Wednesday, October 30, 2013

What should we do with dark IP?

Answer: Open it! 

My friend Layne Hartsell sent me a link to an article on Yahoo news "Anti-Troll' Marblar Unites NASA Patents, Samsung to Crowdsource New Products".
Marblar CEO Daniel Perez said that although many companies' research and development departments spend millions of dollars on such patents, more than 95 percent of them sit unused.
"They're just kind of laying dormant," he told ABC News. "But what if people saw the patents for a special type of material from NASA or a unique laser from Oxford? What are some new ways that we can incorporate these patents into new products?"
I digested the text and put some comments on it, you can access it through Diigo HERE.

Marblar is a new tool for mining and valuing dark IP. What value Marblar brings to the market? They bring dark IP to the surface, from different sources, and they put in one place. The huge database of patents also gets sorted and refined using the users of the website (so they crowdsource that work too). They also ease licensing/royalties agreements between at least 3 parties: the owners of the IP (NASA for example), applications developers (the crowd), and companies that have the capability to put products on the market, (Samsung for example).

I see here old school mentality trying to adapt to the new. These are people who still value IP, who don't understand the open innovation game, who don't realize its potential, or who simply can't play it in their current setting. They have spent a lot of money developing all sorts of technologies and are now trying to value them in a different way. In other words, they feel that the IP they're sitting on surpasses their capacity to put it into practice, to develop its full potential, and they are essentially outsourcing (by crowdsourcing) applications development. This is already recognizing that they (closed corporations) aren't innovative enough. This is recognizing that the creativity economy will be driven by the multitude (the crowd, in their terms). But they are still holding on to their patents because they feel they should get a return on their investment and, most importantly, because they don't know how, or they can't play the open game.

If you ask my opinion, I would put all this dark IP into the public domain, especially the one developed with public funds. This will do a lot more good for the local economy!!

If I was a large company like Samsong, I would re-purpose my business core into a value network management group. Don't need intermediaries like Marblar. Samsong has the resources to become a locus of open innovation, an attractor of bright minds, by providing the space, the equipment, and the proper incentives for an innovative ecosystem to grow around their mission.

But I am not a large company and I am with the 99%, which is now merging into open value networks, powerful (I believe) economic entities, capable of bringing ideas to market. Watch the video below where I explain the open value network model.

Open value networks like SENSORICA also have strategies to mine dark IP. You can take a look at our approach in THIS document.

In my opinion, Marblar is only a transitory system. This model is missing something extremely important, the dynamics of open innovation, which is beneficial for society at large, but also for individuals who engage in it IF we give ourselves the proper tools, like a value accounting system, and a p2p production framework like the one proposed by the open value network model. Nonetheless, it is refreshing to see that Marblar implements a rudimentary value accounting system with their "marble" points, which has the effect to turn competitive product development into large scale collaborative product development. This is precisely the dynamics we're nurturing in entities like SENSORICA, to turn product development into a long tail process.

But systems like Marbler are setting up a candy economy (see THIS post for the definition) and are furthering the netarchical capitalism agenda. SENSORICA is setting up a commons-based peer production system, in which ALL revenue is redistributed in a FAIR way to ALL the participants. The Marblar scheme treats participants as resources, as the crowd, as a mass that can be organized to produce new ideas for the big guys to exploit and rip all the profits, giving a candy back to the crowd (see my post Why I don't like crowdsourcing). SENSORICA is empowering, see participants as equipotent peers, is inclusive, is fair. Which one feels better? Which one do you think will grow faster?

The new world will not be uniform or monolithic. As in the old world, there will be oppositions or antagonistic systems in the new world too. Netarchical capitalism, which is in fact a new form of feudalism is gradually defining itself and growing in opposition to peer production. Those who own our most important resources are looking for ways to transfer their assets into the new economy and to preserve their power. They are building platforms that they can control, and are hoping that the rest of us will get trapped in there or become dependent. The p2p or the multitude movement is building p2p infrastructures parallel (that fulfill the same functions) to these centralized and controlled platforms, with the hope to free the individual. We need to distinguish between being able to co-create value using a platform owned by someone, and being able to co-create value in an environment that is not owned or controlled by anyone, as autonomous and equipotent peers. In both cases we co-create value, we collaborate, but I prefer not having someone to randomly decide if I'm in or out...

By t!b!

Tuesday, April 16, 2013

Open source hardware meets the p2p economy

We are at this particular moment in history when we can say with certainty that open source hardware (OSHW) is economically viable. The video below tells the success story of Adafruit Industries. Barely formed, this business model relying on OSHW might already be obsolete. A new model, the open value network, is already threatening to transform the landscape of the open source economy. This article explains why.

Most people find it counter-intuitive that companies that sell high tech open source products can survive in a highly competitive capitalistic environment, giving away their recipes, AND allowing (even encouraging) everyone else to copy them, WITH THE RIGHT TO MAKE COMMERCIAL USE. If you don't believe that this is possible stop wasting your time arguing against it. It is real, it is here, you better understand it fast before the world becomes a strange place for you.

The business around open source innovation cannot be learned in school. It belongs to a new economic paradigm. Old arguments don't apply because the semantics and the logic are not the same. Some time ago, we published the article How to play the open game in the present and future economy, which tries to capture the essence of sustainable open source innovation. This article is constantly revised, so we encourage you to revisit it from time to time.   

The most successful ventures built around OSHW, like ArduinoAdafruitSparkfun, etc., can only be understood within their larger ecosystem. We can identify two main structures: a commercial entity and a community. The commercial entity is a classical form, usually a corporation or a co-op. It takes care of manufacturing, insures quality, structures and integrates the feedback from the community into new products, nurtures the community, performs legal functions, integrates all the transactional logistics (storage, shipping, payment), and provides services. The community plays different roles: early adapters for products testing and providing feedback, consumers, propose new features , spread the buzz, educate new members of the community and even provide technical help, etc.

What we see in the case of OSHW is a greater integration between a commercial entity and its market. Traditional commercial entities maintain a provider-consumer relationship 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. See SENSORICA as an example.

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!   

More on the open value network model

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.
By t!b!
By AllOfUs

Saturday, February 2, 2013

Leadership? What's that?

I am trying to understand how networks respond to problems. I use the presentation below to structure my understanding. I am pursuing this reflection in the context of SENSORICA, which is an open value network. The presentation will continue to evolve...

See also the discussion on Next Edge.

By t!b!
By AllOfUs