Open Value Network
The Value Network definition from the Wikipedia at
"Value networks (value webs), are complex sets of social and technical resources that work together via relationships to create value in the form of knowledge, intelligence, products, services or social good. Included in a company’s value networks are research, development, design, production, marketing, sales, and distribution - working interdependently to add to the overall worth of products and services. Companies also have external facing value networks where value is created from the relationships and interactions between organizations, its customers or recipients, intermediaries, stakeholders, complementors and suppliers. Value network principles apply equally well to public agencies, civil society organizations and other purposeful networks focused on creating economic or social good."
"Open Value Network(s) expand on Value Networks, by incorporating the possibility to open different processes and exchanges up to a broader base of volunteer, but reciprocated participants.
The Value Network approach seeks to add value to all exchanges in a Value Chain. Including voluntary or traditionally non-compensated participants in Open projects related to business webs.
The Open Value Network approach also seeks to create effective ways for many independent-actor and small group business ventures to create and use OpenValueNetwork models."
2. OVN Wiki:
"From a social perspective: an OVN is a complex form of social organization. Through interaction, values and rules as well as norms of reciprocity and trustworthiness are constantly emerging and being (or not) sustained.
From an economic perspective: an OVN is a group of agents that collaborate openly and transparently to offer goods and services, expecting benefits in proportion to everyone’s contribution.
An OVN is understood as a complex dynamical system, a living system, with an emergent structure (not imposed or predefined)... [with] initial conditions for such systems to exist and basic requirements for such systems to succeed in their mission, which are characterized as a Critical Path."
"The OVN model applies to open and decentralized networks. It makes these networks formidable economic agents. The Bitcoin network for example, can provide a stable and secure service of value exchange. It is an open (permissionless) network: anyone can join as a user, as a provider of infrastructure (as a miner), or as a developer (contributing to the Bitcoin open source software). The OVN model allows similar networks to offer more complex services and to produce and distribute material goods."
1. Yasir Siddiqui:
"An open value network (OVN) is a network of open-enterprises that can provide all functions of a corporation in an open-collaboration fashion. Recently, we have seen a rise in open-collaboration in the functions of marketing, communication, value creation, and so forth. Yet, there has never been an open collaboration model that can provide all the functions of a corporation. The structure of OVN framework provided in this paper outlines a model that could create a true open-collaboration enterprise that would follow the principles of open source.
Open-source models present a tremendous opportunity to tackle social and environmental challenges. Nonetheless, open source models daunting financial and legal challenges since there are gaps in the business model. The open-enterprise framework provided in this paper could help resolve these challenges by providing the required open-legal and governance structures.
From sustainability perspective, an OVN provides mechanisms of non-control and open-access while providing all the function of a corporation. Therefore, I conclude that open-enterprises can truly target social and environmental market needs in efficient way while creating and redistributing the value generated in an ethical fashion. Hence, the OVN model meets the Porter and Kramer’s (2011) criteria for scalable sustainability."
2. Apostolis Xekoukoulotakis:
"The OVN model proposes that each production process publishes all information about its internal functioning. That allows production methods to be copied. Provides accountability. Public view allows people to propose better solutions and to detect errors sooner. Moreover, ecological and other externalities are easily Identifiable.
The OVN model also proposes that information about the supply chains be also visible. All production processes should provide information about their product and the requirements they have in tools, materials and human resources as well as the current suppliers and customers.
The ability to search and analyze these data allows for different groups that were otherwise isolated and small to interconnect. This has the profound advantage that these small groups can cooperate, coproduce value and thus be able to compete with traditional companies with a higher number of capital assets. Moreover the information about the supply chains allows people to suggest more efficient supply chains and at the same time bypass the supply chain middlemen entirely."
3. Alex Pazaitis:
"An OVN is a generic organizational and business model, which could possibly enhance and support commons-based peer production. As an organization it is highly adaptive, fully decentralized, and governed through distributed decision-making processes and resource allocation. As the name implies, it supports open participation, has very low barriers of entry, and is designed to empower permissionless individual action through open knowledge and transparent processes.
The OVN is characterized by three fundamental principles: open membership, transparency, and variety of contributions. Open membership means that members can freely join or leave the network and form, join, or acquire enterprise entities. Also, members can be individuals of diverse backgrounds or organizations, including non-profits, government entities, enterprises, or even other OVNs. Transparency enables the open-source communities to gain access to information, knowledge, and processes, with certain restrictions regarding specific types of resources that may need to be handled exclusively by special expertise (e.g., dangerous chemicals may be restricted to chemists). Finally, a broad spectrum of contributions can take place, including material (e.g., resources, tools, consumables) and immaterial inputs (e.g., time, effort, information) or capital (e.g., financial investments, space, equipment, infrastructure).
The aspiration of the OVN model is to create a viable structure that harnesses the advantages of open collaboration and sharing, while it addresses the challenges of open-source projects related to governance and sustainability."
See full paper here: https://www.mdpi.com/2078-2489/11/2/104/htm.
4. David Bollier:
"Most commons tightly limit or prohibit the sale of their resources to markets except on stipulated terms, lest market ambitions begin to unravel collective commitments. Open value networks have no reservations about engaging with markets, but they do take active steps to maintain their organizational and cultural integrity as commons-based peer producers. This means that OVNs insist upon open, horizontal and large-scale cooperation and coordination so that everyone knows what is going on. Using systems like Co-budget, OVNs seek to democratically manage shared wealth and assets while allowing individual access, use, authorship and ownership of resources, consistent with group needs. OVNs use a careful accounting of individual “inputs and outcomes” via a common ledger system, and distribute rewards to participants based on their individual contributions to the project.
