This episode is hosted by Boundaryless Conversation Podcast host Simone Cicero.

The following is a semi-automatically generated transcript that has not been thoroughly revised by the podcast host or by the guest. Please check with us before using any quotations from this transcript. Thank you.

Simone Cicero:
Hello, everyone. We are back at the Boundaryless Conversations Podcast. Today, it’s a special episode. I have several guests. And with me, there are more specifically, Bryan Peters. Hello, Brian.

Bryan Peters:
Hello, this is Bryan. Nice to be here.

Simone Cicero:
And Rob Solomon.

Rob Solomon: Hi.

Simone Cicero:
And Sascha Kellert.

Sascha Kellert:
Hi, this is Sascha. Nice to be here.

Simone Cicero:
Thank you, guys. It’s been an interesting couple of months that we have been having this discussion around, essentially, what we call the entrepreneurial ecosystem enabling organization. And we are having this conversation mostly around the idea of building and using common software and protocols around empowering these new ways of organizing. So, what is an entrepreneurial ecosystem enabling organization for the listeners to our podcast, and in general, the people that follow the work that we do at Boundaryless, you will recall that essentially, this is an idea of how a new form of organization is emerging as an effect of a broader complexity in society markets, lower transaction cost. And essentially, this is making organizations steer towards being more than hierarchical, siloed, and vertically integrated. I would say, to be more like a swarming ecosystem of small micro-entrepreneurial units that are served and essentially use a common pool of shared services, normally. For example, in the context of IT, of finance or HR or legal, and get to dynamically create essentially agreements between them to bring the organization forward.

And as we know, to some extent, this pattern has been implemented by different organizations. And the most famous probably at the moment is Haier, this Chinese company that Boundaryless is working with since a while, that is pretty famous for this very radical way of organizing this way with microentrepreneur units also responsible for their own profit and loss. But similar experiences and experiments have been run by organizations such as Zappos or Amazon itself that is organized in a similar way, even if profit and loss is not such a profound aspect. And also others, like Buurtzorg, to some extent, there have been testing with these approaches and many others. So, I will start this conversation with a quick round with our guests today. And essentially, I would like to ask you guys to just share what is your experience in these in this context, and why you feel like this is an emerging pattern that may especially require its own software ecosystem, let’s say to empower this transition even more? I’m going to start calling you in, guys so that we manage the conversation. So, let’s start maybe with Bryan.

Bryan Peters:
Yeah. So, from my angle, and working with Sobol, which is a ConsenSys Mesh XYZ venture, we saw the problem as these more complex and dynamic organizational patterns emerge, we have challenges in visualizing them, and keeping pace with them. We’re used to having constructs like the org chart, reporting lines, divisional structures. The hierarchy was easy to understand and it gives us a sense of trust and security, even if it is an incorrect picture of what’s actually happening in the organization. And as we get more dynamic, and we embrace this complexity, we need some form of visual tool to understand all the commitments and dynamic agreements that are forming around the accountabilities. And so what direction are we going and how have we structured ourselves to do that? And if we want to keep evolving both of those things faster and faster to bring in the agility and dynamics, and the decentralized decision-making paradigms that we crave, in order to keep pace with this dynamic and complex world that we are trying to embrace, we need a solid visualization. And Sobol has been focusing on how might we map this and make it easy for people to query, visualize, and make changes to the structure and the direction of the organization and these agreements and these commitments in ways that empower the individuals to have the autonomy to find their own path towards moving the organizational objectives forward. And so you can think of it almost as like GitHub for your organizational DNA.

Simone Cicero:
And maybe Rob, you can jump in because you can explain to the listeners a little bit also what ConsenSys Mesh XYZ venture is and Bryan also mentioned this and your other experiences in this space.

Rob Solomon:
Yeah, absolutely. So, I joined ConsenSys in 2017. We grew, I think about — did about 5X our headcount in the first year that I was there, and kind of that — At one point, we were a collection of 50 different startups, Sobol being one of them. But we had startups building. And I should say ConsenSys is a blockchain company that builds applications and infrastructure on the — primarily the Ethereum network, but really on any type of protocol that can support applications. And so we’re about 50 or so startups. Some of them were poker applications, supply chain applications, developer tools, things like that. We also had consulting offices on pretty much every continent, many countries, different offices all around the world. And then we offer blockchain training and education, marketing, had an accelerator, we had an investment firm, and so on. And then we also had shared services like marketing, design, finance, IT, legal, HR that would support all these different business units.

And so at that time, ConsenSys was a very flat organization. All these units were very autonomous, and we were trying to bring order to this by having explicit agreements between teams, service agreements, funding agreements. If we’re going to give you this budget, here are the expectations with how you spend that and what you’ll perform to do with this budget. Here are your accountabilities and authorities inside the company or domains. And as you could imagine Sobol was a key piece of how we visualize that and kept everything under — comprehensible inside the organization. Last year in 2020, we restructured the organization and spun out some of the core infrastructure and software tools into ConsenSys.net. And we kept some of the teams that and largely the structure that I just mentioned, at the parent company Mesh.XYZ. We went through a little split there. We’re no longer quite that size of 50 startups, and we no longer are doing the same type of global consulting. But a lot of the teams persist, and with a renewed interest on incubation, and future of work.

