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Toward the Open Company

Posted by kdawson on from the putting-it-on-the-line dept.

Arto Stimms writes "The author of the e text editor is using the principles of open source to transform his company into an Open Company. Not only is he releasing the source, the company itself becomes totally open: no concept of bosses or employees. Anyone can join in at any time, doing whatever task they find interesting, for whatever time they find appropriate. This is in service of the idea of 'the real freedom zero': the freedom to decide for yourself what you want to work on."

17 of 272 comments (clear)

  1. I don't think it will work... by Thelasko · · Score: 4, Interesting

    This is the kind of thinking that made the hippie commune into the corporate juggernaut it is today. By "corporate juggernaut" I mean, virtually extinct.

    The best "Open" corporate structure I've ever head of was a company that had a policy where no person could make more than seven times as much money as any other person in the company.

    --
    One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
    1. Re:I don't think it will work... by Thelasko · · Score: 2, Interesting

      When Steve Jobs started Next Computers, there were only two salary levels. Of course, it didn't last very long.

      If the leaders of the company are corrupt, there are many ways to get around these types of corporate rules. The first method that comes to mind is by creating an Enron style shell corporation. It's very difficult to create such a transparent corporate environment and keep it that way. However, for every Next, there is a Berkshire Hathaway, where the CEO makes a mere $100k/year.

      --
      One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
    2. Re:I don't think it will work... by JoeMerchant · · Score: 4, Interesting

      The best "Open" corporate structure I've ever head of was a company that had a policy where no person could make more than seven times as much money as any other person in the company.

      Ben & Jerry tried that, gave it up after a few years... nobody wants to buy $23/quart ice cream and they just couldn't get competent executive management to stick around at 7x the salary of cost competitive labor.

    3. Re:I don't think it will work... by Esc7 · · Score: 3, Interesting

      I know by your handle this is going to fall on deaf ears but:

      Your theoretical example is perfectly logical. Unfortunately I'm having a hard time transferring it to a real world example in my company, or other companies.

      Now if one person made oranges and the other made gold bars it would make perfect sense. But people don't "make" oranges. They pick them. Or they plant them. Or they tell people when to pick them or plant them. Or they supervise people who tell other people when to pick or plant or water them. A little more complicated now right?

      What people produce isn't really goods, it is "work" that is added to things to make them more valuable. Turning a lump of clay into a statue. Turning libraries and code into programs. Turning ore into metal. Turning disparate data into a useful statistical analysis for the rest of the company.

      Unless you're talking about yesteryear artisans and craftsmen, you're going to be hard pressed to find a person who completely produces a good with no help. In fact, some would say the whole point of modern industrialization is that we take complicated things and break them down so we can move any person around and still produce the same good.

      And when the production isn't an assembly line anymore and becomes this complex web of people who do jobs which effects are near impossible to quantify, well I would say hugely differing salaries are not as defensible. Plus having this "artificial" limit tells the employees that if there is a rising tide, it will raise all ships. People like fairness and equality and the feeling that someone gives a damn about you and if this policy accomplishes that, good for them.

    4. Re:I don't think it will work... by ClosedSource · · Score: 3, Interesting

      The reason that CEOs get paid more than they are worth is that executive compensation is really a big circle-jerk.

      A CEO of one company is typically a board member of several others. Nobody in the game is motivated to keep salaries in check because they don't want to limit their own.

      In addition, placing a current club member on your board is often required if you want to become a public company.

    5. Re:I don't think it will work... by JoeMerchant · · Score: 2, Interesting

      I consider $250k reasonable for a CEO and $36k reasonable for a factory worker.

      Reasonable, yes. However, if you're CEO of a major international corporation handling bazillions of dollars worth of perishable product and turning better profits than most companies in your sector, you're going to be getting offers much higher than $250k per year, lots of offers.

      Personally, I'd be in favor of capping CEO pay at 7x of the lowest paid employee and allowing him to double that pay in the form of Call options of his choice against company shares. So, if he's making $25K per month, in any given month he can opt to "buy" $50K worth of call options at current market value in lieu of salary (he would have to hold the options to term and then receive their residual value on expiration.) Options are highly volatile, if he does good things for the company valuation he can make quite a bit of money, if he tanks it, he gets nothing. Or, he can just take his $25K per month cash. Make him announce what he's going to do (options vs salary wise) one month before the options are priced. Analysts would have a field day watching the CEO's choices.

    6. Re:I don't think it will work... by nsrbrake · · Score: 2, Interesting

      It looks to me that you're argument is based on the notion that the two goods A and B have no other cost associated with the production of said goods. Holding on to that, the only thing that separates the two goods must rely on scarcity? (supply and demand) to set the price. Even in that case, I am really curious as to how you can justify person A being paid more than person B...? Education? Experience? Being born in the right place? Cared for and raised by already wealthy individuals? Your claim and question that, person A's good is more valuable than person B's, have no bearing on their rate of pay. What is it that allows for one person to be entitled to more than another given the same effort put into it and ignoring the underlying costs which only affect the end price?

      I find this terribly interesting and encourage anyone who has thoughts and or an opinion on this matter to reply and help clarify what I'm missing. Obviously I'm missing something because mrlibertarian is describing how things currently work, which the vast majority of the world population seem to agree with.

      --

      Bah!
    7. Re:I don't think it will work... by Capsaicin · · Score: 2, Interesting

      Imagine two goods, good A and good B, that are sold on the open market. Good A sells for a price that is eight times greater than good B. Person A was able to produce good A in one day, and person B was able to produce good B in one day. So, on the open market, person A makes eight times more money than person B in the same period of time. That means consumers have judged person A to be eight times more productive than person B, even if person B worked much harder!

