The reason behind the Discovery Network

Discovery Network, first proposed by Tiberius Brastaviceanu (in 2008), is licensed under a Creative Commons Attribution 3.0 Unported License. Based on a work at Multitude Project.

What is a Discovery Network? 

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See a real example of a Discovery Network HERE 

Follow the trend of outsourcing

The Discovery Network (DN) concept is somewhat instantiated in the form of outsourcing. The increasing trend of outsourcing shows that verticals find it more efficient to externalize some processes. We are not only talking about manufacturing of some components of the final product, sometimes the entire product is put together by another organization. But it goes even further than that. Companies nowadays outsource R&D, design, finance and accounting, human resources management… Almost everything you can think of can be outsourced, obviously not all by the same company. But what is surprising, is to see that even R&D and design is sometimes externalized, the most precious resources of a company. In today's dynamic economical environment, business people recognize the need to blur the boundaries of their organizations, in order to make knowledge and creativity flow in from the outside. Google understood this best by allowing its users to take part in the design process (Google labs). Nike is another good example for the production of material goods.

We are witnessing the progressive dissolution of verticals. But why is this happening now? Because it become possible, with the help of the new technology, to manage/coordinate a large network of suppliers and service providers. In the old days, Ford, the car manufacturer, needed to make almost everything under the same roof. That was the only way to maintain control, to make sure that the production line kept moving. In our opinion, this trend of outsourcing will continue, and collaboration will become the future way of producing goods. Having said that, the way GM cars are produced, through a network of enablers, is not yet the DN way. The GM product is sold as a GM brand, and GM takes the biggest piece of the pie. The network is actually gravitating around the GM Corporation, which is much heavier than any other contributor to the product. In our case, the DN core acts more as a “small size government”. The power in the DN is distributed. In the classical case, the GM management makes all the decisions, and we already know how badly they can screw up. The DN idea is to take the outsourcing trend to its full potential. 

Tested and proven open and decentralized modes of production 

Our second argument is that highly decentralized modes of production have already been successfully demonstrated: the GNU project is now a classical example. A very decentralized organization produced the GNU/Linux operating system, a highly complex product that competes with Windows produced by Microsoft, one of the most successful corporations in modern times. The proof-of-concept experiment was already performed successfully. We only need to adapt this new model to other industries, to other types of products. 

Yes, information and material products are very different in nature. There is no need for raw materials to produce a piece of software, there is no need to transport mass in space in order to assemble the product or to distribute it. Its distribution is practically free, and its costs of reproduction are close to nothing, reproduction also being highly scalable. A network or a community-type approach seams adequate for an immaterial product. In the case of a material product, raw materials must be extracted from the location where they are found, transported and transformed/purified, transformed again into different components, which are then transported to a point of assembly, integrated into the final product, and finally transported again to points of distribution and to consumers. We agree that some of the tasks in this chain must be performed by organizations with a classical hierarchical structure, but not all of them. Moreover, these tasks can be performed by separate entities, as we discussed it in the first paragraph, some of which can take non-classical organizational forms, especially those that process information and knowledge. Furthermore, all these organizations can cooperate and coordinate their efforts using the same type of infrastructure developed and successfully tested for the open source software production. 

The idea is to coordinate entities that perform an essential and non-divisible part of the entire project. In the case of information products this entity can be brought down to the level of a single individual. For a material product, extraction and purification of raw materials cannot be performed by a singe individual. Therefore, the unit for this labor intensive task would be a larger organization, perhaps a hierarchical one. Other tasks, like the R&D and the design for example, can be undertaken by skilled individuals, independent R&D labs, academic institutions or some type of non-classical organizations. In conclusion, when it comes to material goods, the decentralization cannot go all the way to the level of the individual. But it is still decentralization, imposing a culture of collaboration, sharing, and openness.

A Discovery Network is more effective than a classical vertical and centralized organization because it is only limited by coordination. It doesn't need to acquire the resources needed to put a product on the market, it can take advantage of the redundancy and under-capacity already existing within our economy.      

Technological development and high-tech organizations

An intrinsic characteristic of technology, considered as an entity subject to some type of evolutionary laws, is that it develops exponentially. Another inherent attribute is that its development appears to be chaotic. High-tech firms have to master a given technological domain and must also be able to predict its future development. These two requirements are vital, but how can a high-tech firm, operating at the frontier of technology, manage this increasingly vertiginous change, while keeping its focus on the future? What is the organizational structure that guarantees its survival, taking into account the accelerated change of its own economic environment, which is fueled in great part by the same technology?

