Transvestment
= " the act of moving accumulated wealth out of the system that produced it and into commons that cannot be seized." [1]
Simple Definition
"The transfer of value from one system of production to another"
Description
"Transvestment (Dmytri Kleiner & Baruch Gottlieb) is a macro-economic accounting identity which elaborates the exchange of value between domains of the economy under control of capitalist modes of production and autonomous domains which outside of direct capitalist value extraction practices.
An autonomous, communal economic entity must constantly endeavour to generate net positive transvestment, which would mean greater exvestment from the capitalist domain than the value capitalist agents are able/allowed to extract from the community."
Visualization
A visualization of transvestment through a Venture Commune, via Dmytri Kleiner and Baruch Gottlieb:
Characteristics
One-Directional Design
Michael Haupt:
1.
"The design of transvestment is one-directional by intent. Capital that enters a Bioregional Commons Trust cannot be pulled back into private holding. Land placed under a 99-year renewable ground lease structure (following Community Land Trust precedent) is held in perpetuity by the trust; the transvestor does not retain a reversion right. Reserve capital that backs a bioregional currency during establishment can be gradually returned only after the reserve ratio decreases as the bioregional economy matures, and only through mechanisms the community controls.
This one-directionality is what distinguishes transvestment from impact investment. Impact capital retains the option of exit. Transvestment forecloses that option by design. The trade the wealth holder makes is loss of extractive optionality in exchange for standing in the emerging order."
(https://wiki.bioconomy.earth/concepts/transvestment)
2. The reverse-transvestment loophole
"A recurring design question is whether transvestment is reversible. In earlier commons designs (impact investment, some purpose trusts), the answer has effectively been yes: capital can be pulled back into private holding through structural changes, executive decisions, or legal reinterpretation.
The ... five pathways are designed to close the reverse-transvestment loophole.
- Pathway A places land in perpetual trust with no reversion; the trust holds the title, and the patron holds only what the community grants through participation.
- Pathway B’s capital return is possible only through community decision, not through patron withdrawal.
- Pathway C’s loans are repaid in bioregional currency, which cannot be re-extracted to fiat without community consent (and, under demurrage, cannot be hoarded without accepting the carrying cost).
- Pathway D locks intergenerational capital in the trust while providing heirs with a currency-denominated income stream.
- Pathway E is automatic and cannot be avoided while the patron transacts within the bioregional economy.
The loophole closure is a design feature, not a punishment. It is what makes the patron’s crossing structurally different from earlier philanthropic and impact-investment forms."
(https://wiki.bioconomy.earth/frameworks/five-transvestment-pathways)
Historical Window
Michael Haupt:
"The transvestment argument comes with a claim about timing. The late Roman senatorial aristocracy is the historical anchor: a wealth cohort with vast landed estates and, in many members, the perception that the imperial order was changing, that failed as a class to reposition and was liquidated with the system it clung to. Cassiodorus was the exception; he retired from the Ostrogothic court and founded the Vivarium monastery, deliberately transferring classical learning into the emerging monastic-Christian substrate. Boethius was the cautionary case; he stayed inside the declining political order and was executed by it. The senatorial class chose Boethius’s path.
The claim is that a comparable window is currently open, and closing. What Cassiodorus did was rare but possible; what the senatorial class did was common and fatal. The transvestment proposition names the window and offers a specific architecture through which to make the crossing while the option remains."
(https://wiki.bioconomy.earth/concepts/transvestment)
Note from Michel Bauwens: "I have a somewhat different perspective on this. There was in fact a successful Elite Transfer from the Roman Aristocracy to the Christian Church Institutions."
Transvestment, Exclosure and Inference as a Service
Please check our entries on Exclosure and Inference as a Service to understand the remark below:
Victor writes:
"I think you nailed it, weaving in transvestment and exclosure.
Implication being that if the market is exclosed then internal relational conditions for lower costs of transaction, coordination, and production - relative to market - become possible. So transvestment would be the dynamic of resources and people flowing in as a result of that efficiency gradient."
(personal communication, September 2026)
Typology
Michael Haupt:
"Contrast with adjacent terms:
- Investment: expects a financial return in the same regime.