Simone Cicero:
Thank you so much. So, Sascha, let me just introduce you a little bit, because I think also your experience is going to be crucial on this. Because we spoke first maybe more than one year ago, and when we spoke for the first time, maybe your work was more into essentially creating value structures inside organizations of this kind. So, how do you — For example, one of the questions we debated was how do you go beyond profit and loss, maybe not to steer the direction of certain as warming company, more related to the purpose, for example, and so on. So, by over projecting, let’s say, our value agreements on top of pure profit-based sustainability. And then after a few months, we caught up again and you kind of iterated a bit towards what you call the ownership economy. So, maybe you can also guide us through this process, and why you also pivoted this way, and why it makes sense for your product, also, to talk to these kinds of post-industrial and swarm-based organizations.

Sascha Kellert:
Sure, I’d love to. Thank you for taking me back to a year ago where it was the very early days of Rekursive. And yes, as you rightly said, it was more about rethinking how we define value and how we measure value in organizations with the goal of finding a true value score for anyone who works anywhere. And then using that true value squat to give power back to the people so they can negotiate a better compensation for themselves or better ownership position. And yes, as you said that’s over the year evolved into a different model for the company, Rekursive that I’m running now. And it is more about ownership now. So, we are trying to build the ownership economy. And what we mean by that is basically, we see the next logical step in the evolution of platform capitalism to be a step where more and more companies are co-owned by stakeholders, generally. So not just employees, but also suppliers, partners, customers, and we think that’s a natural sort of step that’s happening. And much like what we’re talking about here today is alternative organizational forms, right, where we have micro-systemic, or ecosystemic organizations. And that’s a change and a shift that’s happening on the level of organizational forms. And there’s also a lot going on in the sense of alternative ownership models, right?

And so we think about this at Rekursive is we see there’s a spectrum from classic organizational ownership forms, which are more industrial age mechanical sort of worldview. On one end of the spectrum, so that’s companies shaping nature and the classic way to think about companies. I mean, Bryan touched on that earlier with like classic hierarchy. And then on the other side of the spectrum, you have a different ownership model, where it’s more about purpose-driven companies. So, nature shaping companies, whether that’s in terms of your organizational form, or design where you realize you’re part of an environment, you’re part of a context, and you interact with that, and you’re not a mechanic or sort of object. That’s sort of the other side of the spectrum, you know, steward ownership, co-ops, B Corps. And yeah, that’s a spectrum we see and we’ve been working on a different model where you can easily as any platform or creative, where you can easily make anyone a co-owner in your company. That’s sort of the shift that we see happening and want to bring about.

Simone Cicero:
Thank you. So, I’m going to drop a first reflection here and I really encourage you guys to signal if you want to jump in. One of the key questions that is emerging here is, does it make sense to really think about common model of organizing as it’s emerging? So, it’s kind of counter-intuitive because every time you bring a model in, people will tell you, you shouldn’t bring a model in. We need to be — every context is different, or every model is wrong as we used to say. But, on the other hand, it seems like markets and societies are evolving in this direction. So, kind of evolving, essentially, in the direction to empower a lot of the small elements, the small teams. So, the small teams, it used to be just one piece of the puzzle in the industrial organization. And now increasingly small things can do basically anything. The unbundling of the Fordist organization has been ongoing for a while now. And as a small team, now you can leverage on cloud infrastructures, you can leverage unbundle marketing services, you can advertise your products with Facebook and Google. You can do whatever you want. You can manage your employees, and so on. So, I feel like there is these days a push towards the small team, empowering the small teams.

And so the question that I would like to ask you to engage with, besides just the basic question, is a common model emerging? It’s also another point of view that I would like you to deal with, that is this idea of having a directive organization versus creative entropy-based organization. And what do I mean with that? I mean, that, essentially, it looks like as organization transition into this idea of being just as warm of small units that consume common services, like most of you. Also Rob mentioned the legal and marketing and so on, and HR, and so on. There is also a related question that we want to deal with that is okay, but then how do you give shape to the organization? How do you direct the organization in a certain direction? And one reflection that I was doing, while I was preparing this podcast and studying, for example, how Amazon works.

And Amazon, as you know, doesn’t have this ultra-distributed P&L but uses different things such as what they call input metrics, or forcingfunctions and also basically giving teams the possibility to optimize themselves to produce a certain outcome. Okay. Which is not the profit or loss maybe, but it’s something that is measurable and clear that the team’s is under control. And of course, the activity of defining these objectives for teams and bringing those objectives down inside of the organization is how do you steer the organization in a certain direction? So, I’m curious to know, what’s your feeling about this? How do you see — what kind of experience are you also having seeing if this common model emerges and how it’s been pushed in a certain direction from the leadership, for example, of organizations you’ve been working with?

Bryan Peters:
Yeah. I mean, my first reaction is yes, a common model is emerging. And I love the tension or common objection that you’re bringing forward, which is basically wait, wait. How can we embrace complexity and these spectrums that we’re talking about in our introductions that will exist between what we sometimes today call traditional paradigms and some of these emerging experimental paradigms? How do we embrace that spectrum and have a common model? Doesn’t it need to be a super wide-open sandbox? And I think having worked on Sobol, one of the things we’ve learned is that complexity and emergence can come overtop of sometimes a shared language, or a shared ontology. And so when we’re thinking about it in our paradigm, it’s visualizing and graphing the nodes and their relationships. The nodes being things like people, teams, that they participate on roles that they play, agreements that they’re forming goals, objectives, drivers measures, and what are the connections between all of these things.