At a higher level, technological development introduces changes in the way economical actors interact with each other. The means of production and distribution of goods and services can also be greatly altered. Not to speak of the process of creation of new knowledge and of its path towards application. Some economical institutions appear to be outdated, holding back economical growth. Some economists advocate the creation of new institutions and the adjustment of classical ones. Can our DN idea be part of the solution?

Economic entities will always contain and/or depend on humans; we are the substance. Therefore, skillful employees are a requirement for the success of a company. On another level, managers can make or break companies, but beyond individual skills, what makes economic entities thrive or become extinct is their form of organization, which in turn determines the management of their resources, their flexibility, their capacity to integrate the new, their interface with the environment, etc. Our thesis is that the classical hierarchical model on which organizations that operate at the frontier of technology are built, is obsolete. The rate of technological change has reached their breaking point. This manifests itself by the apparent crumbling of large  vertically integrated firms, leaving space to highly specialized smaller entities. As mentioned above, outsourcing is also another symptom. At the same time, we observe the birth and the vertiginous growth of cooperative networks, composed of entities that specialize in complementary fields. The new information and communication technology is the enabler behind these networks, providing the infrastructure for instantaneous, reliable, and effective communication, automation of back office processes, coordination, etc. With a proper normative system in place, huge economical forces can be unleashed from the complex synergistic interactions within these networks. These large structures of interdependency relieve some pressure exerted by the fast paced technological advancement, but in return impose different constraints on every individual entity part of them. To thrive within these networks an organization must be able to adapt to a collaborative environment, to figure out the right balance between competition and collaboration, proprietary and openness. Furthermore, with the advent of the Internet and of the web2.0, a new economical entity has emerged. It is diffuse, open, composed of mostly individuals or very small entities, and highly scalable: the open source organization. 

Fast change combined with a stiff and outdated structure have lead to missed opportunities by classical institutions, and to increasing costs for maintaining up-to-date staff, instrumentation needed for product development and design, and manufacturing equipment, to name just a few. The large firms have reacted to this new reality in different ways:

• • Internal adaptation: the adoption of advanced tools for information and knowledge management, employee reeducation and constant refreshment of workforce.

  • Ingestion of packets of new technology and know-how by acquisitions and by mergers.

  • Consulting and outsourcing for business development, R&D and design, manufacturing, marketing, distribution, etc.

  • Increasing collaboration with academic institutions.

  • Integration of collaborative networks

However, these measures have their own limitations; it is time to reconsider the entire system. The answer lies outside the institution paradigm; we need to think in terms of networks that are built on synergistic relations. High tech organizations must become more flexible, more permeable and more diffuse. They must integrate networks that include a variety of other type of entities: commercial institutions, academic institutions, the independent inventor (which has been forgotten), as well as the consumer. Computer technology and the Internet enable the amalgamation of entities sharing similar interests into very large ad hoc groups with tremendous creative and productive potential, at a scale that can surpass any classical organization. The winners of tomorrow are those who know how to create and manage such networks, and how to channel their huge potential.

As we mentioned above, various organizational models adapted for the new reality and that are going in the aforementioned direction have emerged in the field of computer technology, probably the most dynamic and avant-gardist sector. GNU/Linux and Wikipedia represent two distinct models. These concepts can be applied to other industries; one has to figure out the proper way to do it. The need for the DN is actual, and its future looks bright.

Open collaboration is an answer to complexity

To survive as a commercial entity at the frontier of technology it takes agility in turning science into new technologies, as well as a proactive attitude in finding new applications for these new technologies. The game is different today, you cannot wait for the need to manifest itself, it has become common practice to anticipate a need, and to propose solutions before a market arises for them. But the realm of possible applications for a new technology can be vast, and history contains tons of examples of missed opportunities and wrong guessing. Bill Gates and his Microsoft didn't see the Internet coming... Unpredictability is natural in applications development. This is the reason why new forms of organization are imperative, to unleash creativity, to free unused knowledge capital and to secure the free exchange of ideas, to transfer problem solving to a broader and more diverse group, to mix together a large field of expertise, etc. 

