The Open Source Business?

Ted wonders: "Being an advocate of the open source software movement for some time, I'm wondering how and if the principles of open source software could be applied to a new type of open source business. In a world where people slave away for the sole profit of a board of directors and merciless shareholders, is there room for a new type of organization that throws away the archaic and monolithic organizational structure of today and from there form a company that has its direction dictated by all of the members that run it. An organization where everyone has an equal say in what goes on. There isn't any limit on how many people can be involved (the more the better, in fact) as long as they can be useful. Could this be the way of the future?"

Comments

Good luck with that

[nelsonal]

Open source works mostly because the distribution costs are very low relative to the initial costs of creating software. Very few other industries work that way (power generation and distribution are one).

Leadership by committee? Doubtful.

[XorNand]

One of my network support customers is a tiny township of a few square miles, it's about the smallest form of government in modern-day America. Almost every single decision has to be approved by their board of trustees of about six-seven people. It takes absolutely *forever* to get anything done and is frustrating beyond belief. Yes, it's even worse than corporate America. I can't possibly imagine to run even a small company like that and still remain competitive.

Re:Leadership by committee? Doubtful.

[shmlco]

"...where (presumably) every employee is intelligent, educated about the company, and has a personal and very material stake in the company."

Anyone remember the story of the kids who found a cat and when asked the sex, immediately voted that he was male and his name was Johnny? Two weeks later "Johnny" had kittens.

Unfortunately, too many people think they have a equal and valid opinion on any subject. Even when there are in fact educated in a given field, they think that makes them an "expert" in other, non-related fields. Do I really want, for example, a technology company in which the janitors have an equal vote with the engineers? No disrespect, but in all likelyhood if the janitors were intelligent and educated... they wouldn't be janitors.

Look at all of the companies where the workers voted themselves higher and higher wages and more benefits... and then went bankrupt or out of business because they were no longer competitive. Heck, most people can't even run a lemonade stand successfully, much less a large organization.

Now, I do think companies, CEOs, and boards need a higher level of accountability. But IMHO, counting runny noses is probably one of the worst ways possible to run a company. Heck, more than six people can't even decide where to have lunch.

Re:Leadership by committee? Doubtful.

[ignavus]

(begin sarcasm)
Yeah, I mean America would never work if everyone had a vote for the legislature and for the national president.

Only the rich people, who own a share of the country, can really run the country. And the richest should get even more votes than the others.
(end sarcasm)

Um ... how is it that huge nations (and India is much bigger than the US) can be run democratically, but a firm with only a fraction of the size of the nation's population on its workforce could not run democratically?

Why not just change the corporate law: instead of stockholders voting for the board of directors, let the workforce vote for the board of directors, one person one vote?

At the moment, democratic governments are faced with a plethora of non-democratic institutions (business corporations) with enormous powers. The corporations are governed the same way that America (and England, etc) were governed long ago: those with property had a vote (and those with the most property, the aristocrats, were represented in person in the English Parliament); those without property had no vote. This system is called plutocracy - rule by the wealthy. We got rid of it in politics ... but now it is time to get rid of it in the economic world. America campaigned against decisions (like taxation) being made without the Americans being represented in the decision-making body. Why should employees - the owners of human capital - take second place to those who only invest financial capital in the business? The "human capitalist" (the employee) has more at stake in the business - usually their whole human capital is invested in the one business - it is hard to work in more than two or three businesses at the same time. But the financial capitalist (stockholder) can split their money capital up among hundreds of companies at the same time, to hedge against something going wrong in one company.

Business requires money and human effort. How come those who contribute the money control the business; and those who contribute the effort get no say? Does that sound fair or democratic? Isn't it putting money above people? Isn't it contrary to the whole basis of a democratic society?

Re:Leadership by committee? Doubtful.

[bhmit1]

Business requires money and human effort. How come those who contribute the money control the business; and those who contribute the effort get no say? Does that sound fair or democratic? Isn't it putting money above people? Isn't it contrary to the whole basis of a democratic society?

If you contribute human effort without getting paid, you should be given a share of the company or a partnership. Otherwise, I think it's considered slavery or really really bad negotiating skills. Or were you hoping that you would get rewarded when the business does well and still get paid when it doesn't?

People who put money into a business are investors that know there's a risk they won't see that money again. They are rewarded for that risk with a share of the company that goes up in value when the company does well. The bigger the risk they take, the more that share should be valued if the company actually succeeds.

Employees, on the other hand, take absolutely no risk. If you work, you get paid. If you go working for a startup, they often give you options to reward you for taking the risk that you'll be out of a job in a year and may not have a huge starting salary.

Gordon Gekko said it best, greed is good (up to a point). If you're upset by all those CEO's and business owners that are making all the money, then start your own business or become a CEO (unless you have connections, you're better off trying the former). If you choose to stay an employee, then you get exactly what the company offered in exchange for your services and nothing more.

Cooperative

[John Hasler]

This is called a "cooperative". These have been common in the US for over a hundred years.

Re:Cooperative

[plopez]

I wish I could mod you up. To expand on the topic, coops are very common, some examples include:
-Credit unions
-Insurance compaines
-Religous communes
-Rural coops, including telephone, electric, water and sewer coops.
-Mutual benefit corps. such as fraternal organizations.