OVN stress that while they may be legally nonprofits or for-profits, they are not functionally either, in that they have no retained earnings or fixed assets. They instead function as “a flow-through entity which is as formless as possible,” but which functions as a trust for its members, as outlined by a “nondominium” agreement.
While still fairly rudimentary, OVNs represent a fascinating new type of consensual governance/production regime, bound by contractual terms, that blends commons principles and market activity."
The OVN model originated within the Sensorica network/community
"Since 2008 I have been involved in building infrastructure for commons-based peer production. In the open value network model that we propose, the economic activity of all the network affiliates operating in a peer production network is recorded, activities are compared and weighted against each others based on metrics that are agreed upon democratically. The redistribution of benefits is in part quantitative, turning someone's efforts into coins, which can represent equity or debt and can be later used to get tangible benefits. Qualitative characteristics of economic contributions and behavior are also taken into consideration, based on how the contribution is made, on different dimensions of reputation of the affiliate, etc. All this is packaged into an IT tool, a contribution accounting system and an algorithm for computing the redistribution of benefits that we call a value equation. This represents a social contract among affiliates, designed to generate a sense of fairness among them and to render the economic activity effective and efficient.
This system for capturing, recording and comparing economic activity has been implemented in SENSORICA, the first open value network. The same system can also be applied to other types of organizations, more or less networked, more or less open (with respect to access to participation) or transparent (with respect to access to information).
This system has profound consequences on how the global economy works. Let's enumerate a few of them.
When I was in my teenage years, I worked on a farm situated a few kilometers north of Montreal, Canada, picking blueberries and strawberries. We were payed by the weight of fruit that we picked. Throughout the day, we would bring our fruit baskets to a tractor, where they were weighed, and a record was produced. At the end of the day, everyone was paid according to the total weight gathered (a metric for economic activity). Some were making a lot more than others. It was a purely meritocratic redistribution scheme for a simple economic activity, using a very simple metric. This is very different from the normal employment setting, where employees are paid a fixed, negotiated and agreed upon salary, formalized as a job contract. The employer agrees to pay a certain number of coins to an employee before even starting working. This requires some diligence from the employer, which comes in a form of a filter, a job interview. Moreover, this also requires constant monitoring of the employees' contribution to the company. Companies engage in time management and regular performance reviews. There are at least two important setbacks in this employment setting compared to the first one. For one, the managerial overhead for time management and performance monitoring. Second, the inability of the company to dynamically adjust its workforce and talent base, because of the heavy filtering mechanisms and the contractual agreements in place. We will expand on this below. In the raspberry picking case, the payment is proportional to the production, therefore the need to filter and for time management is less stringent. The reward is directly related to the production. This case presupposes the existence of means to evaluate contributions. The activity that doesn't result in a positive contribution, or that causes damage can be dealt with in various ways. For raspberry picking, the evaluation scheme is obvious: total weight of the picked fruit. The new information technology allows us to go far beyond this simple case, to deal with the complexity of numerous and various tasks involved in our normal workday. A contribution accounting system coupled to a value equation gives flexibility to organizations of all sorts and help them reduce costs.
Another important consequence of this technology is that it allows an organization to tap into the world's massive human resources in a very dynamic way. At any given moment, there is someone on this planet that has the solution to your problem. Finding this individual or a group of individuals is one important hurdle. But once that hurdle is passed, we need to be able to effectively integrate this new talent into the stream of activities and its associated reward mechanisms. The possible contributor can be far away, which means hard to identify and authenticate, hard to monitor, hard to reprehend, … In these circumstances, the classical mode of employment is long, costly, and sometimes even impossible if we take into consideration all the geopolitical hurdles in place. These opportunities are lost most of the time, and the company is obliged to work with what it has. Different crowdsourcing platforms have emerged as an interface between companies and the crowd, but in my opinion their value proposition is not resonating well with the crowd. Crowd-based problem solving schemes work very well in open source projects and in projects with a great social impact, They are not performing well when only corporate interest is behind the problem. Companies can develop less exploitative and less alienating mechanisms for managing their own crowd-based activities. In order to do so, they must move away from contractual relationships and time management, to interface directly with the crowd by using tools for contribution accounting and evaluation.
There are other important consequences that we can discuss here, but I think we should jump directly to the one that has, by far, the most disruptive effects on our global economic system. That is the possibility to put information about past economic activity back into the system of redistribution of resources.
A dollar bill that you receive from someone doesn’t come with a description about how this individual acquired it, or about how this individual is seen by his peers in a context of work. It could have been earned honestly or dishonestly.
The contribution accounting system and its value equation implemented in the SENSORICA open value network is used to reward participants based on past economic activity. This data accumulated for every affiliate can be distilled into a socioeconomic profile that can be consulted by anyone around the world. It is very dangerous to allow all this information to be gathered and controlled by private interests. These systems should not be deployed by organizations like Facebook or Google. They must be developed on top of p2p infrastructures like block chain for example. That is precisely what we are striving to do with the open value network infrastructure.