      Nonesense! Consumers have made no judgment whatsoever about Person A or B's productivity. They have judged Product A to be 8 times as desirable.

      Neither does it follow that Person A "makes eight times more" than Person B. The raw materials, transport and storage costs are significantly higher for Product A, meaning Person A and B earn exactly the same for the same effort over the same amount of time. If they didn't Person B would stop making Product B and make Product A instead this lowering the supply of Product B relative to Product A. This would continue until the same effort over the same time would yield the same profit for producers of Product A and B. We call this the "market mechnanism."

      If it were the case the Product B really were so much less desireable the Product A that it was not possible for equilibrium between the commoditites to be reached then we would have to import Product B from China, India or Bangladesh. We call this "capitalist imperialism." ;)

      --
      Better to be despised for too anxious apprehensions, than ruined by too confident a security. --Edmund Burke
    8. Re:I don't think it will work... by mrlibertarian · · Score: 2, Interesting

      Holding on to that, the only thing that separates the two goods must rely on scarcity? (supply and demand) to set the price

      Price is always determined by supply and demand; cost is irrelevant. If I try to sell you a house, do you care about how much money I spent fixing it up? No, you only care about the end product.

      I am really curious as to how you can justify person A being paid more than person B...?

      Because the market is not a meritocracy. Consumers do not pay producers for working hard, for being highly educated, etc. Consumers pay producers because they value the end product. Often times, the market will look like a meritocracy, because hard work tends to result in more productivity. But it is consumers who decide winners and losers.

      My point is that if you want to run a business that is as profitable as possible, then you should try to pay employees according to how much productivity they add to the company. In other words, if the employee was actually a third-party vendor, how much would you pay them for their product?

      To the extent that you rely on silly rules (e.g. I won't pay Joe more than 7 times what I pay Bob) instead of relying on the market's method of valuation, you will be giving your employees the wrong incentives. That eventually leads to less than optimal productivity for your company as a whole, which hurts your bottom line. And a lower bottom line means that consumers are telling you, through their actions, that they do not value your end product as much. That's not a good thing, IMHO.

  2. sit on my ass by mikey177 · · Score: 2, Interesting

    so i can sit on my ass reading slashdot all day and say that i am contributing to research and development.

    1. Re:sit on my ass by stevied · · Score: 2, Interesting

      Sure, but by the model they've outlined, you won't earn anything for it unless other contributors find it valuable.

      And they might. Back in the late 90s, I spent "far too much time" reading and browsing when I should have been coding, but the flip side was that I knew just enough about all sorts of emerging technologies to judge whether it was worth us investing them, and to recommend them to my colleagues. (The running joke became that I knew everything, but actually I knew just enough about a lot of things to know where to go for more information.)

  3. Re:Just like a closed company... by megamerican · · Score: 4, Interesting

    However, you can fire yourself and then go collect unemployment.

    --
    If you have something that you dont want anyone to know, maybe you shouldnt be doing it in the first place -Eric Schmidt
  4. Re:Just like a closed company... by commodore64_love · · Score: 2, Interesting

    No somebody already tried that (quit his own company after the economy went to ____), but the government turned him down. He complained because he had been paying unemployment tax for all those years, but was barred from getting it when he needed it.

    --
    "I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
  5. Re:Ok, I will join! by Improv · · Score: 2, Interesting

    Lowerer UIDs concurer ... oh, wait..

    --
    For every problem, there is at least one solution that is simple, neat, and wrong.
  6. Re:Just like a closed company... by Zero__Kelvin · · Score: 5, Interesting

    "At least in Canada, you don't get unemployment insurance if you quit, it's only for people who are laid off."

    "Same in the US."

    Generalizations are always a bad idea! (it's funny; think about it.)

    In Massachusetts you can quit and still collect under certain circumstances, though you may need to go for an appeal. I have done it. In my case my job responsibilities changed drastically . I explained to the appeals officer that they were trying the equivalent of demoting a lawyer to secretary and keeping the title (the new boss was afraid of technology and wanted to do all the testing manually, and I was in charge of SQA at the time). He understood that even with the same title and pay, I would still only have the experience of a secretary to show on my resume for my efforts. Case closed. I got approved via snail mail the next day !

    The best part was wiping the smile off the face of the HR moron who told me he loves to go to appeals and I don't have a chance of winning because he does it all of the time. No I take that back. The best part was explaining to one of the three lawyers that he brought with him to intimidate me that it wasn't as court of law, and he couldn't object. It's like the Visa (Mastercard?) commercial:

    Winning the case: 26 months of income if needed.
    Watching the way the lawyer was on the verge of tears of anger: priceless ! ;-)

    --
    Guns don't kill people; Physics kills people! - John Lithgow as Dick Solomon on Third Rock From The Sun
  7. Re:Just like a closed company... by GNU(slash)Nickname · · Score: 2, Interesting

    Same in the US.. But if he's running his own company, it's impossible for him to get fired. So why should he have to pay unemployment insurance?

    In Canada, he wouldn't have to pay, and the company wouldn't have to pay the employer's portion either.

  8. Re:Just like a closed company... by Lord+Bitman · · Score: 2, Interesting

    The point is he was basically fired and immediately offered a re-hire at a much lower and unrelated position (though with the same rate of pay). It was his boss, not him, trying to game the system by doing this through a "change in responsibilities" rather than actually firing the staff he didn't want and hiring the staff he did want.
    Sure, he would receive the /money/ from his employer, but everything else he took the job for (a snazzy resume, ability to use his skills, etc) was taken away.

    --
    -- 'The' Lord and Master Bitman On High, Master Of All