And we’re recognizing that many different organizational paradigms, everything from the ones that we consider traditional and hierarchical through to some of these more interesting self-organizing and highly dynamic and micro-enterprising our styles still have sort of some common building blocks. And so it gives me faith and nature has patterns as well, that gives me faith that there can be a shared model, a shared data, grammar or model, and a shared language that can still create tons of experimentation, and truly embrace the complexity and emergence that’s there.

Sascha Kellert:
Yeah. So, the — I think, generally, yes, models are obviously always tricky in terms of their general applicability. The more general they are, the more they lose value. But I think that’s not true when you speak about biomimicry. So, if we use nature as a sort of, as the OD designer and looking at it from that perspective. And I think there are definitely lessons we can learn in terms of how should we organize to be a viable organization. How should we organize interactions? How do we also find a solution for that dichotomy you mentioned earlier between central control, but sort of autonomy across the larger network itself? You know, I think nature has answered quite a few of these questions. And what’s influenced my thinking quite heavily being a systems thinker was the viable system model by Stafford Beer which is a generic blueprint for a viable system that can survive and thrive in any organization. So, I think, yes, merging these things together, I think that is definitely an opportunity to have a new shared language around a better form of organizing, and definitely, some technical aspects that can be used as well copying from nature.

Rob Solomon:
You know, I think the works been changing for a long time. Without taking a step back and thinking about how it’s been changing, it’s easy to miss the ways in which elements of this model and this thinking have been kind of emerging. You know, at the end of the day, you have teams of people working together to build something. And then those teams either expand their scope to build more, or they partner with other teams, to expand the scope of what they offer. So, let’s say you’re building an e-commerce platform, you can either build the payments terminal that accepts the credit card of the person who’s buying the thing. Or you could use a plugin from someone else and have kind of an explicit service agreement between another group that they’re going to collect payment information and keep it all secure and remit payment to you.

More recent technology has kind of enabled us to in trends with agile, using Kanban boards, the way we’ve kind of organized product teams in general, has allowed us to kind of modularize the way in which all this work is being done. You have more teams working with external partners through explicit service agreements and APIs. You have teams inside of organizations working together with, hopefully, more explicit, but sometimes implicit service agreements also through APIs and other types of more scalable agile frameworks to build on top of these things. So, you’re starting to see the organization go from one monolithic, tightly controlled, hierarchical organization that maybe starts to struggle to deal with complexity once you get past a hundred or so employees to massive organizations of autonomous teams working together with more scalable frameworks because they’re accountable for specific things, and they kind of plug in together in more scalable ways. So, I think what 3EO does and what market-based dynamics and other frameworks like this, are trying to do is take this a step further to make these service agreements between teams more explicit to ultimately shore up some of these more recent patterns. And allow teams to become even more accountable, even more autonomous, and make organizations even more scalable continuing on these trends.

Bryan Peters:
Yeah. So, I just want to build on what Rob’s saying there with the analogy of the agile paradigm of work and how its transformed work. And I think that there over that agile movement that started with the manifesto and had sort of the scrum and scaled agile methodologies. And when we look at it, in its nascent phase, it was sort of sticky notes on a whiteboard. And it didn’t really understand what its model was, or what the protocol was. Some of the things when they emerged were somewhat dogmatic. And that’s where some of the pushback of like you can’t create a protocol or a shared model because it starts to over constrain things. But you fast forward, what is it like 20 years now of agile being experimented with, and the software enabling systems that have emerged. And there is a common data model that is there in the sense of there’s these tasks that move through these workflows. And then these tasks have relationships to each other. And your particular practice may be quite varied. And there’s an incredible level of variation that has been able to embrace the complexity of delivering in an agile way in lots of different markets, in lots of different organizational structures, and doing these types of projects. And I think they’ve started to zero in on oh, yeah, no, there are some common building blocks. And there are some common ways in which these workflows play out regardless of the permutations, combinations, and variations that have emerged over time. And they found the software systems that succeeded over the long term and have developed marketplaces and ecosystems that support these practices are the ones that were able to find that somewhat simple model on which all of this could be built.

Simone Cicero:
What I want to underline here is that sometimes compromising over a shared protocol I would say or a shared grammar is a way to enable broader communication, broader legibility, and broader engagement and relationships and transactions happening in the ecosystem. So, one thing that our listeners need to understand is that every time you have an organizational practice or an ecosystem, if you compromise, let’s say, on a certain level of shared grammar language, you do that because you want to have more interactions. It’s a way to reduce faster transaction costs. So, now, for example, having all this common language around agile makes it easy for us to have certain job positions or skills, or having certain confidences where we can change our practices, and so on. Maybe software that can also be compatible with each other so you can have Atlassian, buying Trello, for example, and transitioning and integrating. So, it’s interesting in terms of reconnecting with the idea of distributed profit and loss and markets. So, you’re dealing with the ownership economy, no, and I’m really interested in that part that has been really part of the conversation around progressive organizations, at least in terms of organizational design and development.