- Divestment: withdraws capital without redirecting it.
- Impact investment: financial return plus intended social or ecological outcome, with the option of exit retained.
- Transvestment: one-directional crossing between value regimes, with exit foreclosed by design."
(https://wiki.bioconomy.earth/glossary/t-z/transvestment#)
The contrast between the Fugger and Medici positions (instrumental funder vs constitutive builder) vs. Transvestment
Michael Haupt:
"Historically, patronage of civilizational reform has taken two structurally distinct forms: ... in short, the distinction is between an instrumental funder and a constitutive builder.
The Fugger position, named for the Augsburg banking dynasty of the sixteenth century, is patronage as portfolio decoration. The Fuggers funded humanists while their core business was collecting the indulgence revenues that ignited the Reformation. Their capital was denominated in the order Luther attacked. Their cultural patronage bought no positional advantage in the emerging Protestant-commercial world.
The Medici position, named for the Florentine banking family, is patronage as constitutive investment. The Medici funded Marsilio Ficino’s translation of Plato because it gave the family a cultural authority no amount of banking could produce on its own. When the Medici were expelled from Florence in 1494, the regime fell but the Platonic revival survived, because the reform had been embedded in printed texts that propagated across Europe for two centuries. The reform was not decoration on Medici wealth; it was where Medici standing lived.
Transvestment is the move from the Fugger position to the Medici position, and beyond it. Where the Medici retained ownership of villa, capital, and household, transvestment as the EA defines it goes further: the patron’s capital enters the substrate and becomes the substrate. The commons trust holds it. The bioregional currency circulates it. The clearing layer connects it. The patron participates as a community member with standing earned through contribution, not through capital control."
(https://wiki.bioconomy.earth/concepts/transvestment)
Pathways
Michael Haupt:
- "Pathway A — Land and productive assets into a Bioregional Commons Trust.
- Pathway B — Fiat capital capitalizing the currency reserves of a Bioregional Financing Facility.
- Pathway C — Patient capital endowing regenerative enterprises through interest-free or below-market loans repaid in bioregional currency.
- Pathway D — Intergenerational vehicles converting inheritance into commons endowment.
- Pathway E — The demurrage dividend, in which a wealth holder living inside the bioregional economy contributes to the commons through the holding of currency itself."
(https://wiki.bioconomy.earth/concepts/transvestment)
2. Sequencing, by Michael Haupt:
"The five pathways can be deployed in any order, but a common sequence for the full transvestor is A → C → D → B → E.
Pathway A moves land into commons stewardship first, establishing the ecological backing.
Pathway C deploys liquid capital into regenerative enterprises, funding the productive economy that will generate substrate value.
Pathway D restructures inheritance, ensuring the transition carries beyond the founding patron’s lifetime.
Pathway B capitalizes the currency reserve, funding the monetary infrastructure that connects the substrate to the productive economy.
Pathway E follows automatically once bioregional currency is in circulation and the patron is transacting within the bioregional economy.
Any sequence is structurally valid; the sequence above minimizes the periods during which the patron holds partially transferred capital in uncertain legal or economic states."
(https://wiki.bioconomy.earth/frameworks/five-transvestment-pathways)
3. The Pathways Detailed, by Michael Haupt:
"Transvestment is capital crossing between value regimes. The Five Pathways are the operational specification of the crossing: what a wealth holder actually does, using which instruments, under which jurisdiction, and with which structural consequences.
The pathways are designed to be modular. A patron may deploy through one, two, or all five. Each pathway is self-contained and produces a specific structural change; combining them produces a compounding effect on the patron’s embedding in the emerging order.
The asymmetry between the pathways is intentional. Pathways A, C, and D use proven legal mechanics that exist across most jurisdictions. Pathways B and E require construction of architecture that does not yet exist at the required scale. The asymmetry calibrates the ask to three patron profiles: the deployer (who uses existing mechanics through A, C, and D), the builder (who capitalizes new architecture through B), and the full transvestor (who moves through all five in sequence)."
(https://wiki.bioconomy.earth/frameworks/five-transvestment-pathways)
Pathway A: Land into a Bioregional Commons Trust
Legal mechanic: Community Land Trust (CLT) precedent, adapted to jurisdiction. Assets held in perpetuity by the trust under 99-year renewable ground leases.