What is blowing the minds of many of the posters is the concept that there is no strict heirarchy of control. There seems be be a propensity of some people to disbelieve that anything can get done without a strict military/fascist type table of order.

And yet very successful examples are all around us.

Re:Cooperative

[John Hasler]

> What is blowing the minds of many of the posters is the concept that there is
> no strict heirarchy of control. There seems be be a propensity of some people
> to disbelieve that anything can get done without a strict military/fascist
> type table of order.

There does not exist a human organization in which everyone is equal (though some groups try to pretend).

Re:Cooperative

[markdavis]

Generally, co-ops only work well with a relatively homogeneous collection of people. In a business, it is less likely that all the employees will be in such equal mindsets.

I wouldn't think that co-ops would scale well. It is not all that hard to get 2 to 5 people to agree on a course of action. Much harder , but still doable with 10. But it is nearly impossible with 100 or 1,000. So it will just be a "majority rules".

Without some type of heiarachy, decision making can be much too slow in an "everyone is equal" environment. You need specialization and sub-grouping to focus on particular issues in depth. And some specialization will, inevitably, put some employees on different authority levels than others. For example, hiring and firing... with 1000 employees, there is no way that such an on-going staffing task could be done by "majority rules".

Another example is financing. How many of those employees will really understand finance enough to participate in the voting/control of the spending? Buying? Information Systems? Marketing? Etc.

Re:Cooperative

[automatix]

Fonterra is the world's largest dairy company, and its a producer's co-operative. Now, the producers (farmers) own 100% of the Fonterra shares, and they're also the company's suppliers. A co-operative doesn't neccessarily mean everyone is equal, just that everyone is an owner/stakeholder and that the company acts in their collective interests. In which case co-op's can scale.

With a vote?

[MarkByers]

You mean a direct democracy? In a democracy the majority tries to take privileges away from the minorities for their own advantage. This works OK for countries where it is very difficult to leave but it's hardly a good way to run a company. A company is supposed to be a team that works together. The people that get taken advantage of can easily quit and then you end up with a smaller company with the same problem.

Use OS as byline.. free pass..

[Tracer_Bullet82]

If you're asking for an organiztion where everyone has "equal" say that's just running for disaster.

There's a valid and powerful reason for hierachy and divison of power(yeah, yeah I know it can get corrupted and all, that does not detract from my point!), because if everyone can go on willy nilly and do whatever they want, then what's to ensure something or heck anything get's done. It's get thing done.

Anyways OP's analogy is flawed, when is in a OS project everyone has equal say?

The project manager certainly has more say than a contributor, and there's nothing wrong with that.

And as much as I love OS and the prevailing spirit here.. can we stop granting aticles based on it just using /bots favourite flavor of the weak?

I doubt it

[dazilla]

Strangely enough, we tried this type of concept in running our WoW guild. It was nice at first, but as we increased in visibility, we needed people to take on specific roles, and be able to make snap decisions without consulting others. A hierarchical power structure ended up materializing despite our best efforts to keep it decentralized. Also, when we tried decision-making by polling everyone on every single issue, the decisions would take insanely long to determine. In the end, while in a perfect world an "Open-Source Business" should be implementable, I would need major convincing to believe that it could be done and maintained in our world.

A.K.A.: Employee Buyout of a Corporation

[reporter]

The article at the top states, "...is there room for a new type of organization that throws away the archaic and monolithic organizational structure of today and from there form a company that has its direction dictated by all of the members that run it."

Such an organization already exists. It is an employee-owned company, which often becomes employee-owned through an employee buyout. There are numerous examples of employee-owned companies.

The most famous example is United Airlines. It operated as an employee-owned corporation from 1994 until 2002.

The lesson here is that sometimes employee-owned companies succeed. Sometimes, they fail. There is nothing magical about being open source or about being a company structured on the open-source process. Such software and such companies are subject to the whims of the marketplace and can succeed or fail -- as determined by the invisible hand of the free market.

Yes, but you have to RTFM

[delirium of disorder]

As other posters have mentioned, cooperatives and collectives are one option for a more free business model; there are many others. You may be interested in Anarcho-Syndicalism. Syndicalists see labor unions as a force for revolutionary social change, replacing capitalism and the State with a new society democratically self-managed by workers. Millions of human hours have been spent thinking about and articulating radically free economic paradigms. Your idea for an open source business is interesting, but doesn't go into much detail. You just say that it would be web based, have startup costs, and will go in whatever direction the workers want. It's not a bad idea, but if you and anyone who reads your "plan" are serious, then you should look at the history of nonhierarchical organizations and learn from the theories, failures, and successes of the past. After you develop stronger ideas about how to create democracy in the workplace, you should create a more concrete plan.

Name an open source project run this way

[clymere]

It says something that the most succesful open source projects tend to be run on a model almost identical to a typical corporation. I believe Linus refers to it as the "benevolent dictator" model.

What the poster is describing is nothing less than mob rule. Theres a certain amount of this to all open source projects, but you'll find almost all have a small group of people ultimately making the decision about what direction to take. And of course if they make enough bad decisions, a portion of their developers can always create a fork

If anything, its the pirate form of democracy. Everyone gets their say, the captain makes the final decision, and if makes enough bad ones, they vote in a new captain.