Open business

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Open Business refers to the concept of carrying on a business "as usual", however, doing so as a transparent meritocracy based on individual performance. It is based on, and is a natural and essential extension to, the "open source" concept and was coined by David G.V. Ray. Furthermore, its definition is constantly being refined and integrated with converging concepts across the net.


Contents

[edit] The Issue

What is so "transparent" about it? Essentially, the way:

  • each individuals role and development are emphasized (e.g. everyone receives a wage i.e. no salaries exist),
  • decisions are made,
  • financial information is distributed internally and
  • how profits are shared.


Typical businesses, often run using a "company" structure, have three broad groups of direct participants and a host of so called "stakeholders" who have and a less direct interest (e.g. governments, religions, family members, local community, etc). The direct participants typically include the following groups:


a) the people who do the work (i.e. the employees),

b) the people who provide and own the resources that a) uses (i.e. the investors) and


those that lie in between, i.e. :


c) the people who try to optimize the profit from the combination of a) and b) for the benefit of the b)investors (i.e. the investors agents known as "management").


And therein lies the issue. Its obvious that a conflict of interest typically exists between a) and b)+ c) i.e. the "us" and "them" syndrome. What one gets, the other one doesn't.

More importantly it leads to lost productivity via the development of dysfunctional behaviour such as:

  • an exponential increase in politics
  • a reliance on fear tactics
  • dysfunctional selection processes when selecting new "decision makers"
  • the development of a knowledge "harbouring" or withholding culture as a means of job protection
  • a gradual brain drain due to high staff turnover or retirement (i.e. long term knowledge loss)
  • and many, many others.


Open Business structures are designed to optimize business productivity by removing barriers such as this. They activate business l productivity by motivating individuals to optimize their personal productivity like no other organization can. Profits are redirected to those that produced them regardless of which role they play. They effectively recognize that all three groups as equally essential elements for business success and distributing net profits based on direct contributions to that profit in any given period i.e. and not simply to the investors with a smattering going to management as bonuses if they manage to "squeeze" the employees hard enough during any given accounting period.


A converging definition inspired by open standards, open source and open content implies that an open business, is a business whose business model is run on open standards, open source and open content principles, and focuses on creating `open´ products and services. This approach would guarantee that the business is run for the benefit of all, and not just for one group or stakeholders, whether shareholders, personnel, government etc. Also the strict application of open principles will guarantee that bankruptcy of a specific open business, will not result in the loss of the fruits of its knowledge.

[edit] Main Features

Central to the concepts implementation are:

  • open learning/sharing - a fundamental tenet is open collaboration within the organization (i.e. not to non-members) at all levels in all locations e.g. groupware
  • individual rights - each person is supported and encouraged to identify and optimise their personal development i.e. technical, personal, spiritual, etc.
  • community focus - productivity activities are seen as part of a range of normal human activities e.g. family life, community life, religious commitments, etc.
  • institution free - the organization is not based on any existing institution - state, religious or otherwise. Members can hold whatever views or affiliations they like.
  • open knowledge - the free exchange of knowledge by making use -as much as possible- of open standards, open source and open content principles.
  • Web based IT systems - the use of E-democracy and online business systems
  • open member details - including open access to the contact details of all other members in a convenient form (i.e. once the range and depth of those details have been approved for release by that particular member)
  • open financials - all accounting information, including the compensation of others, is made available internally
  • profit distribution - based on contribution

[edit] Details

[edit] Knowledge

  • all knowledge and information is free and open between members(i.e. not to the public at large)
  • knowledge and information is to be continuously converted into a ubiquitously accessible form from any location e.g. converted from physical documents, individually held electronic documents, closed databases, etc. to inernet browser accessible form
  • "way of doing things" incorporates knowledge capture and dissemination at inception i.e. not as a secondary reprocessing afterthought

[edit] Financials

  • individual pay/income is calculated as usual i.e. based on that individuals competence level, hours worked, performance and industry rate
  • net profit is split between all members based on each individuals contribution to that profit based on the metrics and opinions of the members as a whole

[edit] Management

  • management is predominantly a support and not a controlling function (i.e. where the assumption is that the individual is typically more specialised and competent in their domain than management is)
  • all major decisions are made available to members in a continuously active, dynamic and ongoing voting system i.e. members participate on those topics that are of interest and relevance, management fills in the "gaps" by forming decisions that are not "of interest" to the majority of members e.g. routine administrative decisions or issues where members opinions were sought via voting but no clear decision resulted.
  • leadership/management roles are rotating and not fixed (i.e. they are based on the specific project at hand and voted on by the team that volunteers to support that project)

[edit] Members

  • any person may be a member regardless of their races, sex, religion or political persuasion with the approval of the majority of members
  • the majority of members have the right to remove any existing member e.g. a member seeks to gain a direct personal gain at the expense of the Open Business organization, a member is found to be psychologically impaired, etc.
  • family, community life is considered of greater importance than business activities. 8-18 Monday to Friday is the expected working availability time. No others as a norm.