And also the organizational design and development practitioners have been always talking about agile, for example, and scalable agile, and so on, but hardly spoke about ownership and equity and so on. And I find it interesting because some extent, equity or ownership, in general, is a way to ensure that what you are creating has value for customers. And what I mean with that? If nobody’s telling you what you have to do and you are constrained to figuring out what you have to do to become sustainable. And this normally deals with investing into something. For example, to create something tangible for the market in the long term, there you need the equity and the ownership model. Because you have this face of not having product-market fit, I would say that essentially, can only be attained if you have a way to say all the energy that I’m putting here to get to the product-market fit is going to end somewhere in something that I own essentially. And this is also, I think, a counterpart of directiveness versus self-emergent creative entropy behavior.

So, what I mean with that? If you have an organization where you can do what you want, then it’s clear that you have to deal with your own P&L. Because otherwise, how do you figure out if what you do is sustainable, and somehow it’s resonating with the market. On the other hand, if you have an organization that still gives autonomy to teams, and has a lot of users, for example, these alternative forcing functions, not the profit and loss, but more like KPIs and so on, then there needs to be someone that puts the investment in and needs to pay essentially your teams, and needs to give your team members a stipend, a salary to execute and maximize their outputs for a certain input function like in the case of Amazon. So, this is what I mean when I say the ownership, distributing ownership in the micro-enterprise, for example, is a very powerful way to ensure that the organization, you’re building easier resonance with the market, at least it removes this responsibility from the top, from the visionary from the leaders of the organization and allows essentially to have a more horizontal organization. So, what’s your feeling on that? And then I would like you guys, to jump in also from the perspective of your past experiences with it.

Sascha Kellert:
Yeah, I mean, 100% exactly. So, if you really want to unlock creativity, whether it’s from the people that you work with, or from those people involving the customers to develop products, and to build an organization that can survive and thrive. Then it’s not enough to just change the way you organize or to change the visualization. You need all that but you also need to change the underlying ownership structure. Right? And that’s not happened. There hasn’t been a lot of innovation in terms of legal entities, for instance. We’ve used the concept of the company being incorporated forever, and nothing’s really changed there. You’ve got a few different versions of alternative ownership models, but they all have their own drawbacks. So, I think, yeah, if you really want to build an ecosystemic organization, then the only way that’s going to be successful is if it’s possible to have a shared identity, and shared decision criteria and rules, but also a lot of autonomy on the local level, and you can only achieve that if the underlying ownership structure allows for that, right.

So, that’s not currently possible with an existing sort of setup. And what we think will happen is that over time, you can have a large organization where every time you spin up a new node in that network, the ownership distribution in that network is different. And you can set it up in any way that sort of makes sure you maximize creativity and customer focus. So, for instance, you set up a new node, employees that work in that node get ownership the more they work, in terms of delivering customer value or value to the larger network, the more equity they get. And you also have a tool there to say that node can now share ownership not just with employees, but with customers and partners which then makes any product or any activities aligned with the affected and effect of that node. And I think that’s sort of the — a necessary change in the underlying ownership structure.

Bryan Peters:
For me, I really resonate with this because yes, we’re working on visual — I’m very focused on the visualization. But I love what you’re bringing here Sascha, which is, at the end of the day we’re driven by the incentives in this. And you’re also calling attention to the fact that like, more and more, they talk about this, even when companies are kind of trying to understand their competitive advantage, or how to approach go to market. More and more we’re talking about we’re producing a network. Our network size, and our network vibrancy or network participants is what makes us interesting, valuable to others. And so this understanding that the network’s important, when we have incentive structures today that are not network focused, our incentive structures have done a lot of innovation surrounding investment, and at-risk contributions from investors, at-risk contributions from founders or extremely early-stage employees, and then it kind of stops there. You know, there’s sort of after that, it’s like, we haven’t really thought much about how the incentives flow to others who are adding value into the network. And so I think if we don’t find a way to focus on these problems, then you will not be able to compete with the existing established centralized networks. And so we get excited about the possibilities of these decentralized networks, where all value creators and all contributors to the network in the community are receiving rewards commensurate with their contributions. But if we don’t solve the fundamental problem of the incentive model, and find a way to share that in a way that doesn’t trend towards imbalances, chaos, etc., then we will not be able to compete with a hyper centralized network and be able to bootstrap a new network because you’re not incentivizing all the participants that are needed to actually lift it up.

Sascha Kellert:
Yeah. And I think that’s exactly one of the big problems I see with crypto as well. If you look at it from a perspective of sociology, there is a lot of — and I’m definitely a believer, but there’s also, you know, it’s still a lot that needs to be solved in terms of crypto saying that there’s going to be an opportunity here to solve some of these problems. But then they still — there’s still a lot of the struggles from the old worlds is still present with crypto. Like, we still have centralization, we still have an elite group of people that you could say sort of have a lot more say in terms of where the network development is heading. And what I’m trying to say is the underlying infrastructure needs to be changed. So, how do you distribute ownership? And crypto is probably the best way, or the best tool to get there. But even then, there’s still a lot of things that need to be solved in terms of how do we actually achieve that. There’s still a power-law distribution in terms of the governance around the protocols, and I think some of these issues still need to be solved.

