About this document
This is a wrapup of the organization subsession in the Policy Hero Challenge in #LOTE2. Facilitators: Philippe Verstichel and Kat Borlongan. Policy makers-in-residence: Prabhat Agarwal, Fabrizio Sestini, Rory Smith at European Commission DG Connect. Thanks to Prabhat Agarwal for helpful comments and edits.
The parent session from which this sprung up was the “Rewiring Innovation Policy”. The original question was: what would innovation policy aimed at supporting innovative networked individuals, rather than organizations, look like? In the course of the session, Edgeryders itself has been used repeatedly as an example of a network of innovative (to variable degrees) individuals. One hypothesis, confirmed by the early discussion, was that public support needs an organizational shell, for accountability reasons. Our sub-session looks at what organizational form might Edgeryders take to best support the innovative individuals participating in the network. Lessons were learned along the way.
What the terrain looks like
CONTEXT
- About 95% of public financial resources spent on innovation are spent at the national level. The EC is an important player, but by no means the only one.
- The EC is a public body subject to pretty strict accountability rules: every cent that is spent needs to be traceable. In this respect it is a defensive organization. It has several oversight mechanism breathing down its back; therefore “it is in the paper trail business to avoid being shot down”. In fact, most bureaucracies are defensive to some degree.
- When you think about what you want to achieve consider output, outcome, impact. Suppose your project is to buy a 3D printer, use it to develop some great new product, and sell it on the market. Output is that you actually bought the machine, and you have an invoice to show for it; outcome is that you did develop some product; impact is that the product was actually great, and led to your company successfully taking off. Most oversight is at the output level, which is the easiest to check for. On impact – which is really what the policy is trying to buy in the first place - typically (so-called “ex-post”) evaluations are carried out, not accounting checks.
- Risk-taking behavior (in the style of venture capital funds, that are designed to support companies that will mostly fail but sometimes win big) needs to be explicitly called for and acknowledged publicly. Pure accounting errors are targeted to fall within a so-called acceptable error rate. For the EC, this rate is typically a few percent. This refers to errors on outputs. Some funding schemes explicitly accept risk in outcomes and impacts, e.g. Future and Emerging Technologies. But even compared to those, Venture Capital investors tend to accept much higher risks on outcomes and impacts, sometimes up to 95%. In other words they are happy that many of their companies fail (though with sound accounts).
- As a result of all this, giving public money for strange, inherently risky activities like innovation has a high administrative cost (the administrative cost of procuring standardized goods/services, like toilet paper, is much lower, because given specifications the agency can simply choose the contractor with the best price). This cost is more or less fixed: evaluating and managing a 50K euro proposal costs the same a evaluating a 2 million one. So, public agencies gravitate towards funding the large ones.
- These constraints are much less severe for private funding: trusts, foundations, philantropists etc. can give you money on a handshake provided their board of trustees has a hands-off approach.
KNOW THY ENEMY
Where there is public money up for grabs, there is a risk of fraud. The danger is highest for activities like innovation, in which – by definition – you don’t know if what you build is going to work until you have built it. Fraud is discouraged by building a repossession mechanism into the policy: if someone can’t account for money, they are sued and their assets (buildings etc.) can be repossessed.
Fraudster are your enemies. They poisoned the well, building a climate of distrust. To interact with funding institutions, you must look different from a fraudster. To the EC, a typical fraudster looks like this:
- recently constituted – no history
- no employees
- no capital or minimal capital
In other words, exactly like Edgeryders and other networks of peers. If you are a network and you want to interact with institutions, you have to signal that you are different. Given that interaction happens through bureaucratic procedures – you can’t go have a beer with the EC and show them what a cool person you are – that can be difficult.
DISTRIBUTED AUTHORITY IN ORGANIZATIONS: TWO EXAMPLES
Some networks have managed to style themselves as “distributed authority organizations”. Two examples that might be worth investigating:
- the Open Knowledge Foundation. Great interface with the EC.
- the Pirate Party. That’s more interface with the political space rather than the policy space.
Hypothesis: these are the result of a top-down decision to distribute [Ideas for this section (from PVerstic63) : I think OKF is good at tackling solutions whereas Piraty Party is good at tackling problems - problems space and solution space are two different animals - it looks to me that Edgeryders is neither in problem space nor in solution space, it is rooted in action space with a view to provide tools for the transition to a better future. So, with the buzzwords in mind, it is trying to have a social impact without pretending to have the solution - which is what in my humble opinion social innovation should be about. Hence the question of distributed authority is more a question of leadership rather than power relationships - the OKF in Italy is a typical example of authority by expertise (one individual is a great hacker in GIS). Of course it should not become a technocracy (which is another form of bureaucracy), there is a need for a kind of authority that leaves room for egalitarianism together with diversity.]
THE DISTRIBUTED LEGITIMACY PROBLEM
Reforming organization in distributed power social contexts has a legitimacy problem. Can Alberto decide that, starting tomorrow, Edgeryders becomes an organization and just register it? Can Nadia, or anyone else? Who gets to be on the board? Who gets to be the figure head, the CEO, the President, the High Priest(ess)? Where do we incorporate it? The question is not technical, but relational: it is plausible that, if anyone makes the move, people will spend the next month discussing it. In a bad scenario, the community might even be destroyed by mutual accusation of appropriation… silly, yes, infantile, yes, but we’ve all seen it before. Mythical founders are typically the right people for the job – like Jimmy Wales morphing Wikipedia from for-profit to non-profit.
Possible solutions
WITH ZERO FUNDING
No, we don’t do an Edgeryders org. ER remains a network of people; its purpose is to empower individual Edgeryders to do their thing. The network does not seek funding: we help each other access funding as needed. The ER network is not costless to run. We can sustain it for a year, by committing to each other the time to keep the online network lively; we can work towards at lote3 in 2013 with near-zero funding, as #LOTE2 showed. This brings a lot of political capital: we can actually sit down and interact with funding agencies, because we (the network) don’t want anything from them, so everybody can relax and speak the truth. The session with the DG connect people was extremely frank and illuminating for many of us.
WITH SOME FUNDING
Yes, we are going to seek a small amount of funding. For the first year, we should probably try to raise philantropic money, because the organizational profile of a newborn NGO is too weak for gov or certainly Euro funding. Also, a newly formed NGO can manage 20K, but would disintegrate under the pressure of accounting for 1 million. This requires someone to take charge – probably with the unconditional support of the more senior and influential members of the community. An alternative funding strategy is to bundle the network conversation with some kind of activity (like the idea of systematizing the emergent pattern of collaboration into some kind of distributed consultancy) and run a Kickstarter campaign.
ACTIONABLE: PROJECTS INVENTORY
Whatever the fundraising decision, it makes sense for people to write in the platform what they are working on. This facilitates mutual recruitment: knowing someone is working on something.
ACTIONABLE: EUROPEAN SOCIAL INNOVATION PRIZE
It would make sense to write an application to ESIP. Alberto (one of the judges) will declare conflict of interest and will not vote, but there is the off chance that we’d get 20K no strings attached. Consideration Structure - now Edgeryders is migrating from being a Council of Europe project to something else - there is a greater potential for misunderstandings among the participants. Clarity and some kind of defined structure (social contracts?) is necessary to avoid this.