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We have published the Distributive Enterprise concept first in 2012 - see the MIT Innovations Journal article.
A Distributive Enterprise (DE) is a social enterprise that focuses on open economic development - open collaboration in innovation. In particular, it is a transparent enterprise which maintains the open replication of such an enterprise - independently by others or with incubation assistance - at the core of its operational strategy. As such, this differs from a traditional franchise - in that the Distributive Enterprise (perhaps to be called Open Franchise?) has no strings attached.
The Distributive Enterprise is a business model that applies to any product or service.
The assumption of a DE is that significant potential exists for distributed market domination by a DE in any sector. OSE theorizes here that a DE is destined to become a dominant market force, as long as true Economic Time Binding mechanisms are developed within the field of Open Source Product Development. This is based on an assumption from game theory, which states that cooperators win - and as such, collaboratively-developed enterprise can become a dominant market force. The assumption is that cooperation allows many individuals to build enterprises, enabled by the instant communication of the internet age. When applied to large-market items (billion dollar and larger market items), which are currently monopolies or behave in a monopolistic fashion, the result of a DE is significant improvement in the distribution of wealth.
'Market domination' via DE is a misnomer, in that such 'domination' occurs by the force of many distinct actors. Thus, it is not the typical 'domination' associated with a single or small group of dominating agents. For this reason, OSE uses the term distributed market domination.
Further, theory and practice of open source software - and now hardware - indicates that the best products arise when open source development is operative. The best case of this is shown clearly with RepRap - the open source 3D printer - which now forms the basis of a billion dollar industry . The promise of Distributive Enterprise is that lowering barriers to entry carries true democratizing potential, and as such, will be the dominant market force when barriers are lowered to a sufficient point. Practically speaking - if the best product of some sort is developed (under the assumption that intellectual capital is the largest enabler of economic power) - then adoption can be widespread when intellectual capital has reached the point of allowing import substitution for items that were previously possible only in the centralized production scenario.
The benefit is allowing more companies or individuals to produce better products. Customers benefit by increased access to quality goods and services. By pooling knowledge, all the businesses in the network benefit from better design and lower development costs.
(Discuss how the ecosystem generates value for the network, and more value than democratic capitalism, while not requiring protectionism)
The goal is to create an economic system that promotes not only production of wealth, but also, its distribution. Peak performance organizations - ones that are ethical and distributive - are the intended outcomes. In general, a distributive enterprise tends towards regenerative development.
Someone interested in replicating an enterprise has several options. One option is to download all knowhow, designs, and enterprise plans for free. Or, the person may be trained by the DE organization such as OSE. OSE is currently developing immersion training for social entrepreneurs.
The DE model allows free download of plans because downloading does not take any energy on the part of the entity or person who produced the plans. However, if the Developer is teaching or putting in effort, it is good for the Developer to get paid. This is an ethical model which allows replication to happen freely, while allowing the Developer to be financially sustainable. Thus, the developer may focus on further innovation - which is the essence of open source economic development.
There are several models for financial sustainability of entities or individuals who publish their intellectual property (IP) openly. Some of these financial models require a fundamental mindset of abundance, but others can be understood from the mindset of scarcity. From an abundance mindset, 'the more you give away, the more comes back to you.' If one does not believe in such abundance, a revenue model based on production or education will suffice. In the case of production, it is likely that this person's sales will be driven by the marketing of the developer's primacy in a given field. This production scenario further assumes that work or production can be outsourced readily using advanced production and communication technology available today. The education model, on the other hand, revolves around the high value of skill that can be converted to tangible earning by teaching, holding workshops, or other means.
In practice, it is typical for the developer who shares his IP to have mastery and primacy in a given field of endeavor. In such a case, that individual is in high demand for various contracts, consulting gigs, speaking engagements, and many other opportunities - and marketing is ascertained by their fame. THere tends to be a positive feedback loop - reifying the notion that 'the more you give the more comes back to you.[ Making a living is not an issue in such a mindset, and the individual with that mindset operates as a high-performing peak player.
The goal is to address the issue of artificial scarcity and Disparity of Wealth as related both to peoples' lifestyles and to global geopolitics. Another goal is to embody a Higher Purpose in the economic system and in lifestyle choices.
To test the usefulness and purpose of its results - a distributive enterprise dogfoods its own products. Participants in distributive enterprise aim to blend their lifestyle with their work - as an expression of consistency between one's values and one's actions. This leads to a connection of the economy to addressing pressing world issues. As Gandhi said, be the change you want to see in the world.
The Distributive Enterprise concept builds upon the notions of appropriate scale proposed by E.F. Schumacher, upon the concept of economic swadeshi proposed by M.K Gandhi - and it is updated by bringing it into the digital age where information can be shared readily. The Distributive Enterprise model is an expression of human-centered economics of collaborative development.
OSE's theory is that any Distributive Enterprise - once the enterprise reaches viral replicability criteria - will dominate the marketplace compared to proprietary products. Proprietary products carry inherent development, marketing, organizational overhead, and maintenance cost inefficiencies, while open source products are based on principles of optimization and collaborative efficiency. Open source products are aimed at efficient production on a small scale, or for machines, on the scale of one. As a network of many distributed producers, OSE predicts that the combined effort of many small enterprises can produce a volume of good and services that mathes or exceeds centralized, mass production. For this to happen, mechanisms of quality control, the tools for efficient small scale production, self-marketability, and optimization of the design are required. All of these are tractable issues, and are part of the viral replicability criteria.