Simone Cicero:
Right. Two things. The first thing is, as Sascha said these problems are, to some extent, are still there. So, my question for you will be, do you see that as also some kind of inherent problems. So, for example, to run an organization, you cannot get rid of, for example, some kind of leadership, some types of centralization, or decision making, for example. And on the other hand, what are the new possibilities that using crypto as a powerful way, for example, to design new structures of incentives that can help us to actually go beyond that? And as a final reflection, what would be the impact of these new tools into re-casting the idea of one organization that we have? Because it seems like the more we go in this direction, the less we are dealing with one organization, and the more the ecosystem becomes the real player here in the room, essentially.

Rob Solomon:
Yeah. The points are good ones. One kind of quick initial reaction to governance in crypto right now is, of course, there are groups that are disproportionately contributing and disproportionately voting on things. But just because people aren’t participating directly in governance doesn’t mean that the fact that they have the ability to doesn’t make a big difference. I mean, we see this with political elections as well. Just because people aren’t voting doesn’t mean that we should scrap democracy, for example. Because we know that if a politician comes along, that is kind of so against the spirit of what these people are for, or is so in favor of what these people that aren’t voting for, they will become active, participate in that.

Right now in Ethereum world, there’s governance around rewards to miners and gas fees and things like that. And for the vast majority of crypto users, they don’t really care all that much, they don’t need to participate that much in the governance. But if there was another more consequential decision that impacted different groups, then you probably could expect more participation and vocalization from other groups. And the fact that these people all have the incentive, even if they’re not directly exercising their rights and governance, it still makes an impact on how the contributors approach various proposals and how the network will kind of eventually evolve and grow.

So, there’s still some benefit even if people aren’t fully participating in governance, in crypto, and there is some degree of centralization and in terms of who’s contributing and how and where the projects are going. That said, there’s still a long way to go. The blockchain itself is a major breakthrough on a kind of a core infrastructure level. But we still need better user interfaces and more efficient execution to make these things really usable. I mean we had the internet in 1990, but no one was doing a four-person podcast screen share recording session in 1990 because the hardware didn’t exist, the user interfaces didn’t exist, this application didn’t exist. So, yes the infrastructure was there to allow this, but you still needed the kind of layers and tools on top of that.

And so as it relates to participation and governance, and incentivization, and all that in a more scalable and effective way with blockchain. You know, I think there are definitely some things that platforms like Ethereum need to do to become more feasible. Namely, the expense of interacting with a blockchain and the scalability of the blockchain. But there’s kind of a clear path to how that’s going to be worked out. From there, it’s more about what are the actual tools that people kind of log into and use? And how easy is it for them to participate and view what’s important to them, participate, make their votes clear? And how can various projects they work on from a legal standpoint, from an ease-of-use standpoint, spin up and create shares or tokens or whatever it is in those projects and distribute those to the right types of people. And there’s all kinds of applications for the distribution, monitoring use of those things. You could imagine people starting to package these with other securities and trade them and you know, all kinds of things and what happens in these cases.

So, there’s so much yet to be figured out more on the user side. Blockchain isn’t a panacea that’s going to fix all problems. But it does provide a scalable framework to build on top of. And now we need to do — go through the act of building. And that’s a lot of the reason why ConsenSys was founded in the first place was to build out that application layer to make these ideas more feasible. So, still a ways to go for sure. And we’ll never have perfect, perfect solutions, where the will of every single person is immediately and perfectly reflected in the projects they contribute to. But we can definitely make things a lot more scalable and targeted, and effective.

Bryan Peters:
I like the sort of like challenge that Sascha was bringing forward here relative to the blockchain ecosystem, and I see a spectrum of things happening, and a challenge that’s very real. So, the spectrum of things that is happening is like some blockchain companies are being founded on the existing sort of paradigms of investment, value sharing, etc. Whilst actually very honestly, trying to build the decentralized future. But as Rob’s pointing out, it’s a very nascent technology still. And so the behavioral things that we believe are possible and talk about here on this podcast, the primitives in the blockchain ecosystem, aren’t there and the legal elements of the real-world scenario, bringing the real and the technical together, to be able to unlock the behavioral paradigms we’re interested in, there’s a big gap there. And so I think there’s a spectrum of participants who have to deal with the struggle of well, how do I build this decentralized future, whilst I fund myself and legally organize myself using the old world paradigm, and stay true to that?

And I think the founders out there in the blockchain ecosystem and the communities out there that have been able to sort of get this right in one way or another or really lean into the ethos and use decentralized autonomous organizations as best they can, are on the innovative edge of what is possible, given current legal paradigms and working with legal and government organizations to try and like solve that gap as they’re going. And it’s like, I have a lot of empathy, for those trying to build on top of that, with a true vision for the future, whilst trying to bring in these primitives that are needed. So, yes, the decentralized finance thing, and transactional stuff is starting to see some maturity recently, but like decentralized identity and reputation, and the protocols associated with that are still very much emerging and how they will be used. The concepts of these dynamic equity and value share economies and how they might marry up to the primitives in the blockchain ecosystem and the legal system, it’s like, wow. Like, my heart goes out to those trying to solve those problems, and stay true to their purpose of decentralization, whilst operating on today’s model.