[edit] Project Management(PM)

  • uses all existing available PM standards and methods as appropriately applied to the specific project at hand e.g. standards such as those espoused under Prince2, PMBOK, Six Sigma (Black Belt), etc. and same methods Agile, etc., however,
  • although all of the same "constraints" and "resources" are managed as usual there is more emphasis placed on the Project Management as a supporting function
  • project participants "volunteer" themselves for specific projects (i.e. as opposed to be "nominated" by more senior management) and
  • the actual Project Manager role is continually re-assigned on a meritocratic, per project basis i.e. based on merit according to the opinions of the team members within that particular project during its formation stages (or later if in the opinion of the majority they need to be replaced).

[edit] Opinions & Metrics

Throughout any given accounting period:

  • feedback/opinions and
  • metrics, e.g. on individual performance,

are collated dynamically from all members throughout any given period to form the basis of any given net profit distribution .

It's worth noting that this does not mean an equal distribution of profits to each member, it does mean a fair distribution of net profits to any individual based on their contribution.

[edit] Example

Our organisation, Widgiman, (i.e. probably registered as not for profit with limited liability) produces widgets.

Each widget requires:

  • 3 hours of labor
  • 3 hours access time to widget making machinery and
  • .25 hours average ad hoc management/maintenance support hours when something screws up

The current industry recognized pay rates for the Widget industry worldwide, expressed in OWC's (i.e. "one world currency" - a fictitious currency)are:

  • for Widget Machine Operators is 15 OWC's/Hour
  • for Widget Engineers is 22 OWC's/Hour
  • for Accountants is 30 OWC's/Hour and
  • for Senior Managers is 30 ONC's/Hour (yes, no salary just wages) and

Other factors:

  • the current Market Rate for Funds at this Widget Industry risk level is 6%
  • the investment required is 2,000,000 OWC's.
  • the business has a gross income of 7,000,000 OWC's but makes a 1,000,000 OWC's net profit (i.e. after all COGS and expenses, including stage 1 wage costs)
  • the factory requires 11 operators, 1 engineer, 1 manager and 1 accountant

Each member is compensated in two stage:

Stage 1 - regularly, Monthly:

  • Operators, engineers and managers are paid their wage based on their evidenced contribution (e.g. timesheets + bonus based on opinions and feedback) and
  • investor receives an initial 6% return on their investment


Stage 2 - "once off", End of Year

  • the net profit (ie. gross income less costs of goods and all expenses including all Stage 1 costs are deducted from the gross profit) is split between evenly between the operators, engineers, managers and investors.

End Result:

Operator Income:

  • Stage 1 - 12 months x 22 days/month x 40 hrs/wk x 15 OWC = 158,400 OWC's
  • Stage 2 - 7% of 1M = 71,428 OWC's
                                                          -------------
                                                          229,828
                                                          =============

Engineers Income:

  • Stage 1 - 12 months x 22 days/month x 40 hrs/wk x 22 OWC = 232,320 OWC's
  • Stage 2 - 7% of 1M = 71,428 OWC's
                                                          -------------
                                                          303,748
                                                          =============

Accountants Income:

  • Stage 1 - 12 months x 22 days/month x 35 hrs/wk x 30 OWC = 277,200 OWC's
  • Stage 2 - 7% of 1M = 71,428 OWC's
                                                          -------------
                                                          348,628
                                                          =============

Managers Income (our manager is a director in this and another firm simulataneously):

  • Stage 1 - 12 months x 15 days/month x 35 hrs/wk x 30 OWC = 189,000 OWC's
  • Stage 2 - 7% of 1M = 71,428 OWC's
                                                          -------------
                                                          260,428
                                                          =============

Investors Income:

  • Stage 1 - 12 months x 6%(effective)x 2,000,000 OWC's = 120,000 OWC's
  • Stage 2 - 7% of 1M = 71,428 OWC's
                                                          -------------
                                                          191,428 (i.e. significantly above the market rate)
                                                          =============

Nb. where Widgiman makes a loss, the loss is born proportionally by each member based on the overall %'s above i.e. there is no priority payment except, naturally, to creditors under law.

[edit] See also

[edit] External links

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