What the patron does: Transfers title of land or productive assets into the Bioregional Commons Trust. The trust holds the asset in perpetuity under steward governance. The patron loses reversion rights; the community gains inalienable stewardship.
Structural consequence: The transferred assets become the ecological backing for the bioregional currency. The patron’s standing in the bioregional order is now tied to the health of the substrate their capital funded. Board seats and decision authority do not follow the capital; they follow participation and contribution.
Precedent: The US Community Land Trust movement (from 1969 onward) provides the direct template. New Communities Inc. in Georgia, the first CLT in the United States, was founded in 1969 by civil rights activists. The National Community Land Trust Network now catalogs over 260 CLTs in the US alone. UK, Canadian, and Australian variants exist. South Africa’s Communal Property Association Act 28 of 1996 provides the local statutory pathway.
Patron profile: The deployer with land or productive assets to transfer. Also available to the full transvestor as the first move in a sequence.
Pathway B: Fiat capital into currency reserves
Legal mechanic: Capitalization of the Bioregional Financing Facility’s currency reserve. Full reserve during the establishment phase, with the reserve ratio decreasing as the bioregional economy matures.
What the patron does: Deploys fiat capital as the currency reserve backing bioregional currency issuance at establishment. The reserve backs RPI (Regenerative Participation Income) issuance during the phase when the bioregional economy is not yet mature enough to back the currency on its own substrate.
Structural consequence: The patron’s capital enables the bioregional currency to function during the transition period, when substrate-backed issuance would be insufficient to support the coordination work required to build the substrate. As the bioregional economy matures and substrate backing becomes viable, the reserve ratio decreases and the original capital can be gradually returned to the patron on terms the community controls.
Precedent: Reserve-backed currency operation has multiple historical and contemporary analogues. WIR Bank in Switzerland has operated a mutual-credit currency since 1934, with member trade capacity as the backing. The Wörgl and Wära demurrage currencies (1932-1933) operated under partial reserve. The design specification here is novel in its combination of features (bioregional issuance, demurrage carrying cost, substrate backing over time), and the Bioregional Financing Facility institutional template developed by Dark Matter Labs and the Buckminster Fuller Institute provides the phased-development architecture.
Patron profile: The builder. This is the pathway that requires the largest capital deployment and produces the most structural change, because it capitalizes the monetary infrastructure of the emerging order.
Pathway C: Patient capital endowing regenerative enterprises
Legal mechanic: Interest-free or below-market loans to regenerative enterprises, repaid in bioregional currency. Yields must be spent locally or gifted onward, keeping capital cycling through the commons.
What the patron does: Provides patient capital (long-tenor, non-extractive terms) to regenerative enterprises operating within the bioregion. Loans are repaid in bioregional currency, which the patron either spends locally or gifts to the commons. The capital cycles through the bioregional economy rather than exiting to distant shareholders.
Structural consequence: Regenerative enterprises gain access to capital on terms compatible with their business model and time horizon. The patron’s capital circulates within the bioregion rather than being extracted. Yields, denominated in bioregional currency, either fund the patron’s continued participation in the bioregional economy or return to the commons through gift.
Precedent: Patient capital and impact-first investment have significant contemporary practice, though most operate within extractive currency and expect exit on standard terms. The pathway here is distinctive in that the loans are denominated in bioregional currency for repayment, closing the extractive exit loop. Grameen-style microfinance provides the tenor and terms precedent; the bioregional currency repayment provides the retention feature.
Patron profile: The deployer with liquid capital and a preference for continued participation in a specific bioregion. Also available to the full transvestor as the deployment channel for capital that Pathway A cannot absorb.
Pathway D: Intergenerational vehicles into commons endowment
Legal mechanic: Estate structures (trusts, foundations, family offices) that convert inheritance into commons endowment. The underlying capital is held perpetually by the commons trust; the income stream passes to heirs in bioregional currency.
