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Tuesday, August 29, 2006

Open Business as Entrepreneurs Lifecycle Management

After doing some research and experimenting with "collaborative entrepreneurship", this is how I see that Open Business should (and hopefully will) emerge:
Entrepreneurs Lifecycle Management:

- Entrepreneurs, because they are the drivers of the economy, the ones who create value from their ideas. They should be the clear focus for any business opportunity.
- Lifecycle Management, because throughout their life they will most probably succeed at some point, and they will succeed many times if they are good at what they do
The cycle includes starting a project/company, generating revenues, cashing out or growing through acquisition. All transactions that can easily be identified and measured.

So what's new?

The current model for business is based around corporations with many individuals and projects. The individuals inside the corporation are managed by the excutive team. The executive team ultimately answers to the investors. And the overall responsibility for actions is spread along the chain with enough intermediaries that none can feel entirely responsible for anything bad that the Corporation does.
Inside the corporation, the focus is on products or services issued managed as projects. And while everybody agrees that the people are what makes the difference most of the time between good and bad projects, the focus remains on projects, and the assumptions is that one qualified individual can be replaced by another qualified individual.

Instead, I would like to suggest that a better model would be to focus on entrepreneurs, and the team of individuals around them.
In this model:
- everybody is their own corporation of one individual
- the project is managed as a commons, with the entrepreneur as the benevolant dictator and with the other people involved as contributors volunteering to the project
- the entrepreneur carries the idea, and keeps the motion forward with the help of whoever is relevant at a specific time/phase of his project
- At each step of the lifecycle (where transactions are clearly identified and value can be measured), the entrepreneur will decide how much value was added by who, and will distribute the reaches accordingly

Yeah right, but how do you make it work?

There are many issues obviously with the model:
- it takes a while to see revenue: this all depends on where the entrepreneur is in his lifecycle when you meet him. If he is just getting started with a project, it may take some time. But if he already has revenue coming in, then it becomes much easier.
- it requires that everybody has access to an entrepreneur: this is what social networking should help achieve. Whoever comes out of school or is looking for a job is already using his/her network to find such a job. So people are already going through the motion, the only difference is that since the system is focused on people, it requires to focus not just on skills, but also affinity with the entrepreneur and the other members of the team. I believe that it is better to have such focus anyway, so this is not really a big leap from what we have today.
- it requires complex discussions to distribute revenues: yes, it may be complex, but no if the size of the "business cell" is small enough. In order for such a model to take off it needs to be constructed with a layer of small businesses rather than huge organizations. But we are seeing already that ecosystems of small subcontractors are doing very well if not better than large organizations in Asia (see the ecosystems studied in "The Only Sustainable Edge" from John Seely Brown). So if we are talking small business cells, discussions remain at the human level and are very manageable. If I do not get what I think should be my share of the rewards, I am always free to work with somebody else. At the same time, the entrepreneur has no interest in being unfair because the word would get out and nobody would want to work for him.
- It will be hard to get investment: who would invest in projects if they are not hosted within corporations? Well, what we are talking about is similar to what has been done to IP in the Open Source model. Everybody gets the right to use instead of the right to own. So now investors are contributors, except that they contribute money instead of just time. And they will get their share just as the other contributors (call them angel employees for this discussion, or think advisory capital as described by Stowe Boyd). The good news with this concept is that money will no longer get accumulated in stock, but rather it will be re-distributed to all contributors. As the result, it will also probably become a lot less sparse than it is today.

Some good things about this:
- no need for large corporations anymore, the corporation is used for individuals to be the recipient of their business personna. This will bring to an end a model where organizations will sometime knowingly do the wrong thing for the sake of generating revenue for their investors. In a one man corporation, nobody can hide.
- a much stronger focus on people: any contributor is no longer a pion in a large organization, but rather somebody who chose to work with a given entrepreneur or a given team, and who has been accepted for his/her contribution - a good thing for everybody's own self estim
- a "companion" model, where individual contributors will be included as part of a team, and where it is everybody's interest that each individual keep learning and growing.

So how real is this?

As I mentionned earlier, and as it has been presented for example in "The Only Sustainable Edge", collaborative entrepreneurship and crowdsourcing are trends going in the right directions. Meanwhile telecommuting is changing the way people think about their job and how they relate to their company.
I believe that change is on the way.
Let me know if you think I am dreaming...

2 comments:

Sam Rose said...

I think it is possible to create knowledge bases of ways that people can accomplish things by “doing less with more”, for one.

I theorize that investors would be more willing to fund alliances of micro-enterprises if those micro-enterprises were able to show they can compete with, or outcompete traditional companies (and I believe that they will be able to).

I also think that alliances of micro-enteprises will ultimately be better positioned to take advantage of open knowledge/co-created knowledge commons, open source software, open design, and commons-based licenses. I think that alliances of micro-enterprises will eventually increasinlgy be able to out-innovate and out-perform current corporate institutions.

Example: I could create a site online that invites people to suggest and discuss something that they would like to see created, like a new type of software product, or a new type of service. Micro-entreprenuers could work right on the site (perhaps a wiki or something similar) with the enthusiasts. Then, people could bid to fund the projects, and micro-entreprenuers, or alliances of them, could bid to create or administer the project. The whole project creation knowledge base could be open. And, the project proposer could specify that they even want the design or content of the product to be open (instead of patent, copyright, or closed license).

In this system, you have a whole process that stands apart from the traditional way that people solve problems through business. You have an easy to access way for people to lay out visions, and make rules up front about how they are used. You also have an easy way for individuals, small groups, and whole communities to make a constantly growing shared knowledge base. And, you have a way that people can raise capital. You have a way for people without a lot of capital to participate in directly investing in whatever they want to. And, because they can invest small amounts, you have way for small investors to spread their risk.

Another project proposer could be a company IBM, deciding to use the system to outsource more traditional work. The system would be open to micro-enterprises, traditional companies, volunteers who want to work on open projects, etc

mdangear said...

Sam,
On the fund raising, I agree with you that there should be other ways than what we have today. The closest I have seen is Angel Funding, because in the end an Angel is a micro-investor.
Another project that seemed very interesting is the Media Venture Collective (http://www.mediaventure.org/). From what I have seen however, the project has not really taken off yet. Maybe the time will come where the concept can become more popular...