, not only must one develop mechanisms for detecting, measuring, and punishing all IP abuses, but one must also somehow attract contributors who feel comfortable handing over their work to some central entity that has a lien on the commons and all technology contained within.
Is dual-licensing doable? Absolutely. Is it preferable? Not based on the feedback I received from the P2P community. Believe me, I tried to sway the group, citing examples, holding up literature, looking for proof. Ultimately, however, I had to face facts. Dual-licensing often begets litigation, creates extra costs, chases away talent, and simply results in more problems than it solves. And because the community had already demonstrated that both start-up and continued funding could be peer-sustained, I decided to remove dual-licensing from the equation. Instead, all funds would come from within the community (as individual contributions by Inventors) and/or from without the community (as donations).
4. Intellectual Property Access
The dissertation respondents were split on their views regarding ownership and access. There were two main groups, one believing that a 100% open and restrictive license (ex: GPL) was the preferred method for sustaining the commons. The other believed that a more permissive license (ex: BSD) was a better approach. The two styles of licenses have numerous differences, but most relevant to my research was that:
100% open and restrictive licenses (i.e. GPL) typically do not attract open innovation Entrepreneurs.
Permissive licenses could chase certain P2P and OS Inventors away.
Because the goal was to take new ideas from the lab to the market, I found that permissive licenses offered more appeal. There are many who disagreed (and many who will disagree when they read this), but personally, I was persuaded by the logic of one respondent who opined that no individual company can compete with an open ecology, but no open ecology can compete with an open ecology allied with corporate firms.
The open world is able to innovate and explore with much greater freedom than for-profit entities, but for-profit-entities are typically more attuned to the needs and wants of Consumers. Through a permissive license, it is possible to bring the open community and proprietary world together, reaping the benefits of P2P invention and open innovation commercialization.
Again, the above is not a definitive answer and people are more than welcome to debate the details of permissive versus restrictive licensing. I personally was swayed through the research, and this is the approach I used moving forward.
Conclusions
The above are just a few of the major themes explored during my research, and I don’t want to bore the reader with all the tedious details. Rather, I would like to summarize the 3 different scenarios that emerged. I cannot speak to the financial or logistical viability of the following. I can say, however, that each scenario is a major improvement upon my original design.
PART TWO CONTINUED TOMORROW!