Rob Solomon:
Well, actually we had originally been talking about the idea of participation in networks inside of larger firms. And these firms kind of adopting a more decentralized model. And we spoke a lot about kind of equity in the context of emerging projects, new types of organizations, loosely coupled organizations, and kind of in the blockchain world. But bringing this back to the idea of more traditional firms starting to ease into these emerging models. When we think about equity, oftentimes we think about equity from the standpoint of what’s fair for our employees. We want them to participate in the upside. We don’t want to have massive income inequality in the country. We want to keep them from quitting because we’ll give them an equity plan that requires that they stay here for four years. So, there’s equity, kind of in that sense. But there’s also equity as kind of a means to align incentives across a large organization.

And when you think about incentive alignment at a startup, let’s say you’re at a start, that’s 10 people and you own 10% of the company, your incentive alignment is incredibly strong with that startup. You will spend money like it’s your money, you will put in the extra hours. You feel like your contributions because you’re one of 10, you’re making 10% of the contribution of the company and you also own such a large percentage of it, you will kind of go above and beyond really feeling like you are an owner. The risk you run into when you’re one of 500,000 employees and you own a fraction of a fraction of a .0 or 1% of the company is that you’re still incentivized in nominal terms but you don’t feel like your contribution can really move the needle on the value of your equity. And so you’re incentivized not to quit, but you’re not incentivized to spend money like it’s your own money or to put in the extra hours and kind of things like that. And you don’t have much say on things and much participation in governance.

So, one of the things that I think is interesting about our opportunity here, as we divide the firm into autonomous product teams, whether that’s through things that have been more widely adopted already like such as agile, or teams experimenting with more interesting models, such as Haier, that are kind of giving more autonomy to these teams, is the idea of incentivizing performance, at the local level, so at the team level, and what they’re building and at the global level, so that you’re kind of getting the optimal mix of, hey, what you do really matters to your team, and you’re going to be rewarded appropriately. Also, you’re a stakeholder in the broader network. And your collaboration is also valuable with other groups inside the network. And that’s always the case. Even without direct incentives, people are promoted, and fired based on their local performance. People are expected to collaborate nicely with others in the organization. That also factors into their performance evaluations and their social capital inside the organization. But we have an opportunity to be much more deliberate and scalable with this.

As organizations get larger and larger, the ability for the hierarchical structure and managers to kind of see who’s a good actor, who’s adding value, and who’s not, and then to be able to compensate them for that, and align these incentives gets harder and harder the organization scale. And so these more formal scalable conversations on equity can do a lot. And the act of kind of decentralizing and modularizing organizations can do a lot to help scale these organizations into networks. And we see this with economies. You would never run an economy where you can’t own your company, you own a share of the entire country. Then you wouldn’t be incentivized to run your business, the way that we run your business. Conversely, maybe there would be some benefit to having some stake in the country that you’re a part of so that you don’t have businesses polluting or manipulating groups of people or acting in some of the more unethical ways that we see happening kind of in the modern world. So, there’s some mix here and we can start to emulate that inside of organizations as well.

Simone Cicero:
Wow. Lots of stuff emerging. I want to drop some further reflection for you guys to have another round, possibly either towards the end of this conversation. You guys, I don’t remember who exactly said — you said something very interesting that you refer to all the world paradigms, and the fact that, for example, some of these people run in these very new organizations, such as those that develop a blockchain solution, for example. And I think it was Bryan that you mentioned they have been running these new organizations with all the word paradigms. And I think this really made me reflect also on the role that both these shared grammar on building a post-industrial organization made of micro-entrepreneurial units, shared services, and dynamic contracting. And the technology that can empower those new ways of organizing data, for sure, I think is going to entail some kind of use of a blockchain solution, as a, I would say, zero trust, let’s say, a multi-party infrastructure for communication. To some extent, also the software that you are building and that we want to build in a more powerful way as an ecosystem, let’s say, so the software that empowers for example, certain attribution of ownership or describing our work agreements, and having contracts between parties and exchanging P&L and money through units and so on.

So, it looks like these technologies are essential for many things that are really fundamental to our future ways of organizing in a way that, for example, you know, equity distribution, for example, when Rob, you mentioned the idea that if you own equity, then you have incentives to put 100% of yourself into something, you know, that is — there is inherently let’s say not something that happens in a bureaucratic organization because of the traditional relationship with capital and labor that happens in a traditional industrial organization that are inherently let’s say premised on exploiting the work around the labor — the contribution of the employee let’s say. That’s essentially the thesis of capitalism as we used to see that in the industrial economy, let’s say. So, I think this kind of idea that the new incorporation of this — of capitalism that somebody identifies as a post-capitalism, or post-bureaucratic, post-industrial assets powered by Web 3, and other technologies, like the ones that we are developing, as I said, is really essential to unlock additional ways of organizing.

