Defining “Purposeful Communities”
Let’s define a “purposeful community” as a community that is organized around fulfilling some specific function. Corporations, government bodies, and nonprofits are all examples of purposeful communities. In contrast, I wouldn’t consider a town or country a purposeful community, since they aren’t trying to accomplish a specific well-defined goal.
Closed Hierarchies: An Industrial Model
Today, purposeful communities scale beyond Dunbar’s number by adopting a hierarchical and closed structure. The community has a single executive (“CEO”, “President”) and power is delegated through a “chain of command” down to workers on the edge of the network.
These organizations have hard, binary boundaries (you either are an employee or you aren’t a part at all) with expensive processes for bringing people in (or ejecting them). The organization is usually opaque, trying to ensure as little (unbiased) information about its internal processes makes it out as possible. (Any such information leakage reduces the power of the individuals at the top of the hierarchy.)
This model of organization design worked very well for industrial revolution era. It’s good at taking a specific well-defined strategy, reaching economies of scale by coordinating a large organization, and then extracting as much value as possible. This strategy was originally developed around the production of physical assets (factories, equipment, etc); it’s easy to control access to these resources (and thus ensure an “organizational monopoly on value extraction”). Thanks to the invention of “intellectual property”, the closed-hierarchical model could be applied to organizations producing intangible assets (think IBM, Google, etc).
Closed Hierarchies vs Open Source
However, this model does not and cannot apply to open-source communities. The closed-hierarchical model is all about controlling access to something, and then using the point of control as leverage to build a hierarchy that maximizes value extraction. Open-source gives up control, and thus gives up this mode of organization.
In the absence of a model for capturing and directing resource flows, open-source projects have been forced to make do with less: less resources, less structure, and less powerful tools for coordination. However, even in the absence of scalable organizational forms, they’ve thrived. Why is that?
I think the rise of open-source demonstrates a vital weakness of the closed-hierarchical model when dealing with intangible capital.
By creating a hard boundary (“hired” vs “fired”) around who can participate, they exclude the overwhelming majority of potential contributors. This isn’t so bad in the industrial model, where success comes from executing on a well-defined strategy at scale. But it’s crippling in the intangible innovation world, where 10x or 100x ideas can come from unexpected corners. The aggregate value provided by the “long tail” of unexpected contributors can be huge.
By creating a hard boundary (“negotiated contract to use our IP” vs “infringement”) around building on top of ideas, the closed-hierarchical model excludes the overwhelming majority of potential users. In particular, it disproportionately excludes “just tinkering” use cases, since the tinkerers are not going to going to have the scale or resources to negotiate agreements with giant corporations. This isn’t so bad in the industrial model, where the cost of excluding certain users can be easier to predict upfront. However, with software and innovation, today’s “just tinkering” often becomes tomorrows “society-transforming innovation”. Those innovations are smothered by the closed-hierarchical model.
It’s because of these advantages that open-source projects, when well-resourced, have consistently outcompeted the closed-source alternatives. You can consider Linux vs Windows (Windows won desktop computing, but Linux is ubiquitous in mobile and server computing) as an example. As an even more dramatic example, consider Git vs Bitkeeper. This dominance has extended so far that companies like Google pre-emptively open-source key technologies (like TensorFlow), because they know if that if they don’t, their tech will be outcompeted by an open system.
To realize the paradigm-shifting value of open-source, we need to build the social technologies that enable effective open coordination at scale. Such a system should:
- Be open/permissionless: anyone can contribute, and be rewarded for their work.
- Support self-organization and decentralized decision making: people should be propose new initiatives and coordinate around new types of work, without needing approval from a centralized administrator.
- Enable value harnessing without control: Projects should be able to “harness” value from downstream projects and dependents, even though they do not have the control that allows them to exclude potential users. (Cred needs to flow upstream.)
SourceCred aims to be such a decentralized and open approach to coordinating purposeful communities.