What the patron does: Restructures inheritance so that the underlying capital enters a Bioregional Commons Trust while heirs receive an income stream denominated in bioregional currency. The capital is not lost to heirs; the extractive optionality is. Heirs participate in the bioregional economy as beneficiaries of a perpetual endowment.
Structural consequence: Intergenerational wealth transfer is redirected from private accumulation into commons endowment. Heirs are structurally embedded in the bioregional order from the point of inheritance. The perpetual endowment sustains the community coordination work across generations, decoupled from the founding patron’s continued attention or survival.
Precedent: Purpose Trusts (Steward Ownership) are the closest contemporary precedent. The Patagonia transfer to the Patagonia Purpose Trust and the Holdfast Collective in 2022 is the most visible example. The Bosch and Zeiss/Carl-Zeiss-Stiftung models are historical analogues that have operated across multiple generations. The Purpose Foundation in Germany maintains a growing catalog of steward-ownership structures.
Patron profile: The deployer with intergenerational capital and heirs who accept the transition. Also available to the full transvestor as the mechanism that carries the substrate forward beyond the patron’s own lifetime.
Pathway E: The demurrage dividend
Legal mechanic: Demurrage on held bioregional currency. Carrying cost accrues to the Bioregional Commons Fund. No explicit transfer is required.
What the patron does: Holds and uses bioregional currency in the ordinary conduct of economic life within the bioregion. The carrying cost on held currency ensures that a portion of the value passes to the commons through the currency’s own design. The wealth holder contributes to the commons through the holding of currency itself, without any separate transfer or philanthropic action.
Structural consequence: The patron’s contribution to the commons is a passive function of participating in the bioregional economy. The design ensures that anyone holding significant currency balances is a proportionally significant contributor to the commons, without any voluntary act. This closes the free-rider problem that undermines pure gift-based commons funding.
Precedent: Silvio Gesell’s demurrage design (Freigeld) provides the theoretical basis. The Wörgl experiment (1932-1933) provides the operational precedent under crisis conditions. Modern demurrage-adjacent designs include some CBDC implementations (though not with commons-directed carrying cost) and complementary currency designs. The specific bioregional-currency-with-commons-directed-demurrage design is the EA’s synthesis.
Patron profile: Every participant in a mature bioregional economy. Pathway E is not optional for wealth holders who transact in bioregional currency; it is a structural feature of the currency itself. Pathways A through D are voluntary; Pathway E is structural for anyone holding the currency at all."
(https://wiki.bioconomy.earth/frameworks/five-transvestment-pathways)
Commentary
Tiberius Brastaviceanu on Transferring Assets to the Ethical Economy:
"Michel Bauwens wrote:
- "In addition, we create ‘transvestment’ vehicles, which allow the acceptance of capital, as disciplined by the new commons and market forms that we develop through peer production, this creates a flow of value from the system of capital to the system of the commons economy. Faced with a crisis of capital accumulation, it is entirely realistic to expect a stream of value which seeks a place in the commons economy. Instead of the cooptation of the commons economy by capital, in the form of the netarchical capitalist platforms which capture value from the commons, we coopt capital inside the commons, and subject it to its rules."
We already see this with SENSORICA's service experience. If you ??click the link you'll see how SENSORICA is doing it. But the paragraph that is pertinent here is the following:
"This mutually beneficial economic relationship between classical institutions and SENSORICA, as an open innovation and peer production network, can be seen as a bridge between the classical capitalist economy and the p2p economy, as a channel for transfer of resources from the old economy to the new. "
I don't believe in protective measures, like reciprocity-based licenses. We simply do more and better with less. What I see is that corporations that interact with will be forced to adopt our open innovation model, because this is the only option they have to remain relevant in their market. In doing that, they shed functions to the crowd. In other words, the era of outsourcing turns into an era of crowdsourcing, which is, in Michel's terms, believe it or not, the "commonification" of the corporation : ) Well, if you don't believe me, we can sit down and I can show you how it manifests itself. In other words, yes, I see clear and tangible signs of the corporation starts to subject itself to the rules of commons-based peer production."
