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Power to the people: new models for ownership and governance in a collaborative society

16th June 2016

Matt Stokes from Nesta on how innovative governance and organisational models can return power to people. This blog was originally published on the Nesta website.

It’s becoming a cliché that our economic system concentrates wealth and power in the hands of a few. In prevalent corporate models, the workforce creates value (assets and intellectual property), the profits of which are then diverted to a limited number of owners and shareholders.

Some collaborative economy platforms are a logical extension of this model. Rather than relying on a workforce for producing assets, they do away with assets completely, relying on users to create both supply and demand. More than ever, users and workers are the value creators – but still the profit is diverted into the hands of the few.

The benefits of these platforms are well-known – convenience, flexibility, low prices, supplementary income and more sustainable resource use to name a few. I use them and we all use them. But that doesn’t change the fact that wealth still concentrates at the top: high commission rates and fees can extract money from users, and users see none of the organisations' multibillion-dollar valuations.

And alongside the concentration of wealth lies the concentration of power. On most of these platforms, it’s the top tier of management (or an algorithm) which sets the rules, rather than  the value creators.

Surely there must be a better way for people to collaboratively own and govern the organisations they sustain?

From old models to new

In recent years we have seen a welcome renaissance in traditional models of employee ownership and co-operativism. The number of employee-owned businesses in the UK is growing at around 10% a year and the number of people owning co-operatives increased by 16% between 2010 and 2015. Research shows that they benefit businesses, people and the economy.

The next steps are now being taken by innovators linking traditional ideas about collaborative ownership and governance with the opportunities offered by technology.

Collaborative platforms owned by users

One example of this is the “platform co-operativism” movement promoted by (among others) Trebor Scholz and Nathan Schneider. This is the idea of developing user-governed and user-owned collaborative platforms, which empower and enrich users. They aim to put the platform in the commons, rather than in the hands of a few.

Platform co-operatives could take a number of forms. Janelle Orsi, for example, has proposed three in the context of sharing/renting accommodation: “Cobnb”, a marketplace for homes owned by those renting out their space; “Munibnb”, a city-owned platform not just for holiday travel but also for development, pop-ups and infrastructure; and “Allbnb”, where the profit made on use of public land would be distributed among residents as an annual dividend.

Such platforms would also be open-source so that other co-operatives can build upon, and improve, them. They would provide safety nets to users (i.e. co-owners) who fall upon hard times. And at a less tangible level, they would offer user-owners more choice, dignity and flexibility.

Platform co-operativism faces a number of challenges – from accessing finance to breaking into the market, and from scaling to managing risk. But it speaks volumes that in just a few years the term has become common currency, and that cities such as Barcelona are beginning to develop such models. 

Experimenting with governance and ownership models

Beyond platform co-operativism, many other organisations are experimenting with new models of ownership and governance.

Enspiral is a virtual and physical network of ventures and professionals, which acts as a sort of support network for over 250 contributors across the world. The organisation is made up of a minimum viable board (three people), surrounded by a group of members (who vote on governance issues and invite new people and organisations), then a group of contributors (who vote on governance issues) and finally friends (a wider supporter network with no say over governance).

Enspiral is funded entirely by contributors, and every member has one share in the organisation. Half of the income from donations goes towards core running costs. Contributors decide how the other half of their donations is spent using a collaborative tool called Cobudget.

In short, Enspiral is both collaboratively owned and collaboratively governed.

Another example is France Barter, a B2B co-operative through which businesses can barter goods and services. Given the centrality of trust and transparency to a barter-based system, the organisations co-founders chose for it to be governed by five different councils (“collèges”) made up of founders, staff, users, funders and “expert” users. Each collège has an equal vote.

This model of user ownership encourages businesses (i.e. users) to be actively involved in the strategic and day-to-day governance of the platform. It also nurtures a sense of collective responsibility and encourages the development of trust between users and in the platform itself. 

Strengths and challenges

Organisations like these are not only more democratic and inclusive. They are networks rather than traditional bureaucracies, cultivating lateral rather than vertical links, and many of them are decentralised (Enspiral and Faircoop, which I referred to in my last blog, have no “core team”).

They are agile and responsive to change – changing structures to respond to growth and scaling, regularly changing boards and councils, bringing in new people and constantly pushing back at forces of re-centralisation.

Just as importantly, they change to keep improving. Perhaps what struck me most in my conversations at OuiShare Fest was the humility with which these innovators were developing their models. They didn’t just accept that changes would be needed; they actively sought out and welcomed those changes.

Inevitably, these innovators face challenges. Their organisations’ structures are not always easily understandable (as this primer on Enspiral’s governance makes clear). They are susceptible to re-centralisation; they have difficulty accessing finance; and the legal structures they need may not even exist yet. Some organisations, such as Faircoop, seek to get around those constraints through innovations such as cryptocurrencies.

Finally, there is an inherent tension between, on the one hand, having strict governance rules and, on the other, allowing people to determine governance. What is the use of a constitution if it can be easily altered? When in an organisation’s lifetime should rules be decided? Which rules and structures can be changed, and what can’t?

Looking forward

Innovative models of corporate governance aren’t going to do away with bureaucracies and hierarchies any time soon.  But they are rapidly growing in number and popularity, and they offer an attractive alternative to the top-down, disenfranchising and undemocratic models to which we have become accustomed.

They offer a way for the whole spectrum of those involved with an organisation to engage more deeply with them.

Ultimately, they offer an opportunity to return power to the people.

- See more at: http://www.nesta.org.uk/blog/power-people-new-models-ownership-and-governance-collaborative-society#sthash.rMx4mPW3.dpuf

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