Thursday, May 15, 2014

Hybrid models, trying to bridge corporate models with open innovation

Disclaimer: This blog entry reflects the thoughts of the author and does not speak on behalf of the Sensorica OVN.  

On May 14th SENSORICA and the OVN model were presented (by Tibi) at POINT - Atelier de cocréation et d’innovation. We also actively participated in a workshop where attendees were given the chance to understand the value accounting system and to apply it to a fictional case (see embedded document below). Five workshops were running in parallel on different topics around open innovation. We got great feedback and we were pleased to see that other groups picked up the value accounting system concept and integrated it into their own cases, along with other ideas.  

Among the participants, we had representatives of companies and consortia, as well as academics, all eager to learn more about open innovation. The working definition of open innovation was very broad. I (Tibi) presented the more restricted concept of open source innovation

One interesting observation
People are trying to bridge open source with the corporate model by creating hybrid models. It seems to me (Tibi) that the proposed hybrid models were lacking a deep understanding of the organic nature of open communities. Almost all of them featured mechanisms of control and value capture that can compromise the sustainability of the open community, which is narrowly instrumentalized to supply innovation to the box (i.e. a classical entity, corporation or other, that has well-defined boundaries such as a fixed number of employees bounded by contractual relations, limited budgets, limited production capacity, etc.). Arduino, a working hybrid model, seems to work well. But not everyone is able to walk that fine balance between extracting value from an open community and nurture this open community. 

In the end, these people are invested in the box and their natural reaction is to preserve it, while they are trying to rip the benefits of open innovation. The natural state of open innovation is open source. This happens within communities or networks, which are open (access to participation), transparent (access to information), decentralized (allocation of resources) and horizontal (access to governance and decision making). All this is fundamentally incompatible with corporate models. 

During this event I realized that you can have 3 main attitudes with respect to open source innovation (open innovation in its pure sense).

  1. tabula rasa - Find a new self-sustainable system of production and distribution that fits on top of open source innovation. This assumes that this new mode of innovation dominates all the other ones and therefore, new modes of production will eventually self-organize around it, leading to a new type of economy. I personally bet on commons-based peer production and more precisely on the OVN model.
  2. opportunism - Find a way for existing corporations (or other classical structures or boxes) to capture the value through open source innovation. This leads to a dilution of the open source innovation concept to simply open innovation, and to the creation of hybrid models. This attitude assumes that the corporate model is still viable and that it can co opt the new modes of innovation. I personally think this is the wrong attitude. 
  3. pragmatism - Realize that open source innovation is dominating other forms of innovation, and that new modes of production will eventually structure around it (might be the OVN model). But in order to establish flows from the classical economy to the new during the transition period, we can create hybrid structures like Arduino, Adafruit and so on. 

The problem of bridging corporate models with open innovation is a false one, and can only be perceived as a problem during the transition. The new natural state of economic production is, in my opinion, Open Value Networks, because they build on open source.

See also my article Open Source Hardware meets the p2p economy

Saturday, February 22, 2014

Value cycle and value equation

Creative Commons (BY NC CA) licence granted by the author(s)

Disclaimer: This blog entry reflects the thoughts of the author and does not speak on behalf of the Sensorica community. Further, the work is built on the work of the Sensorica community on value equation. Moreover, the author has many views on the value equation and this blog represents only of the many perspectives. Lastly, the author assumes that the reader is familiar with concepts of Open-value network.
The current capitalistic economic model was designed in the industrial era to reflect the thoughts, culture, technology, knowledge and processes of that era.  In fact, our current economic model has been optimized to reflect the technological (information processing) capacity of industrial era. The era of internet, however, requires a new economic model and new efficiency mechanisms. In order to understand the notion of value equation, it is important to understand the value cycle and the efficiency mechanisms of the current economy.

Saturday, January 4, 2014

The future of Marketing

Creative Commons (BY NC CA) licence granted by the author(s)

By Yasir Siddiqui

Industrialization was concerned with the production of good as the primary source of economic growth and hence the marketing followed Goods dominant-logic (GDL). In other words, in GDL, “goods are embedded with value, produced away from the market or consumer, and sold through the manipulation of marketing-mix [(including advertising)] decisions that will maximize firm profit. Under this logic, the market and the customer are things to act upon: to segment, to target, to penetrate, to manipulate, and to control.” (Lusch et al., 2006) [i]