Interfacting Sensorica's Peer Production with classical institutions
Tiberius Brastaviceanu, Scott Laughlin, Jim Anastassiou
"SENSORICA is not a corporation, it is not a coop, it is not an non profit, it is not an LLP. It is an open value network. From a legal perspective, it is a non-registered association. It is an open network of freelancers that coordinate and co-manage their work using some IT tools (the NRP-VAS) and some special governance. If you still don’t understand what SENSORICA is and how it operates please don’t panic. It is something new and it takes a bit of time to get accustomed. It is new, but at the same time it is very similar to other new things that have emerged recently, like Bitcoin for example. We can say that SENSORICA is for production what a blockchain-based cryptocurrency is for exchange. So the million dollar question is how do we interface these new creatures with the ones from the classical world? How do you sign a contract with a loose network of individuals? Who is going to show up to do the work? How can we guarantee that a swarm of people converging on tasks from all four corners of the planet via the Internet will deliver on time, and with the required specifications? Who is responsible and accountable?
In our opinion, SENSORICA is the most advanced commons-based peer production network applied to hardware production, using infrastructure and methodologies that have been specifically tailored for open networks. We claim that the OVN model is able to sustain deterministic economic processes and accountability, while preserving the open and fluid nature of networks, while maximizing individual autonomy. This new ability of open innovation and peer production networks to generate predictable outputs, demonstrated by SENSORICA, was the main topic of the meeting with Jenn Gustetic from the White House, in June of 2015.
The role of SENSORICA in the service cases enumerated earlier shaped as the interface between the crowd and the classical institution. In other words, input from the crowd can be structured and channeled towards solving someone’s problem, through SENSORICA’s infrastructure, methodologies and governance. But let’s not get confused, we are not talking about a crowdsourcing platform. So what is the difference? A crowdsourcing platform like Upwork is an intermediary between companies and the crowd: the company posts a problem with a prize for someone who can provide the solution; the platform takes a cut. Taskrabbit is the Uber of cheap labor, connecting people who need chores done with people who can do them, while taking a cut from their transactions. In both cases, the intermediary platform is owned by a company and those who supply the work aren’t organized, they respond individually to demands. In the SENSORICA model, no one in particular really owns the platform. Affiliates of the network organize, they form groups to tackle complex problems for long periods of time. In the cases discussed here, the size of a project is comparable to a startup, reaching up to 10 individuals. The longest duration of steady work is 6 months and ticking. These are the first pilot projects, but the potential is for thousands of individuals per project, which amounts to a large size enterprise, for long-term projects that can take years. SENSORICA is really showing the signs of a new system of production that can operate at large scale. But as an R&D service provider, it can be already be seen by classical institutions as R&D on demand, as an adjacent, very cohesive R&D operation open to the crowd, funneling in low cost and rapidly evolving open innovation. Practically the entire revenue generated is split among participants, with only 5% going to maintain and to develop the infrastructure, which is under the total control of participants.
At the third iteration, the service beneficiary gets a fast paced innovation at a quarter of the normal cost. Even more interestingly, the cost cuts aren’t transferred to those who provide the service. They are actual cost savings that result from a heavy use and rapid remix of open source, from the mutualization of resources within the network, from the collaborative nature of activities, from the elimination of bureaucracy, and other inefficiencies that come from lack of motivation. On the contrary, everyone is paid with the same measure, according to the Canadian labor market, no matter where the contributor lives. More precisely, within SENSORICA those who live in Pakistan aren’t paid less. And if that wasn't enough, on top of providing rapid innovation at a fraction of the cost to classical institutions, so that they can maintain jobs, at the same time sensoricans increase the value of the global commons, because everything they do is open source. All the data about the economic activity within SENSORICA is open to the public, we can’t make this up!
This mutually beneficial economic relationship between classical institutions and SENSORICA, as an open innovation and peer production network, can be seen as a bridge between the classical capitalist economy and the p2p economy, as a channel for transfer of resources from the old economy to the new."
Can we use Tranvestment strategies towards the state ?