But the new economy will not only be defined by increased creativity and productivity. Complexity will be an even greater factor. We are reaching the point where the reductionist approach to solve problems doesn't work anymore. Our societies have become complex. We are now forced to deal with complexity. More and more of our problems relate to complex systems. The most valuable solutions in the future will be those which take complexity into consideration. According to Ko Kuwabara (2000) the Linux community has succeeded because it can face the complexity of the project without reducing it, through its own intrinsic complexity (ref. p21). Self-organizing open collaborative systems are suitable for solving complex problems, by design. This "innate" ability will make them superior economical entities in the near future, because they will be able to supply an essential service to society. 

Knowledge capital

What will become of proprietary knowledge, which is believed to give commercial institutions an edge over their competitors, in the context of a networked economy? Our answer is that it becomes irrelevant in most cases. 

Intellectual property, or the mechanism by which one protects his commercially viable ideas, made sense in an era characterized by a lack of effective tools for communication, collaboration, and coordination. Let's imagine a non-networked economy, a situation in which there is very little interdependency between economical agents, other than the simple relation of supplier-consumer. In this context, sharing ideas with another group becomes a pure gift. Complementarity doesn't exist among productive groups. There is no incentive to share when there is very little interdependency; competition makes sense. There is no co-creation, no collaboration. If we think of added value products, the wealth of a group making products belonging to this category can only come from its own creation, or from stealing ideas from others. Stealing an idea from another group can be translated directly into economical advantages. As for the "victimized" group, without the legal protection for its intellectual property there is no other effective way to recuperate the loss, but to still another commercially viable idea, or to spend more resources to come up with one. This was almost the situation in the past, not because individuals across the planet are antisocial, or inherently individualistic, but mostly because geography imposed very strict constraints on co-creation, lacking effective means of communication, collaboration, coordination, and transportation. Every producer had to specialize in all aspects of a particular product; outsourcing was very limited, complementarity among producers was also limited, at least at the first level (there were complementary products, ones that got their value because other type of products existed, but these products were not the direct result of co-creation, in most cases). 

The new technology changes everything. Modern tools of communication, collaboration, and coordination makes the implementation of very complex logistics possible. A product doesn't need to be created under the same roof, or at least logistics is not the limiting factor anymore. The release of this fundamental constraint enabled groups to specialize. Different groups specialized in different areas can coordinate their efforts, using the new technology, to produce highly complex products. This possibility led to a better allocation of resources, a reduction of redundancy, to better design, and better quality. It has become economically viable to co-create. The success of outsourcing, an increasing tendency, proves it. (We also need to consider transportation which makes the assembly of material products possible, even if they contain parts produced in other remote locations.) In this context, relations between economical agents became more complex. Openness and sharing starts to make economical sense when complementarity exists, because it can be translated into economical advantages. The ability to pull resources together, to form and to polarize a community/network have become the most important factor for success. Those who prefer to work alone, who don't like to share, will be left behind and crushed by highly creative and dynamic networks. 

Networks will form, either you join them or not, simply because groups can easily get in contact with one another, no matter where they are on the planet, they can coordinate their actions very effectively, they can effectively exchange their material products and services, and, most importantly, because joining a well-functioning network brings to the group non-negligible economical advantages. But integrating a network implies some degree of openness. The intensive to get wealthy by taking advantage of the network structure makes groups adopt a culture of sharing. Being open, leaking ideas to competitors might expose a group. But the risk is overshadowed by the speed of creation and production insured by the network. Ultimately, success comes from being first to the market with a new and valuable product.   

It doesn't make economical sense to protect knowledge when science and technology advances so fast. Your proprietary knowledge will become obsolete very soon, the day someone comes up with a better answer to the same problem. Think of the CD, or the DVD, they are already obsolete! This is why organizations are increasingly using patents as defensive tools. They want to block smart entrepreneurs from replacing their technology in which they have so much invested.