Sensoricans designed and experimented with a system that allows redistribution of benefits and privileges, eliminating the problem of the classical monetary coin, for being detached from the role of the individual in society. This is very similar to the situation in my mother’s village. The system can be scaled and it is using digital technology instead of clay tablets, which makes it easy to gather, store, analyse and retrieve information about socio-economic activity in real time, with no spatial barriers. This is not a Big Brother situation if applied according to p2p principles.
We are in the middle of a socioeconomic revolution. It is still unclear what the future will look like. In order to inform this transformation we need to revisit a fundamental concept that is used in all these approaches, value."
From Nathan Schneider:
- Assembly - “Where we band together to build.”
- Bioecon - “a peer to peer, growth sensitive, decentralized and self regulated economic agreement in which the means of exchange is produced by participants as a result of our activity”
- Enspiral: Formally a cooperative, legally an LLC in New Zealand - “we hacked the constitution to make it cooperative-like”
Also a number of Ventures within the structure ; Uses Loomio (which is an Enspiral Venture) for decision-making
- Greener Acres Value Network - “a resource for entrepreneurs in for-profit and non-profit startups and operational expansions who want to take advantage of agricultural localization”
- Metamaps - “a free and open source web platform for changemakers, innovators, educators and students. It enables individuals and communities to build and visualize their shared knowledge and unlock their collective intelligence.”
"“The model was first proposed, developed and implemented by Sensorica affiliates. Sensorica was created in February 2011. Initially, the model evolved from the Discovery Network model proposed by Tibi between 2008 and 2010. In 2011, the model was developed in collaboration mainly by Tibi, Steve, Kurt, and Bayle, and drew from the work of Verna Allee, Yochai Benkler, Michel Bauwens, Clay Shirky, and others. After the summer of 2012, the network resource planning and contribution accounting system (NRP-CAS) was influenced by Bob Haugen who has been working on resource planning systems since 1995.
Yasir joined Sensorica in 2013 and helped develop the framework for open value networks. The OVN model was extended to network of networks, in the context of the Open Alliance initiative also lead by Sensorica, an attempt to federate open organizations in Montreal. In 2016 the NOICE/Verdun project built on the Open Alliance initiative, as a second attempt to bring the OVN model at a larger scale.
Other organizations have adopted a model similar to Sensorica: CoMakery, CollectiveOne, Scuttlebutt.” [OVN world wiki pages].
Although rooted in earlier and ongoing traditions of open source and collaborative economies, OVN redresses the flaws of collaborative crowdsourcing in CBPP, notably the unsustainable capture of open source value by corporate private interest. The value that is captured by private interest can be captured by an OVN and shared internally bringing value to both contributors and the community. The emphasis thus far has been on FabLab type manufacturing, research intensive projects in a permissionless setting, but can apply to a variety of end uses. The OVN framework accomplishes this feat through a formal accounting of contributions and planning via (….) protocols: NRP (network resource planning), socialization of work, transparency, commoning, a Contribution Accounting System that includes localized cultural subjectivity, signalization, content, interaction, and logging contributions. An OVN also requires contribution accounting and exchange systems, a fair Reputation system, a Role system, a Feedback system, an Incentive system. The OVN framework structure is at four different levels: project-level, open-enterprise level (inter-project level), network level (inter-enterprise level), and global level (inter-network level) [Yasir Siddiqui 2013]. This serves to trickle up network synergies to empower social and environmental demands at global network level.
Organizationally, OVNs at project level are permissionless and flatter, less hierarchical than more traditional business models, relying on stigmergy to self-coordinate. OVN’s structure formalizes stigmergic patterns through patterns of actions/feedback and self documentation. OVNs like Sensorica are focused on prototyping , research with an eye to serial manufacturing. In practice, an OVN registers contributor contributions towards the value of a project/goods/product/service in a value cycle from value creation to value distribution via a value equation.
The key idea behind the value equation is to reformulate the value distribution problem to a matching problem and disconnect money (or exchange value) from the process of value distribution. [Value cycle and value equation Yasir Siddiqui 2014 ]
In effect, for the first time, an attribution system is integrated into the production workflow and supply chains. The first record keeping implementations were in the form of google spreadsheets, in development on blockchain and holochain alpha. Meanwhile DAOs and other protocols are rapidly converging on similar solutions."
"The open value network model departs from capitalism for 3 main reasons:
- No economic cast, no division between owners and workers, between those who own the means of production and those who provide work. The commons takes care of that.
- No clearly defined frontier between the system of design-production-distribution and the market, the system rewards every contributor to value creation in proportion to his/her contribution. The value accounting system takes care of that.
- Reappropriation of labor. Active affiliates who are involved in value creation are not exchanging their labor for wages, they are in fact accumulating equity, which gives them rights to the future revenue generated by exchanging the value they create with the market. Thus the individual is always the owner of his work.
The value accounting system allows value networks to go beyond the gift economy AND beyond the candy economy." (http://multitudeproject.blogspot.ca/2013/04/open-source-hardware-meets-p2p-economy.html)
This section defines three fundamental characteristics of an OVN network: open-membership, transparency and open-access, and contributions and their governance.
