Continued from Part 1 of My Brush with P2P Production in Renewable Energy Research
Scenario 1
Under this model, there is no external entity, Green R&D. Inventors voluntarily come together and peer-fund explorative research, design, and development within the renewable energy sector. They place their findings in an online content management system that doubles as a prior art database and discussion forum. Through permissive licenses that keep core R&D within the commons while allowing proprietary improvements on the fringes, Entrepreneurs use the open and accessible prior art database to develop renewable energy solutions that they then take to Consumers.
There exists no outside funding, limiting the universe of stakeholders to Inventors, Entrepreneurs, and Consumers. In addition, there exists no global corporate mandate governing the actions of any stakeholder, thus, granting each individual the freedom to exit the system or transfer to a different stakeholder category. For example, an Inventor may become an Entrepreneur if he or she wishes to commercialize any aspect of intellectual property created wholly or partially within the community. Alternatively, an Entrepreneur can become an Inventor by freely donating intellectual property to the commons if he or she believes that doing so might benefit future research, increase standardization, or generate good will. This system is graphically represented below.
Scenario 2
Under this model, again, there is no external entity, Green R&D. All steps mirror those in Scenario 1, except that this arrangement permits the use of external funds. Either from the very beginning or after the successful completion of a viable prototype, this open community of Inventors begins receiving complementary funds from a range of interested Donors (with a capital “D”). Absent explicit instructions from the Donor, all incoming funds are automatically and proportionally allocated to individual projects based on a point system that indicates the perceived value of said projects. One could assign this point system based on the number of Inventors, the sum total of their experience, and the level of activity within any given project. For example, if there were four projects with points 8, 6, 4, and 2 respectively, then each new dollar of external financing would be split up $0.40, $0.30, $0.20, and $0.10 automatically.
The universe of stakeholders expands to include one additional group, Donors. Again, all stakeholders maintain their autonomy, freely exiting, entering, or moving to different stakeholder categories within the system. Donors may withhold funding at any time and they can specify to which project they would like their money to go. However, they cannot dictate terms to any other stakeholder group, nor vice versa. This system is represented below.
Scenario 3
Under this model, Green R&D exists as a fellow peer to other Inventors, funding its own activities. It conducts research, design, and development as a discrete entity using its own resources (labs, scientists, etc). However, Green R&D also receives external funding from Donors who want to pool their money into one central location. This arrangement does not preclude donations to other Inventors, but as a conspicuous focal point within the system, Green R&D receives a disproportionate amount of exposure and funding. These monies are governed by a hybrid board of Inventors and Donors who are either democratically appointed or assigned leadership positions based on the size of their monetary donations or the level of their technical contributions. In all other respects, this scenario mirrors Scenario 2.
The universe of stakeholders parallels the constellation discussed in Scenario 2. Green R&D is simply an additional P2P Inventor that makes its own decisions about which projects to pursue and how best to use internally and externally generated funds. Donors may indicate their preferences on how money is allocated by attaching explicit instructions to each financial contribution, but as a not-for-profit entity, Green R&D does not have a fiduciary duty to generate earnings or return dividends. Donors may withhold funding at any time, but they cannot dictate terms to Green R&D or its hybrid board. This system is modeled below.
Which System to Choose?
I do not make any overarching recommendations as to which of the above scenarios offers the greatest potential for achieving the stated goal of faster and more affordable renewable energy innovation. Each system, in its own way, allows Inventors, Entrepreneurs, and Consumers to engage with one another freely under a range of given conditions. As many pointed out, various components of the above scenarios have the potential to repel or attract individual members within different stakeholding groups, especially P2P Inventors. In order to rank and prioritize the above systems, however, one would have to put all three into practice and measure not only the number of contributors and volume of products, but also, the quality of said products and their impact on the market and the environment.
That being said, simple observations allow one to list some of the benefits that the second two scenarios have over the first. As one respondent illustrated, Inventors would likely begin receiving external donations after the creation and launch of enough successful prototypes, whether those donations were actively solicited or not. So while Scenario 1 resolves the problem of start-up and continued funding, it does not take into account an eventual shift towards hybrid funding (internal + external). Scenarios 2 and 3 are already equipped to handle such a transition if and when it does arrive.
Furthermore, one can contrast Scenario 2 with Scenario 3, highlighting how the latter offers a superior method for achieving economies of scale. If Green R&D is the sole recipient of external funding, it can potentially purchase materials, land, and equipment at better prices than its smaller peer counterparts. Admittedly, smaller Inventors might be able to match Green R&D’s spending through coordinated efforts, but as one respondent indicated, self-governing communities do not lend themselves to such focused, centralized cooperation.
Ultimately, the stakeholders would have to decide whether they wanted breadth or depth in the research. The centralized funding in Scenario 3 allows Green R&D to pursue a limited number of projects with greater resources. The decentralized funding in Scenario 2 allows the P2P Inventor community to explore a wider range of projects, but probably with fewer resources dedicated to each. Which scenario to choose is simply a matter of personal preferences.
Final Thoughts
I started this paper as a casual and somewhat indifferent admirer of open source and P2P production. Mozilla and Wikipedia are great, but show me the money. I had never bought an open design radio, and lacking advanced programming skills, I had never really dabbled in open source software development. I approached P2P production strictly for its instrumental value in speeding exploration into renewable energy.
After interacting with such incredibly passionate members of the open source and P2P communities, my opinion has evolved considerably. While still a recent business school grad at heart, I have become more attuned to the ethical and moral implications of openness. Many have said it before, but information truly longs to be free. Traditional R&D silos, while often profitable, necessarily restrict progress in the long run. The building blocks necessary to overcome solar panel inefficiency, wind unpredictability, energy storage, and countless other limitations may already exist in remote labs around the world. Unfortunately, patent fences and insufficient cooperation prevent us from connecting the dots and overcoming challenges that affect all of humanity. And believe me, these dots want to be connected.
Does my growing appreciation of openness go far enough to qualify me as a true standard bearer of P2P production? Maybe, maybe not. There are some (especially from my MBA program) who will only see idealism and lofty rhetoric in my words. Others might feel that I’m just a fence-straddling latecomer who still doesn’t really “get it.” Either way, I still have much to learn. This paper was a useful starting point, and as I launch my job search into solar energy, I hope to expand my understanding of P2P production in the years to come. In the meantime, I would like to express my gratitude to those who have carried me this far.
-Austin Brentley