Open Source Ecology Case
We are an incubator dedicated to training Distributive Entrepreneurs. Our intent with this is viral replication of complete economy kernels - as embodied by the GVCS. For example, the OSE Microfactory + derivative, collocated enterprises can serve as economic revitalization centers in many communities around the world. These are founded on access to technology and knowhow for re-invigorating a community's economy via relocalized production - while maintaining strict quality control standards that meet or exceed proprietary industry standards.
Such an enterprise follows OSE Specifications for Distributive Economics, and focuses on optimization as its key to economic significance and to scalability. This means that the enterprise, in its essential design, has a mechanisms for continuously optimizing design, documenting its process and results, and training producers for enterprise replication. This process is based on the Philosophy of Open. Factor e Farm is an example of a facility that performs all of these functions. We are currently developing a practical training option - where distributive entrepreneurs-in-training help in production runs in exchange for our training.
In summary, a Distributive Enterprise
- Is open source
- Distributes its business model openly
- Dogfoods its products
Note: this was an application video for the Shuttleworth Fellowship in 2011. We got the fellowship. However, this was before I understood much about management, so the timeliness in the video are not accurate, and cannot be used to extrapolate to the current state of the project. In 2015, we are revisiting the goals. 2015 will be our first focused and explicit attempt of creating a virally-replicated enterprise around the brick press. We have learned that viral replicability criteria are rigorous and not easy to attain, but at this time, we think we understand them enough to succeed. When we say viral replication, we mean that OSE produces the necessary assets - from product design to enterprise plans - and then we (1) dogfood the enterprise as proof of concept of its viability and meaningfulness; and (2), train and assist others in replication. We believe that most of the growth of the production will come from other replicators, not necessarily from OSE. Viral replication is defined as reaching a majority market share for any specific product on a 5-year time scale - MJ, Jan. 2015
Our Scaling Strategy for Impact
A distributive enterprise focuses on replication of itself - by other independent agents - as the core of its operational strategy. By definition, this involves a documentation and training components.
The process looks like this:
- Open Source Ecology (OSE) (Factor e Farm is the main development facility) develop a platform for rapid development of the GVCS tools - called the Distributive Enterprise platform.
- OSE completes the GVCS Civilization Starter Kit (CSK - or the complete set of tools, synonymous with the GVCS) - by 2016 as a result of the Distributive Enterprise platform.
- These tools are evaluated for their robustness, and the CSK v1.0 is modified to produce the smallest, most robust set of modular tools for creating complete economies.
- As Civilization Starter Kit (CSK) v1.0 is developed, significant economic impact begins occurring in the surrounding region.
- As CSK v1.0 is developed, we begin to focus on Distributive Enterprise training at Factor e Farm.
- Many other Civilization Starter Kit producer start-ups begin - either by training at Factor e Farm or via independent collaboration.
As a movement, OSE publishes future versions of the CSK - improving the quality and scope of the tools contained in the set - to achieve an appropriate technology basis for humanity.
The practical implementation is via 5000 independent chapters - are attained by 2023.
Our preferred business model is collaborative development of product design, whereby each participant can gain benefit from such collaboration by engaging in real production. The goal is that we truly remove material constraints from determining the well-being of humans, as production is no longer an issue of control and power.
The simple numbers are to demonstrate clearly that the power of such a distributive enterprise is easily $100k/person/year, whether in Missouri, Brooklyn, or Gabon. We are well on our way to demonstrating this in practice at Factor e Farm.
Unreasonable Economics - OSE's Distributive Enterprise Guidelines
Much of the discussion in the open source community ends at open blueprints, but not training of your own competitors based on the economic significance of those blueprints. Yet that's specifically what OSE is doing because of its ethical commitment to mutually assured abundance. OSE's role is to blend open source with enterprise development - to generate a new type of social entrepreneur - the Distributive Entrepreneur.
Approach to Collaboration
The distributive enterprise concept is a radical experiment at operating with zero competitive waste. This means:
- Publishing early and often, especially if there is a good chance of 'being ripped off.' If someone else is capable of producing a viral, fully open source design, that can only help. This is relevant even for patent trolling - where someone uses our work to make derivatives that are patented. For one, any future derivatives must likewise be open source, so OSE would be protected, and defensive institutions such as Creative Commons, Electronic Frontiers Foundation, Peer to Peer Foundation, and Wikileaks should be engaged in defending the freedom of information.
Second, if someone takes our work and builds on it - if the improvements are shared alike, then everyone benefits.
Third, if such improvements are made, that can only help the case for Distributive Enterprise.
The question is how this plays out in practice, whether defectors spoil the game for the super-cooperators. Game theory (reference to Super-cooperators, the book) indicates that defectors do not stand to win in a game motivated by ethical concerns.
But most importantly, the question here revolves around our individual responsibility. Is each one of us willing to play their part in not contributing to a legalistic dog eats dog approach to innovation. The choice is ours: to be dominated by ethics or by greed.
Everything about this issue we have already learned in kindergarten. It's up to us how we play as adults.
- Why OSE Doesn't Support the Use of Creative Commons Non-Commercial Licenses
- Ralf Schlatterbeck on the Peer Production License - 
- See MIT Innovations Journal where Thomson and Jakubowski introduce the Distributive Enterprise concept.
- Desirable Properties of a Distributive Enterprise