"Open-membership is a major difference between a traditional enterprise and the OVN. In traditional organization, the contributors are employees who need permission to produce use-value, whereas, in an OVN, the employer-employee control relationships do not exist. Instead, an OVN is open, that is, anyone can join and/or leave the network and/or form, join and/or foreclose an open-enterprise at any point. Members can be individuals, or organizations (non-for-profits, governments, open-enterprises or other open-value networks); that is both the OVN and any open-enterprise thereof could consist of individuals, organizations, non-for-profit, government entity and OVNs. This open-membership permits OVN to engage with crowd and operate on a long-tail curve." (https://docs.google.com/document/d/1iwQz5SSw2Bsi_T41018E3TkPD-guRCAhAeP9xMdS2fI/pub#h.xr8z2tjzus2s)
Transparency and open-access
"Transparency is applied in the open source communities to provide access to information, knowledge, and processes. In addition to transparency, in an OVN, open access to participation is also critical to allow an equal opportunity for value creation. Nonetheless, certain contributions could be restricted due to the nature of the contribution. For example, dangerous chemicals may be restricted to chemists. Access to such contributions would be available provided that a certain level of expertise is attained (explained further under project custodian.)"
"A contribution of a member can be any product, service, time spent on tasks or projects, physical space offered for activities, prototype, ideas, data, information, financial investment, social connection, manufacturing, distribution channels, sales, assuming liability of a product, providing insurance, certification, evaluation, and any other tangible and non-tangible input that a community member provides to satisfy a desire, want or need. In other words, any effort that is a part of the use value is a contribution. By allowing “contribution” to be defined in such a wide spectrum, an OVN does not differentiate between financial and non-financial contributions and therefore, all contributions are evaluated and rewarded as per the defined governance of the project and network.
There are three types of contributions: project-contribution, network-contribution, and commons-contribution. Project-contributions are those contributions that are applicable to the scope of the project; the governance of these contributions is defined at the project level. For instance, perishable or consumable materials could only be a part of the project. Network-contributions are those contributions that are applicable to the scope of the network; the governance of these contributions is defined at the network level. For instance: a physical tool can be shared across projects. Commons-contributions are those contributions that are applicable across networks; the governance of these contributions is defined at the global governance level. For instance: use of standards, legal framework and knowledge."
Governance and structure
The OVN framework defines the structure at four different levels: project-level, open-enterprise level (or inter-project level), network level (or inter-enterprise level), and global level (or inter-network level). This hierarchical structure is design to create synergies among many open-value networks in a network of network environment (or a network of open-enterprise environment). These synergies can be leveraged to collaborate across open-value networks in order to rapidly address the social and environmental demands of the marketplace. In the next section, we will explain the aforementioned hierarchal structures: the project level structure, the open-enterprise level, the network level structure and the global level structure.
Project level structure
An OVN consists of many open-enterprises that may engage with many projects organized in a non-hierarchical fashion with each project acting as an emergent, self-governing and open structure. Due to the emergent nature, the structure of each project will be different. Nonetheless, there are certain guidelines that each project will need to adopt to enable collaboration at large-scale given under the Collaboration model.
The collaboration model is the cornerstone of the OVN framework designed to support collaboration within projects. Similar to a traditional enterprise, an open-enterprise can undertake numerous projects. However, unlike a firm, both the open-enterprise and any projects thereof could be forked to achieve maximum flexibility (explained further under forking.) This collaboration model consists of two major components: value capture and distribution processes; and value creation and exchange processes.
Value capture and distribution processes
An OVN provides mechanisms to capture value by providing structure and infrastructure required to track each contribution within a project. Finally, once the project reaches maturity, any revenue generated from the project is redistributed based on the respective contributions.
These mechanisms are achieved by implementing the following processes:
- Initiation: A member or members of the network or an open-enterprise thereof can have an idea, which could come from personal interest, a scientific study, or a market study, for a product and/or service that they would like to develop and/or provide.
- Agreement: Prior to engaging in a project, the initiators of a project agree on three aspects: first, a value equation, second, a governance equation; and third, decisionmaking process within the project. A value equation is a set of evaluation criteria used to evaluate members’ contributions; for example, labour market could provide an appropriate parameters for the initial value equation. A governance equation is a set of criteria that give access to contributors to decisionmaking processes. If and once there is an agreement on these matters, the project commences.
- Logging: Once the project commences, each member of the project logs his or her contribution during the course of the project. Logging contribution could be a role that a member can undertake for a project to make the process more efficient (explained further under project tasks and roles)
- Referencing: Whenever a member uses a contribution of another member, he/she makes a reference in the original contribution. Failure to do so could end up in a bad reputation (explained further under reputation)
- Fluid equity: Each member’s fluid equity in a project is updated frequently (or in real-time) based on the value equation and the members’ contributions. Since the contributions are logged and referenced, it is possible to calculate the fluid equity by re-tracing the contribution chain and applying the value equation to the contributions.
- Reward distribution: Whenever members generate revenue (through a market exchange), they distribute it through the financial custodian (explained further under global custodian), who redistributes the revenues based on the fluid equity system.
Co-creation of value and exchange processes
While the processes to maximize coordination within a larger membership have been realized within the open source communities, the OVN structure provides additional guidelines on processes to ensure that there are synergies among the value creation and exchange processes, and value capture and distribution processes.
1) Project tasks: A project task refers to an action that a member must perform to advance the development of a project. Each task is SMART: Specific, Measurable, Attainable, Realistic and Timely. On the other hand, roles refer to a certain list of tasks that a person is required to perform and the decisions thereof.