In this editorial, Michel Bauwens makes a parallel between tranvesting capitalism vs transvesting the state:
See: Post-Capitalist Strategy of the P2P Foundation
Examples
Examples provided by Sensorica
Tiberius Brastaviceanu:
Example 1: The Barda case
The Barda periscope project was the first implementation of a new open project development methodology designed by Fernando, Tiberius and Lynn, in the context of a service provided to a client. This methodology was formalized in SENSORICA’s network resource planning (NRP) software through a concept named Workflow recipes, which are time-dependent and deliverables-dependent bundles of Processes associated with a Project (a context of work). This methodology consists of the following steps: Project initiation, Design considerations, Design, Prototyping, and Product. All the contributions to the Project were logged within this structure.
In order to reduce the perceived risk for the client, the Project was divided into milestones. A cost estimation was produced for the client for every milestone. The agreement was to get paid at the end of every milestone. Every milestone was to be delivered with complete documentation, open source style. The client could stop the process at the end of any milestone and decide to switch to another organization to complete the Project. The documentation provided a guarantee for rapid continuation. The burden was on SENSORICA to provide a good service, at the level of satisfaction of the client, in order to complete all the milestones.
Moreover, the activity logs in the NRP and the associated documentation provided the client with full and real time access to the process. Coordination on different issues and tasks took place in context, directly in the working documents, and the client was invited to provide feedback.
A problem emerged during this project: very rapidly, the work documents became long and the client’s ability to follow the process was hindered. We spent time formatting the documents to make their content more transparent, but these measures didn’t diminish the time spent by the client to effectively follow the process. The situation was more complex, because this was a three parties relation, between the SENSORICA team, Barda and Parcs Canada, Barda’s client. Information produced by sensoricans had to be reformatted to match Barda’s project management structure and the language used between Barda and Parc Canada. In the end, Barda provided sensoricans with a template for 3-way communication, based on their own open issues and tasks.
The Barda periscope project was a small project, involving only a few contributors (see project in SENSORICA’s NRP-VAS). Coordination was fairly easy at this small scale.
Example 2: The Queen’s University case
Joshua Pearce is a professor at Queen’s University and Michigan Tech University. He is dedicated to open science and sustainable technologies, and had been following SENSORICA since 2013. He is the author of the Quantifying the Value of Open Source Hardware Development paper. For years, Joshua’s team has designed multiple scientific instruments by building on various open source projects. These instruments have been released under open licenses. In 2015, he decided to take a risk and transfer to the SENSORICA network the task of designing an instrument used in the characterization of photovoltaic materials. This was an important shift in Joshua team’s approach, from in house development with inspiration from open source projects to crowdsourcing development through the SENSORICA distributed network. The main goal was to create an instrument with a community around it, which would increase the speed of innovation, insure continuity of the product, and increase its diffusion rate to universities around the world. At the same time, the PV characterization project was also seen as a pilot project to build an interface between the crowd and a classical institution, Queen’s University, through SENSORICA’s p2p infrastructure, open project methodologies, and governance.
The open science movement is building momentum. It started with open publications, increasing access to scientific knowledge. This initiative became more nuanced, proposing early stage sharing of data and information (prior to the publication), sharing of unpublished past results and even sharing of lessons learned from failed experiments. In parallel with the development on the distribution side, the movement also built infrastructure for data sharing in resource-intensive domains of inquiry, like genomics for example, as well as social networking platforms designed for scientists and scientific projects (like Research Gate). Recently, we have seen initiatives for redesigning scientific instruments that are in tune with the open science philosophy. New instruments are acquiring new characteristics: they become shareable, they facilitate socialization of scientific activities, they become modular and interoperable, as well as easily serviceable and upgradable. Efforts also go into redesigning scientific labs, making them more collaborative, interconnected, accessible through teleproximity, etc. SENSORICA leads the way to open science, as one can see in this presentation. The PV characterization project incorporates many of these new aspects.
This project was started by incorporating all the lessons learned in the Barda periscope project. There was a difference in scale: more individuals contributed to the design and the prototyping of the PV characterization device (11 affiliates and over 200 logged contributions). The requirements for accountability and responsibility were also higher, since we were now dealing with a University. All this put more pressure on our support processes. We created a Project responsible role, to be the interface between the University and the SENSORICA OVN. Financial incentives were attached to it. Moreover, the roles of outreach (find skills), orientation (help new affiliates get accustomed), coordination (make sure that all affiliates are on the same page) and facilitation (make sure that all affiliates get the help they need) became very important. We experimented with new tools for orientation that proved to be more effective. A specific forum was created for the project, in order to focus discussions. The PV project was also more complex, its documentation proliferated faster, which lead to the need of content maps in order to ease the navigation.