And in these new ways of organizing, I think one thing that is interesting thing that is emerging, is this idea that we may be able to create initiatives and strategies that attain, let’s say, obtain, what — also Peter Thiel once described as this idea of becoming the last mover. What do I mean with becoming the last mover? I mean, something that it’s so let’s say powerful, and maybe so inclusive, and so co-creative, and so able to really get all the stakeholders on board, so that it makes the case for collaboration more than for co-opetition, or dropping out or forking out. And also the idea that, for example, this is the challenge that we have in front of us. Also, we are talking about building the software ecosystem.

So, can these new technologies and these new organizational models really make the case for us to say, we’re building this, and this is the most open, most inclusive, most competitive, most powerful way to build it? It makes no sense for you to build something alternative. We should be doing this together. So, I know, it’s kind of a challenging reflection. But for — I mean, referring, for example, so one way is exchange and we said let’s build this as our 3EO, as entrepreneurial ecosystem enabling organization, if we really make this by using all these tools that we have been talking about, is it possible that we are really discovering a new way to build organizations? So, to bring organizations in a world in a way that is long term, inclusive, it tends to generate the possibility to create more value on top of a shared grammar, a shared ecosystem. So, that’s the point, I think.

Bryan Peters:
I mean, this kind of sparks a little — a dream that I’ve had inside of me that was this idea that we talked about embracing these new ways of working and helping lift them up. And the role technology will play and in the sense, how might we do this? It’s kind of that tension I was talking about earlier. Like, if we want to build this change, don’t we kind of have to model it ourselves as we’re building it. And so I have this I this sort of dream that like, what if all the technologies that helped bring forward this future of work were built by a giant decentralized venture studio that was using these sort of — had some sort of Commons, open-source software protocol, public good, and shared services that exist there, that they recognize they all want to pour value into, and receive value from. Almost akin to the model that Rob was saying, like some incentives associated with the whole and the shared whole, and also some localized incentives.

And can we find that schema and build upon it ourselves? And in doing so, ensuring that we aren’t accidentally being pulled towards replicating the old patterns, while we were trying to create the new and producing this, a centralized platform that controls which plugins are allowed to play on it, that govern this supposedly micro-entrepreneurial, micro-enterprise world. It’s like that feels strange to me. And so I have a dream that maybe, maybe we can find something that catalyzes enough of these early players who are sharing a similar dream to come over top and allow that Commons or shared piece to emerge because they start with that in mind. And can from day one, maybe architect that first value sharing paradigm that honors the whole — the global as well as the local in terms of the incentive structure. And so that’s what I feel is possible and what I get excited about when I hear or reflect on what you were saying there.

Rob Solomon:
You know, with any type of new technology or operating model inside of companies, whether it’s something like agile or holacracy, or a department model, conglomerate model, whatever that is. There’s the requirements, the kind of core basic requirements to call a system that and then there’s all the different ways that that company is kind of customized. And one of the things I think is good about some of these emerging models that we’re talking about here, where you have a more market based participatory collaborative network of teams working together is that I actually feel the kind of core requirement to start to go down this path is actually pretty light. And then the way in which companies and groups and organizations can introduce some of these new elements, they can do them one time, they could do them in different ways.

So, I think what the core requirement would be is that you have an organization, whether it’s a formal company where teams are part of organization. Or a collection of companies, or cooperative, or whatever you kind of define is your group of humans working in collaboration with one another as a part of smaller distinct teams. Whatever you call it, that’s your organization. And I think the core requirement to start to go down this path is that these teams have some high degree of autonomy. And you have some type of process in place for them to collaborate together. And that’s — The good news is, is that exists at almost every company already. From there, you have opportunities to iterate on how those teams collaborate across whether they’re connecting to each other through APIs and service agreements, and so on. You have how you incentivize those teams to collaborate.

And that could be through performance-based bonuses. It could be through generic equity in the entire company. It could be through something that’s almost like Phantom equity in the project that they’re working on specifically with some rewards based on how they collaborate inside the network. People are already incentivized by their social capital and their want to develop long-term relationships with people that they can help and can help them. So, there’s lots of — I think, to get started, it’s actually a lot less extreme than most people think. And I think that there’s — as blockchain technology, as new operating models, as products like Sobol, and Cone and Rekursive, start to show more promise and traction, we don’t need to necessarily go into a company and say you have to adopt this entire model wholesale and radically shift overnight.

I think what we’ll see is we’ll see organizations continuing to adopt agile and go a little bit more extreme with the way in which you know — I think Amazon is famous for basically saying adopt this API structure between teams or you’re fired. There was like a famous email from Jeff Bezos basically saying that every team needs to be modernized and think of itself as a product that will become more prevalent over time. Teams will have more clear upside in their own performance through new technologies and new models. At Cone, what I’d like to see is teams becoming more directly accountable for the value of services that they’re consuming inside and outside the organization through transactions between teams, so that you can have a more complete P&L. Which allows you then to have other types of incentives, knowing the performance of each team more completely. Sobol will help to graph this.

So, point being, I think in some ways, it’s tough because it means it’s going to take a little bit longer and be more of a process. But on the other hand, it’s encouraging in that we’re not going to need or require teams to shift overnight. But we say as we move to these models, it’s going to be a process. And I think it’s been in progress for a long time and it will continue to progress forward.