Each project will have a combination of tasks and roles. For example, producing a component of a product is a task; distribution, selling and repairing are all tasks that could be logged as contributions. On the other hand, roles consist of a list of tasks that a member assumes the responsibility of. For example, assuming the liability of a product is a role. Additional examples of roles include coordinators, strategists and/or community developer. Roles can be logged as contributions. Tasks and roles within projects are published for members to accept. Any member could be a part of the project by accepting a role of a task even if the role and/or task is currently under-taken by another member by “Forking” the project (explained further under forking.) Moreover, each task could undergo verification, which can further inform reputation mechanisms (explained further under reputation.)
2) Verification: Once a contribution is logged, another member could evaluate the validity and quality of the contribution. Moreover, this verification could take place immediately or after a certain period of time during the course of the project. Verification could be a role within a project.
3) Project custodian: Project custodian is a special role chosen through the decision making process of the project. For example, a project custodian could be responsible to ensure the proper use of an asset, such as fragile, complex or expensive equipment. At any point during the project, members can vote to select a different member as a project custodian. Similar to other roles, project custodianship is a contribution.
4) Decision-making: Whereas members within the context of a task or a role undertake the task-based decisions, certain decisions such as the selection of a project custodian or a communication platform would require decision making across the project. Such decisions can be based on voting, meritocracy, consensus or executive decision (see more on the governance equation). On the other hand, on a disagreement, it would be possible to fork the project (explained further under forking) since the knowledge is open sourced.
5) Conflict management: If there is a conflict among members during the course of the project, members can modify the value equation and the governance equation based on the parameters as per the prior agreement. However, if the conflicts are not resolved, the members can fork the project (explained further under forking.)
6) Forking: During the course of the project, any member(s) can choose to fork a project for any reason. That is, take a different direction on the development of the project than the rest of the contributors to the project. In such an instance, the new project can choose different agreements on the value equation and the governance equation of the project from the time of the forking. However, all the contributions prior to the forking will utilize the agreements at the time of forking.
7) Predictability: If the project is based on a market study or a customer demand, which are both contributions, then a mechanism could be implemented to predict the value received based on the expected input required to finish the task. This mechanism would improve efficiency of the project by attracting the appropriate level of contributions by guiding the development of value equation. For example, a market study could entice financial contribution, which would be evaluated as per the value equation.
8) Reputation: Reputation refers to the detailed track record of a member; for example, tasks delivered and not delivered. During the course of the membership, any member can evaluate another member, which would be visible to all the members. The reputation system could be designed by skill set to create a comprehensive knowledge, skill and attribute profile. Evaluation for reputation could be a role within a project. If coupled to the calculation of fluid equity, the reputation system becomes a very powerful mechanisms for self-regulation.
Open-enterprise level structure
There are two types of open-enterprises within an OVN: brand-based and liability-based.
Brand-based: Any member(s) within the OVN can create a new brand and market any of the products through this brand trademarks. This brand trademark could have any legal structure from a private ownership to a cooperative-ownership. Whereas the brand trademarks could be privately owned, a brand charter would dictate the use of the brand trademarks. The brand trademarks could be open for use so long as the members abide by the terms and conditions dictated in the brand charter; for example, product quality and standards. The management of the brand use is further discussed under the legal framework. Nevertheless, access to the use of brand trademarks is a contribution to a specific project and would be evaluated as per the governance of the project.
Liability-based: Any member(s) within the OVN can create a legal entity to assume the liability of the product including the appropriate use of brand trademarks. This liability could have any legal structure from a private ownership to a cooperative-ownership. Whereas the legal entity could be privately owned, a liability charter would dictate the use of the legal entity name for contractual obligation and liability purposes. This liability entity could be open for use so long as the members abide by the terms and conditions dictated in the liability charter; for example, product verification. The management of the liability entity use is further discussed under the legal framework. Nevertheless, access to the use of liability entity is a contribution to a specific project and would be evaluated as per the value equation of the project.
Network level structure
Network-level structure defines the structure across all projects of the open-enterprise. The guidelines in the network-level structure supersede the guidelines in the project structure. However, in order to minimize control and maximize collaboration, the guidelines within the network-level structure are pertinent only to the network commons. For example, the misuse of the network will have negative consequences for all the members. In addition, since any project can fork, the network governance needs mechanism to resolve any conflicts. Hence, it is pertinent to establish a structure for the network commons.
The OVN framework identifies the commons of the network and then provides guidelines for the governance for the network.
OVN framework identifies five commons with the network: Network Brand, Infrastructure, Contribution-commons, Reputation and Solidarity mechanisms. In addition, any network-contributions are also a part of the network commons.
1) Network Brand: provides value to all the projects by providing trust relationship among the collaborators and potential collaborators of the network. Therefore, it is pertinent to protect the network brand in order to maintain an advantage in the marketplace since the brand value could decrease if misused by a member.
2) Infrastructure: Infrastructure provides the tools to produce, store, transfer, exchange and modify information within and outside of network. Therefore, changes in the infrastructure could impact all projects. In addition, tangible tools could also be part of the network that would be governed as per the network governance.
3) Reputation: Reputation of a member in a given project is carried forward to other projects. Thus, reputation is a part of the network commons in order to main trust among members.
4) Solidarity mechanisms: Solidarity mechanisms are part of the open-value network to ensure two unique aspects: compassion and distribution of risk. Compassion is an important part of human-collaboration and therefore, the network provides insurance mechanism for its members based on the members’ reputation. In addition to compassion, solidarity mechanisms are used to partially reward for unavoidable failures in order to create higher levels of trust and knowledge base within the network; these failures include: process inadequacy, task challenge, process complexity, uncertainty, hypothesis testing, and exploratory testing.