During the course of the project we noticed that the outreach function was very important and not so easy to fine-tune. The answers to our signals propagated on social media were slow to come and the conversion to an active contributor was low. We attributed part of that to a poor general understanding of SENSORICA’s OVN model, including its system of incentives. At the beginning of the project, we grossly underestimated the efforts required for outreach, for generating the content to be broadcasted, for establishing a constant social media presence, for mapping the open source ecosystem, targeting specific pools of talent, and establishing trust relations. The project was run below the critical mass of open projects and therefore required a more centralized form of governance.
Example 3: The IoT for heavy industry case
NOTE: We cannot publicly disclose the name of our sponsor in the IoT for heavy industry applications case.
In December 2015, Sensoricans were contacted by a Montreal-based company to help develop an IoT solution for applications in heavy industry. They wanted to make their product “smart” and able to predict its life expectancy. The requirements consisted of a mesh network of sensors that send data to a cloud for analysis, in order to predict failure. The race to be first to market set the pace for fast innovation and low cost. The company crafted a business model based on services, not on selling the hardware, which is fully compatible with the open source development that SENSORICA can offer. The agreement was that everything that SENSORICA develops can be released under an open source licence, with no restrictions for Sensoricans to remix this technology in other projects, including commercial ones.
Thus, the company became the sponsor of an open source IoT applications development project. CAKE, the custodian of the SENSORICA OVN takes in financial contributions from the company and distributes them to network affiliates, as a reward for their involvement to the project, as fiscal sponsorship. The company is not a client of CAKE, since this a three party relationship, between the company, CAKE and the world, the later benefiting from the open source IoT applications design, and not simply a one-to-one service exchange between two organizations, even if the company can draw a direct benefit from this relationship.
The Sensor Network project started almost in free form. The first tacit agreement was that the sponsor informs development based on their knowledge about these applications. Decisions on development were to be made during scrum meetings between Sensoricans and employees of the sponsor, Sensoricans would work on tasks, log their time contributions and get some financial compensation every two weeks, relative to their efforts. As the project unfolded, we felt the need for better planning and cost estimation. The first improvement was to manually create a map of content generated by SENSORICA’s R&D activities. This brought the idea of being able to generate dynamic content maps, either from the NRP-VAS (every development process has R&D documents as deliverables) or from our CRM (content management system), which is not yet implemented. In order to allow the sponsor of the project to follow almost in real time metrics about the project, we created an experimental dashboard. In the end, we realized that we needed to synchronize the sponsor’s ERP with SENSORICA’s NRP. We crafted a shared language and project development structure, and the agreement was to keep track of work in both places. This brings the need to create interfaces between the two management systems, which hasn't yet been implemented. Moreover, we also decided to produce cost estimates for future tasks, to allow the sponsor to better plan its budget. All these measures had a positive impact on our relationship by making our activities much more predictable and auditable, and by increasing the level of reliability of the network.
As the value created during this project increased, the project sponsor realized its first-to-market advantage was in potential danger if the technical work was put in the context of their direct business interest in a public way. This sparked an interesting debate on openness (access to participation) and transparency (access to information). We drew on SENSORICA’s past experience with a project that was sensitive to transparency, and implemented an open and semi-transparent project model. In more concrete terms, anyone can join the project, which preserves the openness aspect. Most of the technical information generated is public from the start, but some documents that contain information about how different components can be used in an application similar to the business case of our sponsor were made non-public. Project affiliates need to sign a non-publication agreement for these documents clustered into a separate folder, but there is no restriction related to the use of this information in any other project. All these non-public documents have a date for publication, which is related to the sponsor’s market deployment strategy and pace. We believe that in through this arrangement we preserved the nature of the SENSORICA OVN, while mitigating the risks perceived by the sponsor, which led a stronger synergy between the two entities." ([2])
Examples provided by Enspiral
- see their Capped Returns-based investment vehicle