The distributive enterprise as a model for the open hardware economy

Excerpted from Marcin Jakubowski:

How to create business models that tend to distribute wealth equitably?

Our method is open source – but in itself, Open Source is not a business model. It is a development methodology. OSE likes open source because it promotes collaboration, cross-fertilization, and innovation. This also means that a workable business model still has to be developed on top of the open source development method for this process to be viable. Standard business models of monopoly capitalism – which have been designed for secrecy – may not apply. A casual observer may conclude that ‘open source business models do not work because standard models of monopoly capitalism cannot be applied readily’. This view is short sighted – because innovative business models can be created to make open source development work. As a business model solution – OSE is proposing the Distributive Enterprise.

In a nutshell, the Distributive Enterprise is a model where we develop enterprises, and give them away for free. We mean shipping real product – where robust business models are created. Ethically and practically, we believe in this and we are developing this model.

Think about it this way: it takes years of development to create a solid and sustainable enterprise. Many companies toil for years to develop their product, and do a lot of reinventing the wheel while they are at it. By the nature of this process, the result can not be optimal – due to the cost of competitive waste. Once a product ships, companies set up castles of protectionism around themselves, from patents to legal and tax ‘structuring’, up to some really foul play. Think of all the companies that make the same, common product. Startup, development, and innovation costs could be reduced significantly if open collaboration existed between all the companies: from product design to enterprise aspects, from sourcing to business model generation and marketing. The intended result of lowered start-up barriers is that an enterprise could break through start-up mode readily – and begin innovating. By innovating, we mean getting a head start on transitioning from business as usual to a regenerative enterprise – a transformative endeavor on a whole new playing field than plain survival. With such collaboration, everybody wins – people and the planet – and products become better from continuous improvement.

What would it look like if OSE could produce turnkey blueprints that can be downloaded for free and someone could start an enterprise from scratch? If both the product design and enterprise design were worked out in the bluerints, a veritable Construction Set could be created for enterprise creation.”

Check the original extensive article to see how they intend to experiment with this with their CEB Press machine.

OSE then offers some conclusions:

“Why is DE so important? Therein we have a practical chance to transition enterprise to regenerative enterprise and systems solutions. Think solving wicked problems, similar to Singularity University and Exponential Organizations – but add open source and remove the technofix.

From one perspective, solving wealth disparity is low-hanging fruit. There is enough for all of us: from first principles – the sun shines 10,000 times more power to the surface of the earth than the entire global economy uses today. The reality is that currently, the wealth of our distributed energy source is not distributed well.

OSE’s notion of a regenerative economy is the open source economy. We define the OS economy as an efficient economy, where distribution of wealth also happens – so everyone is happy. OSE’s current practical approach to the regenerative economy is the Global Village Construction Set (GVCS). As we are developing the GVCS, we are innovating on open collaborative development protocols so that any product can be developed quickly. Over the last few years, we have discovered indeed how much of a BHAG the GVCS really is, and what it really takes to get to 100%. We are perhaps 1/4 of the way there as of 2014.

At present, we believe that a 2 week design cycle for a complex machine/product is possible – compressing the effort of about 5 years of human time to 2 weeks via swarming. We imagine something like a Red Bull Creation – but larger, more focused, replicable, self-funding, and with a carefully designed collaboration architecture. For comparison, the industry standard time to design a house is 4 weeks. For a car, the time is 2 years.

For perspective, the current market share of open source hardware is only approximately one millionth of the total economy . This means there is a long way to go for open hardware, because 85 << 3.5 billion. Let’s rewind. Global wealth inequality is a pressing challenge. The World Economic Forum deemed wealth disparity the single most pressing risk to the world in 2014. Open source economic development – and in particular – Distributive Enterprise – can yield drastic improvements on this issue. Is anyone paying attention to this opportunity? There are 2 components to the Distributive Enterprise. The first is its substance – which we call Extreme Enterprise (XE). An extreme enterprise is an enterprise that ships product – and specifically – an optimized, low cost, open source product that is as good as it gets. The optimization includes zero competitive waste – no patents or protectionism of any sort. All documentation assets are available. From design to BOM to production engineering plan, and even marketing materials. An Extreme Enterpise’s efficiency includes social aspects of the Genuine Progress Indicator: by design, it tends to distribute wealth to the populace rather than to concentrate it.

The second component of the Distributive Enterprise is training for startup. Training is desirable so that any entrepreneur who would like to start the enterprise could get the required crash course – an accelerator program focused on distributive good. The entrepreneur is free to pursue the enterprise option either on their own – because all product and enterprise documentation is available – or via an accelerator program that OSE is creating – to minimize barriers to entry.

Who has the incentive to develop all the necessary assets as above? An ethical player like OSE. Is there financial sustainability to such a model? Absolutely. We test the enterprise model to determine if it work. While dogfooding the enterprise as such – we run this enterprise, learn the ropes, and end up with a working business model. Then we add training. As we believe that information wants to be free, we put all of our training materials online. If you want to take immersion crash training with us, we charge you for that. To minimize the barriers for our social entrepreneurs-in-traing – or OSE Fellows – we are evaluating setting ourselves up as a community college such that tuition can be covered via external support – or we can look for other ways to underwrite our Fellows while making the program self-sustaining.

The Distributive Enterprise is a combination of the Extreme Enterprise and training as above. The DE is a business that develops the Extreme Enterprise – up to dogfooding its enterprise model – and then teaches the enterprise to others. As such, the DE is the polar opposite of the monopoly: its revenue model is based on creating competition for itself. The DE model can train 2 types of entrepreneurs: the entrepreneurs who wants to produce as an XE, or someone who wants to dive into the deep end and start another DE. The latter becomes a teacher of other entrepreneurs. The former is solely a producer.

The DE concept can be applied most effectively to common products that are in wide demand, and where current demand is met by some centralized, non-local operation. The DE can bump out the invading colonial, by virtue of community support and based on raw econommic performance afforded by lean, open source XE. There is a huge case for such regenerative economic activity, because relocalized production brings wealth back to communities. Many startups today focus on zero sum games, turking, and other activities that do not generate real tangible value or real transformative potential. As such, DE brings a meaningful option.

The DE can be applied readily to common products with a huge market as opposed to the long tail – products related to the basic infrastructures of survival that are multibillion or near trillion dollar markets: food (food products, agriculture equipment), construction (homes, work places), manufacturing (distributed producution tools, automation), energy (solar, biomass, hydrogen, etc.), transportation (cars). Complex products such as computers or semiconductor fabrication (digital age technology) are not considered here for simplicity, though there is no a priori reason why such enterprises cannot be considered.

There’s a radically viral intent in this concept. Viral such that perhaps we can change the 85 = 3.5 billion.”

2 Comments The distributive enterprise as a model for the open hardware economy

  1. Mike Jones

    If you don’t include use of Esperanto in your analysis, you’re spitting into the wind.

    If everyone would learn Esperanto, it would be an immense economic stimulus and permanent boost for the world economy, when companies can be formed with total liquidity, no longer stopped by the language barrier, or bigoted viewpoints. Esperanto is the original rising tide that lifts all boats. As successful investors will tell you, diversification is king. But nothing supports diversity / diversification like Esperanto does. Esperanto’s star is on the rise.

  2. Patrick S

    Interesting.

    Reading the goals/strategy reminded me a bit of Mondragon as a co-op conglomerate, that has specialised parts of the co-op for financing and training new co-operative initiatives – and seems to have a good record of launching new businesses as a result (better than regular start-ups).

Leave A Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.