The network governance determines the decisions on the implementation of solidarity mechanisms.
Similar to the project governance, the network governance requires decision-making processes and mechanisms to change the decision-making processes. In addition to decision-making, the network requires roles or network custodians to ensure continuity and compliances. Moreover, network requires mechanism to respond to non-compliances to the decisions. Lastly, network needs to be able to recuperate costs in order to self-sustain.
1) Liquid democracy for voting: Whereas the democracy relies on choosing a representative for a fixed term, liquid democracy allows a member to delegate a trusted peer to vote on the member’s behalf on certain or all decisions. The trust delegate could apply the same principle. This creates a trust-based decision network that can be applied to take network level decisions efficiently and to maintain high level of satisfaction since getting involved in all decisions can lead to stress and dissatisfaction. Moreover, to avoid biases, an individual member can directly cast their vote on a decision if the member does not agree with the decision outcome within a fixed period of the outcome. Lastly, the number of votes delegate to a member is hidden from the delegate to avoid any possibilities of corruption, power and favoritism.
2) Conflicts during the forking of the project: Value equation developed at the time of the forking of the project has to account for the previous contributions at the time of the forking. Failure to reach an agreement at the time of the forking could result in a conflict that could be arbitrated using the liquid democracy mechanism for a faster turn-around.
3) Accountability and Non-compliance: It is possible that a member may not comply with the OVN framework. For example, a member may choose a task but not deliver that causes grievances or worse, a member sells a product and keeps the rewards rather than redistributing it. In such instances, the member may get bad reputation, which will be visible to the members across networks.
4) Low-reputation and retribution: A member with low reputation will be less likely to find collaborators in any OVN since the reputation is shared across networks (explained further under global structure.) Therefore, a member with low reputation will be unable to benefit from the advantages of the OVN model (explained further under the OVN advantages.) Nevertheless, it is important to create mechanisms to encourage members to regain the lost reputation rather than banishing the members with low reputation since it could increase hostility against the networks, which could lead to intentional attacks. Yet, any decisions on banishment could be taken based on liquid democracy.
5) Network costs: All efforts related to the network are considered as projects; for example, the development of the network IT infrastructure is a project. Therefore, the contributions to the network level projects are equally divided among all the projects as contributions to the projects.
6) Network custodians. The network custodians are chosen using liquid democracy process and can be responsible for network-commons: brand, infrastructure, and network-contributions. Similarly, network custodians can take the role strategists for the brand and infrastructure; these roles would be selected through liquid democracy but can the responsibility on any and/or all of the decisions could be revoked at any time.
Global level structure
Global level structure defines the structure across all open-enterprises or networks within an OVN. The guidelines in the global level structure supersede the guidelines in the network structure. However, in order to minimize control and maximize collaboration, the guidelines within the global level structure are pertinent only to the global commons. For example: the flow of information across networks. Hence, it is crucial to establish global governance and a legal structure for the global commons.
Global governance of OVN will provide decision-making guidelines for the change in legal constitution of the OVN including the selection of the custodian of the global OVN constitution. This selection could be done through liquid democracy process, as previously described, with participants across OVN.
Legal framework of OVN would consist of global structure, network structure, and enterprise structures. The purpose of the legal structure at the network level is to create a platform for open-innovation. For example, Airbnb provides a platform where the crowd can rent their homes to strangers. Similarly, the OVN provides an ethical and legal framework to create a platform for open source based innovation. Hence, an OVN acts as a platform that consists of many open-enterprises, supported through legal structure at the enterprise level for both brand-based and liability-based entities. In other words, the OVN network provides a platform for the Peer-to-Peer (p2p) liability structure to create a many-to-many relationship between brand owners and liability owners.
In addition to collaboration within an OVN, the legal structure also provides support for many platforms or open-value networks to co-exist. This is accomplished by sharing reputation, value and knowledge across networks while safeguarding the infrastructure and brand of the network.
Permanent global legal structures:
1) Global OVN Constitution custodian: will serve as the umbrella organization for the legal framework and will hold the Global OVN constitution. This constitution will provide guidelines on the roles and responsibilities of the other legal entities and voting mechanisms on how to change the constitution and any of the custodians including global custodian, as per the governance defined in the constitution. Further the constitution defines that each custodian must have its own decision-making mechanism and policies on how to change its decision-making mechanism.
2) Personnel Information custodian: will be responsible for the information infrastructure including holder of private information to keep records of the reputation across OVNs. This custodian will have an agreement to share information required for reputation purposes within and outside of the Open-Value Network with the holder of the constitutions as per the rules of the constitution.
3) Standards custodian: will hold the global standards in order to ensure the flow of information, contribution, value and reputation across the OVN.
Network level legal structures:
1) Network custodian: would be responsible to hold the constitution of the network. This constitution will provide guidelines on the roles and responsibilities of the other legal entities within the network and voting mechanisms on how to change the network constitution and any of the custodians within the network including the network custodian, as per the governance defined in the network constitution. In addition to the network constitution, the network custodian will have an agreement with holder of the global constitutions as per the rules of the global constitution.