In today's economy, there is no need to protect your know-how for a product that has a relatively low reproduction or reverse engineering costs. There is no need to use patents as a defensive tool to shield your market advantage from competition. Technology changes so fast, that it makes no economical sense for a serious competitor to spend time and other resources to copy your technology. By the time he has figured it out and can make a buck on it, your product is no longer the hot thing on the market, and you have already moved on to something new. It makes perfect sense for your competitor to try to work on something else. There is no money in the future for imitators. Yes they will exist and they will be able to make a living, but if you have big aspirations you should consider them as a very small nuisance. SISCO has embraced international open standards and has succeeded in staying above the competition by innovating and acquiring key technologies. Open standards means advantages for consumers, but brings at the same time competitive risks. Only innovative organizations survive in these conditions. SISCO is the living proof that speed is everything in today's economy. Imagine what an organic organization like the DN can achieve in terms of creativity and speed to the market, taking advantage of the new technology. Resources can be rapidly put together from a very broad and diverse base, and shed as soon as they are not needed anymore. Moreover, the risk for the project can be shared. 

Get to the market first and create a brand. Create an image for yourself. Don’t waste resources on protection. Count on speed, quality, and reputation. Be the leader in your domain. 

Another reason is that in a global market it becomes very difficult to enforce your patent rights everywhere, so in practice it becomes useless. Not to mention that our patent system is clogged up!

The strongest argument for patents is that they act as an incentive to innovate. Knowing that you will profit, makes the investment worthwhile. We propose a distributed investment and a risk sharing structure, therefore the incentive to innovate comes, among other things, from a lower risk and a lower productization cost. If the DN is well established its inclusive character must lead to greater creativity, which leads in turn to better design, and to more competitive products. Moreover, the collaboration aspect speeds up productization.

Furthermore, patents have become so fragmented, that in order to put a complex product together it is almost unavoidable to license other technologies. It has become very difficult to make a complex product without infringing on someone else' patent. Therefore, the situation has become very complex, and, as the number of patents continues to skyrocket, the problem will only worsen.

All this shows the inadequacy of the system for today’s reality, which will continue to evolve, accentuating these tendencies. It is not worth the trouble anymore. Don’t bet on something that is doomed to fail. In the near future speed and reputation will determine the winners. This is not to say that there will be no need for secrecy whatsoever within your network/organization. But we must create a stable environment of respect, trust, interdependence, where creativity and productivity are optimized.

Sometimes patents are not even exploited by a company because they rank low on the priority list, but someone else might find them very useful. Because of the nature of relations developed within a DN-like environment this unexploited knowledge capital can be freed, shared across the network, giving raise to a more rapid development.

Lower barriers and shared risk

Within a DN tasks are distributed among many entities. Moreover, resources and the risk are shared. Under these circumstances it becomes possible to undertake very large projects that usually are not considered by classical commercial institutions because of the low return on investment, or because of the high risk involved.

Better use of resources

Redundancy is greatly reduced in a DN-like organization. Resources form member entities, some of which are only used at a fraction of their potential, can be shared within the DN. This is an advantage benefiting the DN as well as its members, but it also has a broader impact, benefiting society as a whole.

Network effects

The total is greater than the sum. Members become stronger within a DN. The relations they develop within this type of organization can have a positive effect on other operations they might run in parallel. Here the concept of collateral advantages becomes important. Through these relations members can absorb more than what is formally on the table for a common DN project.

The socio-psychological factor

Read this very well written document produced by our collaborators from BetterMeans HERE (or here). 

An opportunity for countries under development

Anyone with great ideas and good organizational skills can put together a network composed of key members dispersed throughout the world and coordinate their efforts in order to create value. The Discovery Network is a geographically diffuse organization. The DN core can be established in a place deprived of natural resources, production capabilities or a market. The information, communication and collaboration infrastructure are there to insure the cohesion and the coherence of the DN. Modern means of transportation insure the gathering of resources to the physical location of production and the distribution of products to consumers. All these capabilities are exploited today, only in a different context. The idea is that wealth can now be created in a place deprived of resources, but rich in know how. "Location, location, location" is loosing it's meaning as we can clearly see by observing online consumer behaviors. "Connections, connections, connections" is also becoming an obsolete formula. In a dynamic world providing lots of choices "Value, Value, Value" is becoming the norm!

In conclusion, the DN idea may not seam to be a radical change because members of the DN can be classical institutions, which incorporate the classical division of labor, a culture of competition and individualism, etc. But the DN represents an important change in the right direction, towards a culture of sharing and openness, towards greater democratization of production. If these values come together to form the new basis of the economy, any institution that will survive the change will be transformed. We believe that the economy WILL decentralize under the social pressure induced by the new technology. Monopolies create irresponsible and despotic sovereigns, decentralization should to be more generous in the distribution of power.

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