Simone Cicero:
Right. Sascha, maybe last reflection that I would like to ask you to make because since like, as we speak, ownership is becoming more like, a fundamental dimension we want to play with, essentially. So, both because we’re going to have ownership as an essential element also in big organizations, not just into startups. So, as we see, for example, where Rob said you can have equity both in the state and in the company. So, this is the idea, you can have equity both in the larger organization like Amazon, for example. There are lots of people working at Amazon, they have little salaries and lots of equity — lots of shares, let’s say, not equity. And on the other hand, the idea that ownership can be something that you use, where it doesn’t count what you do, you cannot reduce transaction cost.

So, in some spaces, transaction costs can be reduced very easily and you can have smart contracting and so on. So, for example, you can have much better ways to manage P&L and executing contracts and so on. But there is something that is really about being the intrapreneur that you cannot start sectionalized. It’s something that you need ownership for. You need equity for, you need to be able to collate all this effort that you make and your contribution that you’re making into something that is not transactionalized. It needs to be something that you own. You are essentially part, as Rob also said, you feel like you’re part of, you know, it’s really yours. What you think about that.

Sascha Keller:
Yeah, so ownership is a fundamental building block to finding new forms of organizing, and to making sure those new forms of organizing are actually successful. And ownership, as we discussed earlier, is basically something that everybody needs to have access to, right. So, you can call it universal basic asset ownership. And I think that’s something that needs to be driven up quite significantly on a global scale, right. And universal basic asset ownership means if I work somewhere, I get the opportunity to own a stake in that, whether it’s a small team or local business unit. Not just in that, but also in the larger organization that this small team is a part of, right. So, you have ownership that you get access to based on the work that you’re doing right now, right here, but you also get ownership in the company at large, right. So, that incentivizes you to do customer-centric work for the team that you’re working in. But it also makes sure you align your actions with the organization at large, right.

So, I think that’s something that’s essential. And we need the infrastructure to be able to implement that, right. And right now, we don’t really have that. We have employee stock option plans, which you know, are limited in terms of their scope and their accessibility and that needs to change. We need to get to the stage where we can easily make anyone a co-owner and give anyone ownership in, even on a project level. If they join as a freelancer and I work with a small team for a couple months, I should be able to have ownership in that, right. And I should be able to retain that ownership over time. And I think that goes even further when you think about assets, ownership, and driving that up. What about turning, you as a knowledge worker, turning something that you’ve designed like an SOP, a standard operating procedure, or you found a better way of calling a customer.

You know, why can’t we tokenize that? Why can we turn that into an asset, right? And if it’s used inside the team frequently you again, have something there that you can make money with, so to speak, right. So, if I found a way to do a task that I can turn that into an ownership asset, right. So, I think ownership is essential if we want to enable these and accelerate these new forms of organizing, and it needs to be ownership in the larger organization, ownership in your small team, and then you having the ability to create your own ownership assets. So, if I have, I don’t know, I am an Instagram influencer and I have presets, a certain way to design my photos, I can create an ownership asset out of that and make money with it by selling it to other people. Yeah. So, I think those are the three forms of ownership. And then, yeah, I think that’s essential to enabling a new way of organizing, right.

Simone Cicero:
Right. Right. Right. So, that was a great conversation. We’re already more than one hour into this. And I know you guys have something else coming up. So, unfortunately, we have to cut it here. But I’m sure we’re going to get back on this. And for our ecosystem, our listeners, really we’re looking forward for you to reach out and express your interest into working with us on this challenge of building essentially an ecosystem that creates these software solutions, and enables these transition based on these shared grammar of organizing that is emerging from complexity, technological pervasivity, and these new trends in the economy and society. I want to thank all of you and use this last couple of minutes to just ask you guys to point out our listeners to where they can find your latest work or maybe give a try to your softwares and reach out to you. Let’s start with Bryan.

Bryan Peters:
Yeah, sure. You can find us at Sobol.io. That’s S-O-B-O-L.io. And there’s a fair amount on the website. You can start a free trial and tinker with what we’ve built so far. I’m available on LinkedIn to connect and I love having chats like the one we’ve had here today, and so feel free to connect.

Simone Cicero:
Thank you. Rob?

Rob Solomon:
Yeah. You can find me on Twitter at Rob M. Solomon, a bit of a mess there. But you can find some of my writings that I did with Corporate Rebels and with ConsenSys on there, on the topic of market-based organizations and decentralized organizational frameworks. And then more importantly, the technology that I’ve built to enable market-based organizations is viewable at Cone.network. That’s C-O-N-E.network.

Simone Cicero:
Thank you. Sascha?

Sascha Keller:
Yeah. You can find me on Twitter using my surname. The handle is @Kellert. That’s K-E-L-L-E-R-T. And Rekursive is the company that I was talking about earlier. And that you can find at Rekursive.org, and that’s with a K.

Simone Cicero:
Yes. Super. So, thank you all. I mean, you guys, it’s been great. Our listeners know where they can find our latest research. Go to PlatformDesignTookit.com/EEEO to check out the entrepreneurial ecosystem enabling organization model that we sometimes referred as 3EO during this conversation. It’s just the same thing. We’re using 3EO to be a little bit more handy. And again, thanks so much. Stay tuned for the next steps from this group of crazy people. And catch up soon.