In addition to the constitution, the network custodian may hold the brand of the network as well as the responsibility of the any physical and virtual infrastructure, although, these function could be assigned to a separate custodian. For example, one network brand custodian for the network brand, one virtual infrastructure custodian for the virtual infrastructure, and several physical infrastructure custodians for each or some of the local physical hub.
2) Contract holder custodian: will be responsible to hold the contract among all enterprise level legal entities (elaborated under enterprise-level legal structures). This custodian will have an agreement with the network custodian as per the rules of the constitution. A network may choose to merge this role with the network custodian.
3) Financial custodian: will be responsible to conduct all financial transaction across the OVN. This custodian will have an agreement with holder of the network custodian as per the rules of the network constitution. A network may choose to merge this role with the network custodian.
Enterprise level legal structures:
1) Brand custodian: Any member(s) that wishes to form a brand could initiate an open-enterprise within the network with its unique brand name and provides a charter for the brand use. This custodian will have an agreement with the contract holder of the network as per the rules of the network constitution. For example, the open-enterprise can use the services of the network as long as it allows for peer-based audits to ensure transparency and ethical behavior as defined in the network constitution.
2) Liability custodian: Any member that wishes to assume the liability of a product can form a legal entity. This custodian will have an agreement with the contract holder of the network as per the rules of the network constitution. Thereafter, any member that abides by the terms and conditions of the liability custodian would be able to transact directly with the market while forwarding the liability to the custodian."
The above material is mostly sourced from the document under construction: Open Value Network: A framework for many-to-many innovation. Authors: Yasir Siddiqui (main author), Tiberius Brastaviceanu.
Creative Commons (BY NC CA) licence granted by the authors. First published on December 25th, 2013
See also the Open Value Network wiki
See also the paper titled: Breaking the chains of open innovation: Post-blockchain and the case of Sensorica by Alex Pazaitis.
"What we see in the case of OSHW is a greater integration between a commercial entity and its market. Traditional commercial entities maintain provider-consumer type of relations with their markets: some "smart" individuals within the firm study what consumers might need, pass that to a team of engineers to make it, and put it for sale with a team of marketing wizards who will make almost anything look like the perfect fit. If the firm was right about the need, which is not always the case, customers pay for it and take it, and ask for service if needed. Service is provided by the commercial entity in exchange of customer loyalty. In this approach, the consumer is educated about what he needs and wants, after the "smart guys" have made the market study, decided on the general need, and offered a one-fit-all solution. This is obviously the extreme case, or what was widely practiced 20-15 years ago. Today, traditional corporations build communities around their brands, and they try to absorb more feedback from their consumers. In the case of OSHW, individual consumers drive design and development.
This integration between the commercial entity and the market in the prevalent OSHW models is made possible by the internet technology. But as we saw above, there is still a clear distinction between the commercial entity and the community. For example, a community member who proposes a new design that becomes commercially successful is not rewarded with a fair share of the profits made by the commercial entity. I call this the "candy economy", meaning that the members of the community around a OSHW company stick with it and contribute mostly for intrinsic motivations, and a small present (a candy) or a token of recognition from time to time.
Is this division between the commercial entity and the community necessary? Or is it an impediment for a better arrangement?
The open value network model abolishes the distinction between the commercial entity and the community!
The open value network is a model for commons-based peer production.
The diagram above depicts the structure of a value network. The physical and the virtual infrastructure, as well as the tools and the equipment used in R&D and in production are part of a pool of shareables, legally owned by a custodian, which is bound by a contract to act in the interest of the community, obeying a set of predefined rules set by the community. All the information and the knowledge generated by the value network become part of the commons (there is no intellectual property). Affiliates (agents) rely on their know how to create value (products), using these resources. This value (products) is exchanged on the market for some form of revenue. The revenue is redistributed among all affiliates in proportion to their contributions, using a value accounting system. The barrier to participation to value creation processes is very low. In that sense, the value network is open. Value creation is so widely defined that it encompasses activities usually performed by members of the commercial entity and the community, in the prevalent OSHW model cited above. Therefore, the two structures, the community and the commercial entity are merged together at the level of value creation.
The open value network model distinguishes between different types of agents, based on their degree of involvement/participation. Thus, we can distinguish between active affiliates (those who take part in value creation) and unaffiliated observers (those who know what's going on in the value network). If we go back to the prevalent OSHW model cited above, we can say that the owners and the employees of the commercial entity, as well as the community members who provide feedback and new design ideas, or who actively propagate information about products are ALL active affiliates.
We also need to note that active affiliates are those individuals who participate in value creation AND who decide to log their contributions within the value accounting system. Participation in the value accounting system is NOT mandatory. Someone can elect to contribute to the value network without expecting something in return. Thus, the open value network integrates a gift economy with a market-oriented economy.
That is all fine on the value production side, but what about the distribution side, or the market side? All the transactional logistics (for the exchanges between the value producing network and its market) and the legal aspects associated with it are moved into what sencoricans call the "Exchange firm", which can be embodied as a non-profit, with the sole purpose of serving the value network.
So why is the open value network a menace to current OSHW business models? Because by abolishing the distinction between the commercial entity and the community, value networks like SENSORICA threaten to drain these communities associated with OSHW-based firms of their talent!" (http://multitudeproject.blogspot.ca/2013/04/open-source-hardware-meets-p2p-economy.html)
"We need to make the distinction between co-creation of value and value exchange. These are two important processes but very distinct ones. Sensoricans are working hard to solve the value accounting problem, which is meant to support large scale co-creation of value. The value accounting is a way to capture individual contributions that blend into a unique product, to evaluate these contributions, and to compute equity in the end product, a % for every member.
NOTE the value accounting system is NOT a system that objectifies value and it is not a bean counting system! It is a contract, a method to which all contributors adhere to reassure every contributor about how the future revenue will be redistributed. That's it! It preserves the subjective nature of value, it can take, in theory, into consideration all types of value, tangible and intangible.
Once the product is made it is exchanged, and this is where you need currencies, or systems of value exchange.
Again, value accounting for co-creation of value and value exchange are two different things in my mind. These two systems must interact with each other, but we need to see them as separate. One is designed to manage the amalgamation of value from different agents into one product, the other one is designed to facilitate value exchange between different agents, with no value added in the process."
The current infrastructure on which the first OVNs rely is too centralized
"Currently, OVN relies on a traditional relational database system, which requires a server that represents a central point of failure that cannot be considered resilient. Likewise, the user interface of OVN is a traditional webserver-based application. Technologies already exist that can replace these traditional client-server (or cloud) models, which I will try to cover in sufficent detail.
Two modern technologies are required to replace the conventional centralized structure of OVN:
Secondly, the data repostitory can be replaced with the Interplanetary File System (IPFS). This is a very ingenious peer-to-peer protocol that replicates versioned data among a distributed network of nodes, guaranteeing availability and migrating data accross the IPFS network where demand is highest to reduce latency and bottlenecks.
Everything in it is content addressed, so it is self-authenticating and can't be confused with with another apparently very similar file - not even different by a dot or a space. It also means it can never disapper behind a broken link and can't vanish into a gone server or memory hole. No particular server need always be online but the file is always online.
Also, data can be cryptographically authenticated and signed and redundant data is removed and replaced with a locable reference (much like zip or other compression), so it has the good properties of a blockchain without the large waste of storage. The version history repository, like Git, ensures that all changes are completely auditable.
In fact, a shared virtual file system (via FUSE) probably means that the JSON messaging between OVN nodes would be redundant. JSON messages would probably still be used for IPFS searches. The system could present itself as a seamless interface to a unified data repository, but as impossible to disrupt or corrupt as bittorrent.
IPFS stores version differences in a kind binary tree structure (Merkel Directed Acyclical Graph) and thus has a tremendous efficiency advantage over blockchains, which have to be fully copied to every node. The bitcoin blockchain size is already 45 Gigabytes and will never cease growing, making blockchains impractical or impossible for mobile applications, reducing the degree of decentralization." (https://hackpad.com/Omnilocal-Resource-Based-Economy-ORBE-OixTKH54JY3)
OVN, Ethereum and IPFS
Jim Anastassiou from SENSORICA has done some work for transitioning the OVN's infrastructure, the NRP-CAS, or network resource planning and contribution accounting system, on truly p2p infrastructures. SENSORICA affiliates are looking at Ethereum for the governance of OVNs and to IPFS for data and information storage. On the governance side, Jim has identified three main modules that can be implemented on Ethereum: The Governance Equation, the Value Equation, and the Resource management system.
- Governance Equations are algorithms that can also be seen as smart contracts, that govern the access to decision making to network affiliates, based on their economic contributions.
- Value Equations are algorithms that can also be seen as smart contracts, that govern the redistribution of benefits to all participants in an open venture based on their economic contributions.
- Resource management systems are bundles of virtual representations of resources with smart contracts associated with them, that govern access to resources and their use.
Other people work on building process management, reputation systems, etc. on Ehtereum.
Recently, sensoricans have looked into Holochain as an alternative to Blockchain, as backbone technology for resource and process management applications.
OVN's vs DAOs
Tiberius Brastaviceanu et al. :
“An Open Value Network (OVN) is primarily an organizational framework designed to support commons-based peer production” ; structure comes first. But not in the same way as DAOs. DAOs are more an engineering approach, designing a game with the goal to incentivize people to behave in a certain way, geared towards collaborative production. OVNs provide a frame, without prescribing a specific game for open ventures. Open ventures can start from a template game, remix a template or create an entirely new game. An OVN is seen as an ecosystem. Ventures within the network interconnect at a very intimate level as valuables flow freely between them. In DAOs there is no real discussion about flow of resources between them other than cryptographic tokens. Nevertheless, DAOs do have an underlying ecosystem of libraries of smart contracts and DAO2DAO protocols, AMM (Automatic Market Makers) for tokens, TheGraph to provide interoperability between DAOs. The underlying blockchain provides basic connectivity. But no real structure exists for DAOs to perform the level of sophisticated project management, division of labor, accounting methodology that OVN embed in their framework to get things done and that legacy organizations have benefited from for centuries."
What does radical openness mean?
"Radical openness means that any person is able to join a production process. The only constrains are there to protect the shared resources, the commons. This has a profound effect on the way the production process works.
From an economic point of view, radical openness and radical transparency allows engagement to the production processes by a great number of people that can produce value in amounts that could have never before being conceived(wikipedia, wikispeed).
From an ethical point of view, the production process tries to maximize product value rather than profits. At the same time revenue is distributed to a greater number of people. Because everyone is free to join and cocreate value, in an open and democratic way, people love to work, they work on things they like or are good at." (http://commonsfest.info/en/2015/anichta-diktia-axias/ April 2015)